SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )1
Natural Health Trends Corp.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.001 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
63888P-10-9
----------------------------------------
(CUSIP Number)
Andrew L. Azure, 13 Eagles Nest Drive, LaConner, Washington 98257
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
July 23, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|
Note. Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
Page 1 of 91 Pages
The Exhibit Index appears on page 12
___________
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 63888P-10-9 Page 2 of 91 Pages
- -------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Azure Limited Partnership I
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Washington State
- -------------------------------------------------------------------------------
NUMBER 7) SOLE VOTING POWER
OF 1,662,767
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 1,662,767
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,662,767
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 63888P-10-9 Page 3 of 91 Pages
- -------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Andrew L. Azure
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -------------------------------------------------------------------------------
NUMBER 7) SOLE VOTING POWER
OF
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 1,662,767
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
1,662,767
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,662,767
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 63888P-10-9 Page 4 of 91 Pages
- -------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Darlene K. Beck
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -------------------------------------------------------------------------------
NUMBER 7) SOLE VOTING POWER
OF
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 1,662,767
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
1,662,767
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,662,767
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 63888P-10-9 Page 5 of 91 Pages
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1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Debbie R. Reis-Baker
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -------------------------------------------------------------------------------
NUMBER 7) SOLE VOTING POWER
OF
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 1,662,767
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
1,662,767
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,662,767
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 63888P-10-9 Page 6 of 91 Pages
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This Schedule 13D (this "Schedule 13D") is being made and filed by the
Azure Limited Partnership I, a Washington State limited partnership ("Azure
LP"), and each of its general partners, Andrew L. Azure ("AAzure"), Darlene K.
Beck ("DBeck") and Debbie R. Reis-Baker ("DReis-Baker"; and collectively with
Azure LP, AAzure and DBeck, the "Reporting Persons").
Sub-items not expressly addressed in this Schedule 13D are inapplicable
to the Reporting Persons, or the responses to such sub-items are negative.
As part of the closing, on July 23, 1997, of the transactions (the "GHA
Transactions") contemplated by that certain Amended and Restated Agreement and
Plan of Reorganization, dated as of July 23, 1997 (the "GHA Plan of
Reorganization"), by and among Natural Health Trends Corp., a Florida
corporation ("NHTC"), Global Health Alternatives, Inc., a Delaware corporation
("GHA"), and the stockholders of GHA (which included Azure LP) (the "GHA
Stockholders"), the GHA Stockholders (including Azure LP) transferred and
assigned to NHTC their shares of GHA Common Stock in consideration of (among
other things), for each GHA Stockholder, a pro rata portion (in the GHA
Agreement, "Percentage") of 5,800,000 shares of Common Stock, par value $.001
per share ("NHTC Common Stock"), of NHTC. It is through the GHA Transactions
that Azure LP (and, indirectly through Azure LP, the other Reporting Persons)
became the beneficial owners of the 1,662,767 shares of NHTC Common Stock
reported herein.
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par value $.001 per
share ("NHTC Common Stock"), of Natural Health Trends Corp., a Florida
corporation ("NHTC").
Item 2. Identity and Background
Azure LP. Azure Limited Partnership I is a Washington State limited
partnership the principal business of which is engaging in investment
activities. The address of Azure LP's principal business and office is 13 Eagles
Nest Drive, LaConner, Washington 98257.
AAzure. Andrew L. Azure, a United States citizen, is a general partner
of Azure LP. AAzure's present principal occupation is serving as Director of
Marketing of Pacific Cabulance, whose principal business is providing
transportation services to medical patients and whose address is 19300 144th
Avenue, N.E., Woodinville, Washington 98702.
DBeck. Darlene K. Beck, a United States citizen, is a general partner
of Azure LP. DBeck's present principal occupation is serving as Aerobics
Director and Instructor at the Riverside Health Club, whose address is 2225
Riverside Drive, Mt. Vernon, Washington 98273.
<PAGE>
CUSIP No. 63888P-10-9 Page 7 of 91 Pages
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DReis-Baker. Debbie R. Reis-Baker, a United States citizen, is a
general partner of Azure LP. DReis-Baker's present principal occupation is
homemaker, and her business address is c/o Azure Limited Partnership I, 13
Eagles Nest Drive, LaConner, Washington 98257.
AAzure, DBeck and DReis-Beck are brother and sisters.
During the last five years, none of the Reporting Persons: (i) has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors), or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The shares of NHTC Common Stock reported herein as beneficially owned
by the Reporting Persons were issued as partial consideration for the 1,384,617
shares of GHA Common Stock that were transferred by Azure LP to NHTC as part of
the GHA Transactions. Such shares of GHA Common Stock had previously been
transferred to Azure LP by Leo L. Azure, Jr. ("LAzure"), the father of the three
natural person Reporting Persons. LAzure had used his personal funds to obtain
such shares of GHA Common Stock.
Item 4. Purpose of Transaction
Azure LP and the other GHA Stockholders wished to participate in the
GHA Transactions in order to combine NHTC and GHA, which is now a subsidiary of
NHTC. The shares of NHTC Common Stock issued in the GHA Transactions (including
the 1,662,767 shares of NHTC Common Stock reported herein) were part of the
consideration to the GHA Stockholders for NHTC's acquisition of GHA.
(a) Section 1.02(b) of the GHA Plan of Reorganization provides that each
GHA Stockholder (including Azure LP) will be entitled to receive from NHTC their
"Percentage" (as defined in Section 1.02(d) of the GHA Plan of Reorganization)
of 800,000 shares of NHTC Common Stock (the "First Contingent Shares") if
Acquired Pre-Tax Earnings (as defined in Section 1.02(d) of the GHA Plan of
Reorganization) during the twelve-month period ending June 30, 1998 shall equal
or exceed $1,200,000. Section 1.02(c) of the GHA Plan of Reorganization provides
that each GHA Stockholder (including Azure LP) will be entitled to receive from
NHTC their Percentage of a number of shares of NHTC Common Stock (the "Second
Contingent Shares") having a "Fair Market Value" (as defined in Section 1.02(d)
of the GHA Plan of Reorganization) equal to the lesser of: (1) eight times (8x)
Acquired Pre-Tax Earnings during the year ending June 30, 2000 minus the Fair
Market Value of the shares of NHTC Common Stock issued at the closing of the GHA
Transactions minus the Fair Market Value of any First Contingent Shares that are
issued minus "Acquisition Costs" (as defined in Section 1.02(d) of the GHA Plan
of Reorganization)
<PAGE>
CUSIP No. 63888P-10-9 Page 8 of 91 Pages
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minus $27,350; and (2) $45,000,000. The form of the GHA Plan of Reorganization
is filed as Exhibit B to this Schedule 13D, and reference is hereby made to such
Exhibit B for a more complete description of the First Contingent Shares and
Second Contingent Shares (collectively, the "Contingent Shares") and the rights
of the GHA Stockholders (including Azure LP) with respect thereto.
Under a letter agreement, dated as of July 23, 1997 (the "Percentages
Agreement"), between Azure LP and Capital Development S.A. ("CD"), another GHA
Stockholder, the parties thereto made certain agreements that, in essence,
adjust their relative Percentages under the GHA Plan of Reorganization (but not
their aggregate Percentages relative to all other GHA Stockholders) with respect
to the right to receive any Contingent Shares. The Percentages of Azure LP and
CD (before giving effect to the Percentages Agreement) are approximately
28.668396% and 14.149044%, respectively, or approximately 42.81744% in the
aggregate. Under the Percentages Agreement, Azure LP and CD agreed that: (1) in
the event that Sir Brian Wolfson shall have remained an officer or director of
NHTC substantially continuously until June 30, 2000, as between them their
Percentages with respect to the right to receive Contingent Shares will be
approximately 17.126976% for Azure LP and 25.690464% for CD (still approximately
42.81744% in the aggregate), and (2) in the event that Sir Brian Wolfson shall
not have remained an officer or director of NHTC substantially continuously
until June 30, 2000, as between them their Percentages with respect to the right
to receive Contingent Shares will be approximately 21.40872% for Azure LP and
21.40872% for CD (still approximately 42.81744% in the aggregate). The form of
the Percentages Agreement is filed as Exhibit C to this Schedule 13D, and
reference is hereby made to such Exhibit C for a more complete description of
the agreements set forth therein.
Pursuant to Section 6.02(i) of the GHA Plan of Reorganization, NHTC,
GHA and the GHA Stockholders (including Azure LP) entered into a Registration
Rights Agreement, dated as of July 23, 1997 (the "Registration Rights
Agreement"), whereby NHTC granted certain "shelf" and "piggyback" registration
rights covering the 5,800,000 shares of NHTC Common Stock issued or issuable at
the closing of the GHA Transactions as well as any Contingent Shares that may
subsequently be issued. Under Section 9 of the Registration Rights Agreement,
certain GHA Stockholders, including Azure LP, agreed, for a period of two years
from the date thereof, not to sell, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of NHTC Common Stock without the consent of a
majority of the members of the Executive Committee of NHTC or, if there be no
such Committee, a majority of the members of the Board of Directors of NHTC. The
form of the Registration Rights Agreement is filed as Exhibit D to this Schedule
13D, and reference is hereby made to such Exhibit D for a more complete
description of the agreements set forth therein.
From time to time after the date hereof, any one or more of the
Reporting Persons may purchase or acquire additional shares of NHTC Common Stock
(or options to purchase additional shares of Common Stock); however, there are
currently no plans or proposals to do so.
<PAGE>
CUSIP No. 63888P-10-9 Page 9 of 91 Pages
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(d) Pursuant to Section 6.02(j) of the GHA Plan of Reorganization: (A) the
Board of Directors of NHTC took the following actions, effective immediately
after the annual meeting of the shareholders of NHTC scheduled to take place on
August 4, 1997: (i) the Board of Directors of NHTC was increased by two (2), and
Sir Brian Wolfson ("Sir Brian") and Hiram Knott were appointed members of such
Board to fill the vacancies created by such increase; (ii) Sir Brian was named
Chairman of the Board of Directors of NHTC; (iii) the Board of Directors of NHTC
established an Executive Committee comprised of Neal R. Heller, Elizabeth S.
Heller and Sir Brian, and such Executive Committee was delegated the authority
to act in the place and stead of the Board of Directors of NHTC to the fullest
extent permitted under Florida corporate law; and (iv) Sir Brian was named
Chairman of such Committee, and (B) the Board of Directors of GHA was fixed at
one, and Sir Brian was elected the sole member thereof.
Section 9.01 of the GHA Plan of Reorganization provides that, for so
long as the GHA Stockholders shall collectively beneficially own not less than
ten percent (10%) of the outstanding shares of NHTC Common Stock, NHTC shall use
its reasonable best efforts to: (i) cause two individuals designated by one or
more of Sir Brian, LAzure and Robert C. Bruce (the Company's Chief Financial
Officer and a GHA Stockholder) (such individuals in such capacity, the
"Attorneys") and reasonably acceptable to NHTC to be nominated for election to
the Board of Directors of NHTC at each annual meeting of its stockholders and
each special meeting (and written consent in lieu of a meeting) at (or in) which
directors are to be elected following the closing of the GHA Transactions; (ii)
cause the Board of Directors or management of NHTC to recommend in any proxy
statement for such meeting to the stockholders of NHTC that they vote for the
election of such nominees; and (iii) cause the management proxies who may vote
at any such meeting to vote any shares for which a proxy card is received with
no indication as to the election of such nominees to vote for their election;
provided, however, that from and after such time (if any) that the GHA
Stockholders shall collectively beneficially own less than ten percent (10%),
but not less than five percent (5%), of the outstanding shares of NHTC Common
Stock, NHTC shall be required to fulfill its obligations under the foregoing
provisions only with respect to one individual designated by one or more of the
Attorneys and reasonably acceptable to NHTC.
Item 5. Interest in Securities of the Issuer
(a) Azure LP. The aggregate number of shares of NHTC Common Stock
beneficially owned by Azure LP is 1,662,767, all of which are outstanding shares
directly held by Azure LP. On a percentage basis these shares represent
approximately 8.9% of the outstanding shares of NHTC Common Stock.
Other Reporting Persons. The aggregate number of shares of Common Stock
beneficially owned by each of AAzure, DBeck and DReis-Baker is 1,662,767, all of
which are outstanding shares directly held by Azure LP. On a percentage basis
these shares represent approximately 8.9% of the outstanding shares of NHTC
Common Stock.
<PAGE>
CUSIP No. 63888P-10-9 Page 10 of 91 Pages
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(b) Azure LP has the sole power to vote and to direct the vote, and
(subject to Section 9 of the Registration Rights Agreement, as hereinabove
described) the sole power to dispose of and to direct the disposition of, the
1,662,767 shares of NHTC Common Stock reported herein. None of the other
Reporting Persons hold any shares of NHTC Common Stock, but inasmuch as AAzure,
DBeck and DReis-Baker are general partners of Azure LP they may be deemed to
share (with each other and/or Azure LP) the power to vote and to direct the
vote, and to share (with each other and/or Azure LP; and subject to Section 9 of
the Registration Rights Agreement) the power to dispose of and to direct the
disposition of, the 1,662,767 shares of NHTC Common Stock reported herein.
AAzure's, DBeck's and DReis-Baker's beneficial ownership of the 1,662,767 shares
of NHTC Common Stock reported herein arise solely from their capacity as general
partners of Azure LP.
(c) Reference is hereby made to the descriptions and discussions of the
GHA Transactions appearing elsewhere in this Schedule 13D, which descriptions
and discussions are hereby incorporated herein by reference in response to this
sub-item.
Item 6. Contracts, Arrangements, Understanding or Relationships With Respect
to Securities of the Issuer
Reference is hereby made to the descriptions and discussions of the
Contingent Shares, the Percentages Agreement and the Registration Rights
Agreement appearing elsewhere in this Schedule 13D, which descriptions and
discussions are hereby incorporated herein by reference in response to this
Item.
Item 7. Material to be Filed as Exhibits
Exhibit A - Form of Joint Filing Agreement and Power of Attorney, dated
as of July 30, 1997, among Azure Limited Partnership I, Darlene K. Beck, Debbie
R. Reis- Baker and Andrew L. Azure
Exhibit B - Form of Amended and Restated Plan of Reorganization, dated
as of July 23, 1997, among Natural Health Trends Corp., Global Health
Alternatives, Inc. and the stockholders of Global Health Alternatives, Inc. (the
"GHA Plan of Reorganization")
Exhibit C - Form of letter agreement, dated as of July 23, 1997,
between Capital Development S.A. and Azure Limited Partnership I (the
"Percentages Agreement")
Exhibit D - Form of Registration Rights Agreement, dated as of July 23,
1997, by and among Natural Health Trends Corp., Global Health Alternatives, Inc.
and the stockholders of Global Health Alternatives, Inc. (the "Registration
Rights Agreement")
<PAGE>
CUSIP No. 63888P-10-9 Page 11 of 91 Pages
- --------------------------------------------------------------------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 31, 1997
AZURE LIMITED PARTNERSHIP I
By:/s/ Andrew L. Azure /s/ Andrew L. Azure
- ----------------------------------- ----------------------------------
Andrew L. Azure, General Partner Andrew L. Azure, individually
/s/ Darlene K. Beck /s/ Debbie R. Reis
- ----------------------------------- ----------------------------------
Darlene K. Beck, individually Debbie R. Reis, individually
<PAGE>
CUSIP No. 63888P-10-9 Page 12 of 91 Pages
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EXHIBIT INDEX
Exhibit Document Page
- ------- --------------- ------
A Form of Joint Filing Agreement and Power of 13
Attorney, dated as of July 30, 1997, among
Azure Limited Partnership I, Darlene K. Beck,
Debbie R. Reis-Baker and Andrew L. Azure
B Form of Amended and Restated Plan of 15
Reorganiza- tion, dated as of July 23, 1997,
among Natural Health Trends Corp., Global
Health Alternatives, Inc. and the
stockholders of Global Health Alternatives,
Inc. (the "GHA Plan of Reorganization") 15
C Form of letter agreement, dated as of July 70
23, 1997, between Capital Development S.A.
and Azure Limited Partnership I (the
"Percentages Agreement")
D Form of Registration Rights Agreement, dated 74
as of July 23, 1997, by and among Natural
Health Trends Corp., Global Health
Alternatives, Inc. and the stock- holders of
Global Health Alternatives, Inc. (the "Regis-
tration Rights Agreement")
<PAGE>
CUSIP No. 63888P-10-9 Exhibit A Page 13 of 91 Pages
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Form of
Joint Filing Agreement and Power of Attorney
1. Introduction. This Joint Filing Agreement and Power of Attorney
(this "instrument") is being executed and delivered by the Azure Limited
Partnership I, a Washington State limited partnership (the "Partnership"), and
each of its general partners, Darlene K. Beck, Debbie R. Reis and Andrew L.
Azure (collectively, the "General Partners"). The Partnership is the holder of
shares of Common Stock, par value $.001 per share ("Common Stock"), of Natural
Health Trends Corp., a Florida corporation ("NHTC"), to an extent that requires
the Partnership and each of the General Partners to file a Schedule 13D under
the Securities Exchange Act of 1934, as amended (the "Act") and Regulation 13D-G
thereunder ("Regulation 13D-G"). The purpose of such Schedule 13D is to report
the Partnership's and General Partners' holdings of NHTC Common Stock and
certain related matters called for thereunder. In this instrument, the term
Schedule 13D shall hereafter refer to any Schedule 13D (including any amendatory
Schedule 13D) that may be required to be filed under the Act and/or Regulation
13D-G, or that may be advisable to so file, in order to provide and/or update
the public disclosures called for thereunder with respect to: (i) the
Partnership's and/or any General Partner's holdings of NHTC Common Stock and/or
(ii) the other disclosures required under the Act and Regulation 13D-G.
2. Joint Filing Agreement. In accordance with the provisions of Rule
13d-1(f) of Regulation 13D-G, each of the undersigned hereby agrees that: (i)
the Schedule 13D dated July 31, 1997 of the Partnership and each of the General
Partners with respect to NHTC Common Stock is filed on behalf of each of the
undersigned, and (ii) any further Schedules 13D with respect to NHTC and/or NHTC
Common Stock executed by or on behalf of any of the undersigned shall be filed
on behalf of such of the undersigned who shall have executed the same (or on
whose behalf the same shall have been executed).
3. Power of Attorney. Each of the undersigned General Partners (in such
capacity, a "Granting Partners") hereby constitutes and appoints each of the
other General Partners, with full power of substitution, appointment and
revocation, the true and lawful agent and attorney-in-fact of such Granting
Partner with full discretionary power and authority, without the consent of such
Granting Partner, for and on such Granting Partner's behalf, and in such
Granting Partner's name, place and stead: (A) to prepare, execute, deliver and
file with the Securities and Exchange Commission and NHTC (and to cause to be
prepared, executed, delivered and filed with the Securities and Exchange
Commission and NHTC) any and all Schedules 13D that may be necessary or
advisable under the Act and/or Regulation 13D-G to file with respect to the
Partnership's and/or General Partners' holdings of NHTC Common Stock; and (B) to
do and perform all acts and deeds in connection with the foregoing, including
without limitation: (i) giving, receiving, executing and delivering all notices,
requests and other communications on behalf of such Granting Partner pursuant to
or in connection with any Schedule 13D, and (ii) paying expenses incurred or
which may be incurred by or on behalf of such Granting Partner in connection
with any of the foregoing.
<PAGE>
CUSIP No. 63888P-10-9 Exhibit A Page 14 of 91 Pages
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of July, 1997
AZURE LIMITED PARTNERSHIP I
By:
-------------------------------- ---------------------------------
Darlene K. Beck, General Partner Darlene K. Beck, individually
By:
-------------------------------- ---------------------------------
Debbie R. Reis, General Partner Debbie R. Reis, individually
By:
-------------------------------- ---------------------------------
Andrew L. Azure, General Partner Andrew L. Azure, individually
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 15 of 91 Pages
- --------------------------------------------------------------------------------
Form of GHA Plan of Reorganization
----------------------------------
================================================================================
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
July 23, 1997
by and among
NATURAL HEALTH TRENDS CORP.,
GLOBAL HEALTH ALTERNATIVES, INC.
and
THE STOCKHOLDERS OF GLOBAL HEALTH ALTERNATIVES, INC.
================================================================================
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 16 of 91 Pages
- --------------------------------------------------------------------------------
TABLE OF CONTENTS*
------------------
Page
----
ARTICLE I
THE MAIN TRANSACTION
SECTION 1.01. Main Transaction...........................................
SECTION 1.02. Consideration..............................................
(a) Firm Shares..........................................
(b) First Contingent Shares..............................
(c) Second Contingent Shares.............................
SECTION 1.03. Main Transaction and Transactions Defined..................
SECTION 1.04. Execution of Agreement.....................................
SECTION 1.05. Power of Attorney..........................................
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Existence ................................
SECTION 2.02. Consents, Authorizations and Conflicts ....................
SECTION 2.03. Company Financial Statements...............................
SECTION 2.04. Capitalization and Title to Shares ........................
SECTION 2.05. Company Properties; Liens..................................
SECTION 2.06. Company Insurance..........................................
SECTION 2.07. Company Litigation and Compliance..........................
SECTION 2.08. Company Contracts..........................................
SECTION 2.09. Company Taxes..............................................
SECTION 2.10. Company Employee Plans.....................................
SECTION 2.11. Company Environmental Compliance...........................
SECTION 2.12. Finder's Fees..............................................
SECTION 2.13. Absence of Certain Changes.................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NHTC
SECTION 3.01. Organization and Existence.................................
SECTION 3.02. Consents, Authorizations and Conflicts.....................
SECTION 3.03. NHTC Financial Statements..................................
SECTION 3.04. NHTC Capitalization........................................
SECTION 3.05. NHTC Properties; Liens.....................................
SECTION 3.06. NHTC Insurance.............................................
SECTION 3.07. NHTC Litigation and Compliance.............................
SECTION 3.08. NHTC Contracts.............................................
SECTION 3.09. NHTC Taxes.................................................
SECTION 3.10. NHTC Employee Plans........................................
- ------------------
* The Table of Contents and cover page are not a part of this Agreement.
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CUSIP No. 63888P-10-9 Exhibit B Page 17 of 91 Pages
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Page
SECTION 3.11. NHTC Environmental Compliance..............................
SECTION 3.12. SEC Filings................................................
SECTION 3.13. Finder's Fees..............................................
SECTION 3.14. Absence of Certain Changes ..............................
ARTICLE IV
OTHER REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Nature of Transaction......................................
SECTION 4.02. Acquisition for Investment.................................
SECTION 4.03. Tax Treatment of Transactions..............................
SECTION 4.04. No Other Representations and Warranties....................
SECTION 4.05. Release....................................................
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
SECTION 5.01. Access to Records and Properties...........................
SECTION 5.02. Operation of the Company and NHTC..........................
SECTION 5.03. Consents and Notices.......................................
SECTION 5.04. Best Efforts to Satisfy Conditions.........................
SECTION 5.05. Bridge Loans...............................................
ARTICLE VI
CONDITIONS TO THE MAIN TRANSACTION
SECTION 6.01. Conditions to Obligations of NHTC..........................
(a) Representations and Warranties;
Performance of Obligations..........................
(b) Charter, By-laws, etc.................................
(c) Consents and Notices..................................
(d) Legal Restraints......................................
(e) No Company Material Adverse Change....................
(f) Company Shares Certificates...........................
(g) Receipt...............................................
(h) Opinions of Counsel...................................
(i) IRS Forms W-8 and W-9................................
(j) Management Options...................................
(k) Heller Options........................................
(l) Other Matters........................................
SECTION 6.02. Conditions to Obligations of the Company Stockholders......
(a) Representations and Warranties;
Performance of Obligations..........................
(b) Charter, By-laws, etc.................................
(c) Consents and Notices..................................
(d) Legal Restraints......................................
(e) No NHTC Material Adverse Change.......................
(f) Receipt...............................................
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CUSIP No. 63888P-10-9 Exhibit B Page 18 of 91 Pages
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Page
----
(g) Firm Shares Certificates..............................
(h) Opinions of Counsel...................................
(i) Registration Rights Agreement........................
(j) Corporate Governance.................................
(k) Management Compensation...............................
(l) Reservation of Shares................................
(m) Other Matters..........................................
ARTICLE VII
CLOSING PROCEDURE AND DATE; TERMINATION
SECTION 7.01. Closing Procedure; Closing Date............................
SECTION 7.02. Termination of Agreement...................................
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. By the Company Stockholders................................
SECTION 8.02. By NHTC....................................................
SECTION 8.03. "Losses" Defined...........................................
SECTION 8.04. Notice of Claims...........................................
SECTION 8.05. Survival of Provisions.....................................
SECTION 8.06. Exclusive Remedy...........................................
SECTION 8.07. Other Recoveries...........................................
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Board and Executive Committee Representation...............
SECTION 9.02. Termination and Modification of Agreements.................
SECTION 9.03. Public Announcements.......................................
SECTION 9.04. Further Actions............................................
SECTION 9.05. Expenses...................................................
SECTION 9.06. Entire Agreement...........................................
SECTION 9.07. Descriptive Headings; References...........................
SECTION 9.08. Notices....................................................
SECTION 9.09. Governing Law and Forum....................................
SECTION 9.10. Assignment.................................................
SECTION 9.11. Remedies...................................................
SECTION 9.12. Waivers and Amendments.....................................
SECTION 9.13. Third Party Rights.........................................
SECTION 9.14. Illegalities...............................................
SECTION 9.15. Gender and Plural Terms....................................
SECTION 9.16. Effectiveness; Termination of Original Agreement...........
SECTION 9.17. Counterparts...............................................
SIGNATURES.................................................................
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 19 of 91 Pages
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, dated
as of July 23, 1997 (this "Agreement"), is by and among: (1) Natural Health
Trends Corp., a Florida corporation ("NHTC"), on the one hand, and (2) Global
Health Alternatives, Inc., a Delaware corporation (the "Company"), and (3) the
stockholders of the Company who execute this Agreement (the "Company
Stockholders"), on the other hand. The names and addresses of the Company
Stockholders appear on Exhibit A attached hereto and made part hereof. The
shares of the Company owned by the Company Stockholders (the "Company Shares")
will constitute all of the outstanding 4,829,768 shares of Common Stock, par
value $.0001 per share, of the Company (the "Company Common Stock") if all
stockholders of the Company execute this Agreement.
BACKGROUND
Under that certain Agreement and Plan of Reorganization, dated as of
March 19, 1997 (the "Original Agreement"), by and among NHTC, GHA Holdings,
Inc., a Delaware corporation ("Holdings") and wholly owned subsidiary of NHTC,
and the Company, the parties thereto agreed to effect a tax-free reorganization
under Section 368(a)(1)(C) of the Code. The parties to the Original Agreement
now wish to effect a tax-free reorganization under Section 368(a)(1)(B) of the
Code and, consequently, to amend and restate (and thereby supersede) the
Original Agreement. In connection with such amendment and restatement (and
supersession), among other things: (i) Holdings is being deleted as a party to
the Transactions (as defined in the Original Agreement and this Agreement), and
(ii) the Company Stockholders are being added as parties to this Agreement.
NOW, THEREFORE, this Agreement evidences that, for and in consideration
of the mutual covenants set forth herein, and intending to: (A) amend and
restate (and thereby supersede in its entirety) the Original Agreement as of the
date hereof (the "Restatement Date"), so that from and after the Restatement
Date the Original Agreement shall no longer be of any force or effect, and (B)
effect a tax-free reorganization under Section 368(a)(1)(B) of the Code, the
parties hereto hereby agree as follows:
ARTICLE I
MAIN TRANSACTION
SECTION 1.01. Main Transaction. On the Closing Date or on the date(s)
of any subsequent Additional Closing(s) (as defined in Section 7.01), each
Company Stockholder shall transfer, assign, grant, convey and set over to NHTC,
and its successors and assigns forever, and NHTC shall accept and receive from
each Company Stockholder, free and clear of any and all liens, security
interests, mortgages, pledges, covenants, easements, encumbrances, defects in
title, agreements and claims and rights of third parties ("Liens") all of such
Company Stockholder's right, title and interest in, to and under the number of
Company Shares set forth opposite such Company Stockholde-r's name on the
appropriate "Agreement Signature Page" hereto.
SECTION 1.02. Consideration. (a) Firm Shares. In consideration of the
Company Stockholders' transfer of the Company Shares to NHTC, on the Closing
Date NHTC shall
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CUSIP No. 63888P-10-9 Exhibit B Page 20 of 91 Pages
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issue and deliver to each Company Stockholder, and each Company Stockholder
shall accept and receive from NHTC, free and clear of any and all Liens,
pre-emptive and similar rights, a number of shares of NHTC Common Stock, par
value $.001 per share ("NHTC Common Stock"), equal to such Company Stockholder's
Percentage (as defined in Section 1.02(d) below) of 5,800,000; provided,
however, that: (i) no fractional shares of NHTC Common Stock shall be issued
pursuant to the foregoing; and (ii) all fractional shares of NHTC Common Stock
that a Company Stockholder would otherwise be entitled to receive pursuant to
the foregoing shall be aggregated, and if a fractional share of NHTC Common
Stock results from such aggregation such fraction shall be rounded (up or down)
to the nearest whole share. The number of Firm Shares so issuable to each
Company Stockholder in accordance with the foregoing is set forth opposite such
Company Stockholder's name on the appropriate "Agreement Signature Page" hereto.
(b) First Contingent Shares. In further consideration of the
Company Stockholders' transfer of the Company Shares to NHTC as aforesaid, if
Acquired Pre-Tax Earnings during the First Contingent Shares Measure Period (as
such terms are defined in Section 1.02(d) below) shall equal or exceed
$1,200,000, then promptly after the sixtieth (60th) day after the end of the
First Contingent Shares Measure Period, NHTC shall issue and deliver to each
Company Stockholder, and each Company Stockholder shall accept and receive from
NHTC, free and clear of all Liens, pre-emptive and similar rights, a number of
shares of NHTC Common Stock equal to such Company Stockholder's Percentage of
800,000; provided, however, that: (i) no fractional shares of NHTC Common Stock
shall be issued pursuant to the foregoing; and (ii) all fractional shares of
NHTC Common Stock that a Company Stockholder would otherwise be entitled to
receive pursuant to the foregoing shall be aggregated, and if a fractional share
of NHTC Common Stock results from such aggregation such fraction shall be
rounded (up or down) to the nearest whole share.
(c) Second Contingent Shares. In further consideration of the
Company Stockholders' transfer of the Company Shares to NHTC as aforesaid,
promptly after the sixtieth (60th) day after the end of the Second Contingent
Shares Measure Period, NHTC shall issue and deliver to each Company Stockholder,
and each Company Stockholder shall accept and receive from NHTC, free and clear
of all Liens, pre-emptive and similar rights, a number of shares of NHTC Common
Stock equal to such Company Stockholde-r's Percentage of a number of shares of
NHTC Common Stock having a Fair Market Value (as of such 60th day) equal to
the lesser of:
o (8 x Acquired Pre-Tax Earnings) minus FSFMV minus FCSFMV minus
Acquisition Costs minus $27,350, and
o $45,000,000
with the terms used in the above formula and provisions having the meanings set
forth in Section 1.02(d) below; provided, however, that: (i) no fractional
shares of NHTC Common Stock shall be issued pursuant to the foregoing; and (ii)
all fractional shares of NHTC Common Stock that a Company Stockholder would
otherwise be entitled to receive pursuant to the foregoing shall be aggregated,
and if a fractional share of NHTC
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CUSIP No. 63888P-10-9 Exhibit B Page 21 of 91 Pages
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Common Stock results from such aggregation such fraction shall be rounded (up or
down) to the nearest whole share.
(d) For purposes of this Agreement, the term:
"Acquired Pre-Tax Earnings" means the Pre-Tax Earnings of the
Existing Businesses and any New Business in the Company (or any successor or
assign thereof) during the First Contingent Shares Measure Period (for purposes
of Section 1.02(b)) or Second Contingent Shares Measure Period (for purposes of
Section 1.02(c)).
"Acquisition" means any transaction, or any series of related
transactions, by which the Company (or any successor or assign thereof) or any
of its consolidated subsidiaries: (1) acquires (x) all or a substantial part of
the assets (other than through a purchase of inventory in the ordinary course of
business), (y) one or more manufacturing lines or (z) a going business or
division, of any other person or entity, whether through purchase of assets,
merger or otherwise, or (2) directly or indirectly acquires (in one transaction
or as the most recent transaction in a series of transactions) control of at
least 50% (in number of votes) of the securities of a corporation which have
ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or at least
50% (by percentage or voting power) ownership interest in any partnership, joint
venture or limited liability company (other than corporate partnerships or joint
ventures covered by the preceding clause).
"Acquisition Costs" means the consideration paid at any time
on or after the Closing Date and prior to the end of the Second Contingent
Shares Measure Period for any Acquisition of an Existing Business or New
Business, including (net of any tax benefits) commissions, finders fees,
investment banking, legal and accounting fees and disbursements paid in
connection therewith and such other transaction costs as shall be agreed upon by
the NHTC and one or more of the Attorneys (as defined in Section 1.05). For this
purpose, any such consideration consisting of: (1) NHTC Common Stock shall be
valued at the Fair Market Value thereof as of the date of issuance; (2) any
promissory notes issued by, or indebtedness assumed by, NHTC or any subsidiary
thereof (including the Company) shall be valued at the face amount of such
promissory notes or indebtedness (as the case may be); and (3) any Other
Consideration shall be valued at the Fair Market Value thereof. The parties
hereto hereby acknowledge and agree that the "Acquisition Costs" of: (A) the
Ellon Acquisition shall be limited to any "Contingent Consideration" paid in
accordance with (and as defined in) Section 1.04(b) of the Ellon Acquisition
Agreement; (B) the Fruitseng Acquisition shall be limited to any "Contingent
Shares" issued in accordance with (and as defined in) Section 1.04(b) of the
Fruitseng Acquisition Agreement (as such provision is being modified and amended
under Section 9.02(a) hereof); (C) the MikeCo Acquisition shall be zero ($0);
(D) each of the Ellon Acquisition, Fruitseng Acquisition and MikeCo Acquisition
shall additionally include legal and accounting fees and disbursements and such
other transactional costs attributable to such Acquisition (as opposed to
services or other valuable assets or other rights) as shall be agreed upon by
the NHTC and one or more of the Attorneys, in the case of each of the foregoing
clauses (A), (B), (C) and (D), at any time on or after the Closing Date and
prior to the end of the Second Contingent Shares Measure Period. The parties
hereto hereby additionally acknowledge and agree that "Acquisition Costs" shall
include the following Losses (as defined in Section 8.03), but only to the
extent that such Losses
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CUSIP No. 63888P-10-9 Exhibit B Page 22 of 91 Pages
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shall not have been taken into account in the calculation of "Acquired Pre-Tax
Earnings" during Second Contingent Shares Measure Period and only to the extent
that such Losses shall not have been reimbursed pursuant to Section 8.01: all
such Losses directly or indirectly incurred, suffered, sustained or required to
be paid by NHTC, the Company or any of their respective Subsidiaries at any time
on or after the Closing Date and prior to the end of the Second Contingent
Shares Measure Period resulting from, relating to or arising out of any: (i)
Taxes (as defined in Section 2.09(b) hereof) of the Company relating to any
periods prior to the Closing Date; (ii) any action, suit, claim, proceeding,
investigation or similar matter (including with respect to product liability and
other third-party liability claims) of any Existing Business or New Business, to
the extent that the same may result from, relate to or arise out of acts or
occurrences on or before the Closing Date; (iii) any liability or obligation
owed to any Company Stockholder or other securityholder of the Company (as
such), to the extent that the same may result from, relate to or arise out of
acts or occurrences of or on behalf of the Company on or before the Closing Date
(and not in connection with any of the Transactions); and (iv) any fees, costs
and expenses in connection with the negotiation, execution and/or consummation
of the Transactions (the Losses described in the foregoing clauses (i) through
(iv) being hereinafter collectively referred to as the "Unexpected Acquisition
Costs").
"Business" means the assets, manufacturing lines, going
business or division, corporation, partnership, joint venture or limited
liability company the acquisition of which constitutes an "Acquisition"
hereunder.
"Contingent Shares" means the First Contingent Shares and
Second Contingent Shares, collectively.
"Ellon Acquisition" means the Acquisition described in clause
(1) of the definition of "Existing Business" in this Section 1.02(d), which was
effected pursuant to the Ellon Acquisition Agreement.
"Ellon Acquisition Agreement" means that certain Assets
Purchase Agreement, dated as of October 15, 1996, by and among the Company,
Ellon, Inc., Ellon USA, Inc. and Ralph Kaslof and Leslie J. Kaslof, as the same
may be supplemented, modified, amended and/or restated from time to time.
"Existing Business" means: (1) Ellon, Inc. ("New Ellon"), a
Delaware corporation and wholly-owned subsidiary of the Company, which (in
October 1996) completed an Acquisition of substantially all of the assets of
Ellon USA, Inc. ("Old Ellon"), and the operations thereof, or such other
entities and operations of the Company through which its homeopathic and/or
flower remedy product business(es) are held and/or performed; (2) Maine
Naturals, Inc. (formerly named Fruitseng, Inc.), a Delaware corporation, which
(in October 1996) completed an Acquisition of substantially all of the assets of
Downeast Cranberry Company, Inc., and the operations thereof, or such other
entities and operations of the Company through which its beverage business(es)
are held and/or performed; (3) Global Health Alternatives (UK) Ltd., an England
and Wales corporation and wholly-owned subsidiary of the Company, and the
operations thereof, (4) the other entities and operations of the Company through
which the Company's rights and obligations under the General Agreement of
Cooperation between the Company and MEBO Holding Corp. are held and/or
performed; (5) the entities and/or operations of the
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CUSIP No. 63888P-10-9 Exhibit B Page 23 of 91 Pages
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Company through which the Company's rights and obligations under the Agreement
of Development with Kang Ban Technical Trading Company (affiliated with the
Beijing University of Traditional Chinese Medicine) are held and/or performed;
(6) MikeCo, Inc., a New York corporation and wholly-owned subsidiary of the
Company, the outstanding capital stock of which (in May 1997) was acquired by
the Company, and the operations thereof, or such other entities and operations
of the Company through which its "NR- 1222" business(es) are held and/or
performed; (7) GHA Natural Products, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company formed by the Company in May 1997, and
the operations thereof; (8) Natural Health Laboratories, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company formed by the Company in
May 1997, and the operations thereof; and (9) any other entities and/or
operations that are part of the properties or assets of the Company or any
Subsidiary (as defined in Section 2.01(c) hereof) of the Company on the Closing
Date.
"Fair Market Value" means: (1) when used with reference to
NHTC Common Stock, as of any particular date, the average of the mean of the
final bid and final ask prices of the NHTC Common Stock for each trading day
during the 30-day period immediately preceding such date, provided that: (i) if
at the time of determination NHTC Common Stock shall be traded on a national
securities exchange or quoted in an automated quotation system for which closing
sale price information is published, then such average shall be of the closing
sale prices of the NHTC Common Stock on each such trading day; and (ii) if on
any such trading day there shall not have been reported final bid and ask prices
(or, if applicable, a closing sale price) then such prices (or, if applicable,
such price) shall be the final bid and ask prices (or, if applicable, the
closing sale price) reported for the next preceding trading day for which such
prices (or, if applicable, such price) shall have been reported; and (2) when
used with reference to any Other Consideration, the fair market value thereof as
determined in good faith by the Board of Directors of NHTC.
"FCSFMV" means the Fair Market Value, as of the sixtieth
(60th) day after the First Contingent Shares Measure Period, of the NHTC Common
Stock issued or issuable as the First Contingent Shares; provided that if no
First Contingent Shares are issued then such "FCSFMV" means zero ($0).
"Firm Shares" means the shares of NHTC Common Stock issued or
issuable under Section 1.02(a).
"First Contingent Shares" means the shares of NHTC Common
Stock issued or issuable under Section 1.02(b).
"First Contingent Shares Measure Period" means the
twelve-month period ending June 30, 1998.
"Fruitseng Acquisition" means the Acquisition described in
clause (2) of the definition of "Existing Business" in this Section 1.02(d),
which was effected pursuant to the Fruitseng Acquisition Agreement.
"Fruitseng Acquisition Agreement" means that certain Assets
Purchase Agreement, dated as of October 15, 1996, by and among the Company,
Fruitseng Inc.
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CUSIP No. 63888P-10-9 Exhibit B Page 24 of 91 Pages
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(now, Maine Naturals, Inc.), Downeast Cranberry Company, Inc. and Robert E.
Cleaves, IV, Stephen W. Batzell, Thomas P. Pinansky, John M. Eldredge and Robert
C. Bruce, as the same may be supplemented, modified, amended and/or restated
from time to time.
"FSFMV" means the Fair Market Value, as of the Closing Date,
of the NHTC Common Stock issued or issuable as the Firm Shares.
"GAAP" means United States generally accepted accounting
principles.
"MikeCo Acquisition" means the Acquisition described in clause
(6) of the definition of "Existing Business" in this Section 1.02(d), which was
effected pursuant to the MikeCo Acquisition Agreements.
"MikeCo Acquisition Agreements" means that certain: (i)
Agreement and Plan of Reorganization dated as May 23, 1997, by and among the
Company, MikeCo, Inc. and H. Edward Troy, Patrick Killorin, Kevin Underwood,
Mark Colosi, Joe Grace and William Deehan, as the same may be supplemented,
modified, amended and/or restated from time to time, and (ii) Assignment of
Patents dated May 23, 1997 made by Troy Laboratories, Inc. in favor of MikeCo,
Inc.
"New Business" means any Business that: (i) is not an Existing
Business, and (ii) is not, on or prior to the date of acquisition thereof by the
Company or any other subsidiary of NHTC, designated by one or more of the
Attorneys as an "Excluded New Business" for purposes of this Agreement.
"NHTC Shares" means the Firm Shares and any Contingent Shares
that may be issued or issuable under this Article I.
"Other Consideration" means, when used with reference to the
Acquisition Costs of any Existing Business or New Business, any consideration
paid for the purchase or other acquisition thereof excluding: (i) NHTC Common
Stock and (ii) any promissory notes issued by, or indebtedness assumed by, NHTC
or any subsidiary thereof (including the Company or ).
"Percentage" means, with respect to any Company Stockholder,
the percentage obtained by dividing: (i) the number of Company Shares held by
such Company Stockholder (as indicated opposite such Company Stockholder's name
on the appropriate "Agreement Signature Page" hereto), by (ii) the total number
of Company Shares outstanding on the Closing Date; provided, however, that in
the event that a Company Stockholder establishes to the reasonable satisfaction
of NHTC that such Company Stockholder has acquired or transferred its rights to
any of the Firm Shares and/or Contingent Shares from or to any other Company
Stockholder, then, with respect to the rights to any of such Firm Shares and/or
Contingent Shares (as the case may be), such Company Stockholders' Percentages
shall be appropriately adjusted.
"Pre-Tax Earnings" means, with respect to any entity for any
period, the income (or loss) from operations before income taxes (if any) of
such entity for such period plus any non-cash charges (such as, without
limitation, depreciation and
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CUSIP No. 63888P-10-9 Exhibit B Page 25 of 91 Pages
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amortization) plus any extraordinary or non-recurring expenses incurred during
such period related to the disposition of any Business or the revaluation of
intangibles.
"Second Contingent Shares" means the shares of NHTC Common
Stock issued or issuable under Section 1.02(c).
"Second Contingent Shares Measure Period" means the
twelve-month period ending June 30, 2000.
(e) No First Contingent Shares shall be issued if the formula
provided under Section 1.02(b) above yields a zero or negative value, and no
Second Contingent Shares shall be issued if the formula provided under Section
1.02(c) above yields a zero or negative value; and in either such event NHTC
shall have no claim or cause of action against the Company, its successors or
assigns or any other person or entity (without prejudice, however, to the rights
of NHTC under Article VIII).
SECTION 1.03. "Main Transaction" and "Transactions" Defined. The
transactions provided for above in this Article I are hereinafter sometimes
referred to as the "Main Transaction"; the Main Transaction and other
transactions contemplated by this Agreement are hereinafter sometimes referred
to as the "Transactions".
SECTION 1.04. Execution of Agreement. (a) Each Company Stockholder is
executing and delivering this Agreement, for the limited purpose of: (i)
consenting to the above provisions of Article I of this Agreement and agreeing
to be bound thereby, (ii) making the representations, warranties, covenants and
agreements set forth in Sections 4.02 and 4.05 with respect to such Company
Stockholder (and no other Company Stockholder), (iii) confirming to the Company
and Indemnifying Company Stockholders (as defined in Section 8.01(d)) the truth
and accuracy of the representations and warranties made by the Company herein,
and of the other statements made herein, with respect to such Company
Stockholder (and no other Company Stockholder), and (iv) making and giving all
covenants, agreements, confirmations and ratifications set forth in this
Agreement that are expressly being made or given (as the case may be) by the
Company Stockholders (in their capacity as such).
(b) Each party hereto hereby acknowledges and agrees that,
notwithstanding anything to the contrary set forth in this Agreement (but except
as otherwise expressly provided in Article VIII hereof), no Company Stockholder
or Attorney shall have any liability under this Agreement or otherwise in
respect of the Transactions other than for a breach of: (i) representations and
warranties of such Company Stockholder or Attorney (and no other Company
Stockholder or other person or entity) made herein, (ii) the representations and
warranties of the Company made herein with respect to such Company Stockholder
or Attorney (and no other Company Stockholder or other person or entity), (iii)
the covenants and agreements of such Company Stockholder or Attorney (and no
other Company Stockholder or other person or entity) made herein, and (iv) the
covenants and agreements of the Company made herein with respect to such Company
Stockholder or Attorney (and no other Company Stockholder or other person or
entity). From and after the Closing Date, the liability of the parties hereto
for breaches of this Agreement shall be subject to limitations of Article VIII
hereof.
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SECTION 1.05. Power of Attorney. (a) Each Company Stockholder has
executed and delivered an Irrevocable Power of Attorney in respect of this
Agreement and the Transactions (each a "Power of Attorney") appointing Sir Brian
Wolfson, Leo L. Azure, Jr. and Robert C. Bruce attorneys-in-fact of such Company
Stockholder (such individuals so appointed (and any other person substituted or
appointed by any of them in accordance with the Power of Attorney) in such
capacity, individually an "Attorney" and collectively the "Attorneys").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to NHTC that, except as
previously disclosed in writing to NHTC (in this Article II (and Section
6.01(a)), "Previously Disclosed"):
SECTION 2.01. Organization and Existence. (a) The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each Subsidiary of the Company, the identities of
which have been Previously Disclosed, is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries has the full corporate
power and authority to own and lease their respective properties and assets and
to carry on their respective businesses as and where such properties and assets
are now owned, leased and/or operated and such businesses are now conducted. The
Company has heretofore made available to NHTC true, correct and complete copies
of the respective certificates or articles of incorporation and by-laws (or
equivalent governing instruments), each as amended to the date hereof, of the
Company and each of its Subsidiaries. Each of the Company and each of its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the character
of the properties and assets now owned and/or operated by it or the nature of
the business now conducted by it requires it to be so licensed or qualified and
in which failure to be so licensed or qualified could reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities, capitalization, financial position,
operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company or any Company
Stockholder to perform their respective obligations under this Agreement and/or
to consummate the Transactions (a "Company Material Adverse Effect").
(b) Each Company Stockholder that is a corporation, partnership or
other non-natural person (each, a "Corporate Company Stockholder") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(c) The Company has made available to NHTC the original or true
copies of the minute books and stock transfer records of the Company and its
Subsidiaries. Such stock transfer records are current and accurate in all
material respects.
(d) For the purposes of this Agreement, the term "Subsidiary"
means, of any person or entity, any other entity of which the securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors (or other persons performing similar functions) are
directly or indirectly owned by such first person
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or entity. The Company does not own, directly or indirectly, any equity or
proprietary interests or securities of any entity or enterprise organized under
the laws of the United States, any state thereof, the District of Columbia or
any other domestic or foreign jurisdiction, other than the Subsidiaries thereof
Previously Disclosed.
SECTION 2.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by the Company or any Company Stockholder (collectively,
the "Company Parties"; and each individually, a "Company Party") of this
Agreement, the Power of Attorney, Registration Rights Agreement or any of the
other agreements, instruments, certificates or other documents executed and
delivered (or to be executed and delivered) by any Company Party in connection
with this Agreement and/or any of the Transactions (collectively, the "Company
Party Documents"), nor the consummation of the Transactions, nor the performance
by the Company of any of its other obligations hereunder or thereunder, require
or will require any governmental authority or private party consent, waiver,
approval, authorization or exemption (collectively, "Consents") or the giving of
any notice ("Notice") applicable to the Company (as opposed to NHTC) except for
such Consents and Notices: (i) that have been duly obtained (in the case of
Consents) or given (in the case of Notices) and are unconditional and in full
force and effect, or (ii) of which the failure to obtain (in the case of
Consents) or give (in the case of Notices) could not reasonably be expected to
have a Company Material Adverse Effect.
(b) This Agreement and each other Company Party Document has been
(or prior to the Closing will be) duly authorized (in the case of the Company
and the Corporate Company Stockholders), executed and delivered by each Company
Party party thereto and constitute the legal, valid and binding obligations of
such Company Party enforceable against such Company Party in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, fraudulent conveyance or similar laws of
general application relating to or affecting the enforcement of creditors'
rights. The execution and delivery by the Company Parties of the Company Party
Documents to which they are respectively a party, the performance by the Company
Parties of their respective obligations thereunder, and the consummation of the
Transactions, do not and will not contravene, conflict or be inconsistent with,
result in a breach of, constitute a violation of or default under, or require or
result in any right of acceleration or to create or impose any Lien under: (i)
the Company's or any Corporate Company Stockholder's certificate of
incorporation or by-laws (or equivalent governing instruments), or (ii) except
where such contravention, conflict, inconsistency, breach, violation, default,
right or imposition could not reasonably be expected to have a Company Material
Adverse Effect, and assuming satisfaction of the matters referred to in Section
2.02(a): (x) any Laws applicable or relating to any Company Party or any of the
businesses or assets of the Company or any Subsidiary thereof, or (y) any
Company Permit (as defined in Section 2.07) or Company Contract.
SECTION 2.03. Company Financial Statements. (a) The books of account
and other financial and accounting records of the Company and its Subsidiaries
are, and during the respective periods covered by the Company Financial
Statements (as hereinafter defined) were, correct and complete in all material
respects, fairly and accurately reflect or reflected their respective income,
expenses, assets and liabilities, including the nature thereof and the
transactions giving rise thereto, and provide or provided a fair and accurate
basis for the preparation of the Company Financial
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Statements. The Company has heretofore delivered to NHTC the following unaudited
financial statements of the Company (the "Company Financial Statements"):
Consolidated Balance Sheet as of December 31, 1996 (the "Company Base Date") and
Consolidated Statements of Income and Consolidated Statement of Cash Flows for
the periods then ended. The Company Financial Statements have been prepared in
conformity with GAAP (except for the absence of notes), consistently applied,
and are correct and complete in all material respects, and fairly present the
consolidated financial position of the Company as of the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods covered thereby.
(b) As of the Restatement Date, neither the Company nor its
Subsidiaries has any indebtedness, liabilities or obligations (absolute,
contingent or otherwise) other than those: (i) that have been set forth or
reserved against in the Company Financial Statements, (ii) incurred since the
Company Base Date in the ordinary course of its business or otherwise consistent
with recent past practice that are, individually and in the aggregate, of an
immaterial nature and amount, (iii) arising under $685,000 aggregate principal
amount of 12 1/2% Promissory Notes of the Company ("Bridge Notes") and warrants
to purchase Common Stock of the Company ("Company Warrants") issued after the
Company Base Date, (iv) arising under borrowings made from NHTC, (v) arising in
connection with the MikeCo Acquisition, the terms of which (and agreements with
respect to which) have been Previously Disclosed, (vi) arising under Laws,
Company Permits and/or Company Contracts, and (vii) which could not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 2.04. Capitalization and Title to Shares. (a) The authorized
capital stock of the Company consists of: (1) 10,000,000 shares of Company
Common Stock, of which (i) 4,829,768 (the "Company Shares") are issued and
outstanding, (ii) up to 300,000 shares have been (or at the date hereof may be)
reserved for issuance (formally or informally) pursuant to options formally (or
informally) granted to management personnel of the Company or subsidiaries
thereof ("Management Options"); and (2) 10,000,000 shares of undesignated
Preferred Stock, par value $.0001 per share, none of which are issued or
outstanding. All Company Shares are duly authorized, validly issued, fully paid
and nonassessable shares of capital stock of the Company, with no personal
liability attaching to the ownership thereof. Except as disclosed hereinabove or
otherwise Previously Disclosed, there are no issued, outstanding or existing:
(1) securities convertible into or exchangeable for any shares of capital stock
of the Company; (2) options, warrants or other rights to purchase or subscribe
for any shares of capital stock of the Company or for securities convertible
into or exchangeable for any shares of capital stock of the Company; or (3)
agreements or commitments of any kind or description relating to the issuance or
purchase of any shares of capital stock of the Company, any such convertible or
exchangeable securities or any such options, warrants or other rights.
(b) The Company or one or more of its Subsidiaries is the record
and beneficial owner of all of the outstanding capital stock of each Subsidiary
of the Company, free and clear of all Liens (other than Permitted Liens).
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CUSIP No. 63888P-10-9 Exhibit B Page 29 of 91 Pages
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(c) Each Company Stockholder has good and marketable title to the
number of Company Shares indicated opposite such Company Stockholder's name on
the appropriate "Agreement Signature Page" hereto, free and clear of all Liens.
(d) For purposes of this Agreement, the term "Permitted Liens"
means: (i) Liens for taxes not yet due and payable; (ii) Liens imposed by Laws
(as defined in Section 2.07), such as banker's, warehousemen's, mechanic's and
materialmen's liens, and other similar statutory or common law liens arising in
the ordinary course of business; (iii) Liens arising out of pledges, bonds or
deposits under worker's compensation laws, unemployment insurance, old age
pension or other social security or retirement benefits or similar legislation
and deposits securing obligations for self-insurance arrangements in connection
with any of the foregoing; (iv) easements, rights of way, building restrictions,
minor defects or irregularities in title and such other encumbrances or charges
against property (real, personal or mixed) as are of a nature that do not in a
materially adverse way affect the marketability of the same or interfere with
the use thereof in the ordinary course of business as presently conducted; (v)
Liens arising under Company Contracts (as defined in Section 2.08); (vi) Liens
securing indebtedness (x) disclosed or reflected in the Company Financial
Statements, (y) owed to NHTC or any subsidiary thereof, (z) or otherwise
Previously Disclosed; and (vii) Liens that will be released and discharged in
full on or prior to the Closing Date.
SECTION 2.05. Company Properties; Liens. The Company has good and
marketable title to its interests in its properties and assets, free and clear
of all Liens (other than Permitted Liens). Each Subsidiary of the Company has
good and marketable title to its interests in its properties and assets (real,
personal or mixed, tangible or intangible), free and clear of all Liens (other
Permitted Liens).
SECTION 2.06. Company Insurance. The Company has heretofore delivered
to NHTC a true, correct and complete list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its Subsidiaries. There are
no material claims pending under any such policies or material disputes with
underwriters, and all premiums due and payable have been paid. There are no
pending or threatened terminations with respect to any such policies, and the
Company and its Subsidiaries are in compliance in all material respects with all
conditions contained therein. All such policies are in full force and effect.
SECTION 2.07. Company Litigation and Compliance. (a) Except as
Previously Disclosed or (in the case of the following clauses (iii) and (v)
only) where such events or circumstances could not reasonably be expected to
have a Company Material Adverse Effect: (i) there are no governmental authority
or private party actions, suits, claims, proceedings or investigations pending
or threatened against the Company, any Subsidiary thereof or any Company
Stockholder: (x) relating to either the Company, any Subsidiary thereof or any
properties or assets now or previously owned, leased or operated by the Company
or any Subsidiary thereof, (y) which questions or challenges the validity of
this Agreement or any other Company Party Document or any action taken or to be
taken by the Company or any Company Stockholder pursuant thereto, or (z) which
questions or challenges the Company's or any of its Subsidiary's right, title or
interest in or to any of its properties or assets; (ii) neither the Company nor
any
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CUSIP No. 63888P-10-9 Exhibit B Page 30 of 91 Pages
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Subsidiary thereof is the subject of any judgment, order or decree of any
governmental authority, court or arbitrator; (iii) the Company and each of its
Subsidiaries is in compliance with all federal, state, local and foreign laws,
statutes, ordinances, codes, judgments, orders, decrees, directives, rules and
regulations of any governmental authority, court or arbitrator ("Laws")
applicable or relating to its business, properties or assets; (iv) neither the
Company nor any of its Subsidiaries has engaged in any unfair trade practice,
committed any commercial or other fraud, paid or provided any kickbacks, bribes
or other gratuitous goods or services in order to solicit, secure or maintain
any business or commercial relationship, or committed any act or omission
actionable under the federal Racketeer Influenced and Corrupt Organizations Act,
as amended ("RICO"), or any similar state Laws, or under the federal Foreign
Corrupt Practices Act (assuming for this purpose that the Company has securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) or any similar state Laws, nor has any Company Stockholder
or any other person or entity engaged in or committed any such acts or omissions
or made any such payments in order to benefit, directly or indirectly, the
Company, any Subsidiary or the prospects thereof; and (v) the Company and each
Subsidiary thereof has obtained all governmental licenses, permits, rights,
privileges, registrations, exemptions, required reports, franchises,
authorizations and other consents which are required under any applicable Laws
("Permits") to own and/or operate the respective businesses, properties, assets
and operations of the Company and its Subsidiaries ("Company Permits"). All
Company Permits are valid and in full force and effect, and there exists no
default or violation by the Company under any Company Permit which could
reasonably be expected to have a Company Material Adverse Effect. No event, act
or omission has occurred which has resulted, or (with or without notice, the
passage of time or both) could reasonably be expected to result, in the
revocation or non-renewal of any Company Permit the revocation or non-renewal of
which could reasonably be expected to have a Company Material Adverse Effect.
SECTION 2.08. Company Contracts. (a) In this Agreement, the term: (i)
"Contract" means any contract, agreement, instrument, undertaking, bid,
commitment or arrangement, written or oral, of any kind or description
whatsoever (including without limitation all leases (of real or personal
property), licenses, indentures, credit agreements, debt instruments,
guarantees, mortgages, security agreements, joint venture agreements, company or
business acquisition or disposition agreements, concession agreements,
management agreements, consulting agreements, employment agreements, powers of
attorney, agency agreements, equipment purchase orders, customer purchase
orders, supply orders, indemnity agreements, and agreements or covenants not to
compete); and (ii) the term "Company Contract" means any Contract to which the
Company or any of its Subsidiaries is a party or by which any of their
properties or assets are subject or bound.
(b) The Company has Previously Disclosed all Company Contracts
(other than routine purchase or supply orders, those for routine services
provided to the Company or a Subsidiary thereof, and those terminable at will or
upon 60 days' or less notice without the payment of any penalty, bonus,
severance payment or additional compensation) existing on the date hereof, and
provided to NHTC true, complete and correct copies of all such Company Contracts
requested to be reviewed thereby. Except where such event or circumstance could
not reasonably be expected to have a Company Material Adverse Effect: (i) all
Company Contracts are in full force and effect in
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CUSIP No. 63888P-10-9 Exhibit B Page 31 of 91 Pages
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accordance with the written terms thereof, and there are no outstanding defaults
by the Company, any Subsidiary thereof or any other party under any Company
Contract, (ii) no event, act or omission has occurred which has resulted, or
(with or without notice, the passage of time or both) could reasonably be
expected to result, in a default under any Company Contract, and (iii) no other
party to any Company Contract has asserted the right, and no such party has any
right, to renegotiate or modify the terms or conditions of any Company Contract.
SECTION 2.09. Company Taxes. (a) The Company and each Subsidiary
thereof have filed all Tax returns required to be filed by them, which returns
are complete and correct in all material respects, and neither the Company nor
any Subsidiary is in default in the payment of any Taxes which were payable
pursuant to said return, except where the failure to so file or such default
could not reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any Subsidiary thereof has, since their respective
inceptions, been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code. As of December 31, 1996, the Company
and each of its Subsidiaries has paid or accrued on its books and records all
liability for Taxes with respect to all periods or portions thereof ending on or
before such date. For the period January 1, 1997 through the Closing Date,
neither the Company nor any Subsidiary thereof has incurred any liability for
Taxes other than Taxes arising in the ordinary course of business with respect
to such period. Neither the Company nor any Subsidiary thereof: (i) is under
audit, examination or review by any taxing authority nor has any such audit,
examination or review been threatened; (ii) has received notice of any proposed
or actual assessment or deficiency with respect to Taxes; (iii) has extended the
statute of limitation with respect to the assessment or collection of any Taxes.
(b) For purposes of this Agreement, the terms "Tax" or "Taxes" mean
all taxes, charges, levies or other like assessments, including without
limitation all net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, capital, payroll, employment, excise, stamp,
property or other taxes, together with any interest and any penalties, additions
to tax or additional amounts imposed by any federal, state, local or foreign
governmental authority.
SECTION 2.10. Company Employee Plans. (a) Except as Previously
Disclosed, there is no, and has not been for the five-year period preceding the
Closing Date any, "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which (x)
is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by the Company or any ERISA Affiliate (as defined
below) thereof that covers any employee or former employee of the Company or any
ERISA Affiliate thereof or under which the Company or any such ERISA Affiliate
has any material liability, which has not, as of the date hereof, been
Previously Disclosed and a copy thereof delivered to NHTC. Such plans are
hereinafter referred to collectively as the "Company Employee Plans"; and for
purposes of this Agreement, "ERISA Affiliate" means, of any person or entity,
any other person or entity which is a member of a controlled group of
corporations with such person (within the meaning of Section 414(b), 414(c) or
414(m) of the Code).
(b) Except as Previously Disclosed, there are no material
liabilities relating to any Company Employee Plan. Prior to the date hereof
there has been no amendment
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to, written interpretation or announcement (whether or not written) by the
Company or any of its ERISA Affiliates relating to, or change in employee
participation or coverage under, any Company Employee Plan which would increase
the expense of maintaining such Company Employee Plan above the level of the
expense incurred in respect thereof for the fiscal quarter ended on December 31,
1996. Each Company Employee Plan is and has been since inception in compliance
in all material respects with the applicable provisions of ERISA and the
applicable provisions of the Code. All contributions required to be made to each
Company Employee Plan have been timely made. Each Company Employee Plan intended
to be qualified under Section 401 of the Code (if any) is so qualified and has
received a favorable determination letter from the U.S. Internal Revenue Service
("IRS"). No Company Employee Plan is or was a "defined benefit plan", as defined
in Section 3(35) of ERISA, or a "multiemployer plan", as defined in Section
3(37)(A) of ERISA. There are no pending or threatened investigations, audits,
examinations or inquiries by any governmental authority involving any Company
Employee Plan, no threatened or pending claims (except for claims for benefits
payable in the ordinary course), suits or proceedings against any Company
Employee Plan or asserting any rights or claims to benefits under any Company
Employee Plan which could give rise to any liability, nor are there any facts
which could give rise to any liability in the event of any such investigation,
audit, examination, inquiry, claim, suit or proceeding.
SECTION 2.11. Company Environmental Compliance. (a) Except where such
events or circumstances could not reasonably be expected to have a Company
Material Adverse Effect: (i) the respective properties and operations of the
Company and its Subsidiaries are in compliance with all applicable Laws and
Permits regulating, relating to or imposing liability or standards of conduct
relating to environmental matters or the protection of human health or the
environment ("Environmental Laws"); (ii) neither the Company nor any Subsidiary
thereof has received any citation, summons, order, complaint, penalty,
investigation or review, or request for information or other action, by any
governmental authority or private party with respect to any: (x) alleged
violation by the Company or any Subsidiary thereof of any Environmental Laws,
(y) alleged failure by the Company or any Subsidiary thereof to have any Permit
under any Environmental Laws, or (z) use, possession, generation, treatment,
storage, recycling, transportation or disposal (collectively "Management") or
"release" (as defined in the Comprehensive Environmental Response, Compensation
and Liability of Act of 1980, as amended ("CERCLA")) of any Hazardous Material
(as hereinafter defined) by or on behalf of the Company or any Subsidiary
thereof; and (iii) no Hazardous Material Managed by or on behalf of the Company
or any Subsidiary thereof has been "released" on any property of the Company or
any Subsidiary thereof, or has come to be located at any site (including any
property of the Company or any Subsidiary thereof) which is listed or proposed
for listing on the National Priority List under CERCLA, the federal
Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS") or on any similar state list, or which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to claims for investigation, clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA.
(b) For purposes of this Agreement, the term "Hazardous Material"
means and includes any hazardous or toxic or polluting substance or waste,
including petroleum products and radioactive materials.
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SECTION 2.12. Finder's Fees. Except as Previously Disclosed, there is
no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, the Company, any Subsidiary
of the Company or any Company Stockholder who may be entitled to any fee or
commission from NHTC or any of its affiliates upon consummation of, or otherwise
in connection with, the Transactions.
SECTION 2.13. Absence of Certain Changes. Since the Company Base Date,
except as Previously Disclosed or as consented to in writing by NHTC: (A) the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course and/or otherwise consistent with recent past practice; (B)
there has been no material adverse change in the condition (financial or
otherwise), business, properties, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company or any Company
Stockholder to perform their respective obligations under this Agreement and to
consummate the Transactions; and (C) without intending to limit the generality
of the foregoing, neither the Company nor any Subsidiary thereof has:
(i) amended its certificate or articles of
incorporation or by-laws;
(ii) made or agreed to make any increase in the
compensation payable to any officer, director, employee,
consultant, agent or representative, or paid or agreed to pay
any bonus or extraordinary compensation to any such person;
(iii) entered into or completed any transaction or
Company Contract, or amended or terminated any transaction or
Company Contract, except: (1) Bridge Notes and Company
Warrants, substantially similar to those in existence at the
date hereof, issued to new investors in the Company, and (2)
transactions and agreements entered into in the ordinary
course of business and/or otherwise consistent with recent
past practice;
(iv) cancelled or waived any claim or right of
substantial value;
(v) increased (or experienced any adverse change in
any assumption underlying any method of calculating) bad
debts, contingencies or other reserves from that reflected in
the Company Financial Statements;
(vi) sold, assigned, transferred, licensed or
otherwise disposed of, encumbered, permitted to lapse, or
suffered any Lien (other than Permitted Liens) on or with
respect to, any of its properties or assets, except in the
ordinary course of business or otherwise pursuant to Company
Contracts Previously Disclosed;
(vii) issued or sold any debt securities (other than
Bridge Notes, substantially similar to those in existence at
the date hereof), or granted any rights calling for the
issuance or sale of any debt securities (including without
limitation options, warrants, convertible or exchangeable
securities or similar rights) (other than Bridge Warrants and
Bridge Notes, substantially similar to those in existence at
the date hereof);
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(viii) created or otherwise become liable with
respect to any indebtedness for borrowed money (except Bridge
Notes and for money borrowed from NHTC) or the purchase of
property, plant or equipment;
(ix) guaranteed, indemnified or otherwise became
liable for the obligations or liabilities of another person
or entity (other than a Subsidiary); or
(x) agreed or committed, whether or not in writing,
to do any of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NHTC
NHTC hereby represents and warrants to the Company and the Company
Stockholders that, except as previously disclosed in the SEC Filings (as defined
in Section 3.12) or otherwise in writing to the Company (in this Article III
(and Section 6.02(a)), "Previously Disclosed"):
SECTION 3.01. Organization and Existence. (a) NHTC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida. Each Subsidiary of NHTC, the identities of which has been
Previously Disclosed, is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each of
NHTC and its Subsidiaries has the full corporate power and authority to own and
lease their respective properties and assets and to carry on their respective
businesses as and where such properties and assets are now owned and/or operated
and such businesses are now conducted. NHTC has heretofore made available to the
Company true, correct and complete copies of the respective certificates or
articles of incorporation and by-laws (or equivalent governing instruments),
each as amended to the date hereof, of NHTC. Each of NHTC and each of its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the character
of the properties and assets now owned and/or operated by it or the nature of
the business now conducted by it requires it to be so licensed or qualified and
in which failure to be so licensed or qualified could reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities, capitalization, financial position,
operations, results of operations or prospects of NHTC and its Subsidiaries,
taken as a whole, or on the ability of NHTC to perform its obligations under
this Agreement and/or to consummate the Transactions (an "NHTC Material Adverse
Effect").
(b) NHTC does not own, directly or indirectly, any equity or
proprietary interests or securities of any entity or enterprise organized under
the laws of the United States, any state thereof, the District of Columbia or
any other domestic or foreign jurisdiction, other than Subsidiaries thereof
Previously Disclosed.
SECTION 3.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by NHTC, the Registration Rights Agreement or any of the
other agreements, instruments, certificates or other documents executed and
delivered (or to be executed and delivered) by NHTC in connection with this
Agreement and/or any of the Transactions
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(collectively, the "NHTC Documents"), nor the consummation of the Transactions,
nor the performance by NHTC of its other obligations thereunder, require any
Consent or any Notice applicable to NHTC (as opposed to any Company Party)
(including without limitation such Consents and Notices as may be necessary or
appropriate in order to preserve for (x) the educational/vocational operations
and facilities of NHTC and its Subsidiaries (the "NHTC Educational Facilities")
their accredited status, and (y) students of the NHTC Educational Facilities, as
such, access to the financial aid programs to which they currently have access,
at substantially current levels) except for such Consents and Notices: (i) that
have been duly obtained (in the case of Consents) or given (in the case of
Notices) and are unconditional and in full force and effect, or (ii) of which
the failure to obtain (in the case of Consents) or give (in the case of Notices)
could not reasonably be expected to have an NHTC Material Adverse Effect.
(b) This Agreement and each other NHTC Document has been (or prior
to the Closing will be) duly authorized, executed and delivered by NHTC and
constitute the legal, valid and binding obligations of NHTC enforceable against
NHTC in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, reorganization, insolvency, fraudulent conveyance
or similar laws of general application relating to or affecting the enforcement
of creditors' rights. The execution and delivery by NHTC of the NHTC Documents,
the performance by NHTC of its respective obligations thereunder, and the
consummation of the Transactions, do not and will not contravene, conflict or be
inconsistent with, result in a breach of, constitute a violation of or default
under, or require or result in any right of acceleration or to create or impose
any Lien under: (i) NHTC's certificate or articles of incorporation or by-laws,
or (ii) except where such contravention, conflict, inconsistency, breach,
violation, default, right or imposition could not reasonably be expected to have
an NHTC Material Adverse Effect, and assuming satisfaction of the matters
referred to in Section 3.02(a): (x) any Laws applicable or relating to NHTC or
any of the businesses or assets of NHTC or any Subsidiary thereof, or (y) any
NHTC Permit (as defined in Section 3.07) or NHTC Contract (as defined in Section
3.08).
SECTION 3.03. NHTC Financial Statements. (a) The books of account and
other financial and accounting records of NHTC and its Subsidiaries are, and
during the respective periods covered by the NHTC Financial Statements (as
hereinafter defined) were, correct and complete in all material respects, fairly
and accurately reflect or reflected their respective income, expenses, assets
and liabilities, including the nature thereof and the transactions giving rise
thereto, and provide or provided a fair and accurate basis for the preparation
of the NHTC Financial Statements. Such books of account and records have been
maintained in accordance with the Exchange Act and all applicable rules and
regulations of: (i) the U.S. Securities and Exchange Commission ("SEC"), (ii)
the U.S. Department of Education ("USDOE"), (iii) the Florida Department of
Education and its State Board of Independent Postsecondary, Vocational,
Technical, Trade and Business Schools (the "Florida State Board"), and (iv) all
applicable accreditation bodies who have presently accredited any of the NHTC
Educational Facilities. Prior to the date hereof NHTC has delivered to the
Company the audited and unaudited financial statements of NHTC appearing in the
SEC Filings (the "NHTC Financial Statements"). The NHTC Financial Statements
include the consolidated balance sheet of NHTC as of September 30, 1996 (the
"NHTC Base Date"). The NHTC Financial Statements have been prepared in
conformity with GAAP, consistently applied, are
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correct and complete in all material respects, and fairly present the
consolidated financial position of NHTC as of the respective dates thereof and
the consolidated results of its operations and cash flows for the periods
covered thereby.
(b) As of the Restatement Date, neither NHTC nor its Subsidiaries
has any indebtedness, liabilities or obligations (absolute, contingent or
otherwise) other than those: (i) set forth or reserved against in the most
recent of the NHTC Financial Statements, (ii) incurred since the NHTC Base Date
in the ordinary course of its business or otherwise consistent with recent past
practice that are, individually and in the aggregate, of an immaterial nature
and amount, (iii) arising under Laws, NHTC Permits and/or NHTC Contracts, and
(iv) which could not reasonably be expected to have an NHTC Material Adverse
Effect.
SECTION 3.04. NHTC Capitalization. (a) The authorized capital stock of
NHTC consists of: (i) 40,000,000 shares of NHTC Common Stock, of which (A)
12,811,261 shares are issued and outstanding, (B) 666,666 shares are reserved
for issuance under outstanding options granted under the NHTC Plan prior to the
date hereof, (C) an aggregate of 5,723,344 shares are reserved for issuance
under Class A Warrants and Class B Warrants (collectively, "NHTC Warrants")
issued prior to the date hereof, and (D) 5,800,000 are reserved for issuance as
the Firm Shares; and (ii) 2,200 shares of Series A Preferred Stock, par value
$.001 per share, and 1,497,800 shares of undesignated Preferred Stock, par value
$.001 per share, none of which are issued or outstanding. All of the shares
described in the foregoing clause (i)(A) have been, and all of the Firm Shares,
Contingent Shares and shares of NHTC Common Stock to be issued in lieu of the
shares of Company Common Stock issuable pursuant to Section 1.04(b) of the
Fruitseng Acquisition Agreement (as such provision has been modified and amended
under Section 9.02(a) hereof) will (upon the issuance and delivery of
certificates therefor) be, duly authorized, validly issued, fully paid and
nonassessable, and no personal liability attaches to, or will attach to, the
ownership thereof. Except as Previously Disclosed or hereinabove described,
there are no issued, outstanding or existing: (1) preemptive or similar rights
with respect to the issuance or sale of any capital stock of NHTC; (2)
securities convertible into or exchangeable for any shares of capital stock of
NHTC or any Subsidiary thereof; (3) options, warrants or other rights to
purchase or subscribe for any shares of capital stock of NHTC or for securities
convertible into or exchangeable for any shares of capital stock of the NHTC or
any Subsidiary thereof; or (4) agreements or commitments of any kind or
description relating to the issuance or purchase of any shares of capital stock
of NHTC or any Subsidiary thereof, any such convertible or exchangeable
securities or any such options, warrants or other rights.
(b) NHTC or one or more of its Subsidiaries is the record and
beneficial owner of all of the outstanding capital stock of each Subsidiary of
NHTC, free and clear of all Liens (other than Permitted Liens).
SECTION 3.05. NHTC Properties; Liens. Each of NHTC and each of its
Subsidiaries has good and marketable title to its interests in its properties
and assets (real, personal or mixed, tangible or intangible), free and clear of
all Liens (other than Permitted Liens).
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SECTION 3.06. NHTC Insurance. NHTC has heretofore delivered to the
Company a true, correct and complete list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of NHTC and its Subsidiaries. There are no
material claims pending under any such policies or material disputes with
underwriters, and all premiums due and payable have been paid. There are no
pending or threatened terminations with respect to any such policies, and NHTC
and its Subsidiaries are in compliance in all material respects with all
conditions contained therein. All such policies are in full force and effect.
SECTION 3.07. NHTC Litigation and Compliance. (a) Except as Previously
Disclosed or (in the case of the following clauses (iii) and (v) only) where
such events or circumstances could not reasonably be expected to have an NHTC
Material Adverse Effect: (i) there are no governmental authority or private
party actions, suits, claims, proceedings or investigations pending or
threatened against NHTC, any Subsidiary of NHTC or any principal stockholder
thereof: (x) relating to either NHTC, any Subsidiary of NHTC or any properties
or assets now or previously owned, leased or operated by NHTC or any Subsidiary
of NHTC, (y) which questions or challenges the validity of this Agreement or any
other NHTC Document or any action taken or to be taken by NHTC pursuant thereto,
or (z) which questions or challenges NHTC's or any of its Subsidiary's right,
title or interest in or to any of its properties or assets; (ii) neither NHTC
nor any Subsidiary of NHTC is the subject of any judgment, order or decree of
any governmental authority, court or arbitrator; (iii) NHTC and each of its
Subsidiaries is in compliance with all Laws applicable or relating to its
business, properties or assets; (iv) neither NHTC nor any of its Subsidiaries
has engaged in any unfair trade practice, committed any commercial or other
fraud, paid or provided any kickbacks, bribes or other gratuitous goods or
services in order to solicit, secure or maintain any business or commercial
relationship, or committed any act or omission actionable under RICO or any
similar state Laws, or under the federal Foreign Corrupt Practices Act or any
similar state Laws, nor has any principal stockholder or any other person or
entity engaged in or committed any such acts or omissions or made any such
payments in order to benefit, directly or indirectly, NHTC, any Subsidiary or
the prospects thereof; and (v) NHTC and each Subsidiary thereof has obtained all
Permits to own and/or operate the respective businesses, properties, assets and
operations of NHTC and its Subsidiaries (including without limitation such
Permits as may be necessary or appropriate in order afford to students of the
NHTC Educational Facilities, as such, access to the financial aid programs
described in the SEC Filings, at substantially current levels) ("NHTC Permits").
All NHTC Permits are valid and in full force and effect, and there exists no
default or violation by the NHTC under any NHTC Permit which could reasonably be
expected to have an NHTC Material Adverse Effect. No event, act or omission has
occurred which has resulted, or (with or without notice, the passage of time or
both) could reasonably be expected to result, in the revocation or non-renewal
of any NHTC Permit the revocation or non-renewal of which could reasonably be
expected to have an NHTC Material Adverse Effect.
SECTION 3.08. NHTC Contracts. (a) In this Agreement, the term "NHTC
Contract" means any Contract to which NHTC or any Subsidiary of NHTC is a party
or by which any of their properties or assets are subject or bound.
(b) NHTC has Previously Disclosed all NHTC Contracts (other than
routine purchase or supply orders, those for routine services provided to NHTC
or a Subsidiary
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thereof, and those terminable at will or upon 60 days' or less notice without
the payment of any penalty, bonus, severance payment or additional compensation)
existing on the date hereof, and provided to the Company true, complete and
correct copies of all such NHTC Contracts requested to be reviewed thereby.
Except where such event or circumstance could not reasonably be expected to have
an NHTC Material Adverse Effect: (i) all NHTC Contracts are in full force and
effect in accordance with the written terms thereof, and there are no
outstanding defaults by NHTC, any Subsidiary thereof or any other party under
any NHTC Contract, (ii) no event, act or omission has occurred which has
resulted, or (with or without notice, the passage of time or both) could
reasonably be expected to result, in a default under any NHTC Contract, and
(iii) no other party to any NHTC Contract has asserted the right, and no such
party has any right, to renegotiate or modify the terms or conditions of any
NHTC Contract.
SECTION 3.09. NHTC Taxes. NHTC and each Subsidiary thereof have filed
all Tax returns required to be filed by them, which returns are complete and
correct in all material respects, and neither NHTC nor any Subsidiary is in
default in the payment of any Taxes which were payable pursuant to said returns,
except where the failure to so file or such default could not reasonably be
expected to have an NHTC Material Adverse Effect. Neither NHTC nor any
Subsidiary thereof has, for the five-year period preceding the Closing Date,
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code. As of December 31, 1996, the Company and each of
its Subsidiaries has paid or accrued on its books and records all liability for
Taxes with respect to all periods or portions thereof ending on or before such
date. For the period January 1, 1997 through the Closing Date, neither NHTC nor
any Subsidiary thereof has incurred any liability for Taxes other than Taxes
arising in the ordinary course of business with respect to such period. Neither
NHTC Company nor any Subsidiary thereof: (i) is under audit, examination or
review by any taxing authority nor has any such audit, examination or review
been threatened; (ii) has received notice of any proposed or actual assessment
or deficiency with respect to Taxes; (iii) has extended the statute of
limitation with respect to the assessment or collection of any Taxes.
SECTION 3.10. NHTC Employee Plans. (a) Except as Previously Disclosed,
there is no, and has not been for the five-year period preceding the Closing
Date any, "employee benefit plan" (as defined in Section 3(3) of ERISA) which
(x) is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by NHTC or any ERISA Affiliate thereof that
covers any employee or former employee of NHTC or any ERISA Affiliate thereof or
under which NHTC or any such ERISA Affiliate has any material liability, which
has not, as of the date hereof, been Previously Disclosed and a copy thereof
delivered to the Company. Such plans are hereinafter referred to collectively as
the "NHTC Employee Plans".
(b) Except as Previously Disclosed, there are no material
liabilities relating to any NHTC Employee Plan. Prior to the date hereof there
has been no amendment to, written interpretation or announcement (whether or not
written) by NHTC or any of its ERISA Affiliates relating to, or change in
employee participation or coverage under, any NHTC Employee Plan which would
increase the expense of maintaining such NHTC Employee Plan above the level of
the expense incurred in respect thereof for the fiscal quarter and fiscal year
ended on December 31, 1996. Each NHTC Employee Plan is and has been since
inception in compliance in all material respects with the applicable
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provisions of ERISA and the applicable provisions of the Code. All contributions
required to be made to each NHTC Employee Plan have been timely made. Each NHTC
Employee Plan intended to be qualified under Section 401 of the Code (if any) is
so qualified and has received a favorable determination letter from the IRS. No
NHTC Employee Plan is or was a "defined benefit plan", as defined in Section
3(35) of ERISA, or a "multiemployer plan", as defined in Section 3(37)(A) of
ERISA. There are no pending or threatened investigations, audits, examinations
or inquiries by any governmental authority involving any NHTC Employee Plan, no
threatened or pending claims (except for claims for benefits payable in the
ordinary course), suits or proceedings against any NHTC Employee Plan or
asserting any rights or claims to benefits under any NHTC Employee Plan which
could reasonably be expected to give rise to any liability, nor are there any
facts which could give rise to any liability in the event of any such
investigation, audit, examination, inquiry, claim, suit or proceeding.
SECTION 3.11. NHTC Environmental Compliance. Except where such events
or circumstances could not reasonably be expected to have an NHTC Material
Adverse Effect: (i) the respective properties and operations of NHTC and its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii)
neither NHTC nor any Subsidiary thereof has received any citation, summons,
order, complaint, penalty, investigation or review, or request for information
or other action, by any governmental authority or private party with respect to
any: (x) alleged violation by NHTC or any Subsidiary thereof of any
Environmental Laws, (y) alleged failure by NHTC or any Subsidiary thereof to
have any Permit under any Environmental Laws, or (z) Management or "release" (as
defined in CERCLA) of any Hazardous Material by or on behalf of NHTC or any
Subsidiary thereof; and (iii) no Hazardous Material Managed by or on behalf of
NHTC or any Subsidiary thereof has been released on any property of NHTC or any
Subsidiary thereof, or has come to be located at any site (including any
property of NHTC or any Subsidiary thereof) which is listed or proposed for
listing on the National Priority List under CERCLA, CERCLIS or on any similar
state list, or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims for investigation,
clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
SECTION 3.12. SEC Filings. NHTC has previously delivered to the Company
true, correct and complete copies of the following documents filed with the SEC
(collectively, the "SEC Filings"): (i) NHTC's annual reports on Form 10-K for
its fiscal years ended December 31, 1995 and December 31, 1996, (ii) NHTC's
quarterly reports on Form 10-Q for its fiscal quarter ended March 31, 1996, June
30, 1996, September 30, 1996, and March 31, 1997, (iii) NHTC's proxy or
information statements relating to meetings of, or actions taken without a
meeting by the stockholders of NHTC held since January 1, 1996, (iv) NHTC's
registration statement on Form S-3 dated June 11, 1997, and (v) all of its other
reports, registration statements (including under the Securities Act of 1933, as
amended (the "Securities Act")) and other filings (including amendments) filed
by NHTC with the SEC since January 1, 1996. Each SEC Filing filed under the
Exchange Act contains the disclosures required to be made therein under the
Exchange Act and, as of the date thereof, did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each SEC Filing filed under the Securities Act
contains the disclosures required to be made therein under the
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Securities Act and, as of the date thereof, did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
SECTION 3.13. Finder's Fees. Except as Previously Disclosed, there is
no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, NHTC, any Subsidiary of NHTC
or principal stockholder of NHTC who may be entitled to any fee or commission
from any of the Company Parties or any of their respective affiliates upon
consummation of, or otherwise in connection with, the Transactions.
SECTION 3.14. Absence of Certain Changes. Since the NHTC Base Date,
except as Previously Disclosed or as consented to by the Company: (A) NHTC and
its Subsidiaries have conducted their respective businesses only in the ordinary
course and/or otherwise consistent with recent past practice; (B) there has been
no material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of NHTC and its Subsidiaries, taken as a
whole, or on the ability of NHTC to perform their respective obligations under
this Agreement and to consummate the Transactions; and (C) without intending to
limit the generality of the foregoing, neither NHTC, nor any Subsidiary of NHTC
has:
(i) amended its certificate or articles of
incorporation or by-laws;
(ii) made or agreed to make any increase in the
compensation payable to any officer, director, employee,
consultant, agent or representative, or paid or agreed to pay
any bonus or extraordinary compensation to any such person;
(iii) entered into or completed any transaction or
NHTC Contract, or amended or terminated any transaction or
NHTC Contract, except: (1) the offer and issuance of shares
of NHTC Common Stock in an offering exempt from the
registration requirements of the Securities Act under
Regulation S (the "Reg. S Offering"), and (2) transactions
and agreements entered into in the ordinary course of
business and/or are consistent with recent past practice;
(iv) cancelled or waived any claim or right of
substantial value;
(v) increased (or experienced any adverse change in
any assumption underlying any method of calculating) bad
debts, contingencies or other reserves from that reflected in
the NHTC Financial Statements;
(vi) sold, assigned, transferred, licensed or
otherwise disposed of, encumbered, permitted to lapse, or
suffered any Lien (other than Permitted Liens) on or with
respect to, any of its properties or assets, except in the
ordinary course of business or otherwise pursuant to NHTC
Contracts Previously Disclosed;
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(vii) declared, paid or set aside for payment any
dividend or other distribution (whether in cash, securities
or other property) in respect of any of its capital stock;
(viii) issued or sold any shares of its capital
stock (other than NHTC Common Stock pursuant to the Reg. S
Offering) or debt securities, or granted any rights calling
for the issuance or sale of any of the foregoing (including
without limitation options, warrants, convertible or
exchangeable securities or similar rights);
(ix) purchased, redeemed or otherwise acquired
(whether or not for value) any shares of its capital stock;
(x) created or otherwise became liable with respect
to any indebtedness for borrowed money or the purchase of
property, plant or equipment;
(xi) guaranteed, indemnified or otherwise become
liable for the obligations or liabilities of another person
or entity; or
(xii) agreed or committed, whether or not in
writing, to do any of the foregoing.
ARTICLE IV
OTHER REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Nature of Transaction. NHTC acknowledges that the Main
Transaction is an acquisition of a business in its entirety as a going concern
to be directed and operated by NHTC, and not an investment in, or a purchase and
sale of, securities under the Securities Act, Exchange Act or the securities or
Blue Sky laws of any state ("Blue Sky Laws"). Nevertheless (and without
intending to create any implication that the Main Transaction is an investment
in, or a purchase and sale of, securities under the Securities Act, Exchange Act
or any Blue Sky Laws), NHTC hereby acknowledges its understanding that the
Company Shares are not registered under the Securities Act, or registered or
qualified under any Blue Sky Laws, on the grounds that the offering, sale,
issuance and delivery thereof are exempt from the registration and/or
qualification requirements thereof, and that the Company Stockholder's reliance
on such exemption is predicated in part on the following representations,
warranties, covenants, agreements and acknowledgments of NHTC. NHTC hereby
represents and warrants to and covenants and agrees with the Company
Stockholders that NHTC: (1) has been furnished with all information which NHTC
deems necessary to evaluate the merits and risks of the acquisition of the
Company Shares; (2) has had the opportunity to ask questions and receive answers
concerning the information received about the Company Shares and Company; (3)
has been given the opportunity to obtain any additional information NHTC deems
necessary to verify the accuracy of any information obtained concerning the
Company Shares and Company; (4) (i) meets the requirements of at least one of
the suitability standards for an "accredited investor" (as that term is defined
in Rule 501 of Regulation D under the Securities Act), and (ii) by reason of its
business and
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financial experience, and the business and financial experience of those
persons, if any, retained by NHTC to advise it with respect to its investment in
the Company, NHTC, together with such advisors (if any), has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of an investment in the Company
Shares; (5) is acquiring the Company Shares for NHTC's own account for strategic
business purposes and with no present intention of offering, selling or
distributing of all or any part of the Company Transaction Shares (or any
interest therein); (6) received the offer to invest in the Company Shares on a
personal contact basis and not by means of any general solicitation or general
advertising; (7) understands that: (i) the Company Shares have not been
registered or qualified under the Securities Act or any Blue Sky Laws and cannot
be resold unless the Company Shares are subsequently so registered and qualified
or an exemption from such registration and qualification is available, and (ii)
neither the Company, any Company Stockholder nor any other person is obligated
to effect such registration or qualification; (8) will not offer, sell,
transfer, distribute or otherwise dispose of the Company Shares except in
compliance with the Securities Act and all applicable Blue Sky Laws; (9) has
adequate means of providing for NHTC's current needs and foreseeable
contingencies and has no need for its investment in the Company Shares to be
liquid; (10) is able to bear the economic risk of the investment in the Company
Shares indefinitely; and (11) is currently able to afford the complete loss of
such investment.
SECTION 4.02. Acquisition for Investment. Each Company Stockholder
hereby acknowledges its understanding that the NHTC Shares to be acquired by it
in the Main Transaction ("its NHTC Shares") are not registered under the
Securities Act, or registered or qualified under any Blue Sky Laws, on the
grounds that the offering, sale, issuance and delivery thereof are exempt from
the registration and/or qualification requirements thereof, and that NHTC's
reliance on such exemption is predicated in part on the following
representations, warranties, covenants, agreements and acknowledgments of such
Company Stockholder. Each Company Stockholder hereby represents and warrants to
and covenants and agrees with NHTC that such Company Stockholder: (1) has been
furnished with all information which such Company Stockholder deems necessary to
evaluate the merits and risks of the acquisition of its NHTC Shares; (2) has had
the opportunity to ask questions and receive answers concerning the information
received about its NHTC Shares and NHTC; (3) has been given the opportunity to
obtain any additional information such Company Stockholder deems necessary to
verify the accuracy of any information obtained concerning its NHTC Shares and
NHTC; (4) (i) meets the requirements of at least one of the suitability
standards for an "accredited investor" (as that term is defined in Rule 501 of
Regulation D under the Securities Act), (ii) is not a "U.S. person" (as that
term is defined in Regulation S under the Securities Act) and the offer of its
NHTC Shares was not made to such Company Stockholder in the United States and at
the time the buy order for its NHTC Shares originated such Company Stockholder
was outside the United States, and/or (iii) by reason of such Company
Stockholder's business and financial experience, and the business and financial
experience of those persons, if any, retained by such Company Stockholder to
advise such Company Stockholder with respect to such Company Stockholder's
investment in its NHTC Shares, such Company Stockholder, together with such
advisors (if any), has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
an investment in its NHTC Shares; (5) is acquiring its NHTC Shares for such
Company Stockholder's own account for
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investment purposes and with no present intention of offering, selling or
distributing of all or any part of its NHTC Shares (or any interest therein);
(6) received the offer to invest in its NHTC Shares on a personal contact basis
and not by means of any general solicitation or general advertising; (7)
understands that: (i) its NHTC Shares have not been registered or qualified
under the Securities Act or any Blue Sky Laws and cannot be resold unless its
NHTC Shares are subsequently so registered and qualified or an exemption from
such registration and qualification is available, and (ii) neither NHTC nor any
other person is obligated to effect such registration or qualification (except
to the extent provided in the Registration Rights Agreement); (8) will not
offer, sell, transfer, distribute or otherwise dispose of its NHTC Shares except
in compliance with the Securities Act and all applicable Blue Sky Laws; (9) has
adequate means of providing for such Company Stockholder's current needs and
foreseeable contingencies and has no need for such Company Stockholder's
investment in its NHTC Shares to be liquid; (10) is able to bear the economic
risk of the investment in its NHTC Shares indefinitely; (11) is currently able
to afford the complete loss of such investment; (12) consents to the placing of
a legend on the certificate(s) representing its NHTC Shares stating that such
securities have not been registered under the Securities Act and setting forth
the restrictions on transfer contemplated hereby and to the placing of a stop
transfer order on the books of NHTC (and any transfer agent thereof) against its
NHTC Shares until the same may be legally resold or distributed; and (13) is
acquiring its NHTC Shares in a transaction intended to qualify as a
reorganization under the provisions of Section 368(a)(1)(B) of the Code and that
as of the Closing such Company Stockholder has no plan or intention to sell,
exchange or otherwise dispose of its NHTC Shares received in such
reorganization.
SECTION 4.03. Tax Treatment of Transactions. (a) NHTC and the Company
intend that the Main Transaction and the other Transactions (the
"Reorganization") will qualify as a reorganization under the provisions of
Section 368(a)(1)(B) of the Code). As of the Closing, NHTC: (i) has no plan or
intention to liquidate the Company, to merge the Company with or into another
corporation, to sell or otherwise dispose of the stock of the Company or to
cause the Company to sell or otherwise dispose of any of its assets except in
the ordinary course of its trade or business; (ii) has no plan or intention to
cause the Company to issue additional shares of its stock that would result in
NHTC losing control of the Company within the meaning of Section 368(c) of the
Code, (iii) has no plan or intention to discontinue the historic business of the
Company and (iv) has no plan or intention to reacquire any of its stock issued
in the Reorganization.
(b) Following the Closing, NHTC shall take no action, and shall not
permit the Company to take any action, which would cause the Reorganization to
fail to qualify as a reorganization under the provisions of Section 368(a)(1)(B)
of the Code.
(c) Following the Closing, if NHTC has acquired at least 90% but
less than 100% of the Company Common Stock, it will take, and/or cause the
Company to take such actions as the Attorneys reasonably request in order for
either NHTC, the Company or an Affiliate of either to acquire the Company Shares
not owned by NHTC in a manner that will preserve the Reorganization as a
reorganization qualified under the provisions of Section 368 (a)(1)(B) of the
Code; provided, however that NHTC shall not be obligated to:
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(i) pay any consideration greater than or different from the
number of Firm Shares or Contingent Shares which NHTC would
have paid, or
(ii) to incur or assume any liabilities or obligations
greater than or different from those which NHTC would have
incurred or assumed,
in relation to the Company Shares in question had they been acquired pursuant to
this Agreement.
SECTION 4.04. No Other Representations and Warranties. Each party
hereto acknowledges and agrees that no other party hereto has made to any other
party hereto (or to any other person or entity) any representation or warranty
with respect to this Agreement and/or any of the Transactions other than those
expressly set forth in Article II, III or IV hereof or in any other Company
Party Document or NHTC Document (as the case may be).
SECTION 4.05. Release. Each Company Stockholder hereby irrevocably
releases and forever discharges NHTC, its directors, officers, employees and
agents from any Losses, as defined in Section 8.03, whether or not previously
incurred or hereafter arising out of or in any way related to, directly or
indirectly, the sale of the Company's securities to such Company Stockholder.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
SECTION 5.01. Access to Records and Properties. (a) The Company shall
give NHTC and its counsel, accountants and lenders and the respective officers,
directors, employees, agents and representatives thereof, such access (during
normal business hours) to, and opportunity to examine, the books, records,
files, documents, properties and assets of the Company and its Subsidiaries, and
cause the officers, directors, employees, consultants, agents, representatives,
counsel and accountants of the Company and its Subsidiaries to furnish such
financial and operating data and other information with respect to the Company
and its Subsidiaries, in each case, as NHTC shall from time to time reasonably
request. NHTC shall give the Company and the Company's counsel, accountants and
lenders, and the respective officers, directors, employees, consultants, agents
and representatives thereof, such access (during normal business hours) to, and
opportunity to examine, the books, records, files, documents, properties and
assets of, NHTC and its Subsidiaries, and cause the officers, directors,
employees, agents, representatives, counsel and accountants of NHTC and its
Subsidiaries to furnish such financial and operating data and other information
with respect to the NHTC and its Subsidiaries, in each case, as the Company
shall from time to time reasonably request. Any investigation pursuant to this
Section 5.01 shall be conducted in such manner as not to interfere unreasonably
with the ordinary course of the business, operations or other activities of the
parties hereto or with the confidentiality respecting the transactions
contemplated by this Agreement.
(b) In the event the Closing shall not occur: (i) the Company and
its counsel, accountants and lenders, and the respective officers, directors,
employees, agents and representatives thereof, shall return all documents and
materials that are non-public,
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confidential and/or proprietary to NHTC which have been furnished in connection
herewith; and (ii) NHTC and its counsel, accountants and lenders, and the
respective officers, directors, employees, agents and representatives thereof,
shall return all documents and materials that are non-public, confidential
and/or proprietary to the Company which have been furnished in connection
herewith. However, nothing contained in this Section 5.01 shall prohibit the
Company, NHTC or any such other person or entity from (subject to the
penultimate sentence of Section 5.03 and to Section 9.03) supplying or filing
such documents, materials or other information with such federal, state, local
or foreign government, agency or authority which any party hereto deems
necessary or appropriate in connection with the matters contemplated by Section
5.03.
SECTION 5.02. Operation of the Company and NHTC. From the date hereof
to the Closing Date, or except to the extent that NHTC shall otherwise consent
in writing, the Company shall operate its and its Subsidiaries' businesses as
presently operated and only in such a manner as would be the ordinary course of
business and/or consistent with recent past practice. Without limiting the
generality of the foregoing, the Company and NHTC shall (and shall cause each of
its Subsidiaries to): (i) not be in default or violation under any Laws
applicable to its business, operations, property or assets; (ii) (in the case of
NHTC and its Subsidiaries only) not merge or consolidate with any other entity,
acquire any other business or entity, or agree to do any of the foregoing; (iii)
maintain its properties and assets in good operating condition, order and repair
(ordinary wear and tear excepted), and notify the other such parties (or, in the
case of the Company Stockholders, one or more of the Attorneys) of any
significant loss of, damage to or destruction of any such properties or assets;
(iv) use its reasonable best efforts to preserve its present employees,
reputation and business relationships with persons and entities having business
dealings with it; (v) use its reasonable best efforts to preserve its present
rights, privileges and franchises; and (vi) refrain from taking any action, or
fail to act in such a way, that would render any of its representations and
warranties contained in Article II (including without limitation Section 2.13)
(in the case of the Company) or Article III (including without limitation
Section 3.14) (in the case of NHTC) inaccurate at and as of the Closing Date,
and shall promptly advise the other such parties of any such event or
circumstance and of any other breach of any representation, warranty, covenant,
condition or obligation of such party hereunder.
SECTION 5.03. Consents and Notices. Promptly after the date hereof, the
Company and NHTC hereto shall use their respective reasonable best efforts to
obtain all Consents and give all Notices which may be necessary or appropriate
in order to consummate the Main Transaction and the other Transactions
(including without limitation such Consents and Notices as may be necessary or
appropriate to obtain from the USDOE or Florida State Board), and to continue in
effect, and to assure that the Company, NHTC and their respective Subsidiaries
shall to be entitled to have and enjoy, all of the benefits of the Company
Contracts, Company Permits and the properties and assets of the Company and the
NHTC Contracts and NHTC Permits after the Closing Date (including preserving for
(x) the NHTC Educational Facilities their accredited status, and (y) students of
the NHTC Educational Facilities, as such, access to the financial aid programs
to which they currently have access, at substantially current levels). The
parties hereto shall not (x) submit or file any documents, materials or
information to or with, or take any other action before or at the request of,
any governmental authority in respect of any Laws, NHTC Permit or Company
Permit, or (y) take any other action with respect
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to, or which may affect NHTC's, the Company's or any of their respective
Subsidiaries' rights under, any NHTC Contract or Company Contract or NHTC Permit
or Company Permit without (in each case) first consulting with (in the case of
the Company or any Company Stockholder) counsel to NHTC or (in the case of NHTC)
counsel to the Company. The parties hereto shall otherwise cooperate with each
other in discharging their respective obligations under this Section 5.03, and
shall promptly advise counsel to the other parties hereto of any difficulties
encountered in obtaining any such Consents or giving any such Notices.
SECTION 5.04. Best Efforts to Satisfy Conditions. Each of the Company
and NHTC shall use its reasonable best efforts to cause the conditions to the
Closing set forth in Article VI hereof to be satisfied, to the extent that the
satisfaction of such conditions is in the control of such party, as soon as
practicable after the date hereof; provided, however, the foregoing shall not
constitute a limitation upon the covenants and obligations of any party
otherwise expressly set forth in this Agreement.
SECTION 5.05. Bridge Loans. Each of the Company and NHTC hereby
acknowledges and agrees that, inasmuch as NHTC has made one or more "Company
Bridge Loans" (as defined in the Original Agreement) to the Company on terms
satisfactory to both the Company and NHTC, such parties have discharged their
respective obligations under Section 5.05 of the Original Agreement.
ARTICLE VI
CONDITIONS TO THE MAIN TRANSACTION
SECTION 6.01. Conditions to Obligations of NHTC. The obligation of NHTC
to consummate the Main Transaction and other Transactions is subject to the
satisfaction of the following conditions, each of which may be waived by NHTC.
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company set forth in Article II shall be
true and correct on the Closing Date as if made on and as of the Closing Date.
The Company Parties shall have performed the agreements and obligations required
to be respectively performed by them under this Agreement prior to the Closing
Date. The Company and the Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders) shall have executed and delivered to NHTC a
certificate or certificates certifying to their compliance with the foregoing,
in form and substance reasonably satisfactory to NHTC. Notwithstanding the first
sentence of this Section 6.01(a): (1) from time to time on or prior to the
Closing, the Company shall be permitted to deliver to NHTC written information
which changes, modifies or supplements the representations and warranties set
forth in Section 2.01 (or Previously Disclosed) because of the occurrence or
non-occurrence of any event, or any circumstance arising, after the date of this
Agreement; (2) upon such delivery such information shall be deemed to have been
"Previously Disclosed" for purposes of Section 2.01 (and, accordingly, the
representations and warranties therein shall be deemed to be amended by such
information), and (3) if such event(s) or circumstance(s) result(s) in the
aggregate in a Company Material Adverse Effect, then the condition stated in the
first sentence of this Section 6.01(a) shall be deemed not to have been
satisfied. If, notwithstanding (x) any failure of such condition as provided in
the foregoing clause "(3)", or (y) any misrepresentation on the
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part of the Company as to which NHTC have received written notice from or on
behalf of the Company prior to the Closing, NHTC proceeds with the Closing, then
such failure of condition and/or such misrepresentation (as the case may be)
shall be deemed for all purposes to be waived.
(b) Charter, By-laws, etc. The Company shall have delivered to NHTC
a certificate signed by two or of more its officers certifying to: (i) a true,
correct and complete copy of the Company's certificate of incorporation, (ii) a
true, correct and complete copy of the Company's by-laws, (iii) a true, correct
and complete copy of all Company Board of Directors and stockholder resolutions
adopted in connection with this Agreement and/or the Transactions, and (iv) the
identity and signature of its officer or officers who shall have executed this
Agreement or any other Company Party Document on or before the Closing Date.
(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for NHTC to consummate the Main Transaction or
any of the other Transactions (including without limitation such Consents and
Notices as may be necessary or appropriate to obtain from the USDOE or Florida
State Board) and to continue in effect, and to assure that the Company, NHTC and
their respective Subsidiaries shall to be entitled to have and enjoy, all of the
benefits of the Company Contracts, Company Permits and the properties and assets
of the Company and the NHTC Contracts and NHTC Permits after the Closing Date
(including preserving for (x) the NHTC Educational Facilities their accredited
status, and (y) students of the NHTC Educational Facilities, as such, access to
the financial aid programs to which they currently have access, at substantially
current levels), shall have been duly obtained (in the case of Consents) or
given (in the case of Notices) and shall be unconditional and in full force and
effect.
(d) Legal Restraints. There shall not have been proposed or enacted
any Laws, or any change in any existing Laws, which prohibits or delays, or
threatens to prohibit or delay, the consummation of the Main Transaction or any
of the other Transactions or which could reasonably be expected to have a
Company Material Adverse Effect. No action, suit, claim or proceeding shall have
been commenced or threatened by any governmental authority or private party (i)
seeking to restrain, enjoin or hinder, or to seek damages from NHTC or any
Subsidiary thereof on account, of the consummation of the Main Transaction or
any of the other Transactions, or (ii) which could reasonably be expected to
have a Company Material Adverse Effect.
(e) No Company Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole, since the Company Base Date.
(f) Company Shares Certificates. Each Company Stockholder shall
have delivered to NHTC the certificate or certificates representing such Company
Stockholder's Company Shares, endorsed by such Company Stockholder in blank or
accompanied by a stock power executed by such Company Stockholder in blank.
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(g) Receipt. The Company Stockholders (or one or more Attorneys on
the behalf of the Company Stockholders) shall have executed and delivered to
NHTC a written instrument, in form and substance reasonably satisfactory to
NHTC, acknowledging receipt of the certificates representing the Firm Shares.
(h) Opinions of Counsel. NHTC shall have received an opinion letter
of Dechert Price & Rhoads, New York, New York, special counsel to the Company,
dated the Closing Date and in form and substance reasonably satisfactory to
counsel to NHTC.
(i) IRS Forms W-8 and W-9. Each Company Stockholder shall have
completed, executed and delivered to NHTC an IRS Form W-8 (or substitute
therefor) or IRS Form W-9 (or substitute therefor), as appropriate.
(j) Management Options. Each holder of Management Options shall
have agreed to the cancellation and termination thereof, effective as of the
Closing, by an agreement or instrument reasonably satisfactory to NHTC.
(k) Heller Options. The Board of Directors of the NHTC (or an
appropriate committee thereof) shall have granted or issued to Neal R. Heller
and/or Elizabeth S. Heller options to purchase 800,000 shares NHTC Common Stock
(in the aggregate), in form and substance reasonably satisfactory to the
Company.
(l) Other Matters. The Company and Company Stockholders (or one or
more Attorneys on the behalf of the Company Stockholders) shall have furnished
or caused to be furnished to NHTC, in form and substance reasonably satisfactory
to NHTC or their counsel, such certificates and other evidences as NHTC may
reasonably request as to the satisfaction of the conditions contained in this
Section 6.01.
SECTION 6.02. Conditions to Obligations of the Company Stockholders.
The obligation of the Company Stockholders to consummate the Main Transaction
and other Transactions is subject to the satisfaction of the following
conditions, each of which may be waived by the Company or any Attorney.
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of NHTC set forth in Article III shall be true
and correct on the Closing Date as if made on as and of the Closing Date. NHTC
shall have performed the agreements and obligations required to be respectively
performed by them under this Agreement prior to the Closing Date. NHTC shall
have executed and delivered to the Company and Company Stockholders (or one or
more Attorneys on the behalf of the Company Stockholders) a certificate or
certificates certifying to its compliance with the foregoing, in form and
substance reasonably satisfactory to the Company. Notwithstanding the first
sentence of this Section 6.02(a): (1) from time to time on or prior to the
Closing, NHTC shall be permitted to deliver to the Company and Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) written information which changes, modifies or supplements the
representations and warranties set forth in Section 3.01 (or Previously
Disclosed) because of the occurrence or non-occurrence of any event, or any
circumstance arising, after the Agreement Date; (2) upon such delivery such
information shall be deemed to have been "Previously Disclosed" for purposes of
Section 3.01 (and, accordingly, the representations and warranties therein
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shall be deemed to be amended by such information), and (3) if such event(s) or
circumstance(s) result(s) in the aggregate in an NHTC Material Adverse Effect,
then the condition stated in the first sentence of this Section 6.02(a) shall be
deemed not to have been satisfied. If, notwithstanding (x) any failure of such
condition as provided in the foregoing clause "(3)", or (y) any
misrepresentation on the part of NHTC as to which the Company and Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) has received written notice from or on behalf of NHTC prior to the
Closing, the Company and Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders) proceeds with the Closing, then such failure
of condition and/or such misrepresentation (as the case may be) shall be deemed
for all purposes to be waived.
(b) Charter, By-laws, etc. NHTC shall have delivered to the Company
and Company Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) a certificate signed by two or more its officers certifying to:
(i) a true, correct and complete copy of NHTC's certificate or articles of
incorporation, (ii) a true, correct and complete copy of NHTC's by-laws, (iii) a
true, correct and complete copy of all NHTC Board of Directors resolutions
adopted in connection with this Agreement and/or the Transactions, and (iv) the
identity and signature of its officer or officers who shall have executed this
Agreement or any other NHTC Document on or before the Closing Date.
(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for the Company Stockholders to consummate the
Main Transaction or any of the other Transactions (including without limitation
such Consents and Notices as may be necessary or appropriate to obtain from the
USDOE or Florida State Board) and to continue in effect, and to assure that the
Company, NHTC and their respective Subsidiaries shall to be entitled to have and
enjoy, all of the benefits of the Company Contracts, Company Permits and the
properties and assets of the Company and the NHTC Contracts and NHTC Permits
after the Closing Date (including preserving for (x) the NHTC Educational
Facilities their accredited status, and (y) students of the NHTC Educational
Facilities, as such, access to the financial aid programs to which they
currently have access, at substantially current levels), shall have been duly
obtained (in the case of Consents) or given (in the case of Notices) and shall
be unconditional and in full force and effect.
(d) Legal Restraints. There shall not have been proposed or enacted
any Laws, or any change in any existing Laws, which prohibits or delays, or
threatens to prohibit or delay, the consummation of the Main Transaction or any
of the other Transactions or which could reasonably be expected to have an NHTC
Material Adverse Effect. No action, suit, claim or proceeding shall have been
commenced or threatened by any governmental authority or private party (i)
seeking to restrain, enjoin or hinder, or to seek damages from any Company
Stockholder, the Company or any Subsidiary thereof on account of the
consummation of the Main Transaction or any of the other Transactions, or (ii)
which could reasonably be expected to have an NHTC Material Adverse Effect.
(e) No NHTC Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects
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of NHTC and its Subsidiaries, taken as a whole, since the NHTC Base Date. NHTC
Common Stock shall continue to be quoted in the NASDAQ Small Cap market; and
there shall not have been proposed or enacted any Laws, or any change in any
existing Laws, and no action, suit, claim or proceeding shall have been
commenced or threatened by any governmental authority, the National Association
of Securities Dealers, Inc. or any private party seeking that would result in
the discontinuance of such listing.
(f) Receipt. NHTC shall have executed and delivered to the Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) a written instrument, in form and substance reasonably
satisfactory to the Attorneys, acknowledging receipt of the certificates
representing all of the Company Shares.
(g) Firm Shares Certificates. NHTC shall have issued to each
Company Stockholder, and delivered to one or more Attorneys on the behalf of
each Company Stockholders, a certificate representing the number of Firm Shares
issuable to such Company Stockholder under Section 1.04(a) hereof.
(h) Opinions of Counsel. The Company shall have received an opinion
letter of Lane & Mittendorf LLP, New York, New York, special counsel to NHTC,
dated the Closing Date and in form and substance reasonably satisfactory to
counsel to the Company.
(i) Registration Rights Agreement. NHTC shall have executed and
delivered to the Company a Registration Rights Agreement in form and substance
reasonably satisfactory to the Attorneys (the "Registration Rights Agreement").
(j) Corporate Governance. The Board of Directors of NHTC shall have
taken the following actions, effective immediately after the annual meeting of
the shareholders of NHTC scheduled to take place on August 4, 1997: (i) the
Board of Directors of NHTC shall have been increased by two (2), and Sir Brian
Wolfson and another person designated by at least two of the Attorneys (the
"Other Director") shall have been appointed members of such Board to fill the
vacancies created by such increase; (ii) Sir Brian Wolfson shall have been named
Chairman of the Board of Directors of NHTC by its Board of Directors; (iii) the
Board of Directors of NHTC shall have established an Executive Committee
comprised of Neal R. Heller, Elizabeth S. Heller and Sir Brian Wolfson and such
Executive Committee shall have been delegated the authority to act in the place
and stead of the Board of Directors of NHTC to the fullest extent permitted
under Florida corporate law; and (iv) Sir Brian Wolfson shall have been named
Chairman of such Committee. The Board of Directors of the Company shall have
been fixed at one, and Sir Brian Wolfson shall have been elected (or shall
remain) the sole member thereof.
(k) Management Compensation. NHTC shall have offered in writing to
the management personnel of the Company selected by it such committed
compensation packages (having salary, benefits, bonus, stock ownership/option
and other components) as shall be reasonably satisfactory to the Company.
(l) Reservation of Shares. NHTC shall have reserved for issuance as
the Contingent Shares and for issuance in lieu of the shares of Company Common
Stock issuable pursuant to Section 1.04(b) of the Fruitseng Acquisition
Agreement (as such
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provision is being modified and amended as under Section 9.02(a) hereof) such
number of shares of NHTC Common Stock as the Company and NHTC shall mutually
agree.
(m) Other Matters. NHTC shall have furnished or caused to be
furnished to the Company and/or Attorneys on behalf of the Company Stockholders,
in form and substance reasonably satisfactory to the Company or its counsel,
such certificates and other evidences as the Company may reasonably request as
to the satisfaction of the conditions contained in this Section 6.02.
ARTICLE VII
CLOSING PROCEDURE AND DATE; TERMINATION
SECTION 7.01. Closing Procedure; Closing Date. (a) The Main Transaction
may be completed at one or more closings and the initial such closing shall be
referred to herein as the "Closing" (unless the context otherwise requires) and
the term "Closing Date" (defined below) refers to the date of the initial
Closing. Subject to Section 7.01(b) below the initial Closing shall take place
when the Attorneys are able to, and do, deliver to NHTC in accordance with this
Agreement at least 4,346,792 shares of the Company Common Stock (which
constitutes more than 90% of the Company Common Stock). If less than all Company
Shares are delivered at the initial Closing then one or more additional Closings
(each an "Additional Closing") shall be scheduled upon three business days
notice from the Attorneys to NHTC, provided that there can be no Closing after
the Initial Deadline Date or Additional Closing after the Final Deadline Date
(defined below). At any Additional Closing the Conditions to the Main
Transaction set forth in Article VI hereof which were satisfied or waived at the
Initial closing shall be deemed to still be so satisfied or waived, except for
those relating to the delivery of the Company Shares and Firm Shares which are
the subject of such Additional Closing and the related receipts.
(b) The Closing of the Main Transaction shall take place at the
offices of Lane & Mittendorf, 320 Park Avenue, New York, New York or at such
other place as the Company and NHTC shall mutually agree, at 10:00 A.M., local
time, on such date mutually agreed upon by the Company and NHTC that is within
five business days after the first date upon which all Consents and Notices
which at the time remain conditions to the obligations of the parties to effect
the Main Transaction and other Transactions shall have been obtained or given
(as the case may be, the "Closing Date").
SECTION 7.02. Termination of Agreement. (a) This Agreement may be
terminated by either the Company or NHTC, upon notice to the other such parties
hereto, if the initial Closing shall not have occurred on or before August 4,
1997 (the "Initial Deadline Date") or if there shall have been a Closing, as to
only those Company Shares not delivered by September 5, 1997 (the "Final
Deadline Date"); provided, however, that: (i) NHTC shall not be permitted to
terminate this Agreement under this Section 7.02 if the Closing shall not have
occurred by the Initial Deadline Date or if any Additional Closing shall not
have occurred by the Final Deadline Date to the extent applicable, as the case
may be, by reason of any breach by NHTC of Section 5.04; and (ii) the Company
shall not be permitted to terminate this Agreement under this Section 7.02 if
the Closing shall not have occurred by the Initial Deadline Date or Final
Deadline Date, as the case may be, by reason of any breach by the Company of
Section 5.04.
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(b) To the extent of the rights, liabilities and obligations
pertaining to Company Shares or Firm Shares not theretofore delivered at a
Closing or Additional Closing, termination of this Agreement under this Section
7.02 shall automatically and irrevocably terminate all liabilities and
obligations of the terminating party (and, in the event that the terminating
party is the Company, the Company Stockholders) arising under this Agreement;
all rights of the terminating party (and such other party) arising under this
Agreement, and all liabilities and obligations of the other party or parties
hereto, shall survive any such termination.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. By the Company Stockholders. (a) Subject to the
limitations set forth below in this Section 8.01, from and after the Closing
Date, the Indemnifying Company Stockholders, jointly and severally, shall
indemnify NHTC and its directors, officers, employees and agents (collectively,
the "NHTC Indemnified Persons"), against, and hold the NHTC Indemnified Persons
harmless from, any and all Losses directly or indirectly incurred, suffered,
sustained or required to be paid by, or sought to be imposed upon, any of the
NHTC Indemnified Persons resulting from, relating to or arising out of:
(i) any breach of any of the representations or
warranties of the Company set forth in Section 2.01 hereof or
in any other Company Party Document,
(ii) any breach of any covenant or agreement made by the
Company under this Agreement or any other Company Party
Document,
(iii) the sale of the Company's securities to the Company
Stockholders, including but not limited to any such Losses
related to any action, suit or proceeding brought by one or
more Company Stockholders notwithstanding Section 4.05
hereof.
(iv) any Unexpected Acquisition Costs to the extent (and
only to the extent) that the same shall exceed (determined as
of the end of the Second Contingent Shares Measure Period):
(i) 8 x Acquired Pre-Tax Earnings minus (ii) FSFMV minus
(iii) FCSFMV minus (iv) other Acquisition Costs minus $27,350
(as such terms are defined in Section 1.02(d) hereof).
(b) Subject to the limitations set forth below in this Section
8.01, from and after the Closing Date, each Company Stockholder shall: (i)
indemnify the NHTC Indemnified Persons and Indemnifying Company Stockholders,
against, and hold the NHTC Indemnified Persons and Indemnifying Company
Stockholders harmless from, any and all Losses directly or indirectly incurred,
suffered, sustained or required to be paid by, or sought to be imposed upon, any
of the NHTC Indemnified Persons or Indemnifying Company Stockholders resulting
from, relating to or arising out of such Company Stockholder (but no other
Company Stockholder) not having good and marketable title to the number of
Company Shares indicated opposite such Company Stockholder's name on the
appropriate "Agreement Signature Page" hereto, free and clear of all Liens,
prior to the Closing; and (ii), indemnify and hold harmless the NHTC Indemnified
Persons
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against and from any and all Losses directly or indirectly incurred, suffered,
sustained or required to be paid by, or sought to be imposed upon, any of the
NHTC Indemnified Persons resulting from, relating to or arising out of such
Company Stockholder bringing, joining or maintaining any action, suit or
proceeding directly or indirectly relating to the sale of the Company's
securities against the NHTC Indemnifed Persons notwithstanding such Company
Stockholder's release pursuant to Section 4.05 hereof.
(c) The right to indemnification under this Section 8.01 is subject
to the following limitations:
(i) The indemnification rights under this Section
8.01 shall expire at the respective times set forth in
Section 8.05, and the Indemnifying Company Stockholders
and other Company Stockholder shall not have any
liability under this Section 8.01 or otherwise in
connection with the Transactions unless an NHTC
Indemnified Person gives written notice to one or more of
the Attorneys asserting a claim for Losses, including
reasonably detailed specific facts and circumstances
pertaining thereto, before the expiration of the periods
of time that the underlying representations, warranties,
covenants and agreements survive under Section 8.05
hereof.
(ii) Indemnification for Losses under Section 8.01
shall be payable hereunder only if and to the extent that
the aggregate amount of all Losses of the NHTC
Indemnified Persons to which this Section 8.01 hereof
applies shall exceed $25,000 (the "Indemnity Floor"), and
shall not be payable in any event with respect to the
Indemnity Floor; notwithstanding the foregoing, the
Indemnity Floor shall not apply to any Losses resulting
from, relating to or arising out of an event described in
Section 8.01(a)(iii).
(iii) The liability for Losses under Section 8.01(a)
of the Indemnifying Company Stockholders shall in no
event exceed the lesser of (as the case may be, the
"Indemnity Cap"): (A) $3,000,000 and (B) one-half of the
Fair Market Value (as defined in Section 1.02(d)), as of
the date of determination, of (x) the NHTC Shares then
held by the Indemnifying Company Stockholders, and (y)
the realized cash proceeds (in the form of, for example,
dividends or sale proceeds) or readily marketable assets
(in the form of, for example, freely tradeable
securities) (such cash or readily marketable assets,
"Qualified Proceeds") in respect of the NHTC Shares
previously held by the Indemnifying Company Stockholders;
notwithstanding the foregoing, the Indemnity Cap shall
not apply to any Losses resulting from, relating to or
arising out of an event described in Section
8.01(a)(iii).
(iv) The liability for Losses under Section
8.01(b)(i) of each Company Stockholder shall in no event
exceed Fair Market Value, as of the date of
determination, of (x) the NHTC Shares then held by such
Company Stockholder, and (y) the Qualified Proceeds in
respect of the NHTC Shares previously held by such
Company Stockholders. The liability for Losses under
Section 8.01(b)(ii) of a Company Stockholder shall in no
event
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CUSIP No. 63888P-10-9 Exhibit B Page 54 of 91 Pages
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exceed the lesser of (A) the product of $0.5625 which
amount is the closing market price per share of NHTC
Common Stock on the day prior to the Closing Date, times
the number of NHTC Shares acquired on the Closing Date by
such Company Stockholder, and (B) such Company
Stockholder's pro rata portion of such Losses as
determined by the ratio of such Company Stockholder's
NHTC Shares to all of the NHTC Shares acquired on the
Closing Date by all Company Stockholders party to the
action, suit or proceeding giving rise to such Losses.
(v) The NHTC Indemnified Persons shall have recourse
hereunder only against the NHTC Shares issued hereunder
and held by the Indemnifying Company Stockholders (in the
case of Losses under clauses (i), (ii) and (iv) of
Section 8.01(a)) and the relevant Company Stockholder (in
the case of Losses under Section 8.01(b)(i)) and any
Qualified Proceeds thereof; provided that in no event
arising under such clauses of such Sections, shall the
NHTC Shares and Qualified Proceeds of any one
Indemnifying Company Stockholder (and members of its
immediate family, successors and assigns, treated for
this purpose as one Indemnifying Company Stockholder)
forfeited, surrendered or applied in respect of any such
Losses exceed the product of (A) the Indemnity Cap, and
(B) the percentage obtained by dividing (x) such
Indemnifying Company Stockholder's Percentage (as defined
in Section 1.02(d)) as of the Closing Date by (y) the
Percentage of all Indemnifying Company Stockholders as of
the Closing Date ("Pro Rata Indemnity Percentage"). With
respect to Losses arising under Section 8.01(a)(iii), the
liability of any one Indemnifying Company Stockholder (as
defined in the previous sentence) shall in no event
exceed the lesser of (A) the product of $0.5625, which
amount is the closing market price per share of NHTC
Common Stock on the day prior to the Closing Date times
the number of NHTC Shares acquired on the Closing Date by
such Indemnifying Company Stockholder, and (B) such
Indemnifying Company Stockholder's Pro Rata Indemnity
Percentage of such Losses (the "Securities Claim
Liability Amount").
(vi) Notwithstanding anything to the contrary set
forth in this Agreement, the liability of any one
Indemnifying Company Stockholder shall not in the
aggregate exceed the greater of either such Indemnifying
Company Stockholder's Pro Rata Indemnity Percentage of
the Indemnity Cap or the Securities Claim Liability
Amount.
(d) For purposes of this Agreement, the term "Indemnifying Company
Stockholders" means the following Company Stockholders: the Azure Limited
Partnership I; Capital Development S.A.; Joseph Grace; John M. Eldredge; Robert
C. Bruce; and their respective successors and assigns.
SECTION 8.02. By NHTC. (a) Subject to the limitations set forth below
in this Section 8.02, from and after the Closing Date, NHTC shall indemnify the
Company Stockholders, and their respective directors, officers, employees and
agents (collectively, the "Company Indemnified Persons"), against, and hold the
Company Indemnified Persons harmless from, any and all Losses directly or
indirectly incurred, suffered,
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 55 of 91 Pages
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sustained or required to be paid by, or sought to be imposed upon, any of the
Company Indemnified Persons resulting from, relating to arising out of:
(i) any breach of any of the representations or
warranties of NHTC set forth in Section 2.02 hereof or in
any other NHTC Document,
(ii) any breach of any covenant or agreement made by
the Company under this Agreement or any other Company
Party Document, or
(iii) any indebtedness, liability or obligation of
the Company or any Subsidiary thereof not constituting an
Unexpected Acquisition Cost.
(b) The right to indemnification under this Section 8.02 is subject
to the following limitations:
(i) The indemnification rights under this Section
8.02 shall expire at the respective times set forth in
Section 8.05, and NHTC shall not have any liability under
this Section 8.02 or otherwise in connection with the
Transactions unless a Company Indemnified Person gives
written notice to NHTC asserting a claim for Losses,
including reasonably detailed specific facts and
circumstances pertaining thereto, before the expiration
of the periods of time that the underlying
representations, warranties, covenants and agreements
survive under Section 8.05 hereof.
(ii) Indemnification for Losses under this Section
8.02 shall be payable hereunder only if and to the extent
that the aggregate amount of all Losses of the Company's
Indemnified Persons to which this Section 8.02 hereof
applies shall exceed $25,000, and shall not be payable in
any event with respect to the first $25,000 of such
Losses; provided, however, that the foregoing limitations
shall not apply with respect to claims under clause (iii)
of Section 8.02(a).
(iii) NHTC's liability for Losses under Section
8.02(a) shall in no event exceed the Indemnity Cap;
provided, however, that the foregoing limitations shall
not apply with respect to claims under clause (iii) of
Section 8.02(a).
SECTION 8.03. "Losses" Defined. In this Agreement, the term "Losses"
means and includes all losses, claims, liabilities, damages (including, without
limitation, punitive, consequential and special damages awarded to any
third-party claimant), judgments, liabilities, payments, obligations, costs and
expenses (including, without limitation, any costs of investigation, remediation
or cleanup, and any reasonable legal fees and costs and expenses incurred after
the Closing Date in defense of or in connection with any alleged or asserted
liability, payment or obligation as to which indemnification may apply
hereunder), regardless of whether or not any liability, payment, obligation or
judgment is ultimately imposed against the NHTC Indemnified Persons or Company
Indemnified Persons and whether or not the NHTC Indemnified Persons or Company
Indemnified Persons are made or become parties to an action, suit or proceeding
in respect thereof, voluntarily or involuntarily.
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SECTION 8.04. Notice of Claims. With respect to any matter as to which
any person or entity (the "Indemnified Person") is entitled to indemnification
from any other person or entity (the "Indemnifying Person") under this Article
VIII, the Indemnified Person shall have the right, but not the obligation, to
contest, defend or litigate, and to retain counsel of its choice in connection
with, any claim, action, suit or proceeding by any third party alleged or
asserted against the Indemnified Person in respect of, resulting from, relating
to or arising out of such matter, and the costs and expenses thereof shall be
subject to the indemnification obligations of the Indemnifying Person hereunder;
provided, however, that if the Indemnifying Person acknowledges in writing its
obligation to indemnify the Indemnified Person in respect of such matter to the
fullest extent provided by this Article VIII, the Indemnifying Person shall be
entitled, at its option, to assume and control the defense of such claim,
action, suit or proceeding at its expense through counsel of its choice if it
gives prompt notice of its intention to do so to the Indemnified Person. Neither
an Indemnified Person nor an Indemnifying Person shall be entitled to settle or
compromise any such claim, action, suit or proceeding without the prior written
consent of the other party hereto (and for purposes of this provision the "other
party hereto" shall be: (A) NHTC, for any Indemnified Person or Indemnifying
Person who is an NHTC Indemnified Person, and (B) one or more of the Attorneys,
for any Indemnified Person or Indemnifying Person who is a Company Indemnified
Person), which consent shall not be unreasonably withheld.
SECTION 8.05. Survival of Provisions. (a) All representations and
warranties contained herein or made pursuant to this Agreement shall survive the
Closing for a period of one year after the Closing Date except that
(1) the representations and warranties contained in or
made pursuant to Section 2.04 shall survive the Closing
without limitation, and
(2) the representations and warranties contained in or
made pursuant to Sections 2.07, 2.10 and 2.11 shall survive
the Closing for so long as any claim may be made in respect
of the matters described therein under any applicable statute
of limitations.
(b) All covenants and agreements of the parties contained in or
made pursuant to this Agreement and required to be performed prior to the
Closing Date shall survive the Closing for a period of one year. All other
covenants and agreements contained in or made pursuant to this Agreement
(including Sections 4.05, 8.01 and 8.02) shall survive the Closing for so long
as any claim may be made in respect of such matters under any applicable statute
of limitations.
SECTION 8.06. Exclusive Remedy. Each party hereto agrees that the sole
liability of any other party hereto for any claim with respect to the
transactions contemplated under this Agreement shall be limited to
indemnification under this Article VIII; provided, however, that the foregoing
shall not be deemed to prohibit or restrict the availability of any equitable
remedies (including specific performance) in the event of any breach (or
threatened breach) in the circumstances described in Section 9.11 (or in any
provision of any other Company Party Document or NHTC Document which
specifically contemplates the availability, or permits the exercise, of
equitable remedies (including specific performance)).
<PAGE>
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SECTION 8.07. Other Recoveries. (a) Notwithstanding anything to the
contrary set forth in this Article VIII, the obligations of Indemnifying Persons
under Section 8.01 and 8.02 in respect of any particular Losses shall be reduced
by the amount of any Other Recoveries (as hereinafter defined) actually received
(before or after indemnification hereunder) by or on behalf of the Indemnified
Persons in reduction of such Losses. Any Indemnified Person who shall have
received any indemnification payment hereunder (including in the form of NHTC
Shares and Qualified Proceeds thereof) for any particular Losses shall, upon
receipt of any Other Recoveries in reduction of such Losses, pay to the
appropriate Indemnifying Person an amount equal to the lesser of (x) such Other
Recoveries actually received, and (y) the amount of such indemnification payment
(and/or the Fair Market Value of any such non-cash indemnification payment). The
Company Stockholders and NHTC hereby agree to use their reasonable best efforts
to (and shall cooperate with each other in order to) enforce their respective
rights to any Other Recoveries, both prior to and after making any claim for
indemnification hereunder.
(b) For purposes of this Agreement, the term "Other Recoveries"
shall mean the proceeds or other amounts realized or that may be realized under
any insurance policy or other indemnity or hold harmless agreement (including,
without limitation, those indemnity and hold harmless agreements established
under the Ellon Acquisition Agreement, Fruitseng Acquisition Agreement and the
MikeCo Acquisition Agreements).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Board and Executive Committee Representation. (a) For so
long as the Company Stockholders shall collectively beneficially own not less
than ten percent (10%) of the outstanding shares of NHTC Common Stock, NHTC
shall use its reasonable best efforts to: (i) cause two individuals designated
by one or more of the Attorneys and reasonably acceptable to NHTC to be
nominated for election to the Board of Directors of NHTC at each annual meeting
of its stockholders and each special meeting (and written consent in lieu of a
meeting) at (or in) which directors are to be elected following the Closing
Date, (ii) cause the Board of Directors or management of NHTC to recommend in
any proxy statement for such meeting to the stockholders of NHTC that they vote
for the election of such nominees, and (iii) cause the management proxies who
may vote at any such meeting to vote any shares for which a proxy card is
received with no indication as to the election of such nominees to vote for
their election; provided, however, that from and after such time (if any) that
the Company Stockholders shall collectively beneficially own less than ten
percent (10%), but not less than five percent (5%), of the outstanding shares of
NHTC Common Stock, NHTC shall be required to fulfill its obligations under the
foregoing provisions of this Section 9.01(a) only with respect to one individual
designated by one or more of the Attorneys and reasonably acceptable to NHTC.
(b) For so long as NHTC shall have any obligations under the
foregoing Section 9.01(a), NHTC shall use its reasonable best efforts to cause
the Board of Directors of NHTC to: (i) maintain an Executive Committee thereof,
comprising not more than three members of such Board and having the authority to
act in the place and stead of the Board of Directors of NHTC to the fullest
extent permitted under Florida corporate law,
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 58 of 91 Pages
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and (ii) designate or appoint one of the director(s) designated and elected in
accordance with the foregoing Section 9.01(a) as a member of such Executive
Committee.
SECTION 9.02. Termination and Modification of Agreements. (a) Each
Company Stockholder that is a Former Fruitseng Holder (as defined in Section
9.02(b)), being presently entitled to receive a portion of the up to 369,350
shares of Company Common Stock issuable under Section 1.04(b) of the Fruitseng
Acquisition Agreement, effective automatically at and upon the Closing, hereby
agrees that such Former Fruitseng Holder shall accept, in lieu of such Former
Fruitseng Holder's portion of such shares of Company Common Stock, a number of
shares of NHTC Common Stock per each such share of Common Stock of the Company
in the same proportion that (i) the number of Firm Shares bears to (ii) the
number of outstanding Company Shares (which proportion is approximately 1.2:1).
The foregoing provisions of this Section 9.02(b) shall be deemed to constitute
amendments to Section 1.04(b), and (to the extent necessary to implement such
amendment) the other relevant terms, of the Fruitseng Acquisition Agreement.
NHTC hereby agrees that, in connection with and in satisfaction of the Company's
obligations under Section 1.04(b) (as modified and amended pursuant to the
foregoing provisions of this Section 9.02(a)), it shall issue such shares of
NHTC Common Stock to such Company Stockholders (or their respective successors
and assigns).
(b) The Company and each Company Stockholder who is a party to any
of the following agreements hereby agrees that, effective automatically at and
upon the Closing, such agreements shall be terminated and no longer be of any
force or effect, and no party thereto shall thereafter have any rights,
obligations or liability thereunder: (1) Stockholder's Agreement, dated as of
June 30, 1996, by and between the Company and Dr. Bradford Stillman Weeks; (2)
Stockholders Agreement, dated as of October 15, 1996, by and among the Company,
Ralph Kaslof, Leslie J. Kaslof, International Marketing Group Ltd. and Robert A.
Seibel; and (3) Stockholders Agreement, dated as of October 15, 1996, by and
among the Company, Robert E. Cleaves, IV, Stephen W. Batzell, Thomas P.
Pinansky, John M. Eldredge, Robert C. Bruce, Virginia M. King, Clarissa Rowe,
Arthur B. Page, Douglas M. and Elizabeth R. Costle and Kimball C. Chen (the
foregoing individuals, the "Former Fruitseng Holders").
SECTION 9.03. Public Announcements. No party hereto shall make any
announcement to the public, the Company's or NHTC's respective "trades" or to
the respective employees, customers or suppliers of such parties, or to any
federal, state, local or foreign government, agency or authority, with respect
to this Agreement and/or the Transactions (an "Announcement") to which NHTC, the
Company or any Attorney shall reasonably object; however, NHTC will be required
under the Exchange Act to report this Agreement and the Transactions, and such
reporting (to the extent required under the Exchange Agreement) shall be
permitted in all events. Each party shall afford NHTC, the Company and one or
more Attorneys, the opportunity to review and comment upon each Announcement
proposed to be made by it prior to the release thereof.
SECTION 9.04. Further Actions. From time to time after the Closing
Date, the parties hereto shall execute and deliver (or cause to be executed and
delivered) such other and further agreements, instruments, certificates or other
documents and shall take (or cause to be taken) such other and further actions,
as any other party hereto may
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 59 of 91 Pages
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reasonably request in order to further effect and/or evidence the Transactions
or to otherwise consummate and give effect to the covenants and agreements set
forth herein.
SECTION 9.05. Expenses. Each party hereto shall bear its own legal
fees, accountants' fees, brokers, finder's and investment banking fees and other
costs and expenses with respect to the negotiation, execution and the delivery
of this Agreement and the consummation of the Transactions.
SECTION 9.06. Entire Agreement. This Agreement, which includes the
Exhibit hereto, and the other NHTC Documents and Company Party Documents,
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements,
arrangements and understandings with respect thereto (including without
limitation that certain letter agreement (captioned "Letter of Intent/Heads of
Agreement"), dated 15 November 1996, as amended, from the Company addressed to
NHTC).
SECTION 9.07. Descriptive Headings; References. The descriptive
headings of this Agreement and other NHTC Documents and Company Party Documents
are for convenience of reference only and shall not control or affect the
meaning or construction of any provision hereof or thereof. Article, Section and
Exhibit references in this Agreement are to the referenced Articles and Sections
of, and Exhibits to, this Agreement, unless the context otherwise requires.
SECTION 9.08. Notices. Any notice or other communication which is
required or permitted hereunder or under any other NHTC Document or Company
Party Document shall be in writing and shall be deemed to have been delivered
and received (x) on the day of (or, if not a business day, the first business
day after) its having been personally delivered or telecopied to the following
address or telecopy number, (y) on the first business day after its having been
sent by overnight delivery service to the following address, or (z) if sent by
regular, registered or certified mail, when actually received at the following
address:
If to any Company Stockholder, to the address for such Company
Stockholder set forth on Exhibit A hereto, with copies to the Attorneys and the
counsel set forth in the paragraph next following and (if before the Closing)
the Company, at the addresses as set forth in the paragraph next following;
If to any Attorney or (before the Closing) the Company:
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 60 of 91 Pages
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[c/o] Global Health Alternatives, Inc.
44 Welbeck Street
London W1M 7HF England
Attention: Sir Brian Wolfson
Telecopier No. 011-44-171-486-6217
Telephone No. 011-44-171-486-6216
and
[c/o] Global Health Alternatives, Inc.
193 Middle Street, Suite 201
Portland, Maine 04101
Attention: Robert C. Bruce
Telecopier No. (207) 772-8493
Telephone No. (207) 772-7234
with a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Attention: Claude A. Baum, Esq.
Telecopier No. (212) 698-3599
Telephone No. (212) 698-3500
If to NHTC or (after the Closing) the Company:
[c/o] Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, Florida 33064
Attention: Neal R. Heller, Esq.
Telecopier No. (954) 969-9747
Telephone No. (954) 969-9771
with a copy to:
Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
Attention: Martin C. Licht, Esq.
Telecopier No. (212) 508-3230
Telephone No. (212) 508-3200
Any party may by notice change the address or telecopier number to which notices
or other communications to it are to be delivered, telecopied or sent.
SECTION 9.09. Governing Law and Forum. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (other
than the choice of law principles thereof). Any claim, action, suit or other
proceeding initiated by any party hereto against any other party hereto under or
in connection with this Agreement or any other NHTC Document or Company Party
Document and/or the Transactions shall exclusively be asserted, brought,
prosecuted and maintained in any federal or state court located in the Borough
of Manhattan, State of New York, as the party bringing such action, suit or
proceeding shall elect, having jurisdiction over the subject matter thereof, and
each party hereto hereby irrevocably: (i) submits to the
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jurisdiction of such courts, (ii) waives any and all rights to object to the
laying of venue in any such court, (iii) waives any and all rights to claim that
any such court may be an inconvenient forum, and (iv) agrees that service of
process on it in any such action, suit or proceeding may be effected by the
means by which notices may be given to it under this Agreement.
SECTION 9.10. Assignment. This Agreement, and the respective rights and
obligations of the parties hereunder, may not be assigned or delegated otherwise
than by operation of law by (x) NHTC or (after the Closing) the Company without
the prior written consent of (if prior to the Closing) the Company or (if after
the Closing) one or more of the Attorneys, or (y) any Company Stockholder
without the prior written consent of NHTC, and any purported assignment or
delegation by any party hereto in violation of the foregoing shall be void ab
initio; provided, however, that any or all rights of any party to receive the
performance of the obligations of the other parties hereunder (but not any
obligations of any party hereunder) and rights to assert claims against the
other parties in respect of breaches of representations, warranties or covenants
may be assigned to (i) any entity extending credit to such party or any of its
affiliates or (ii) in the case of the Company Stockholders, any other person or
entity (provided that notice of such assignment shall have previously been
provided to NHTC), but any assignee of such rights shall take such rights
subject to any defenses, counterclaims and rights of set-off to which the
non-assigning parties might be entitled under this Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
SECTION 9.11. Remedies. (a) The parties hereto acknowledge that the
remedy at law for any breach of their respective obligations to effect the Main
Transaction is and will be insufficient and inadequate and that the parties
hereto shall be entitled to equitable relief, in addition to remedies at law.
Each party hereto hereby waives the defense that there is an adequate remedy at
law in the event of any action to enforce the provisions of this Agreement to
effect the Main Transaction. The Company Stockholders acknowledge that the
Company Shares are unique and cannot be obtained on the open market; and NHTC
acknowledges that the NHTC Shares and other benefits to be provided to the
Company Stockholders hereunder are unique and cannot be obtained on the open
market. Without limiting any remedies that any party hereto may otherwise have
hereunder or under applicable law in the event that any other party hereto
refuses to perform its obligations under this Agreement to consummate the Main
Transaction, such parties shall have, in addition to any other remedy at law or
in equity, the right to specific performance.
(b) The parties hereto acknowledge that any violation or threatened
violation of Section 5.01(b) will cause irreparable harm and that the remedy at
law for any such violation or threatened violation will be inadequate. Each
party hereto therefor agrees that the other parties hereto shall be entitled to
temporary and permanent injunctive relief for any such violation or threatened
violation without the necessity of proving (i) that the other parties will be
irreparably injured thereby, (ii) that the remedy at law for such violation or
threatened violation is inadequate or (iii) actual damages.
(c) No party hereto shall have any liability to any other party
hereto for any punitive, consequential, incidental or special damages by virtue
of any breach of any
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representation, warranty, covenant or agreement in or pursuant to this Agreement
or any other NHTC Document or Company Party Document or any other agreement,
instrument, certificate or other document executed and delivered pursuant hereto
or in connection herewith or the Transactions.
SECTION 9.12. Waivers and Amendments. Any waiver of any term or
condition of this Agreement, and any amendment or supplementation of this
Agreement, shall be effective only if in a writing executed by (or on behalf of)
NHTC, the Company and the Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders). A waiver of any breach or failure to
enforce any of the terms or conditions of this Agreement shall not in any way
affect, limit or waive a party's rights hereunder at any time to enforce strict
compliance thereafter with every term or condition of this Agreement. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
SECTION 9.13. Third Party Rights. Notwithstanding any other provision
of this Agreement, and except as permitted pursuant to Section 9.10 hereof or
other expressly set forth herein or therein, this Agreement and the other NHTC
Documents and Company Party Documents shall not create benefits on behalf of any
employee, consultant, agent or representative of any person or entity not party
hereto (including without limitation any counsel, accountant, broker, finder or
investment banker, notwithstanding the provisions of Section 9.05), and this
Agreement and the other NHTC Documents and Company Party Documents shall be
effective only as between the parties hereto, their successors and permitted
assigns.
SECTION 9.14. Illegalities. In the event that any provision contained
in this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect, and the remaining provisions of this
Agreement, shall not, at the election of the party for whose benefit the
provision exists, be in any way impaired.
SECTION 9.15. Gender and Plural Terms. Words of gender or neuter may be
read as masculine, feminine or neuter, as required by the context. Singular and
plural forms of defined and other terms herein may be read as singular or
plural, as required or permitted by the context.
SECTION 9.16. Effectiveness; Termination of Original Agreement. This
Agreement shall become effective only upon its being executed and delivered by
the Company, NHTC and Company Stockholders owning at least 4,346,791 Company
Shares. Effective automatically at such time, the Original Agreement is hereby
terminated by mutual consent.
SECTION 9.17. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
NHTC: The Company:
NATURAL HEALTH TRENDS CORP. GLOBAL HEALTH ALTERNATIVES, INC.
By:___________________________ By:______________________________
Title: President & Chief Title: Chairman of the Board &
Executive Officer President
Company Stockholders
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
AZURE LIMITED PARTNERSHIP I 1,384,617 1,662,767
By:_____________________________
General Partner
By:_____________________________
General Partner
By:_____________________________
General Partner
CAPITAL DEVELOPMENT S.A. 683,366 820,645
By:_____________________________
Title:
COSMO FINANCE & INVESTMENTS
SERVICES S.A. 5,395 6,485
By:_____________________________
Title:
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CUSIP No. 63888P-10-9 Exhibit B Page 64 of 91 Pages
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Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
________________________________ 50,000 60,044
WILLIAM NELSON
________________________________ 35,000 42,031
DR. CARL F. BERNER
________________________________ 135,965 163,278
SIR TOM FARMER
________________________________ 89,562 107,554
ALFRED S. ROSS
GOLDEN UNION INTERNATIONAL S.A. 102,151 122,672
By:_____________________________
Title:
N.K. VERWALTUNGS INC. 114,386 137,364
By:_____________________________
Title:
N. FOSS & CO. A/S 35,965 43,190
By:_____________________________
Title:
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Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
PROMENADE INVESTMENTS LIMITED 35,965 43,190
By:_____________________________
Title:
BENJAMIN B. TREGOE REVOCABLE TRUST 17,983 21,595
(U/A/D 7/20/79)
By:_____________________________
Title:
________________________________ 3,597 4,319
BENJAMIN B. TREGOE
DIDGEMERE CONSULTANTS LIMITED 17,983 21,595
By:_____________________________
Title:
Z & M CAPITAL CORPORATION 17,983 21,595
By:_____________________________
Title:
________________________________ 33,000 39,629
RALPH KASLOF
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 66 of 91 Pages
- --------------------------------------------------------------------------------
Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
________________________________ 93,000 111,682
LESLIE J. KASLOF
________________________________ 7,000 8,406
ROBERT A. SEIBEL
INTERNATIONAL MARKETING GROUP LTD. 7,000 8,406
By:_____________________________
Title:
________________________________ 241,692 290,244
ROBERT E. CLEAVES, IV
________________________________ 94,623 113,631
STEPHEN W. BATZELL
________________________________ 128,001 153,715
THOMAS P. PINANSKY
________________________________ 67,633 81,219
JOHN M. ELDREDGE
________________________________ 7,193 8,638
H. NEWCOMB ELDREDGE
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 67 of 91 Pages
- --------------------------------------------------------------------------------
Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
_______________________________________ 64,246 77,152
ROBERT C. BRUCE
_______________________________________ 8,092 9,717
VIRGINIA M. KING
_______________________________________ 4,046 4,859
CLARISSA ROWE
_______________________________________ 4,046 4,859
ARTHUR B. PAGE
_______________________________________ 4,046 4,859
DOUGLAS M. COSTLE (JT TEN with below)
_______________________________________
ELIZABETH R. COSTLE (JT TEN with above)
_______________________________________ 3,238 3,888
KIMBALL C. CHEN
17,983 21,595
WESTMINSTER ASSOCIATES
By:____________________________________
Title:
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 68 of 91 Pages
- --------------------------------------------------------------------------------
Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
______________________________________ 21,580 25,915
SIR PETER THOMPSON
______________________________________ 5,000 6,004
DR. STUART UNGAR
______________________________________ 30,000 36,026
DR. BRADFORD S. WEEKS
______________________________________ 10,000 12,009
DENNIS BOOKSHESTER
COMPLIMENTARY MEDICAL ASSOCIATES, INC. 10,000 12,009
By:___________________________________
Title:
______________________________________ 382,225 459,009
PATRICK KILLORIN
______________________________________ 382,225 459,009
KEVIN UNDERWOOD
______________________________________ 382,225 459,009
JOE GRACE
<PAGE>
CUSIP No. 63888P-10-9 Exhibit B Page 69 of 91 Pages
- --------------------------------------------------------------------------------
Agreement Signature Page
------------------------
Company Stockholders
--------------------
Number of Number of
Company NHTC Firm Shares
Name and Signature Shares Held to be Received
- ------------------ ----------- --------------
________________________________ 5,395 6,479
DAVID COHEN
________________________________ 40,662 48,830
H. EDWARD TROY
________________________________ 24,398 29,299
MARK COLOSI
________________________________ 16,265 19,532
WILLIAM DEEHAN
________________________________ 3,597 4,319
ALEXANDRA W. HOPKINS
________________________________ 1,439 1,728
CAROL B.A. LEE
Totals: 4,829,768 5,800,000
====== ========= =========
<PAGE>
CUSIP No. 63888P-10-9 Exhibit C Page 70 of 91 Pages
- --------------------------------------------------------------------------------
Form of Percentages Agreement
-----------------------------
CAPITAL DEVELOPMENT S.A.
6, Boulevard Georges-Favon
Case Postale 5726
CH-1211 Geneva 11 Switzerland
As of July 23, 1997
Azure Limited Partnership I
13 Eagles Nest Drive
LaConner, WA 98257
Attention: Leo L. Azure, Jr.
Global Health Alternatives, Inc. ("GHA")
----------------------------------------
Dear Sirs:
As you know, the undersigned Capital Development S.A. ("CD") is or was
the holder of 683,366 shares (the "CD Shares") of the Common Stock, par value
$.0001 per share, of GHA ("GHA Common Stock"), and the Azure Limited Partnership
I ("ALP") is or was the holder of 1,384,617 shares (the "ALP Shares") of GHA
Common Stock. Accordingly, the CD Shares represent approximately 33% of the
combined CD Shares/ALP Shares, and the ALP Shares represent approximately 67% of
the combined CD Shares/ALP Shares. This approximately 33%/67% proportion is
hereinafter referred to as the "CD/ALP GHA Shares Proportion". As you also know,
GHA has today entered into and consummated the transactions contemplated by an
Amended and Restated Agreement and Plan of Reorganization, dated as of July 23,
1997 (the "NHTC Agreement"), among Natural Health Trends Corp. ("NHTC"), GHA and
the stockholders of GHA (including CD and ALP). Capitalized terms used and not
defined herein have the respective meanings ascribed to such terms under the
NHTC Agreement.
Under the NHTC Agreement, NHTC has issued or delivered, or may be
obligated to issue and deliver, shares of its Common Stock, par value $.001 per
share, as follows: (i) 5,800,000 shares issuable at the one or more Closings
(the "Firm Shares"); (ii) 800,000 shares contingently issuable promptly after
the 60th day after the end of the First Contingent Shares Measure Period (the
"First Contingent Shares"); and (iii) a presently-undeterminable number of
shares (up to $45,000,000 worth) contingently issuable promptly after the 60th
day after the end of the Second Contingent Shares Measure Period (the "Second
Contingent Shares").
Under the NHTC Agreement, each stockholder of GHA immediately prior to
the initial Closing ("GHA Stockholders") thereunder is entitled to receive a
proportion of the Firm Shares and any First Contingent Shares and Second
Contingent Shares that are issued (collectively, the "NHTC Shares") equal to
such stockholder's "Percentage". For this purpose, Percentage means, with
respect to any GHA Stockholder, the percentage obtained by dividing: (i) the
number of shares of Common Stock of GHA held by such
<PAGE>
CUSIP No. 63888P-10-9 Exhibit C Page 71 of 91 Pages
- --------------------------------------------------------------------------------
GHA Stockholder (as indicated opposite such GHA Stockholder's name on
theappropriate "Agreement Signature Page" to the NHTC Agreement), by (ii) the
total number of such shares outstanding on the Closing Date; provided that a GHA
Stockholder's Percentage may be adjusted to the extent that such GHA Stockholder
has acquired or transferred its rights to any of the NHTC Shares from or to any
other GHA Stockholder.
The purpose of this letter is to set forth our agreement with respect
to our respective NHTC Shares, as follows.
1. Ownership of Contingent Shares. It is hereby agreed that, as between
the undersigned CD and ALP (and notwithstanding any inconsistent issuance or
delivery of NHTC Shares by NHTC), CD shall own (or otherwise be entitled to all
the benefits of ownership of) 60%, and ALP shall own (or otherwise be entitled
to all the benefits of ownership of) 40%, of all of the First Contingent Shares
and Second Contingent Shares (collectively, the "Contingent Shares") that may be
issued or delivered to CD and ALP; provided, however, that, in the event that
Sir Brian Wolfson shall not have remained an officer or director of NHTC
substantially continuously from the date hereof until the end of the Second
Contingent Shares Measure Period, then CD shall own (or otherwise be entitled to
all the benefits of ownership of) 50%, and ALP shall own (or otherwise be
entitled to all the benefits of ownership of) 50%, of all of the Contingent
Shares that may be issued or delivered to CD and ALP. The NHTC Shares that, as a
result of the foregoing agreement, CD shall own (or be entitled to the benefits
of ownership of) in excess of the approximately 33%/67% CD/ALP GHA Shares
Proportion are hereinafter referred to as the "Excess Shares".
2. Transfer; Further Assurances. In order to implement the foregoing
agreements, ALP hereby: (i) TRANSFERS, ASSIGNS AND CONVEYS to CD, and its
successors and assigns forever, all the rights, title and interests that ALP may
now have or in the future may obtain in, to and under the Excess Shares, and
(ii) AGREES that it will, at any time and from time to time after the date
hereof, do, execute, acknowledge and deliver (or cause to be done, executed,
acknowledged or delivered) all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and/or assurances as may be reasonably requested
by CD for the better transferring, assigning, conveying, assuring and confirming
to CD (or for the aiding and assisting in the collection of or reducing to
possession by CD) of the Excess Shares, or to vest in CD all of ALP's rights,
title and interests in, to and under the Excess Shares, or to otherwise enable
CD to realize upon or otherwise enjoy all the benefits of the Excess Shares. The
obligations of ALP under the foregoing clause (ii) may be discharged by ALP's
actual transferring and assigning over to CD the NHTC Shares that represent any
Excess Shares issued or transferred to ALP.
3. Firm Shares Unaffected. As a result of the initial Closing under the
NHTC Agreement, ALP has been issued 1,662,767 Firm Shares and CD has been issued
820,645 Firm Shares. Nothing herein set forth shall be deemed to affect the
rights, title or interests of ALP and CD in, to or under any such Firm Shares;
ALP and CD shall maintain their relative ownership interests in the Firm Shares
in the approximately 33%/67% CD/ALP GHA Shares Proportion.
<PAGE>
CUSIP No. 63888P-10-9 Exhibit C Page 72 of 91 Pages
- --------------------------------------------------------------------------------
4. Effect on Percentages. Inasmuch as on the date hereof GHA has
outstanding 4,829,768 shares of Common Stock, the Percentages of ALP and CD (as
to the Firm Shares and, before giving effect to the agreements set forth herein,
the Contingent Shares) are approximately 28.668396% and 14.149044%, respectively
(or approximately 42.81744% in the aggregate. It is acknowledged and agreed
that, as a result of the agreements of the parties hereunder, their respective
Percentages are being adjusted with respect to the Contingent Shares (and not
any Firm Shares) so as to be: (i) in the event that Sir Brian Wolfson shall have
remained an officer or director of NHTC substantially continuously from the date
hereof until the end of the Second Contingent Shares Measure Period,
approximately 17.126976% for ALP and 25.690464% for CD, and (ii) in the event
that Sir Brian Wolfson shall not have remained an officer or director of NHTC
substantially continuously from the date hereof until the end of the Second
Contingent Shares Measure Period, approximately 21.40872% for ALP and 21.40872%
for CD.
5. Prior Agreement Superseded. This agreement is intended to supersede
and entirely replace the letter agreement (captioned as above), dated June ___,
1997, between the parties hereto with respect to NHTC Shares, the parties having
determined that such agreement has been rendered obsolete due to changes in
circumstances with respect to the Agreement and Plan of Reorganization with GHA
and NHTC. Accordingly, such prior letter agreement is hereby terminated by
mutual agreement of the parties thereto.
6. Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of New York, excluding the choice of
law or conflicts of law principles thereof.
[the remainder of this page is intentionally blank]
<PAGE>
CUSIP No. 63888P-10-9 Exhibit C Page 73 of 91 Pages
- --------------------------------------------------------------------------------
If the foregoing accurately sets forth our understanding, kindly
execute a copy of this letter in the space provided and return it to the
undersigned, whereupon it will become a binding agreement between us.
Very truly yours,
CAPITAL DEVELOPMENT S.A.
By:
-------------------------------
Name:
Title:
Accepted:
AZURE LIMITED PARTNERSHIP I
By:
-------------------------------
Darlene K. Beck
General Partner
By:
-------------------------------
Debbie R. Reis
General Partner
By:
-------------------------------
Andrew L. Azure
General Partner
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 74 of 91 Pages
- --------------------------------------------------------------------------------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July
23, 1997, by and among NATURAL HEALTH TRENDS CORP., a Florida corporation (the
"Company"), GLOBAL HEALTH ALTERNATIVES, INC., a Delaware corporation ("GHA"),
and the stockholders of GHA listed on Schedule "A" hereto, as such schedule may
be amended from time to time, each a "Holder" and collectively the "Holders"
acting through their duly appointed attorney-in-fact (the "Attorney"). As used
in this Agreement, the term "Holder" means an original Holder and any transferee
thereof (including any successive transferee) who at the time of determination
holds any Registrable Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement and Plan of
Reorganization, dated as of July 23, 1997, by and among the Company, GHA, and
the Holders (the "Acquisition Agreement"), up to 5,800,000 shares (the "Firm
Shares") of common stock, par value $.001 per share, of the Company ("Common
Stock"), have been, or, upon the occurrence of one or more Additional Closings,
will be distributed to the Holders;
WHEREAS, pursuant to the Acquisition Agreement, the Company may be
obligated to distribute certain additional shares in two tranches (the "First
Contingent Shares" and "Second Contingent Shares," respectively, and
collectively the "Contingent Shares") of Common Stock to the Holders; and
WHEREAS, as a condition to the closing of the transactions
contemplated by the Acquisition Agreement, the Firm Shares and any Contingent
Shares distributed to the Holders shall be subject to this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms; Effectiveness of Registration Rights.
1.1 Defined Terms. Capitalized terms used and not defined herein
shall have the respective meanings ascribed to them in the Acquisition
Agreement. In addition, the following terms shall have the following meanings:
"Affiliate" has the meaning attributed thereto under Rule 405 of
the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Governmental Body" means any federal, state, municipal or other
governmental body, department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"Initiating Holders" means any Holders who in the aggregate, are
holders of at least 50% of the outstanding Registrable Securities then owned in
the aggregate by the Holders.
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 75 of 91 Pages
- --------------------------------------------------------------------------------
"Inspectors" has the meaning attributed thereto in Section 5.
"Other Holders" means all Holders other than the Initiating
Holders.
"Other Securities" has the meaning attributed thereto in Section
3.1.
"Person" means any individual, corporation, sole proprietorship,
partnership, joint venture, association, trust, unincorporated organization,
association, institution, public benefit corporation, business, Governmental
Body or other legal entity.
"Records" has the meaning attributed thereto in Section 5.
"Registrable Securities" means (i) the Firm Shares and any
Contingent Shares issued pursuant to the terms of the Acquisition Agreement and
(ii) any securities of the Company distributed with respect to the aforesaid
shares of its Common Stock; provided, that any such shares shall cease to be
Registrable Securities when sold or otherwise transferred by any Holder pursuant
to (a) an effective registration statement filed by the Company under the
Securities Act or (b) Rule 144 (or any similar provision then in force) under
the Securities Act.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with the registration and other
requirements set forth in this Registration Rights Agreement including, without
limitation, the following: (i) the fees, disbursements and expenses of all
counsel to the Company and all accountants in connection with the registration
statement, any preliminary prospectus or final prospectus, any other offering
documents and amendments and supplements thereto and the mailing and delivery of
copies thereof to underwriters and dealers; (ii) all expenses in connection with
the preparation, printing and filing of the registration statement, any
preliminary prospectus or final prospectus, any other offering document and
amendments and supplements thereto and the mailing and delivery of copies
thereof to underwriters and dealers; (iii) the cost of printing or producing any
agreement(s) among underwriters, underwriting agreement(s) and blue sky or legal
investment memoranda, any selling agreements and any other documents in
connection with the offering, sale or delivery of the Registrable Securities to
be disposed of; (iv) all expenses in connection with the qualification of the
Registrable Securities to be disposed of for offering and sale under state
securities laws, including the fees and disbursements of counsel for the
underwriters in connection with such qualification and in connection with any
blue sky and legal investment surveys; (v) the filing fees incident to securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Registrable Securities to be disposed of; (vi) the
cost and charges of any transfer agent or registrar in connection with the
registration of exchange or transfer of the Registrable Securities to be
disposed of; and (vii) all stock exchange listing fees.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Total Number of Includible Securities" has the meaning attributed
thereto in Section 3.1(b).
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 76 of 91 Pages
- --------------------------------------------------------------------------------
1.2 Effectiveness of Registration Rights. The registration rights
pursuant to Sections 2 and 3 hereof shall become effective on the date upon
which shares of Common Stock are distributed to the Original Holder pursuant to
the Acquisition Agreement and continue so long as any Holder shall hold
Registrable Securities.
1.3 Registration Not Required. Notwithstanding anything herein to
the contrary, the Company shall not be obligated to effect any registration
pursuant to Section 2.1 or Section 3.1 hereof or to keep effective any
registration statement prepared and filed pursuant to Section 2.1 or Section 3.1
hereof, if, in the written opinion of counsel to the Company who shall be
reasonably satisfactory to the Holder or Holders intending to participate in
such registration and which opinion shall be concurred in by counsel to such
Holder or Holders, the intended method or methods of disposition of any
Registrable Securities by such Holder or Holders may be effected without
registration under the Securities Act and without restriction as to subsequent
trading.
1.4 Consents and Approvals. Whenever any consent or approval is
required under this Agreement by the Holders or a group of Holders, such consent
or approval will be deemed given if rendered by the Holders of a majority of the
Registrable Securities requested to be included in the registration relating to
such consent or approval.
Section 2. Shelf Registration
2.1 Shelf Registration. The Company shall cause to be filed with
the Commission no later than nine (9) months after the Closing Date, a shelf
registration statement pursuant to Rule 415 under the Securities Act relating to
the Firm Shares, and no later than three (3) months after the issuance of any
Contingent Shares (each a "Shelf Registration Statement"), and shall use its
best efforts to cause such Shelf Registration Statement to become effective as
soon thereafter as practicable. The Company shall use its best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended to the extent necessary to ensure that it is available for resales of
the Registered Securities and to ensure that it conforms with the requirements
of this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, until the earlier of (i) the sale
by the Holders of all shares of Registrable Securities relating to such Shelf
Registration Statement or (ii) two years after the Closing Date or the date of
issuance of any Contingent Shares, as the case may be.
2.2 Registration Expenses. The Company shall pay or cause to be
paid all Registration Expenses in connection with the shelf registration
pursuant to this Section 2; provided that with respect to any such registration,
each Holder shall bear any transfer taxes applicable to its Registrable
Securities registered thereunder and its pro rata share of all underwriting
fees, commissions, discounts or other compensation in respect of such
Registrable Securities and provided further that in no event shall any Holder be
required to pay any internal costs of the Company.
Section 3. Piggyback Registration.
3.1 Notice and Registration. If the Company proposes, for its own
account or for the account of others, to register any of its voting securities
("Other Securities") for public sale under the Securities Act, on a form and in
a manner which would permit registration
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 77 of 91 Pages
- --------------------------------------------------------------------------------
of Registrable Securities for sale to the public under the Securities Act, it
will give prompt written notice to each Holder of its intention to do so, and
upon the written request of any Holder, delivered to the Company within 15
business days after the giving of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by each Holder, and the
intended method of disposition thereof), the Company will use its best efforts
to effect, in connection with the registration of the Other Securities, the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by each Holder, to the extent required
to permit the disposition (in accordance with the intended method or methods
thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
(a) if, at any time after giving such written notice
of its intention to register any Other Securities and
prior to the effective date of the registration statement
filed in connection with such registration, the Company
shall determine for any reason not to register the Other
Securities, the Company may, at its election, give
written notice of such determination to each Holder, and
thereupon the Company shall be relieved of its
obligations to register such Registrable Securities in
connection with the registration of such Other Securities
(but not from its obligation to pay Registration Expenses
to the extent incurred in connection therewith as
provided in Section 3.2), without prejudice, however, to
the rights, if any, of the Holders immediately to request
that such registration be effected as a registration
under Section 2;
(b) the Company will not be required to effect any
registration of Registrable Securities under this Section
3 if, and to the extent that, the underwriters (or any
managing underwriter) or the placement agent in
connection with a private placement of the Company's
securities, shall advise the Company in writing that, in
their reasonable opinion, inclusion of such number of
shares of Registrable Securities will adversely affect
the price or distribution of the securities to be offered
pursuant to such registration. Such advice shall include
a statement as to such person's opinion as to the number
of shares which may be included without adversely
affecting the price or distribution of the securities
(such total number of shares which such advice states may
be so included being the "Total Number of Includible
Securities"). The Company shall promptly furnish each
Holder with a copy of such written advice, and in such
event the number of shares which such person believes may
be sold shall first be allocated to the Company, next to
any shares proposed to be included in the registration
for the account of Neal R. Heller, Elizabeth S. Heller or
any of their Affiliates, and then the remaining number of
shares shall then be allocated among the Holders in
proportion to the number of shares of Registrable
Securities each first proposed for inclusion in the
registration.
(c) The Company shall not be required to effect any
registration of Registrable Securities under this Section
3 incidental to the registration of any of its securities
in connection with mergers, acquisitions, exchange
offers, dividend reinvestment plans, stock option or
other employee
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 78 of 91 Pages
- --------------------------------------------------------------------------------
benefit plans, any registration of its securities which
are being registered in connection with a private
offering of $2 million or less or the registration of its
securities in connection with a private offering of
$2,200,000 of convertible preferred stock in June 1997.
No registration of Registrable Securities effected under this Section 3 shall
relieve the Company of its obligation, if any, effect the registration of
Registrable Securities pursuant to Section 2.
3.2 Registration Expenses. The Company will pay all Registration
Expenses in connection with any registration pursuant to this Section 3;
provided that with respect to any such registration each Holder shall bear any
transfer taxes applicable to its Registrable Securities registered thereunder,
its pro rata share of all underwriting fees, commissions, discounts or other
compensation in respect of such Registrable Securities; and provided, further,
that in no event shall any Holder be required to pay any internal costs of the
Company.
Section 4. Registration Procedures.
4.1 Registration and Qualification.
(a) If and whenever the Company is required to use its best efforts
to effect the registration of any Registrable Securities under the Securities
Act as provided in Sections 2 and 3, the Company will promptly as is
practicable:
(i) prepare, file and use its best efforts to cause
to become effective a registration statement under the
Securities Act regarding the Registrable Securities to be
offered;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective
and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable
Securities until the earlier of (a) the expiration of two
years from the effective date thereof or (b) until such
time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of
disposition by the Holders, as set forth in such
registration statement;
(iii) shall, prior to filing any registration
statement or prospectus or any amendments or supplements
thereto (including any documents incorporated by
reference in any registration statement after the initial
filing of such registration statement) in which
Registrable Securities are included pursuant to this
Agreement, furnish to counsel for any managing
underwriter for any underwritten public offering of
Registrable Securities and to counsel engaged by the
Holders of a majority in interest of the Registrable
Securities included in such registration statement,
copies of all such documents proposed to be filed with
the SEC, which documents shall be subject to the
reasonable review of such
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 79 of 91 Pages
- --------------------------------------------------------------------------------
counsel, and, if requested by such counsel, the insertion
of material which in their judgment should be included
therein (subject, however, to the approval of counsel to
the Company). Notwithstanding the foregoing, in the case
of periodic reports of the Company which are incorporated
by reference into any registration statement in which
Registrable Securities are included pursuant to this
Agreement after the effective date of such registration
statement, the Company shall only be required to furnish
such periodic reports to counsel engaged by the Holders
of a majority in interest of the Registrable Securities
included in such registration statement, if any,
concurrently with the filing of such periodic reports;
(iv) furnish to the Holders participating in the
registration and to any underwriter of such Registrable
Securities such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in the case of the Holder or any
managing underwriter, including all exhibits), such
number of copies of the prospectus included in such
registration statement (including each preliminary
prospectus and any summary prospectus) or filed under the
Securities Act, in conformity with the requirements of
the Securities Act, such documents as may be incorporated
by reference in such registration statement, or
prospectus, and such other documents, as the Holders or
such underwriter may reasonably request;
(v) use its best efforts to register or qualify all
Registrable Securities covered by such registration
statement under such other securities or blue sky laws of
such jurisdictions as the Holders participating in the
registration or any underwriter of such Registrable
Securities shall reasonably request in writing, and do
any and all other acts and things which may be necessary
or advisable to enable the Holders participating in the
registration or any underwriter to consummate the
disposition in such jurisdictions of its Registrable
Securities covered by such registration statement, except
that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation in any such
jurisdiction, or to consent to general service of process
in any such jurisdiction;
(vi) in the case of any underwritten offering,
furnish to the Holders participating in the registration
and the underwriters, if any, addressed to them, (A) an
opinion of counsel for the Company dated the date of the
closing under the underwriting agreement relating to any
underwritten offering, in form and substance satisfactory
to such Holders, to the effect that (a) a registration
statement covering the Registrable Securities has been
filed with the Commission under the Securities Act and
has been made effective by order of the Commission, (b)
such registration statement and the prospectus contained
therein comply with all material respects with the
requirements of the Securities Act, and nothing has come
to said counsel's attention which would cause it to
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 80 of 91 Pages
- --------------------------------------------------------------------------------
believe that either such registration statement or the
prospectus contains any untrue statement of a material
fact or omits to state a material fact required to be
stated therein or necessary to make the statements
therein in light of the circumstances under which they
were made not misleading, (c) a prospectus meeting the
requirements of the Securities Act is available for
delivery, (d) no stop order has been issued by the
Commission suspending the effectiveness of such
registration statement and, to the best of counsel's
knowledge, no proceedings for the issuance of such a stop
order are threatened or contemplated, and (e) there has
been compliance with the applicable provisions of the
securities or blue sky laws of each jurisdiction in which
the Company shall be required pursuant to clause (v) of
this sentence to register or qualify such Registrable
Securities, assuming the accuracy and completeness of the
information furnished to such counsel with respect to
each filing relating to such laws, and (B) a comfort
letter signed by the independent public accountants who
have certified the Company's financial statements
included in such registration statement, with respect to
events subsequent to the date of such financial
statement, as are customarily covered in accountants'
letters, delivered to underwriters in underwritten public
offerings of securities and such other matters as the
Holders may reasonably request;
(vii) notify the Holders participating in the
registration at any time when a prospectus relating to a
registration pursuant to Section 2 or 3 is or was
required to be delivered under the Securities Act, of the
happening of any event as a result of which the
prospectus included in such registration statement, as
then in effect, includes or included an untrue statement
of a material fact or omits or omitted to state any
material fact required to be stated therein or necessary,
in the light of the circumstances then existing, to make
the statements therein not misleading, and, if necessary
in the reasonable judgment of counsel for the Company,
the Company will prepare and furnish to such Holder a
reasonable number of copies of a supplement of or an
amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary,
[in light of the circumstances then existing, to make the
statements therein not misleading; and
(viii) notify each Holder of the Registrable
Securities included in any registration statement
pursuant to this Agreement of any stop order issued or,
to the knowledge of the Company, threatened by the
Commission in connection with such registration statement
and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
(ix) if requested by the managing underwriter or
underwriters or by any Holder of the Registrable
Securities included in any Registration Statement,
subject to the approval of counsel to the Company in its
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reasonable judgment, promptly incorporate in a prospectus
supplement or post-effective amendment such information
as the managing underwriter or underwriters or such
Holder or Holders reasonably shall furnish to the Company
in writing and request to be included therein, including,
without limitation, with respect to the number of
Registrable Securities being sold by such Holder or
Holders to such underwriter or underwriters, the purchase
price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the
underwritten offering of the Registrable Securities to be
sold in such offering; and make all required filings of
such prospectus supplement or post-effective amendment as
soon as possible after being notified of the matters to
be incorporated in such prospectus supplement or
post-effective amendment;
(x) cooperate with the Holders of the Registrable
Securities covered by any registration statement pursuant
to this Agreement and the managing underwriter or
underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold under such registration
statement, in such denominations and registered in such
names as the managing underwriter or underwriters, if
any, or such Holders may request; and
(xi) use reasonable efforts to do any and all other
customary acts the Holders participating in the
registration may reasonably request and which are
customary for a registration of equity securities.
The Company may require each Holder participating in a registration to furnish
such information regarding such Holder and the distribution of such securities
as the Company may from time to time reasonably request in writing and as shall
be required by law or by the Commission in connection with any registration.
(b) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
4.1(a)(vi) hereof, each Holder shall use its best efforts to discontinue
forthwith disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until the Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
4.1(a)(vi) hereof.
4.2 Listing of Common Stock. Upon the request of the Holders
participating in a registration in connection with any public offering of the
Common Stock, the Company shall use its best efforts to effect, as promptly as
is practicable, the listing of the Common Stock on any national securities
exchange or the inclusion of the Common Stock in any automated quotations system
on or in which the Company's Common Stock shall then be listed or quoted, if the
listing of such Common Stock is then permitted under the rules of such exchange
or automated quotations system.
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4.3 Underwriting.
(a) If requested by the managing underwriter for any underwritten
offering of Registrable Securities pursuant to a registration requested
hereunder, the Company will enter into an underwriting agreement with the
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution to
the effect provided in Section 6 hereof and the provision of opinions of counsel
and accountants' letters to the effect provided in Section 4.1(a)(v) hereof.
Each Holder participating in the registration, as appropriate, shall be a party
to any such underwriting agreement and the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters, shall also be made to and for the benefit of such Holders.
(b) In the event that any registration pursuant to Section 3 shall
involve, in whole or in part, an underwritten offering, the Company may require
the Registrable Securities requested to be registered pursuant to Section 3 by
any Holder to be included in such underwriting on the same terms and conditions
as shall be applicable to the Other Securities being sold through underwriters
under such registration. In any such case, each Holder participating in the
registration shall be party to any such underwriting agreement. Such agreements
shall contain such representations, warranties and covenants by such Holder, as
appropriate, and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the effect provided in
Section 6 hereof. The representations and warranties in such underwriting
agreement by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made and for the benefit of such
Holders.
Section 5. Preparation: Reasonable Investigation.
In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company will give each Holder participating in the registration and the
underwriters, if any, and their respective counsel and accountants
(collectively, the "Inspectors"), such reasonable and customary access to its
books and records (collectively, the "Records") and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of the Holder and such underwriters or their respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
Records which the Company reasonably determines to be confidential and which it
notifies the Inspectors in writing are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary or
appropriate to avoid or correct a misstatement or omission in the registration
statement, (ii) the portion of the Records to be disclosed has otherwise become
publicly known, (iii) the information in such Records is to be used in
connection with any litigation or governmental investigation or hearing relating
to any registration statement or (iv) the release of such Records is ordered
pursuant to a subpoena or other order. Each Holder agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company.
<PAGE>
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Section 6. Indemnification and Contribution.
6.1 Indemnification By the Company. The Company agrees to indemnify
and hold harmless each Person who participates as an underwriter, each Holder
participating in a registration pursuant to this Agreement, each of their
respective officers and directors and each Person, if any, who controls any such
underwriter or such Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act as follows:
(a) against any and all loss, claim, damage and
expense whatsoever, as incurred, arising out of or caused
by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement (or
any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act,
including all documents incorporated therein by
reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or
necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
or final prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading;
(b) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent
of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any
Governmental Body commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or
omission, if such settlement is effected with the written
consent of the Company; and
(c) against any and all expense whatsoever, as
incurred (including fees and disbursements of counsel
chosen by the Holders or any underwriter), reasonably
incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any
Governmental Body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid
under clause (a) or (b) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of or caused by
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any such Holder (or any such "control" Person) expressly for use in a
registration statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto); and further provided that this indemnity
agreement does not apply to any loss, liability, claim, damage or expense
arising out of or caused by any such Holder's continued circulation, subsequent
to such Holder's receipt of the notice described in Section 4.1(a)(vi) hereof,
of a prospectus including the untrue statement of a material fact or omission of
a material fact as to which such notice was provided.
<PAGE>
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6.2 Indemnification by the Holders. Each Holder agrees with respect
to each registration pursuant to this Agreement in which such Holder
participates to indemnify and hold harmless the Company and any underwriter, and
each of their respective directors and officers (including each officer of the
Company who signed the registration statement), and each Person, if any, who
controls the Company or any underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each other Holder, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6.1 hereof, as incurred, with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
registration statement (or any amendment thereto) or any preliminary or final
prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such the Holder
(or any such "control" Person) expressly for use in the registration statement
(or any amendment thereto) or such prospectus (or any amendment or supplement
thereto).
6.3 Indemnification by Underwriter. Anything in Section 6.1 to the
contrary notwithstanding, the Company's obligation to indemnify any underwriter
pursuant to Section 6.1 in an underwritten offering (or any Person controlling
such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) shall be conditioned upon the underwriting
agreement with such underwriter containing an agreement by such underwriter to
indemnify and hold harmless the Company and the Holders and each of their
respective directors and officers (including each officer of the Company who
signed the registration statement) and each Person, if any, who controls the
Company and any Holder, within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any and all loss, liability claim,
damage and expense described in the indemnity contained in Section 6.1 hereof,
as incurred, with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the registration statement (or any amendment
thereto) or any preliminary or final prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such underwriter (or any such "control" Person) expressly for
use in the registration statement (or any amendment thereto) or such prospectus
(or any amendment or supplement thereto).
6.4 Conduct of Indemnification Proceedings. Each indemnified party
shall give prompt notice to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may, at its own expense, participate in and direct the defense of such
action.
Section 7. Transferability of Shares.
7.1 Legends. The shares of any Common Stock distributed to the
Holders pursuant to the Acquisition Agreement (the "Original Common Stock")
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 7, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each certificate representing
Registrable Securities held by the Holder shall (unless otherwise permitted by
the provisions of Section 7.2 be stamped or otherwise imprinted with a legend
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 85 of 91 Pages
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in substantially the following form (in addition to any legend required under
applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE
PROPOSED TRANSACTION WILL BE EXEMPT FROM REGISTRATION
and, in the case of those Holders listed on Schedule B hereto pursuant to
Section 9:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
PLEDGED, ASSIGNED AND MAY NOT BE SOLD OR TRANSFERRED PRIOR TO
JULY 23, 1999, EXCEPT IN ACCORDANCE WITH SECTION 9 OF THE
REGISTRATION RIGHTS AGREEMENT DATED JULY 23, 1997.
7.2 "Stop Transfer" Orders. Each Holder understands that, so long
as the legend is required to be imprinted on a certificate representing
Registrable Securities, the Company may maintain appropriate "stop transfer"
orders with respect to such Registrable Securities on its books and records and
with those to whom it may delegate registrar and transfer functions.
7.3 Compliance with Resolutions. Each Holder agrees to comply in
all respects with the provisions of this Section 7.3. Prior to any proposed
sale, assignment, transfer or pledge (a "Transfer"), of any Registrable
Securities, unless there is in effect a Registration Statement covering the
proposed Transfer, a Holder shall give written notice to the Company of such
Holder's intention to effect such Transfer and the name of the proposed
transferee. Each such notice shall describe the manner and circumstances of the
proposed Transfer in sufficient detail, and, if requested by the Company, shall
be accompanied, at the Holder's expense, by either (i) an written opinion of
legal counsel who shall be, and whose legal opinion shall be, reasonably
satisfactory to the Company addressed to the Company, to the effect that the
proposed Transfer of the Registrable Securities may be effected without
registration under the Securities Act; provided that if the proposed Transfer
would, in the opinion of such counsel, require that the Company take action
and/or execute and file with the Commission and/or deliver to the Holder or any
other person any form or document in order to establish the entitlement of the
Holder to take advantage of such method of disposition, the Company agrees
promptly to take any such action and/or execute and file and/or deliver any such
form or document, or (ii) a "no action" letter from the Commission to the effect
that the Transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the Holder of such Registrable Securities shall be entitled
to effectuate a Transfer of such Registrable Securities in accordance with the
terms of the notice delivered by the Holder to the Company. Notwithstanding the
foregoing, it is agreed that the Company will not request an opinion of counsel
for the Holder with respect to Transfers made in reliance on Rule 144 under the
Act except in unusual circumstances, the existence of which shall be determined
in good faith by the Board of Directors of the Company;
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 86 of 91 Pages
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provided, however, the Holder shall deliver to the Company (i) copies of all
forms customarily delivered or deliverable to brokers in connection with a
Transfer of securities, and (ii) a certificate of the Holder desiring to
Transfer such Registrable Securities containing such representations and
warranties to the Company as are customarily given to brokers in connection with
the Transfer of securities.
7.4 Certificates. Each certificate evidencing the Restricted
Securities with respect to which a Transfer as provided in this Section 7 has
been effected, shall bear, except if such Transfer is made pursuant to Rule 144
under the Act, the appropriate restrictive legend set forth above, except that
such certificate shall not bear such restrictive legend if in the opinion of
counsel for the Holder and the Company such legend is not required in order to
establish compliance with any provision of the Act.
7.5 Rule 144 Sales. At any time when the Holder desires to make
sales of any Registrable Securities in reliance on Rule 144 promulgated under
the Securities Act, the Company covenants and agrees that either there will be
available adequate current public information with respect to the Company as
required by paragraph (c) of said Rule 144 or the Company will use its best
efforts to make such information available without delay if such information is
not available. Without limiting the foregoing, the Company will timely file with
the Commission all reports required to be filed under Section 13 and 15(d) of
the Exchange Act and will promptly furnish to Holder so requesting a written
statement that the Company has complied with all such reporting requirements.
7.6 Assignment. Any Holder may assign his rights hereunder in
connection with any sale, assignment, transfer or pledge of Registrable
Securities provided that such assignee shall have agreed in writing,
satisfactory in form and substance to the Company and its counsel, to be bound
hereby. From and after any such assignment pursuant to this Section 7,
references herein to the Holder shall include such permitted assignee or
assignees.
Section 8. Other Registrable Rights and Registration Statements. The
Company shall not grant to any other person the right to request or demand that
the Company register under any registration statement filed under Section 2 and
3 hereof any of its equity securities unless such rights granted are subordinate
to the rights of the Holders under this Agreement.
Section 9. Restrictions on Transfer.
The Holders set forth on Schedule B hereby agree not to, directly
or indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge hypothecate or otherwise encumber or dispose of any shares of
Common Stock, including, but not limited to the Firm Shares and the Contingent
Shares, or dispose of any beneficial interest in the Company for a period of not
less than 24 months following the date hereof without the prior written consent
of at least a majority of the members of the Executive Committee or in the event
that there is no Executive Committee, at least a majority of the members of the
Board of Directors.
<PAGE>
CUSIP No. 63888P-10-9 Exhibit D Page 87 of 91 Pages
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Section 10. Miscellaneous.
10.1 Severability. If any term, provision, covenant, restriction,
part or portion of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, or is otherwise legally impossible to
perform, the remainder of the terms, provisions, covenants, restrictions, parts
and portions of this Agreement shall remain in full force and effect.
10.2 Specific Enforcement. The parties hereto acknowledge and agree
that irreparable damage would occur event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement, this being in addition to any other remedy to which they may be
entitled by law or equity.
10.3 Entire Agreement. This Agreement and the Acquisition Agreement
contain the entire understanding of the parties with respect to the matters
covered hereby and this Agreement may be amended only by an agreement in writing
executed by the parties hereto.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts by the parties hereto, each of which shall be deemed an original,
but all of which together constitute one and the same instrument.
10.5 Notices. All notices and other communications provided for
herein (including, without limitation, any waivers or consents under this
Agreement) shall be given or made by telecopy, telegraph, cable or otherwise in
writing (each communication given by any of such means to be deemed to be "in
writing" for purposes of this Agreement) and telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the address for notices
specified below or, as to any party, at such other address as shall be
designated by such party in a notice to the other. Except as otherwise provided
in this Agreement, all such communications shall be deemed to have been duly
given (i) when delivered to the telegraph or cable office or personally
delivered or, (ii) in the case of transmission by telecopy, when telecopied
(with confirmation) and mailed (with same day post-mark) certified mail, return
receipt requested or (iii) in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
if to the Company: Natural Health Trends Corp.
2001 West Pompano Beach
Pompano Beach, Florida 33064
Attn: Neal R. Heller
with a copy to: Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
Attn: Martin C. Licht, Esq.
if to any Holder, to the address of such Holder as it appears in the Records of
the Company.
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10.6 Waivers. Each party may waive in whole or in part any benefit
or right provided to it under this Agreement. No waiver by any party of any
default with respect to any provision, condition, requirement, or of any benefit
or right hereof shall be deemed to be a waiver of any other provision,
condition, requirement, benefit or right hereof; nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
10.7 Submission to Jurisdiction; Consent to Service of Process. Any
action with respect to any claim arising out of or relating to this Agreement
including any claim for specific performance arising under Section 9.2 hereof
shall be brought in the State, City and County of New York, and in furtherance
thereof (a) each of the Company and the Holders irrevocably consents and submits
to the exclusive jurisdiction of the Supreme Court of the State of New York for
the County of New York and the United State District Court for the Southern
District of New York and (b) each of the Company and the Holders irrevocably
waives any objection which it may have at any time to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum
and further irrevocably waives the right to object, with respect to such suit,
action or proceedings brought in any such court, that such court does not have
jurisdiction over such party. Each of the Company and the Holders consents that
service of process upon it in any such suit, action or proceeding may be made in
the manner set forth in Section 9.5 hereof (other than by telecopy).
10.8 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
10.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company and the Holders, and their successors
and legal representatives. No rights to the benefit of any third parties are
intended to be created by any provision of this Agreement or any rights
hereunder except to the extent contemplated by Section 7 hereof.
10.10 Governing Law. This Agreement was negotiated and delivered in
the State of New York. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such state.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officer as of the date set
forth at the head of this Registration Rights Agreement.
NATURAL HEALTH TRENDS CORP.
By:________________________________________
Name: Neal R. Heller
Title: President
GLOBAL HEALTH ALTERNATIVES, INC.
By:________________________________________
Name: Sir Brian Wolfson
Title: Chairman
THE STOCKHOLDERS SET FORTH ON
SCHEDULE A
By:________________________________________
Name: Robert C. Bruce
Attorney-in-Fact
<PAGE>
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SCHEDULE A
Azure Limited Partnership I
Capital Development S.A.
Cosmo Finance & Investments Services S.A.
William Nelson
Dr. Carl F. Berner
Sir Tom Farmer
Alfred S. Ross
Golden Union International S.A.
N.K. Verwaltungs Inc.
N. Foss & Co. A/S
Benjamin B. Tregoe Revocable Trust (u/a/d 7/20/79)
Benjamin B. Tregoe
Didgemere Consultants Limited
Z & M Capital Corporation
Robert A. Seibel
International Marketing Group Ltd.
Robert E. Cleaves, IV
Stephen W. Batzell
Thomas P. Pinansky
John M. Eldredge
H. Newcomb Eldredge
Robert C. Bruce
Virginia M. King
Clarissa Rowe
Arthur B. Page
Douglas M. Costle and Elizabeth R. Costle (Jt Ten)
Kimball C. Chen
Westminster Associates
Sir Peter Thompson
Dr. Stuart Ungar
Dr. Bradford S. Weeks
Complimentary Medical Associates, Inc.
Patrick Killorin
Kevin Underwood
Joe Grace
David Cohen
H. Edward Troy
Mark Colosi
William Deehan
Alexandra W. Hopkins
Carol B.A. Lee
<PAGE>
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SCHEDULE B
Azure Limited Partnership I
Capital Development S.A.
Robert C. Bruce
John M. Eldredge
Patrick Killorin
Kevin Underwood
Joe Grace
<PAGE>
