Agreement And Plan of Share Exchange

Exhibit 10.1


AGREEMENT AND PLAN OF SHARE EXCHANGE


BY AND AMONG


CARING PRODUCTS INTERNATIONAL, INC.,


USDR GLOBAL AEROSPACE, LTD. AND


THE SHAREHOLDERS OF USDR GLOBAL AEROSPACE, LTD.


Dated as of May 15, 2002


AGREEMENT AND PLAN OF SHARE EXCHANGE


AGREEMENT (the "Agreement"), dated as of May 15, 2002, by and among Caring Products International, Inc., a corporation existing under the laws of Delaware (the "CPI"), USDR Global Aerospace, Ltd., a corporation existing under the laws of Delaware (the "Company"), and the shareholders of the Company, all of whose names are listed on the signature pages hereof (collectively the "Shareholders").


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, the Shareholders own of record and beneficially an aggregate of 5,000,000 shares (the "Shares") of the Company's common stock, par value $0.001 per share (the "Company Common Stock"), which Shares constitute all of the issued and outstanding shares of all classes of capital stock of the Company; and


WHEREAS, the Company owns or will own prior to the consummation of the transactions contemplated hereunder certain intellectual property relating to a proprietary cockpit security door and the Company intends to exploit such intellectual property by engaging in the manufacture and sale of such door (the "Business"); and


WHEREAS, CPI, a reporting company under the Exchange Act with shares quoted on the OTC Electronic Bulletin Board, has conducted no business since June 1999 (other than that associated with the transaction described herein and with seeking other potential business opportunities); and


WHEREAS, the parties to this Agreement intend to reorganize both CPI and the Company as provided under Section 368(a)(1)(B) of the Code by an exchange of shares of voting common stock pursuant to the following plan (the "Plan"):


PLAN OF REORGANIZATION. It is intended that the terms and conditions of this Agreement comply in all respects with Section 368(a)(1)(B) of the Code and the regulations corresponding thereto, so that the reorganization contemplated hereby shall qualify as a tax free reorganization under the Code. Accordingly, it is the intention of the parties hereto that, as a result of this Agreement, the transactions contemplated hereby shall be accomplished solely in exchange for the voting common stock of each of CPI and the Company and that no gain or loss shall be recognized by the Shareholders or by CPI who are each transferring or issuing their shares of common stock solely in exchange for receiving the common stock of the other; and


WHEREAS, pursuant to the Plan, the Shareholders are desirous of exchanging the Shares for shares of CPI's voting common stock, par value $.001 per share (the "CPI Common Stock), on the basis of 4 shares of CPI Common Stock for each share of Company Common Stock (the ratio of 4 shares of CPI Common Stock for each share of Company Common Stock is hereinafter referred to as the "Exchange Ratio"). The aggregate shares of CPI Common Stock to be issued to the Shareholders is hereinafter collectively referred to as the "Exchange Shares"; and


WHEREAS, certain terms used in this Agreement are defined in Section 10.1.


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NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:


ARTICLE I
EXCHANGE OF SHARES


1.1 Exchange of Shares.
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At the Closing, each of the Shareholders shall transfer, convey and deliver to CPI good and marketable title to that portion of the Shares to be exchanged by such Shareholder as set forth opposite such Shareholder's name on Annex A hereto, free and clear of all liens, claims, debts, obligations or other - ----- encumbrances, except such restrictions as are imposed by Federal and state securities laws; and CPI shall transfer, convey and deliver to each Shareholder good and marketable title to such Shareholder's proportionate share of the Exchange Shares, free and clear of all liens, claims debts, obligations or other encumbrances, except such restrictions as are imposed by Federal or state securities laws. The exchange of voting shares as herein provided shall be the sole consideration for the acquisition of the Shares.


1.2 Restrictions on Transfer. Neither the Exchange Shares nor the
------------------------ Shares to be exchanged as provided in Section 1.1 are being registered under the Securities Act and are to be exchanged hereunder pursuant to an exemption that requires that the further transfer of such shares be restricted under the Securities Act. Each of CPI and the Shareholders agree to deliver to the other at or before the Closing an investment letter acknowledging the foregoing and agreeing to comply with the requirements of such exemption. In order to further evidence such restriction on transferability, each recipient of shares pursuant to this Agreement hereby agrees to the imposition of a customary restrictive legend on the face or back of each certificate representing the shares to be exchanged.


1.3 Delivery of Shares. Subject to the terms and conditions hereof, at
------------------ the Closing (a) the Shareholders shall transfer to CPI the Shares by delivering the stock certificates evidencing the Shares, accompanied by duly endorsed stock powers, with signatures medallion guaranteed, in form and substance satisfactory to CPI, permitting the transfer of the Shares to CPI; and (b) CPI shall deliver to each Shareholder a stock certificate(s) registered in the name of such Shareholder representing his, her or its share of the Exchange Shares as set forth on Annex A hereto
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1.4 Supplemental Action. If at any time after the Closing, CPI or the
------------------- Shareholders shall determine that any further conveyances, agreements, documents, instruments, and assurances or any further action is necessary or desirable to carry out the provisions of this Article I, CPI or the Shareholders, as the case may be, shall execute and deliver any and all proper conveyances, agreements, documents, instruments, and assurances and perform all necessary or proper acts to carry out the provisions of this Article I.


ARTICLE II
CLOSING; CLOSING DATE


Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof by the party entitled to waive that condition), the exchange of the Shares for the Exchange


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Shares provided for in Section 1.1 hereof (the "Closing") shall take place at the offices of Brown Rudnick Berlack Israels LLP, 120 West 45/th/ Street, New York, NY 10036 (or at such other place as the parties may designate in writing) at 9:00 a.m. on such date as the Shareholders and CPI shall mutually agree, but in no event later than May 17, 2002. The date on which the Closing shall be held is referred to in this Agreement as the "Closing Date".


ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The Company hereby represents and warrants to CPI that:


3.1 Organization and Good Standing.
------------------------------


The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on the Business as now conducted. The Company is duly qualified or authorized to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified would not have a Material Adverse Effect.


3.2 Authorization of Agreement.
--------------------------


The Company has all requisite power, authority and legal capacity to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by the Company in connection with the consummation of the transactions contemplated by this Agreement (such other agreements, documents, instruments and certificates are hereinafter collectively referred to as the "Company Documents"), and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of the Company Documents when so executed and delivered will constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms.


3.3 Capitalization.


(a) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock, of which only the Shares are issued and outstanding. All of the Shares were duly authorized for issuance and are validly issued, fully paid and non-assessable.


(b) There is no existing option, warrant, call, right, commitment or other agreement of any character to which the Company is a party requiring, and there are no securities of the Company outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional shares of capital stock or other equity securities of the Company or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock or other equity securities of the Company. The Company is not a party to any voting trust or other voting


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agreement with respect to any of the Shares or to any agreement relating to the issuance, sale, redemption, transfer or other disposition of the capital stock of the Company.


3.4 Subsidiaries.
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The Company does not, directly or indirectly, own any shares of stock or other equity interest (including any form of profit participation) in, has not made any investment in, and does not control or have any proprietary interest in, any corporation, partnership, joint venture or other business association or entity and has no agreement or obligation to acquire any such stock or interest.


3.5 Corporate Records.
-----------------


(a) The Company has delivered to CPI true, correct and complete copies of the certificate of incorporation and by-laws or comparable organizational documents of the Company.


(b) The minute books of the Company previously made available to CPI contain complete and accurate records of all meetings and accurately reflect all other corporate action of the stockholders and board of directors (including committees thereof) of the Company. The stock certificate books and stock transfer ledgers of the Company previously made available to CPI are true, correct and complete.


3.6 Conflicts; Consents of Third Parties.
------------------------------------


(a) None of the execution and delivery of this Agreement or the Company Documents, the consummation of the transactions contemplated hereby, or compliance by the Company with any of the provisions hereof or thereof will (i) conflict with, or result in the breach of, any provision of the certificate of incorporation or by-laws or comparable organizational documents of the Company; (ii) conflict with, violate, result in the breach or termination of, or constitute a default under any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Company is a party or by which any of its properties or assets is bound; (iii) violate any statute, rule, regulation, order or decree of any governmental body or authority by which the Company is bound; or (iv) result in the creation of any Lien upon the properties or assets of the Company except, in case of clauses (ii), (iii) and (iv), for such violations, breaches or defaults as would not, individually or in the aggregate, have a Material Adverse Effect.


(b) No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of the Company in connection with the execution and delivery of this Agreement or the Company Documents, or the compliance by the Company with any of the provisions hereof or thereof.


3.7 Financial Statements; Financial Matters.
---------------------------------------


(a) Annexed hereto as Schedule 3.7 (a) is the unaudited balance
---------------- sheet of the Company as at May 9, 2002. Such unaudited balance sheet is sometimes referred to herein as the "Company Balance Sheet" and May 9, 2002, is sometimes referred to herein as the "Company Balance Sheet Date".


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(b) Following the Closing, the Company will furnish to CPI such audited and unaudited financial statements of the Company and its Subsidiaries as shall be required to permit CPI to comply in a timely manner with its obligations as a reporting issuer under the Exchange Act, including, without limitation, such financial statements (excluding pro forma combined financial statements with CPI) that must be included in the Current Report on Form 8-K required to be filed by CPI following the Closing under applicable SEC rules and regulations (collectively, the "Required Company Financials").


(c) The Company Balance Sheet is (i) in accordance with the books and records of the Company, (ii) complete and correct in all material respects, (iii) prepared in accordance with GAAP (subject to normal year-end adjustments) and in conformity with the practices consistently applied by the Company without modification of the accounting principles used in the preparation thereof, and (iv) present fairly the consolidated financial position, results of operations and cash flows of the Company as at the dates and for the periods indicated.


3.8 No Undisclosed Liabilities.
--------------------------


The Company has no indebtedness, obligations or liabilities of any kind (whether accrued, absolute, contingent or otherwise, and whether due or to become due) that would have been required to be reflected in, reserved against or otherwise described on the Company Balance Sheet in accordance with GAAP which was not fully reflected in, reserved against or otherwise described in the Company Balance Sheet except for indebtedness, obligations and liabilities incurred in the ordinary course of business consistent with past practice since the Company Balance Sheet Date and which in the aggregate do not exceed $10,000 as of the date hereof and will not exceed $10,000 as of the Closing Date.


3.9 Absence of Certain Developments.
-------------------------------


Since the Company Balance Sheet Date:


(i) there has not been any Material Adverse Change nor has there occurred any event which is reasonably likely to result in a Material Adverse Change;


(ii) there has not been any damage, destruction or loss, whether or not covered by insurance, with respect to the property and assets of the Company having a replacement cost of more than $10,000 for any single loss or $10,000 for all such losses;


(iii) there has not been any declaration, setting aside or payment of any dividend or other distribution in respect of any shares of capital stock of the Company or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, or other ownership interest in, the Company;


(iv) the Company has not, and never has since its inception, had any employees;


(v) there has not been any change by the Company in accounting or tax reporting principles, methods or policies;


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(vi) the Company has not entered into any transaction or Contract or conducted its business other than in the ordinary course consistent with past practice;


(vii) the Company has not failed to promptly pay and discharge current liabilities except where disputed in good faith by appropriate proceedings;


(viii) the Company has not made any loans, advances or capital contributions to, or investments in, any Person or paid any fees or expenses to any Shareholder or any Affiliate of any Shareholder;


(ix) the Company has not mortgaged, pledged or subjected to any Lien any of its assets, or acquired any assets or sold, assigned, transferred, conveyed, leased or otherwise disposed of any assets of the Company, except for assets acquired or sold, assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary course of business consistent with past practice;


(x) the Company has not discharged or satisfied any Lien, or paid any obligation or liability (fixed or contingent), except in the ordinary course of business consistent with past practice and which, in the aggregate, would not be material to the Company;


(xi) the Company has not canceled or compromised any debt or claim or amended, canceled, terminated, relinquished, waived or released any Contract or right except in the ordinary course of business consistent with past practice and which, in the aggregate, would not be material to the Company;


(xii) the Company has not made or committed to make any capital expenditures or capital additions or betterments in excess of $10,000 individually or $10,000 in the aggregate;


(xiii) the Company has not instituted or settled any material Legal Proceeding; and


(xiv) the Company has not agreed to do anything set forth in this Section 3.9.


3.10 Taxes.
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(a) (i) The company has not filed, and has not been required to file, any Tax Returns since its incorporation; (ii) adequate reserves or accruals for Taxes have been provided with respect to any period for which Tax Returns have not yet been filed or for which Taxes are not yet due and owing; and (iii) the Company has not executed or filed with the IRS or any other taxing authority any agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including, but not limited to, any applicable statute of limitation), and no power of attorney with respect to any Tax matter is currently in force.


(b) There are no liens as a result of any unpaid Taxes upon any of the assets of the Company.


3.11 Real Property.
-------------


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The Company does not own in fee any real property or interests in real property and does not possess any leasehold interest in any real property.


3.12 Tangible Personal Property.
--------------------------


The Company does not possess any leasehold interest in any personal property.


3.13 Intellectual Property.
---------------------


"Intellectual Property" shall mean all rights in, arising out of, or associated with any or all of the following: (i) all United States and foreign patents and applications and all issues, reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets (whether currently existing or in development), proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) all trade names, logos, common law trademarks and service marks; trademark and service mark registrations and applications therefor throughout the world; and (iv) all computer software, development tools, files, records and data, all media on which any of the foregoing is recorded and all documentation related to any of the foregoing throughout the world.


Company Intellectual Property" shall mean the Intellectual Property that will be owned by or exclusively licensed to (any such license to be perpetual and provide for a royalty of 3.5% of sales until the Company has paid a total of $15,000,000 in royalties and 1% of sales thereafter until the patent rights acquired by the Company prior to the Closing Date have expired) the Company on or prior to the Closing that will be necessary to the operation of the Company, including the design, manufacture, sale and use of the products or performance of the services of the Company, as is reasonably anticipated to be operated in the future, including, without limitation, pursuant to the Lufthansa MOU.


(a) Schedule 3.13 (a) annexed hereto sets forth all of the
------------- United States and foreign patents, patent applications (including provisional applications) to be acquired and owned by the Company on or prior to the Closing, all of the foregoing, the "Registered Intellectual Property."


(b) There are no proceedings or actions before any court, tribunal (including the United States Patent Office ("PTO") or equivalent authority anywhere in the world) related to any of the Registered Intellectual Property.


(c) The Company, or to the Company's knowledge, its predecessor in interest, has not committed any fraudulent act in connection with the application for any patent applied for by the Company's predecessor in interest and to be acquired by the Company prior to the Closing.


(d) No person or entity will have any rights to use any of the Company Intellectual Property following the Closing; and the Company has not granted, and will not grant prior to the Closing, to any person or entity, nor authorized any person or entity to retain, any rights in the Company Intellectual Property.


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(e) On the Closing Date, the Company will own and have good, valid and exclusive title to, and have the unrestricted right to license and use (subject to restrictions on assignment and licensing without the consent of Aerospace, not to be unreasonably withheld or delayed), each item of the Company Intellectual Property, including all Registered Intellectual Property set forth on Schedule 3.13 (a), free and clear of any Lien.


(f) To the Company's knowledge, the operation of the Business of the Company, as such Business is reasonably contemplated to be conducted, including the Company design, development, manufacture, marketing and sale of the products or services of the Company will not infringe or misappropriate the Intellectual Property of any other person or entity.


(g) The Company has not received, and to the knowledge of the Company its predecessor in interest with respect to the Company Intellectual Property has not received, any written notice from any person or entity that the design, development, manufacture and sale of the Company's products and provision of services, infringes or misappropriates the Intellectual Property of any person or entity.


(h) To the Company's knowledge, on the Closing Date, the Company will own or have the right to use all Company Intellectual Property.


(i) To the Company's knowledge, no person or entity has or is infringing or misappropriating any Company Intellectual Property.


3.14 Material Contracts.
------------------


Schedule 3.14 lists all of the following Contracts to which
------------- the Company is a party or by which it is bound (collectively, the "Material Contracts"): (i) Contracts with any of the Shareholders or any current officer or director of the Company; (ii) Contracts with any labor union or association representing any employee of the Company; (iii) Contracts pursuant to which any party is required to purchase or sell a stated portion of its requirements or output from or to another party; (iv) Contracts for the sale of any of the assets of the Company other than in the ordinary course of business or for the grant to any person of any preferential rights to purchase any of its assets; (v) joint venture agreements; (vi) Contracts containing covenants of the Company not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with the Company in any line of business or in any geographical area; (vii) Contracts relating to the acquisition by the Company of any operating business or the capital stock of any other person; (viii) Contracts relating to the borrowing of money; or (ix) any other Contracts which involve the expenditure of more than $10,000 in the aggregate or require performance by any party more than one year from the date hereof. There have been made available to CPI, its affiliates and their representatives true and complete copies of all of the Material Contracts. All of the Material Contracts and other agreements are in full force and effect and are the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Except as set forth on Schedule 3.14, the
------------- Company is not in default in any material respect under any Material


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Contracts, nor, to the knowledge of the Company, is any other party to any Material Contract in default thereunder in any material respect.


3.15 Employee Benefits.
-----------------


The Company has never had or been a party or contributed to any "employee benefit plans", as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any other pension plans or employee benefit arrangements, programs or payroll practice.


3.16 Labor.
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(a) The Company is not a party to any labor or collective bargaining agreement and there are no labor or collective bargaining agreements which pertain to employees of the Company.


(b) No labor organization has made a pending demand for recognition, and there are no representation proceedings or petitions seeking a representation proc ...