AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange (the "Agreement"), dated as
of the 30th day of April, 1998, by and between Sportsman's Wholesale Company, a
Nevada corporation ("SPORTSMAN") AND Cap's Sporting Goods Wholesale, Inc., a
Utah corporation ("CAP'S") and the shareholders of CAP'S ("Shareholders"), who
execute this Agreement and the Investment Letter as set forth in Exhibit A of
this Agreement, with reference to the following:
A. SPORTSMAN is a privately held corporation organized under the
laws of Nevada on March 6, 1996. SPORTSMAN has authorized
capital stock of 55,000,000 shares, $.0001 par value,
50,000,000 Common Stock and 5,000,000 Preferred Stock. There
are 500,000 common shares outstanding.
B. CAP'S is a privately held corporation organized under the laws
of the State of Utah, on February 3, 1998. CAP'S has
authorized capital stock of 55,000,000 shares, including
50,000,000 shares of common stock, $0.001 par value and
5,000,000 shares of preferred stock. There are 1,000,000
common shares outstanding.
C. The respective Boards of Directors of SPORTSMAN and CAP'S have
deemed it advisable and in the best interest of SPORTSMAN and
CAP'S that CAP'S be acquired by SPORTSMAN, pursuant to the
terms and conditions set forth in this Agreement.
D. SPORTSMAN and CAP'S propose to enter into this Agreement which
provides among other things that all of the outstanding shares
of CAP'S be acquired by SPORTSMAN, in exchange for shares of
SPORTSMAN and such items as are more fully described in the
Agreement.
E. The parties desire the transaction to qualify as a tax-free
organization under Section 368 (a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.1 At the Closing, a total of 1,000,000 common shares, which
represents all of the outstanding shares of CAP'S, shall be
acquired by SPORTSMAN in exchange for 1,000,000 shares of
Sportsman common stock which shall be issued to the CAP'S
shareholders as set forth on the signature page of this
Agreement.
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1.2 At the Closing, the CAP'S shareholder will deliver
certificates for the outstanding shares of CAP'S, duly
endorsed so as to make SPORTSMAN the sole holder thereof, free
and clear of all claims and encumbrances and SPORTSMAN shall
deliver a transmittal letter directed to the transfer agent of
SPORTSMAN directing the issuance of shares to the shareholder
of CAP'S set forth on the signature page of this Agreement.
1.3 Following the Share Exchange, there will be a total of
1,500,000 shares of common stock, $.001 par value issued and
outstanding in SPORTSMAN.
ARTICLE 2
THE CLOSING
2.1 The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place in the offices of
Ray, Xxxxxxx & Xxxxxxx, 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
XX 00000-0000 at 10:00 am, on May 22, 1998, or at such other
place or date and time as may be agreed to in writing by the
parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SPORTSMAN'S WHOLESALE COMPANY
SPORTSMAN and its officers and directors hereby represent and warrant
to CAP'S as follows:
3.1 SPORTSMAN shall deliver to CAP'S, on or within a reasonable
time after Closing, each of the following:
(a) Financial Statements. Financial statements of
SPORTSMAN, including, but not limited to, balance
sheet and income statement as of December 31, 1997.
(Schedule A)
(b) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether
of real or personal property) and each contract,
promissory note, mortgage, license, franchise, or
other written agreement to which SPORTSMAN is a party
which involves or can reasonably be expected to
involve aggregate future payments or receipts by
SPORTSMAN (whether by the terms of such lease,
contract, promissory note, license, franchise or
other written agreement or as a result of a guarantee
of the payment of or indemnity against the failure to
pay same) of $1,000.00 or more annually during the
twelve (12) months period ended December 31, 1997, or
any consecutive 12-month period thereafter, except
any of said instruments which terminate or are
cancelable without penalty during such 12-month
period. (Schedule B)
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(c) Loan Agreements. Complete and accurate copies of all
loan agreements and other documents with respect to
obligations of SPORTSMAN for the repayment of
borrowed money. (Schedule C)
(d) Articles and Bylaws. Complete and accurate copies of
the Articles of Incorporation and Bylaws of SPORTSMAN
together with all amendments thereto to the date
hereof. (Schedule D)
(e) Shareholders. A complete list of all persons or
entities holding capital stock of SPORTSMAN or any
rights to subscribe for, acquire, or receive shares
of the capital stock of SPORTSMAN (whether warrants,
calls, options, or conversion rights), including
copies of all stock option plans whether qualified or
nonqualified, and other similar agreements.
(Schedule E)
(f) Officers and Directors. A complete and current list
of all officers and Directors of SPORTSMAN. (Schedule
F)
(g) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current
salary rate for each present employee of SPORTSMAN
who received $1,000.00 or more in aggregate
compensation from SPORTSMAN whether in salary, bonus
of otherwise, during the year 1997, or who is
presently scheduled to received from SPORTSMAN salary
in excess of $1,000.00 during the year ending
December 31, 1998, including in each case the amount
of compensation received or scheduled to be received,
and a schedule of the hourly rates of all other
employees listed according to departments (Schedule
G)
(h) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal
administrative, arbitration or other such proceedings
or investigations (including without limitations
unfair labor practice matters, labor organization
activities, environmental matters and civil rights
violations) pending or, to the knowledge of SPORTSMAN
threatened, which may materially and adversely affect
SPORTSMAN.
(Schedule H)
(i) Tax Returns. Accurate copies of all federal and
state tax returns for SPORTSMAN for the last fiscal
year. (Schedule I)
(j) Jurisdictions Where Qualified. A list of all
jurisdictions wherein SPORTSMAN is qualified to do
business and is in good standing. (Schedule J)
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(k) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant
contracts which SPORTSMAN may have. (Schedule K)
3.2 Organization, Standing and Power. SPORTSMAN is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada with all requisite corporate
power to own or lease its properties and carry on its
businesses as is now being conducted.
3.3 Qualification. SPORTSMAN is duly qualified and is licensed as
a foreign corporation authorized to do business in each
jurisdiction wherein it conducts its business operations. Such
jurisdictions, which are the only jurisdictions in which
SPORTSMAN is duly qualified and licensed as a foreign
corporation, are shown in Schedule J.
3.4 Capitalization of SPORTSMAN. The authorized capital stock of
SPORTSMAN consists of 50,000,000 shares of Common Stock, $.001
par value, and 5,000,000 shares of Preferred Stock, $.001 par
value, of which the only shares issued and outstanding are
1,500,000 shares of common stock issued to the shareholders
listed on Schedule E, which shares were duly authorized,
validly issued and fully paid and nonassessable. There are no
preemptive rights with respect to the SPORTSMAN stock.
3.5 Authority. The execution delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action, including
but not limited to duly and validly authorized action and
approval by the Board of Directors, on the part of SPORTSMAN.
This Agreement constitutes the valid and binding obligation of
SPORTSMAN enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the
availability of the remedy of specific performance. This
Agreement has been duly executed by SPORTSMAN and the
execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement shall not
result in any breach of any terms or provisions of SPORTSMAN
Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which SPORTSMAN is a party or is
bound.
3.6 Absence of Undisclosed Liabilities. SPORTSMAN has no material
liabilities of any nature, whether fixed, absolute, contingent
or accrued, which were not reflected on the financial
statements set forth in Schedule A nor otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached
hereto.
3.7 Absence of Changes. Since December 31, 1997, there has not
been any material adverse change in the condition (financial
or otherwise), assets, liabilities, earnings or business of
SPORTSMAN, except for changes resulting from completion of
transactions described in Section 5.1.
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3.8 Tax Matters. All taxes and other assessments and levies which
SPORTSMAN is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to
the proper government authorities or are held by SPORTSMAN in
separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and
employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes for
any periods and further, the representations and warranties as
to absence of undisclosed liabilities contained in Section 3.6
includes any and all tax liabilities of whatsoever kind or
nature (including, without limitation, all federal, state,
local and foreign income, profit, franchise, sales, use and
property taxes) due or to become due, incurred in respect of
or measured by SPORTSMAN income or business prior to the
Closing Date.
3.9 Options, Warrants, Etc. There are no outstanding options,
warrants, calls, commitments or agreements of any character to
which SPORTSMAN or its shareholders are a party or by which
SPORTSMAN or its shareholders are bound calling for the
issuance of shares of capital stock of SPORTSMAN or securities
representing the right to purchase or receive any such capital
stock of SPORTSMAN.
3.10 Title to Assets. Except for liens set forth in Schedule C,
SPORTSMAN is the sole unconditional owner of, with good and
marketable title to, all assets listed int he schedules as
owned by it and all other property and assets are free and
clear of any mortgages, lines, pledges, charges or
encumbrances of nay nature whatsoever.
3.11 Agreements in Force and Effect. All material contracts,
agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which
SPORTSMAN is a party are valid and in full force and effect on
the date hereof and SPORTSMAN has not breached any material
provision of, and is not in default in any material respect
under the terms of any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise
or similar instrument which breach or default would have a
material adverse effect upon the business, operations or
financial condition of SPORTSMAN.
3.12 Legal Proceedings, Etc. There are no civil, criminal,
administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either
SPORTSMAN or the shareholders thereof threatened, in which,
individually or in the aggregate, an adverse determination
would materially and adversely affect the assets, properties,
business or income of SPORTSMAN. SPORTSMAN has substantially
complied with, and is not in default in any material respect
under, any laws, ordinances, requirements, regulations or
orders applicable to its businesses.
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3.13 Governmental Regulation. To the knowledge of SPORTSMAN, the
company is not in violation of or in default with respect to
any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission,
board, bureau, agency or instrumentality, or delinquent with
respect to any report required to be filed with any
governmental commission, board, bureau, agency or
instrumentality which violation or default could have a
material adverse effect upon the business, operations or
financial condition of SPORTSMAN.
3.14 Accuracy of Information. No representation or warranty by
SPORTSMAN contained int his Agreement and no statement
contained in any certificate or other instrument delivered or
to be delivered to CAP'S pursuant hereto or in connection with
the transaction contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the
statement contained herein or therein not misleading.
3.15 Subsidiaries. SPORTSMAN does not currently have any
subsidiaries or own capital stock representing ten percent
(10%) or more of the issued and outstanding stock of any other
corporation.
3.16 Consents. No consent or approval of, or registration,
qualification or filing with any governmental authority or
other person is required to be obtained or accomplished by
SPORTSMAN or any shareholder thereof in connection with the
consummation of the transactions contemplated hereby.
3.17 Improper Payments. Neither SPORTSMAN, nor any person acting on
behalf of SPORTSMAN has made any payment or otherwise
transmitted anything of value, directly or indirectly, to (a)
any official or any government or agency or political
subdivision there of for the purpose of influencing any
decision affecting the business of SPORTSMAN, (b) any
customer, supplier or competitor of SPORTSMAN or employee of
such customer, supplier or competitor, for the purpose of
obtaining, retailing or directing business for SPORTSMAN, or
(c) any political party or any candidate for elective
political office nor has any fund or other asset of SPORTSMAN
been maintained that was not fully and accurately recorded on
the books or account of SPORTSMAN.
3.18 Copies of Documents. SPORTSMAN has made available for
inspection and copying to CAP'S and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with
any governmental agencies which are material to the terms and
conditions contained in this Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
CAP'S WHOLESALE SPORTING GOODS, INC.
CAP'S and its officers and directors hereby represent and warrant to
SPORTSMAN as follows:
4.1 CAP'S shall deliver to SPORTSMAN, on or within a reasonable
time after Closing, each of the following:
(a) Financial Statements. Financial statements of CAP'S,
including, but not limited to, balance sheet and
income statement as of December 31, 1997. (Schedule
A)
(b) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether
of real or personal property) and each contract,
promissory note, mortgage, license, franchise, or
other written agreement to which CAP'S is a party
which involves or can reasonably be expected to
involve aggregate future payments or receipts by
CAP'S (whether by the terms of such lease, contract,
promissory note, license, franchise or other written
agreement or as a result of a guarantee of the
payment of or indemnity against the failure to pay
same) of $1,000.00 or more annually during the twelve
(12) months period ended December 31, 1997, or any
consecutive 12-month period thereafter, except any of
said instruments which terminate or are cancelable
without penalty during such 12-month period.
(Schedule B)
(c) Loan Agreements. Complete and accurate copies of all
loan agreements and other documents with respect to
obligations of CAP'S for the repayment of borrowed
money. (Schedule CC)
(d) Articles and Bylaws. Complete and accurate copies
of the Articles of Incorporation and Bylaws of CAP'S
together with all amendments thereto to the date
hereof. (Schedule DD)
(e) Shareholders. A complete list of all persons or
entities holding capital stock of CAP'S or any rights
to subscribe for, acquire, or receive shares of the
capital stock of CAP'S (whether warrants, calls,
options, or conversion rights), including copies of
all stock option plans whether qualified or
nonqualified, and other similar agreements. (Schedule
EE)
(f) Officers and Directors. A complete and current list
of all officers and Directors of CAP'S. (Schedule FF)
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(g) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current
salary rate for each present employee of CAP'S who
received $1,000.00 or more in aggregate compensation
from SPORTSMAN whether in salary, bonus of otherwise,
during the year 1997, or who is presently scheduled
to received from CAP'S salary in excess of $1,000.00
during the year ending December 31, 1998, including
in each case the amount of compensation received or
scheduled to be received, and a schedule of the
hourly rates of all other employees listed according
to departments (Schedule GG)
(h) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal
administrative, arbitration or other such proceedings
or investigations (including without limitations
unfair labor practice matters, labor organization
activities, environmental matters and civil rights
violations) pending or, to the knowledge of CAP'S
threatened, which may materially and adversely affect
CAP'S. (Schedule HH)
(i) Tax Returns. Accurate copies of all federal and
state tax returns for CAP'S for the last fiscal year.
(Schedule II)
(j) Jurisdictions Where Qualified. A list of all
jurisdictions wherein CAP'S is qualified to do
business and is in good standing. (Schedule JJ)
(k) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant
contracts which CAP'S may have. (Schedule KK)
4.2 Organization, Standing and Power. CAP'S is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Utah with all requisite corporate power
to own or lease its properties and carry on its businesses as
is now being conducted.
4.3 Qualification. CAP'S is duly qualified and is licensed as a
foreign corporation authorized to do business in each
jurisdiction wherein it conducts its business operations. Such
jurisdictions, which are the only jurisdictions in which CAP'S
is duly qualified and licensed as a foreign corporation, are
shown in (Schedule JJ).
4.4 Capitalization of CAP'S. The authorized capital stock of CAP'S
consists of 55,000,000 shares of Capital Stock, 50,000,000
which are Common Stock, par value $0.001 and 5,000,000 of
which are preferred stock, of which the only shares issued and
outstanding are 1,000,000 shares of Common Stock issued to the
shareholder listed on Schedule EE, which shares were duly
authorized, validly issued and fully paid and nonassessable.
There are no preemptive rights with respect to the CAP'S
stock.
8
4.5 Authority. The execution delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action, including
but not limited to duly and validly authorized action and
approval by the Board of Directors, on the part of CAP'S. This
Agreement constitutes the valid and binding obligation of
CAP'S enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the
availability of the remedy of specific performance. This
Agreement has been duly executed by CAP'S and the execution
and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall not result
in any breach of any terms or provisions of CAP'S Articles of
Incorporation or Bylaws or of any other agreement, court order
or instrument to which CAP'S is a party or is bound.
4.6 Absence of Undisclosed Liabilities. CAP'S has no material
liabilities of any nature, whether fixed, absolute, contingent
or accrued, which were not reflected on the financial
statements set forth in Schedule AA nor otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached
hereto.
4.7 Absence of Changes. Since December 31, 1997, there has not
been any material adverse change in the condition (financial
or otherwise), assets, liabilities, earnings or business of
CAP'S, except for changes resulting from completion of
transactions described in Section 5.1.
4.8 Tax Matters. All taxes and other assessments and levies which
CAP'S is required by law to withhold or to collect have been
duly withheld and collected, and have been paid over to the
proper government authorities or are held by CAP'S in separate
bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and
employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes for
any periods and further, the representations and warranties as
to absence of undisclosed liabilities contained in Section 4.6
includes any and all tax liabilities of whatsoever kind or
nature (including, without limitation, all federal, state,
local and foreign income, profit, franchise, sales, use and
property taxes) due or to become due, incurred in respect of
or measured by CAP'S income or business prior to the Closing
Date.
4.9 Options, Warrants, Etc. There are no outstanding options,
warrants, calls, commitments or agreements of any character to
which CAP'S or its shareholders are a party or by which CAP'S
or its shareholders are bound calling for the issuance of
shares of capital stock of CAP'S or securities representing
the right to purchase or receive any such capital stock of
CAP'S.
9
4.10 Title to Assets. Except for liens set forth in Schedule CC,
CAP'S is the sole unconditional owner of, with good and
marketable title to, all assets listed int he schedules as
owned by it and all other property and assets are free and
clear of any mortgages, lines, pledges, charges or
encumbrances of nay nature whatsoever.
4.11 Agreements in Force and Effect. All material contracts,
agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which
CAP'S is a party are valid and in full force and effect on the
date hereof and CAP'S has not breached any material provision
of, and is not in default in any material respect under the
terms of any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material
adverse effect upon the business, operations or financial
condition of CAP'S.
4.12 Legal Proceedings, Etc. There are no civil, criminal,
administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either CAP'S or
the shareholders thereof threatened, in which, individually or
in the aggregate, an adverse determination would materially
and adversely affect the assets, properties, business or
income of CAP'S. CAP'S has substantially complied with, and is
not in default in any material respect under, any laws,
ordinances, requirements, regulations or orders applicable to
its businesses.
4.13 Governmental Regulation. To the knowledge of CAP'S, the
company is not in violation of or in default with respect to
any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission,
board, bureau, agency or instrumentality, or delinquent with
respect to any report required to be filed with any
governmental commission, board, bureau, agency or
instrumentality which violation or default could have a
material adverse effect upon the business, operations or
financial condition of CAP'S.
4.14 Accuracy of Information. No representation or warranty by
CAP'S contained int his Agreement and no statement contained
in any certificate or other instrument delivered or to be
delivered to SPORTSMAN pursuant hereto or in connection with
the transaction contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the
statement contained herein or therein not misleading.
4.15 Subsidiaries. CAP'S does not currently have any subsidiaries
or own capital stock representing ten percent (10%) or more of
the issued and outstanding stock of any other corporation.
10
4.16 Consents. No consent or approval of, or registration,
qualification or filing with any governmental authority or
other person is required to be obtained or accomplished by
CAP'S or any shareholder thereof in connection with the
consummation of the transactions contemplated hereby.
4.17 Improper Payments. Neither CAP'S, nor any person acting on
behalf of CAP'S has made any payment or otherwise transmitted
anything of value, directly or indirectly, to (a) any official
or any government or agency or political subdivision there of
for the purpose of influencing any decision affecting the
business of CAP'S, (b) any customer, supplier or competitor of
CAP'S or employee of such customer, supplier or competitor,
for the purpose of obtaining, retailing or directing business
for CAP'S, or (c) any political party or any candidate for
elective political office nor has any fund or other asset of
CAP'S been maintained that was not fully and accurately
recorded on the books or account of CAP'S.
4.18 Copies of Documents. CAP'S has made available for inspection
and copying to SPORTSMAN and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with
any governmental agencies which are material to the terms and
conditions contained in this Agreement.
4.19 Investment Intent of Shareholders. Each shareholder of CAP'S
represents and warrants to SPORTSMAN that the shares of
SPORTSMAN being acquired pursuant to this Agreement are being
acquired for her own account and for investment and not with a
view to the public resale or distribution of such shares and
further acknowledges that the shares being issued have not
been registered under the Securities Act and are "restricted
securities" as that term is defined in rule 144 promulgated
under the Securities Act and must be held indefinitely unless
they are subsequently registered under the Securities Act or
an exemption from such registration as available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.1 Conduct and Transactions of SPORTSMAN. During the period from
the date hereof to the date of Closing, SPORTSMAN shall:
(a) Conduct its operations in the ordinary course of
business, including but not limited to, paying all
obligations as they mature, complying with any
applicable tax laws, filing all tax returns required
to be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner
that fairly and correctly reflect its income,
expenses, assets and liabilities.
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5.2 SPORTSMAN shall not during such period, except in the ordinary
course of business, without the prior written consent of
CAP'S:
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of its
properties or assets;
(b) Declare or pay any dividends on shares of its capital
stock or make any other distribution of assets to the
holders thereof;
(c) Issue, reissue or sell or issue options or tights to
subscribe to, or enter into any contract or
commitment to issue, reissue or sell any shares of
its capital stock or acquire or agree to acquire any
shares of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or
merge or consolidate with or into any other
corporation with or into any other corporation or
sell all or substantially all of its assets or change
in any manner the rights of its capital stock or
other securities;
(e) Except as contemplated or required by this Agreement,
pay or incur any obligation or liability, direct or
contingent more than $1,000;
(f) Incur and indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible
for obligations of any other party, or make loans or
advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive
employees, except in accordance with existing
employment contracts;
(I) Enter into any agreement of make any commitment to
any labor union or organization;
(j) Make any capital expenditures.
5.3 Conduct and Transactions of CAP'S. During the period from the
date hereof to the date of closing, CAP'S shall:
(a) Obtain an investment letter from each shareholder of
CAP'S in a form substantially like that attache
hereto as Exhibit A.
(b) Conduct the operations of CAP'S in the ordinary
course of business.
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(c) Issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or
commitment to issue, reissue or sell, any shares of
its capital stock or acquire or agree to acquire any
share of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or
merge or consolidate with or into any other
corporation or sell all or substantially all of its
assets or change in any manner the rights of its
capital stock or other securities;
(e) Except as otherwise contemplated and required by this
Agreement, pay or incur any obligation or liability,
direct or contingent;
(f) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible
for obligations of any other party, or make loans or
advances to any other party;
(g) Make any material change in its insurance coverage;
(I) Enter into any agreement or make any commitment to
any labor union or organization;
(j) Make any material capital expenditures;
(k) Allow any of the foregoing actions to be taken by any
subsidiary of CAP'S.
ARTICLE 6
RIGHTS OF INSPECTION
6.1 During the period from the date of this Agreement to the date
of Closing of the acquisition, SPORTSMAN and CAP'S agree to
use their best efforts to give the other party, including its
representatives and agents, full access to the premises, books
and records of each of the entities, and to furnish the other
with such financial and operation data and other information
including, but not limited to, copies of all legal documents
and instruments referred to on any schedule or exhibit hereto,
with respect to the business and properties of SPORTSMAN or
CAP'S, as the case may be, as the other shall from time to
time request; provided, however, if there are any such
investigations: (1) they shall be conducted in such manner as
not to unreasonably interfere with the operation of the
business of the other parties and (2) such right of inspection
shall not affect in any way whatsoever any of the
representation or warranties given by the respective parties
hereunder. In the event of termination of this Agreement,
SPORTSMAN and CAP'S will each return to the other all
documents, work papers and other material obtained from the
other party in connection with the transactions contemplated
hereby, and will take such other steps necessary to protect
the confidentiality of such material.
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of SPORTSMAN. The obligation of
SPORTSMAN to perform this Agreement is subject to the
satisfaction of the following conditions on or within a
reasonable time after Closing unless waived in writing by
CAP'S.
7.2 Representations and Warranties. There shall be no information
disclosed in the schedules delivered by SPORTSMAN which in the
opinion of CAP'S would materially adversely affect the
proposed transaction and intent of the parties as set forth in
this Agreement. The representations and warranties of
SPORTSMAN set forth in Article 3 hereof shall be true and
correct in all material respects as of the date of this
Agreement and as of the Closing as though made on and as of
the Closing, except as otherwise permitted by this Agreement.
(a) Performance of Obligations. SPORTSMAN shall have in
all material respects performed all agreements
required to be performed by it under this Agreement
and shall have performed in all material respects any
actions contemplated by this Agreement prior to or on
the Closing and SPORTSMAN shall have complied in all
material respects with the course of conduct required
by this Agreement.
(b) Corporate Action. Minutes, certified copies of
corporate resolutions and/or other documentary
evidence satisfactory to counsel for CAP'S that
SPORTSMAN submitted this Agreement and any other
documents required hereby to such parties for
approval as provided by applicable law.
(c) Consents. Execution of this Agreement by the
shareholders of SPORTSMAN and any consents necessary
for or approval is required pursuant thereto shall
have been obtained.
(d) Financial Statements. CAP'S shall have been furnished
with financial statements of SPORTSMAN including, but
not limited to, balance sheets and profit and loss
statements as of December 31,1997. Such financial
statements shall have been prepared in conformity
with generally accepted accounting principles on a
basis consistent with those of prior periods and
fairly present the financial position of SPORTSMAN as
of December 31,1997.
(e) Statutory Requirements. All statutory requirements
for the valid consummation by SPORTSMAN of the
transactions contemplated by this Agreement shall
have been obtained.
(f) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and
state governmental agencies required to be obtained
by SPORTSMAN for consumption of the transactions
contemplated by this Agreement shall have been
obtained.
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(g) Changes in Financial Condition of SPORTSMAN. There
shall not have occurred any material adverse change
in the financial condition or in the operations of
the business of SPORTSMAN, except expenditures in
furtherance of this Agreement.
(h) Absence of Pending Litigation. SPORTSMAN is not
engaged in or threatened with any suit, action, or
legal administrative or other proceedings or
governmental investigations pertaining to this
Agreement or the condition of the transactions
contemplated hereunder.
(I) Authorization for Issuance of Stock. CAP'S shall have
received in from and substance satisfactory to
counsel for CAP'S a letter instructing and
authorizing the Registrar and Transfer Agent for the
shares of common stock of SPORTSMAN to issue stock
certificates representing ownership of SPORTSMAN
common stock to the shareholders of CAP'S in
accordance with the terms of this Agreement.
7.3 Conditions and Obligations of CAP'S. The obligation of CAP'S
to perform this Agreement is subject to the satisfaction of
the following conditions on or before the Closing unless
waived in writing by SPORTSMAN.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by
CAP'S which in the opinion of SPORTSMAN would
materially adversely affect the proposed transaction
and intent of the parties as set forth in this
Agreement. The representations and warranties of
CAP'S set forth in Article 4 hereof shall be true and
correct in all material respects as of the date of
this Agreement and as of the Closing as though made
on and as of the Closing, except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. CAP'S shall have in all
material respects performed all agreements required
to be performed by it under this Agreement and shall
have performed in all material respects any actions
contemplated by this Agreement prior to or on the
Closing and CAP'S shall have complied in all material
respects with the course of conduct required by this
Agreement.
(c) Corporate Action. Minutes, certified copies of
corporate resolutions and/or other documentary
evidence satisfactory to counsel for SPORTSMAN that
CAP'S submitted this Agreement and any other
documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the
shareholders of CAP'S and any consents necessary for
or approval is required pursuant thereto shall have
been obtained.
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(e) Financial Statements. SPORTSMAN shall have been
furnished with financial statements of CAP'S
including, but not limited to, balance sheets and
profit and loss statements as of December 31,1997.
Such financial statements shall have been prepared in
conformity with generally accepted accounting
principles on a basis consistent with those of prior
periods and fairly present the financial position of
CAP'S as of December 31,1997.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by CAP'S of the
transactions contemplated by this Agreement shall
have been obtained.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and
state governmental agencies required to be obtained
by CAP'S for consumption of the transactions
contemplated by this Agreement shall have been
obtained.
(h) Employment Agreements. Existing CAP'S employment
agreements will have been delivered to counsel for
SPORTSMAN.
(I) Changes in Financial Condition of CAP'S. There shall
not have occurred any material adverse change in the
financial condition or in the operations of the
business of CAP'S, except expenditures in furtherance
of this Agreement.
(j) Absence of Pending Litigation. CAP'S is not engaged
in or threatened with any suit, action, or legal
administrative or other proceedings or governmental
investigations pertaining to this Agreement or the
condition of the transactions contemplated hereunder.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.1 Covenant of Further Assurance. The parties covenant and agree
that they shall, from time to time, execute and deliver or
cause to be executed and delivered all such further
instruments of conveyance, transfer, assignments, receipts and
other instruments, and shall take or cause to be taken such
further of other actions as the other party or parties to this
Agreement may reasonably deem necessary in order to carry out
the purposes and intent of the Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.1 All statements contained in any written certificate, schedule,
exhibit or other written instrument delivered by SPORTSMAN or
CAP'S pursuant hereto, or otherwise adopted by SPORTSMAN, by
its written approval or by CAP'S by its written approval or in
connection with the transaction contemplated hereby, shall be
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deemed representations and warranties by SPORTSMAN or CAP'S as
the case may be. All representations, warranties and
agreements made by either party shall survive for the period
of the applicable statute of limitations and until the
discovery of any claim, loss, liability or other matter based
on fraud, if longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF SHARE EXCHANGE
10.1 Termination. Anything here into the contrary notwithstanding,
this Agreement and any agreement executed as required
hereunder and the acquisition contemplated hereby may be
terminated at any time before the closing date as follows:
(a) By mutual written consent of the Boards of Directors
of SPORTSMAN and CAP'S.
(b) By the Board of Directors of SPORTSMAN if any of the
conditions set forth in Section 7.2 shall not have
been satisfied.
(c) By the Board of Directors of CAP'S if any conditions
set forth in Section 7.1 shall not have been
satisfied.
10.2 Termination of Obligations and Waiver of Conditions; Payment
of Expenses. In the event this Agreement and the Share
Exchange are terminated and abandoned pursuant to this Article
10 hereof this Agreement shall become void and of no force and
effect and there shall be no liability on the part of any of
the parties hereto, or their respective directors, officers,
shareholders of controlling persons to each other. Each party
hereto will pay all costs and expenses incident to its
negotiation and preparation of this agreement and any of the
documents evidencing the transactions contemplated hereby,
including fees, expenses and disbursements of counsel.
ARTICLES 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.1 Exchange of Shares. At the Closing, SPORTSMAN shall issue a
letter to the transfer agent of SPORTSMAN with a copy of the
resolution of the Board of Directors of SPORTSMAN authorizing
and directing the issuance of SPORTSMAN shares as set forth on
the signature page of this Agreement.
11.2 Restrictions on Shares Issued to CAP'S. Due to the fact that
CAP'S will receive shares of SPORTSMAN common stock in
connection with the acquisition which have not been registered
under the 1933 Act by virtue of the exemption provided in
Section 4(2) of such Act, those shares SPORTSMAN contain the
following legend:
The shares represented by this certificate have not
been registered under the Securities Act of 1933. The
shares have been acquired for investment and may not
be sold or offered for sale in the absence of an
effective Registration Statement for the shares under
the Securities Act of 1933 or an opinion of counsel
to the Corporation that such registration is
required.
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ARTICLE 12
MISCELLANEOUS
12.1 Construction. This Agreement shall be construed and enforced
in accordance with the laws of the Sate of Utah excluding the
conflicts of laws.
12.2 Notices. All notices necessary or appropriate under this
Agreement shall be effective when personally delivered to
deposited in the United States mail postage prepaid, certified
or registered, return receipt requested, and addressed to the
parties' last known address which addresses are currently as
follow:
If to "Sportsman" If to "Cap's"
Sportsman Wholesale Company Cap's Sporting Goods
000 Xxxxxxxx Xxxxxx Wholesale, Inc
Xxxxxxxxxxx, XX 00000 000 Xxxxx 000 Xxxx
Xxxxxxxxxxx, XX 00000
12.3 Amendment and Waiver. The parties hereby may, by mutual
agreement in writing signed by each party, amend this
Agreement in any respect. Any term or provision of this
agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof such waiver fight
shall include, bu not be limited to, the right of either party
to:
(a) Extend time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies in representations by the
other contained in this Agreement or in any document
delivered pursuant hereto;
(c) Waiver compliance by the other with any of the
covenants contained in this Agreement, and
performance of any obligations by the other; and
(d) Waive the fulfillment of any condition that is
precedent to the performance by the party so waiving
of any of its obligations under this Agreement. Any
writing on the part of a party relating to such
amendment, extension or waiver as provided in this
Section 12.03 shall valid if authorized or ratified
by the board of directors of such party.
12.4 Remedies Not Exclusive. No remedy conferred by any of the
specific provision of this Agreement is intended of this
Agreement is intended to be exclusive of any other remedy, and
each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by
SPORTSMAN or CAP'S shall not constitute a waiver of the right
to pursue available remedies.
12.5 Counterparts. This agreement may be executed in one or
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
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12.6 Benefit. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors and assigns of
SPORTSMAN and CAP'S.
12.7 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto represent the entire agreement of the
undersigned regarding the subject matter hereof, and
supersedes all prior written or oral understandings or
agreements between the parties.
12.8 Each Party to Bear Its Own Expense. SPORTSMAN and CAP'S shall
each bear their own respective expenses incurred in connection
with the negotiation, execution, closing, and performance of
this Agreement, including counsel fees and accountant fees.
12.9 Captions and Section Headings. Captions and section headings
used herein are for convenience only and shall not control or
affect the meaning or construction of any provision of this
Agreement.
SPORTSMAN'S WHOLESALE COMPANY
BY:/s/ Xxxx Xxxx
----------------
President
CAP'S SPORTING GOODS WHOLESALE, INC.
BY: /s/ Xxxx Xxxx
----------------
President
CAP'S SHAREHOLDERS:
/s/ Xxxx Xxxx
-------------------
Xxxx Xxxx
1,000,000 SHARE OF COMMON STOCK
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