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EXHIBIT B
(Resort Marketing Group
Reorganization Agreement)
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REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT (the "Agreement") is made and entered into
by and among STERLING WORLDWIDE CORPORATION, a publicly held Nevada corporation
(the "Corporation"); RESORT MARKETING GROUP, INC., a Florida corporation (the
"Subsidiary"); and XXX XXXXXXXXXXX and XXXXX X. XXXXXXXX, (the "Subscribers");
and the Corporation, the Subsidiary and the Subscribers being collectively
referred to as the "Parties" and each being sometimes hereinafter generically
referred to as a "Party").
P R E A M B L E:
WHEREAS, the Subscribers own all of the shares of the Subsidiary's common
stock, such securities being all of the issued and outstanding shares of the
Subsidiary's capital stock (there being no other securities; the "Subsidiary
Stock"), a corporation engaged in the business more particularly described in
exhibit 0.2 annexed hereto and made a part hereof; and
WHEREAS, the Subscribers desire to acquire 150,000 shares of the
Corporation's Common Stock, no par value per share (the "Stock"), in
consideration for their immediate conveyance of all shares of the Subsidiary
Stock which will constitute 100% of the Subsidiary's authorized, issued and
outstanding securities; provided that the transaction meets the requirements of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Parties, intending to be legally bound, hereby agree as follows:
W I T N E S S E T H:
ARTICLE ONE
EXCHANGE PROVISIONS
1.1 EXCHANGE
(a) Subject to the hereinafter described conditions and Performance Criteria,
the Corporation hereby agrees to exchange 150,000 shares of its Common
Stock, no par value, with the Subscribers for all of the shares of the
Subsidiary Stock currently outstanding, which, upon transfer, will
constitute 100% of the Subsidiary's reserved or issued and outstanding
securities.
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(b) Concurrently with the execution of this Agreement the Subscribers
guarantee delivery of the Subsidiary Stock to the Corporation, the
Corporation shall cause WESTERN STATES TRANSFER CO., of Salt Lake City,
Utah, its transfer agent, to issue 150,000 shares of the Stock to the
Subscribers, as follows:
Xxx Xxxxxxxxxxx 100,000 Shares
Xxxxx X. Xxxxxxxx 50,000 Shares
1.2 EXEMPTION FROM REGISTRATION
(a) The Subscribers hereby represent, warrant, covenant and
acknowledge that:
(1) (a) The Stock is being issued without registration under the
provisions of Section 5 of the Securities Act of 1933, as
amended (the "Act") or under applicable securities regulations
of the State of Florida (the "Florida Securities Act")
pursuant to exemptions provided by Section 4(2) and comparable
provisions of the Florida Securities Act;
(b) The Subscribers will assure that any filings in conjunction
with the transactions contemplated by this Agreement required
under the laws of the State of Florida are promptly complied
with;
(2) All of the Stock will bear legends restricting its transfer, sale,
conveyance or hypothecation unless such Stock is either registered
under the provisions of Section 5 of the Act and under the Florida
Securities Act, or an opinion of legal counsel, in form and
substance satisfactory to legal counsel to the Corporation is
provided by the Subscribers to the effect that such registration is
not required as a result of applicable exemptions therefrom;
(3) The Corporation's transfer agent shall be instructed not to transfer
any of the Stock unless the Corporation advises it that such
transfer is in compliance with all applicable laws;
(4) The Subscribers are acquiring the Stock for their own account, for
investment purposes only, and not with a view to further sale or
distribution; and
(5) Subscribers or their advisors have examined the Corporation's latest
reports to the Securities and Exchange Commission on Forms 10-KSB,
10-QSB and 8-K (collectively and generically hereinafter referred to
as "34 Act Reports"), have been provided with access to all of the
Corporation's books and records and have questioned the
Corporation's officers and directors as to such matters involving
the Corporation as the Subscribers deemed appropriate.
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(b) The Corporation hereby represents, warrants, covenants and acknowledges
that:
(1) The Subsidiary Stock is being transferred without registration under
the provisions of Section 5 of the Act or under the Florida
Securities Act pursuant to the exemptions provided by Section 4(2)
of the Act and comparable provisions of the Florida Securities Act;
(2) All of the Subsidiary Stock will bear legends restricting its
transfer, sale, conveyance or hypothecation unless such Subsidiary
Stock is either registered under the provisions of Section 5 of the
Act and under applicable provincial securities laws, or an opinion
of legal counsel is provided by the Corporation certifying that such
registration is not required as a result of applicable exemptions
therefrom;
(3) The Corporation shall not transfer any of the Subsidiary Stock
except in compliance with all applicable laws; and
(4) The Corporation is acquiring the Subsidiary Stock for its own
account, for investment purposes only and not with a view to further
sale or distribution.
1.3 LIABILITIES.
(a) Any liabilities in any manner encumbering or affecting the Subsidiary or
its assets are disclosed on exhibit 1.3 annexed hereto and made a part
hereof (the "Disclosed Liabilities").
(b) The Subscribers hereby covenant and agree to indemnify and hold the
Corporation harmless from any liabilities of the Subsidiary or affecting
the Subsidiary's assets other than the Disclosed Liabilities ("Undisclosed
Liabilities") and the Corporation may, in addition to all other legal or
equitable remedies that may be available, offset from any funds,
securities or other things of value due to the Subscribers or the
Subscribers' affiliates (as that term is most liberally defined for
federal securities law purposes), such sums as may be required to make the
Corporation whole as a result of the assertion of any Undisclosed
Liability against the Subsidiary or its assets.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES
2.1 THE CORPORATION.
The Corporation hereby represents and warrants to Subscriber, as a
material inducement to his, her or its entry into this Agreement, that, except
as disclosed in exhibit 2.1
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(the "Corporation's Warranty Exceptions") or in the Corporation's 34 Act Reports
filed prior to the date of this Agreement, the following representations and
warranties are, to the best of the Corporation's knowledge, materially accurate:
(a) The Corporation owns or leases the assets described in the Corporation's
34 Act Reports subject to such changes in inventory and supplies as were
required in the ordinary course of business;
(b) The Corporation has 50,000,000 shares of Common Stock, no par value,
authorized, of which less than 30,000,000 shares are currently outstanding
or reserved, there being no other outstanding securities of any class or
of any kind or character of the Corporation, there being no outstanding
subscriptions, options, warrants or other agreements or commitments
obligating the Corporation to issue or sell any additional shares of the
Corporation's Stock or any options or rights with respect thereto, or any
securities convertible into any shares of Stock of any class;
(c) The Corporation is not a party to any written or oral agreement which
grants an option or right of first refusal or other arrangement to acquire
any of its securities or to any agreement that affects the voting rights
of any of its securities, nor has the Corporation made any commitment of
any kind relating to the issuance of shares of any of the Corporation's
securities, whether by subscription, right of conversion, option or
otherwise;
(d) The Corporation is not a party to any agreement or understanding for the
sale or exchange of inventory or services for consideration other than
cash or at a discount in excess of normal discount for quantity or cash
payment;
(e) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims which might result in a material adverse change
in the future financial condition or operations of the Corporation;
(f) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require the consent, authority or
approval of any other person or entity except such as have been obtained;
(g) No transactions have been entered into either by or on behalf of the
Corporation, other than in the ordinary course of business nor have any
acts been performed (including within the definition of the term performed
the failure to perform any required acts) which would adversely affect the
goodwill of the Corporation;
(h) The entering into of this Agreement and the performance thereof has been
duly and validly authorized by all required corporate action;
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(i) (1) The certified, consolidated financial statements of the Corporation
and its subsidiaries, including consolidated statements of
operations, stockholders investment and cash flows and consolidated
balance sheets for its last three fiscal years, and unaudited
consolidated financial statements for the period from the last
consolidated certified financial statement until the end of the
Corporation's fiscal quarter closest to the date of this Agreement,
all prepared in accordance with generally accepted accounting
principles, consistently applied, are included in the Corporation's
34 Act Reports (the "Corporation's Financial Statements").
(2) The Corporation's Financial Statements, as contained in its 34 Act
Reports, fairly present the Corporation's financial condition as of
their respective dates and its results of operations for their
respective periods in accordance with generally accepted accounting
principles, consistently applied;
(j) (1) Except as and to the extent reflected or reserved against in the
consolidated balance sheet of the Corporation and its subsidiaries
(the "Corporation's Interim Balance Sheet), as of January 31, 1997
the Corporation and its subsidiaries had no liabilities or legal
obligations of a nature required to be reflected on a corporate
balance sheet prepared in accordance with generally accepted
accounting principles or disclosed in the notes thereto, whether
absolute, accrued, contingent, or otherwise and whether due or to
become due (including, without limitation, liabilities for taxes and
interest, penalties, and other charges payable with respect thereto
in respect of or measured by the income of the Corporation through
such date, or arising out of any transaction entered into prior
thereto).
(2) There is no material reasonable basis for the assertion against the
Corporation or any of its subsidiaries of any liability or
obligation which is not fully reflected or reserved against in the
Corporation's Interim Balance Sheet or disclosed in the notes
thereto, except liabilities or obligations incurred since January
31, 1996 in the ordinary course of the Corporation's business.
(k) Since the date of the Corporation's Financial Statements no events have
occurred nor have any facts been discovered which could have a material
adverse effect on the financial status, results of operations or prospects
of the Corporation;
(l) On the Closing Date of this Agreement, the Corporation's net liabilities,
excluding liabilities as a result of the transaction contemplated hereby,
shall not exceed those disclosed in its quarterly report on Form 10-QSB
for the six month period ended December 31, 1996, by more than $ NONE ,
and since that date and such filing,
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there has not been any materially adverse change in the financial
condition, operations or prospects of the Corporation;
(m) The Corporation and its subsidiaries do not have any liabilities which
constitute a lien or charge on their securities or assets;
(n) The Corporation and each of its subsidiaries has good, valid and
marketable title to all of its assets, subject to no mortgage, pledge,
lien, encumbrance, security interest or charge, except as disclosed in the
Corporation's Financial Statements, and can and will retain free and clear
title thereto after Closing on this transaction, free and clear of any
claims whatsoever;
(o) There are no claims, actions, suits, proceedings or investigations pending
or threatened against the Corporation or any of its subsidiaries and the
Corporation does not know of any basis for any such claim, action, suit,
proceeding or investigation;
(p) During the past 12 months neither the Corporation nor any of its
subsidiaries have disposed of any assets or contractual rights which
disposition, in the opinion of the Corporation's management, has had or
will in the future have a materially adverse impact on the business of the
Corporation and its subsidiaries taken as a whole;
(q) (1) The Corporation has filed with the appropriate governmental agencies
all tax returns and tax reports required to be filed; all federal,
state and local income, profits, franchise, sales, use, occupation,
property or other taxes due have been fully paid, and, the
Corporation is not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor
has any claim for assessments been asserted against the Corporation
or its assets, nor is the Corporation aware of any facts or
circumstances which could give rise to the assertion of any viable,
material claim; and
(2) All taxes that the Corporation is or was required to withhold or
collect have been duly withheld or collected and to the extent
required have been paid to the proper governmental authority or
person;
(r) The Corporation and each of its current, material operating subsidiaries
is, as of the date of this Agreement, a validly existing corporation,
organized pursuant to the laws of the their respective jurisdictions of
incorporation and qualified to do business in each state where required to
do so, with all legal and corporate authority and power to conduct its
business and to own its properties and possesses all necessary permits and
licenses required in connection with the conduct of its business;
necessary permits and licenses required in connection with the conduct of
its business;
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(s) The conduct of the Corporation's business is in material compliance with
applicable federal, state and local governmental statutes, rules,
regulations, ordinances and decrees;
(t) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the terms
or provisions of, or constitute a default under, the certificate of
incorporation or bylaws of the Corporation; any indenture, contract, other
material agreement or instrument to which the Corporation or any of its
subsidiaries or their respective assets are bound; or, violate any
applicable regulation, judgment, order or decree of any governmental
instrumentality or court, domestic or foreign, having jurisdiction over
the Corporation, its securities, assets or properties;
(u) This Agreement constitutes a binding obligation of the Corporation,
enforceable against it in accordance with the terms hereof, and has been
authorized by all required corporate action;
(v) (1) The Corporation has not experienced any material difficulties with
the management or recruiting of employees for its business, nor does
the Corporation have any reason to believe that any such
difficulties will arise in the future.
(2) None of the employees of the Corporation or its subsidiaries are
represented by labor unions, nor does the Corporation have any
reason to believe that any of its employees desire to be represented
by labor unions; and
(3) The Corporation has no reason to believe that any of its employees
have any potential claims against the Corporation, its subsidiaries
or their successors in interest based on violations of equal
employment laws, occupational health and safety standards or any
other legally protected rights;
(w) (1) The Corporation has not generated any hazardous wastes or engaged in
activities which could be interpreted as potential violations of
laws, statutes, regulations ordinances or judicial decrees in any
manner regulating the generation or disposal of hazardous waste.
(2) There are no on-site or off-site locations where the Corporation or
any of its subsidiaries has stored, disposed or arranged for the
disposal of chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum or petroleum products; there are no
underground storage tanks located on property owned or leased by the
Corporation or any of its subsidiaries; and, no polychlorinated
hiphenyle are
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used or stored at any property owned or leased by the Corporation or any
subsidiary;
(x) (1) The Corporation currently has in full force and effect insurance
policies of the kind and in coverage amounts adequate to meet its
current insurance requirements; and
(2) There are no impediments to obtaining hazard and liability insurance
covering all of the Corporation's assets and operations, at
commercially reasonable insurance rates, nor does the Corporation
have any basis for believing that such insurance, at such rates,
will not be obtainable by the Corporation in the future;
(y) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction; and
(z) There is no material fact, development or threatened development that
materially adversely affects, or is likely to materially adversely affect
the business of the Corporation, which the Corporation has not publicly
disclosed or privately disclosed, either expressly or by reasonable
implication, to the Subscriber.
2.2 THE SUBSIDIARY.
The Subsidiary and each of the Subscriber, jointly and severally, hereby
represent and warrant to the Corporation, as a material inducement to the
Corporation's entry into this Agreement, that, except as specified on exhibit
2.2 annexed hereto and made a part hereof (the "Subsidiary's Warranty
exceptions"), the following representations and warranties are, to the best of
their knowledge, materially accurate:
(a) (1) Exhibit 2.2(a) contains a complete and accurate list of all real and
all personal property owned by the Subsidiary, tangible, intangible
and inchoate (the term Subsidiary in the context of this Article
being deemed to include all subsidiaries of the Subsidiary and
sibling corporation's of the Subsidiary, the assets and operations
of which are to be included among the subjects of this Agreement),
and the principal terms of all patents, trademarks, copyrights,
trade names, service marks, other intellectual property, franchises
and licenses held by the Subsidiary for use in manufacture and sale
of sporting goods or apparel, including identification of the
licensor, the formulae for royalty or other payments thereunder, the
expiration dates, and other terms of any extensions or renewals
permitted thereunder;
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(2) The operations of the several affiliated entities which comprise the
total business of which the Subsidiary has been a part since its
inception have been consolidated as to ownership and control under
the Subsidiary, in a manner resulting in the control and ownership
thereof by the Subsidiary, and, as a consequence of the transactions
contemplated by this Agreement, all such assets and operations shall
become the indirect property (through ownership of the Subsidiary's
capital stock) of the Corporation.
(b) (1) The Subsidiary has 7,500 shares of Common Stock, $0.001 par value,
authorized, 7,500 shares of which are currently issued and
outstanding, there being no other authorized or outstanding
securities of any class or of any kind or character of the
Subsidiary, 5,000 being held by Xxx Xxxxxxxxxxx and 2,500 being held
by Xxxxx X. Xxxxxxxx.
(2) There are no outstanding subscriptions, options, warrants or other
agreements or commitments obligating the Subsidiary or any
Subscribers to issue or sell any additional shares of Subsidiary
Stock or any options or rights with respect thereto, or any
securities convertible into any shares of Subsidiary Stock of any
class;
(c) Upon conveyance of the Subsidiary Stock by the Subscriber, the Corporation
will become the owner of all of the Subsidiary's authorized, issued and
outstanding equity securities;
(d) As of the Closing Date on this Agreement, the Subsidiary will not be a
party to any written or oral agreement which grants any option or right of
first refusal or other arrangement to acquire any of its securities or to
any agreement that will affect the voting rights of any of its securities,
nor have the Subscribers or the Subsidiary made any commitment of any kind
relating to the issuance of shares of any of the Subsidiary's equity
securities, whether by subscription, right of conversion, option or
otherwise;
(e) The Subsidiary is not a party to any agreement or understanding for the
sale or exchange of inventory or services for consideration other than
cash or at a discount in excess of normal discounts for quantity or cash
payment;
(f) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims known to the Subsidiary which might result in a
material adverse change in the future financial condition or operations of
the Subsidiary;
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(g) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require the consent, authority or
approval of any other person or entity, except such as have been obtained;
(h) No transactions have been entered into either by or on behalf of the
Subsidiary, other than in the ordinary course of business nor have any
acts been performed (including within the definition of the term performed
the failure to perform any required acts) which would materially adversely
affect the goodwill of the Subsidiary;
(i) The entering into of this Agreement and the performance required hereunder
has been duly and validly authorized by all required corporate action;
(j) (1) Annexed hereto and made a part hereof as composite exhibit 2.2(j)
are: (a) an unaudited balance sheet of the Subsidiary as of December
31, 1996 with the related statement of operations and accumulated
deficit and unaudited statements of cash flows for the Corporation
from inception to December 31, 1996 (such balance sheets, statements
of operations and other statements are referred to herein as the
"Subsidiary's Financial Statements").
(2) The Subsidiary's Financial Statements fairly present the financial
condition of the Subsidiary as of the dates thereof, and the results
of operations of the Subsidiary for the periods indicated, in each
case in accordance with generally accepted accounting principles
applied on a consistent basis;
(3) Except as and to the extent reflected or reserved against in the
Subsidiary's Balance Sheet, the Subsidiary had no liabilities or
legal obligations of a nature required to be reflected on a
corporate balance sheet prepared in accordance with generally
accepted accounting principles or disclosed in the notes thereto,
whether absolute, accrued, contingent, or otherwise and whether due
or to become due (including, without limitation, liabilities for
taxes and interest, penalties, and other charges payable with
respect thereto (a) in respect of or measured by the income of the
Subsidiary through such date, or (b) arising out of any transaction
entered into prior thereto).
(4) There is no basis for the assertion against the Subsidiary of any
liability or obligation which is not fully reflected or reserved
against in the Subsidiary's Interim Balance Sheet or disclosed in
the notes thereto, except liabilities or obligations incurred since
December 31, 1996 in the ordinary course of the Subsidiary's
business consistent with its past practice.
(k) Except as reflected in the Subsidiary's Financial Statements, since
December 31, 1996 the Subsidiary has not suffered any material adverse
change in its financial condition,
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assets, liabilities or business; or suffered any material casualty loss
(whether or not insured);
(l) On the Closing Date of this Agreement, the Subsidiary's aggregate
liabilities, whether accrued or inchoate, shall not exceed $ NONE
(including liabilities owed to the Subscribers) and such liabilities shall
not require any payments, other than as specifically disclosed in exhibit
1.3;
(m) None of the properties or assets used in the business of the Subsidiary
are subject to any mortgage, pledge, lien, security interest, conditional
sale agreement, encumbrance, or charge of any kind, except as disclosed in
exhibit 1.3;
(n) (1) There are no claims, actions, suits, proceedings or investigations
pending or threatened by or against the Subsidiary and the
Subsidiary does not know of any basis for any such claim, action,
suit, proceeding, or investigation;
(2) The Subsidiary is not subject to any liabilities or potential
liabilities that will subject the Corporation, or its affiliates,
stockholders, officers, directors, agents or advisors to any claims
or liabilities predicated or emanating from torts or violations of
law attributable to the Subsidiary or for which the Subsidiary
assumed responsibility or which can in any manner be imputed to the
Subsidiary or its assets;
(o) The Subsidiary has no liabilities involving expenses attributable
directly, indirectly or incidentally to any litigation;
(p) Except as otherwise disclosed in the Subsidiary's Financial Statements the
Subsidiary has good, valid, and marketable title to all its properties,
licenses, and assets, real, personal and mixed, tangible and intangible;
(q) (1) Since its inception the Subsidiary has not disposed of any assets or
contractual rights which disposition has had or will in the future
have a materially adverse effect on the business of the Subsidiary
and no such disposition will be made by the Subsidiary outside the
ordinary course of business during the interim between execution of
this Agreement and the Closing, unless this Agreement shall have
been terminated, without the prior written consent of the
Corporation;
(2) Neither the Subsidiary nor its subsidiaries, if any, have, during
the six months preceding the date of this Agreement, distributed any
unusual amounts of income to their stockholders, agents, employees
or any related parties.
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(r) The Subsidiary has filed with the appropriate governmental agencies all
tax returns and tax reports required to be filed; all United States, state
and local income, profits, franchise, sales, use, occupation, property or
other taxes due have been fully paid, except as listed on exhibit 1.3;
and, the Subsidiary is not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor has any
claim for assessments been asserted against the Subsidiary or its assets;
(s) The Subsidiary is, as of the date of this Agreement, a validly existing
corporation, organized pursuant to the laws of the State of Florida (and
its subsidiaries and sibling corporations are validly organized and in
good standing under their laws of their corporate domiciles), with all
legal and corporate authority and power to conduct its business and to own
its properties and possesses all necessary permits and licenses required
in connection with the conduct of its business;
(t) The conduct of the Subsidiary's business is in material compliance with
all applicable federal, provincial, state and local governmental statutes,
rules, regulations, ordinances and decrees;
(u) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the terms
or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Subsidiary; any indenture, other material
agreement or instrument to which the Subsidiary or its stockholders are a
party or by which the Subsidiary or its assets are bound; or, any
applicable regulation, judgment, order or decree of any governmental
instrumentality or court, domestic or foreign, having jurisdiction over
the Subsidiary, its securities or its properties;
(v) This Agreement constitutes the valid and binding agreement of the
Subsidiary and is enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law, no such proceeding being
anticipated or under consideration);
(w) (1) The Subsidiary has not experienced any material difficulties with
the management or recruiting of employees for its business, nor does
the Subsidiary have any reason to believe that any such difficulties
will arise in the future.
(2) None of the employees of the Subsidiary are represented by labor
unions, nor does the Subsidiary have any reason to believe that any
of its employees desire to be represented by labor unions; and
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(3) The Subsidiary has no reason to believe that any of its employees
have any potential claims against the Subsidiary or its successors
in interest based on violations of equal employment laws,
occupational health and safety standards or any other legally
protected rights;
(x) (1) The Subsidiary has no reason to believe that it has generated any
hazardous wastes or engaged in activities which violate or could be
interpreted as violating any laws, statutes, regulations ordinances
or judicial decrees in any manner regulating the generation or
disposal of hazardous waste.
(2) There are no on-site or off-site locations where the Subsidiary has
stored, disposed or arranged for the disposal of chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum or
petroleum products; there are no underground storage tanks located
on property owned or leased by the Subsidiary; and, no
polychlorinated hiphenyle are used or stored at any property owned
or leased by the Subsidiary;
(y) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction.
(z) There is no material fact, development or threatened development that
materially adversely affects, or is likely to materially adversely affect
the business of the Subsidiary, which the Subscribers have not disclosed,
either expressly or by reasonable implication, to the Corporation.
2.3 THE SUBSCRIBER.
The Subscribers hereby represent and warrant to the Corporation, as a
material inducement to the Corporation's entry into this Agreement, that, except
as specified on exhibit 2.3 annexed hereto and made a part hereof (the
"Subscriber's Warranty exceptions"), the following representations and
warranties are, to the best of the Subscriber's knowledge, materially accurate;
(a) The Subscribers will, on the Closing Date, own the Subsidiary stock,
registered in their names and subject to no liens, pledges or
encumbrances, and will convey good title thereto to the Corporation, there
being no outstanding subscriptions, options, warrants or other agreements
or commitments obligating the Subscribers to sell any of their shares of
the Subsidiary's Stock or any options or rights with respect thereto;
(b) All of the information reflected in the foregoing representations and
warranties and, the representations and warranties made by the Subsidiary,
are complete and accurate,
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and do not omit any information required to make the information provided
non-misleading, accurate and meaningful, in light of the nature of this
transaction;
(c) (1) Annexed hereto and made a part hereof as composite exhibit 2.3(c)
are completed officers and directors questionnaires pertaining to
the Subscribers and company questionnaires pertaining to the
Subsidiary, which Subscribers have either completed or reviewed, on
forms provided by the Corporation's legal counsel (collectively
hereinafter referred to as the Questionnaires"); and
(2) The Questionnaires have been completed and answered in an accurate
and complete fashion, and do not fail to disclose any information
necessary to render the information provided, not misleading.
(d) Annexed hereto and made a part hereof as Exhibit 2.3(d) is a complete,
accurate and not misleading, narrative disclosure document providing the
information called for by Securities and Exchange Commission Regulation SB
with reference to the Subsidiary, its operations and background.
ARTICLE THREE
CONDITIONS
3.1 CONDITION SUBSEQUENT
(a) The obligations of the Parties are subject to the condition subsequent
that the Subsidiary's Financial Statements comply or can within the 50 day
period following the Closing on this Agreement be made to comply with the
requirements of Regulation S-B promulgated under the Securities Exchange
Act of 1934.
(b) In the event that the Securities and Exchange Commission advises the
Corporation that the financial statements of the Subsidiary (excluding pro
forma financial statements) filed with the Form 8-K of the Corporation
relating to the acquisition of the Subsidiary, or an amendment thereto,
fail to comply in a material respect with generally accepted accounting
principals or the requirements of Regulation S-B and the Securities and
Exchange Commission is unwilling to waive such deficiencies, the
Corporation and the Subsidiary will use their best efforts to correct the
subject financial statements in such manner as will satisfy the Securities
and Exchange Commission's objections thereto or cause the Securities and
Exchange Commission to withdraw its objections; provided that, if such
corrections are not affected or such objections withdrawn within three
months after any deficiencies are raised by the Securities and Exchange
Commission, the Corporation may elect to rescind this Agreement, ab
initio, unless the Parties can, at such time, agree on a restructuring of
this transaction in a manner
Please Initial: Corporation: ______ Subsidiary: ______ Subscribers: ______
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meeting the applicable reporting requirements imposed by applicable
United States, Canadian, state and provincial securities law requirements.
3.2 CONDITIONS TO THE CORPORATION'S OBLIGATIONS
The obligations of the Corporation under this Agreement are subject to the
Subsidiary's (the term Subsidiary in the context of this Article being deemed to
include all subsidiaries of the Subsidiary and sibling corporations of the
Subsidiary, the assets and operations of which are to be included among the
subjects of this Agreement) and Subscriber's satisfaction, or the written waiver
by the Corporation, of the following conditions prior to Closing (the
"Conditions Precedent"):
(a) That all covenants, agreements, actions, proceedings, instruments and
documents required to be carried out or delivered by Subscribers or the
Subsidiary pursuant to this Agreement shall have been performed, complied
with or delivered to the Corporation in accordance with the terms thereof.
(b) That the warranties and representations made by the Subscribers and the
Subsidiary in this Agreement shall be true and correct in all material
respects on and as of the date of Closing and shall be deemed to be made
on and as of such date.
(c) That there are no material violations of any laws, statutes, ordinances,
orders, regulations or requirements of any governmental authority
affecting the Subsidiary or its assets, nor will there be any at the time
of Closing.
(d) There is no action, suit or proceeding pending or threatened against or
affecting the Subsidiary or its assets in any court or before or by any
federal, provincial, state, county or municipal department, commission,
board, bureau, agency or other governmental instrumentality which would
affect the Subscriber's or the Subsidiary's ability to perform hereunder
or which could affect the business of the Subsidiary in a materially
adverse manner.
(e) That the Subsidiary is in material compliance with all applicable federal,
provincial, state or local statutes, regulations, rules or ordinances
applicable to the it, its securities or assets and that the transactions
contemplated hereby will not result in any violations thereof.
(f) That the issuance of the Stock and the transfer of the Subsidiary Stock
complies with the requirements for exemption from registration under the
statutes, regulations and rules applicable thereto and of comparable
provisions of the laws of the Corporation's and the Subscriber's province
of domicile.
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(g) That all licenses, patents and intellectual property rights heretofore
held or owned by the Subsidiary continue to be in good standing and not
subject to legal or other challenges, and that after Closing on this
Agreement, they will continue to remain in full force, effect and
validity.
(h) That the operations of the several affiliated entities which comprise the
total business of which the Subsidiary has been a part since its inception
have been consolidated as to ownership and control under the Subsidiary,
in a manner resulting in the control and ownership thereof by the
Subsidiary, and, that as a consequence of the transactions contemplated by
this Agreement, all such assets and operations shall become the indirect
property (through ownership of the Subsidiary's capital stock) of the
Corporation.
3.3 CONDITIONS TO THE SUBSCRIBER'S OBLIGATIONS
The obligations of the Subscribers under this Agreement are subject to the
Corporation's satisfaction, or the written waiver thereof by the Subscriber, of
the following conditions prior to Closing (the "Subscriber's Conditions
Precedent"):
(a) That all covenants, agreements, actions, proceedings, instruments and
documents required to be carried out or delivered by the Corporation
pursuant to this Agreement shall have been performed, complied with or
delivered to the Sub scribers in accordance with the terms thereof.
(b) That the warranties and representations made by the Corporation in this
Agreement shall be true and correct in all material respects on and as of
the date of Closing and shall be deemed to be made on and as of such date.
(c) That the issuance of the Stock and the transfer of the Subsidiary Stock
complies with the requirements for exemption from registration under the
statutes, regulations and rules applicable thereto, including, without
limitation, the provisions of Sections 4(1), 4(2) or 4(6) of the
Securities Act of 1933, as amended, of Regulation D promulgated
thereunder, and of comparable provisions of the laws of the Corporation's
and the Subscriber's province of domicile.
ARTICLE FOUR
CLOSING
4.1 CLOSING DATE.
The Closing on this transaction will take place within 36 hours following
the execution of this Agreement, with all documents to be pre-cleared and
exchanged by overnight post.
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Closing will be held by telephone conference arranged by the Corporation at a
mutually agreeable time but may be adjourned and reconvened at a physical
location, if required, at the request of either Party. If Closing at a physical
location is required, it shall take place at the Subscriber's offices in Boynton
Beach, Florida, during normal business hours, at a mutually convenient time
within ten business days following the adjourned teleconference closing session.
4.2 ITEMS DELIVERED AT CLOSING BY THE SUBSIDIARY AND THE SUBSCRIBER.
Prior to the Closing, the Subscribers will deliver the following items to
the Corporation, which shall be held in escrow until completion of the Closing:
(a) Certificates for all of the Subsidiary Stock, duly endorsed or with stock
power attached with appropriate signature guarantees, in form and
substance adequate to permit immediate transfer thereof to the
Corporation;
(b) A certification from an officer of the Subsidiary to the effect that after
consulting with counsel to the Subsidiary or other legal counsel
acceptable to the Corporation, he or they reasonably believe that:
(1) The issuance of the Stock to the Subscribers will not require any
actions in the Subscribers' province of domicile, other than such
actions as have been taken no later than the fifth day prior to
Closing, in order to comply with such province's laws, regulations
and rules governing private placements, and that such issuance will
not violate any such laws, regulations or rules; and
(2) The transfer of the Subsidiary Stock as contemplated by this
Agreement meets the requirements of the exemption from registration
requirements provided by Sections 4(1), 4(2) or 4(6) of the
Securities Act of 1933, as amended.
(c) A certification from the Subsidiary's chief financial officer indicating
that, after a review of the Subsidiary's books and records from the date
of the Subsidiary's latest financial statements annexed hereto until the
fifth day prior to Closing, such review did not give such officer cause to
believe that any materially detrimental matters have occurred, or that
there have been any materially detrimental changes in the financial
condition of the Subsidiary, other than as disclosed in this Agreement.
(d) An investment letter, in the form annexed hereto as exhibit 4.2(d).
4.3 ITEMS DELIVERED AT CLOSING BY THE CORPORATION.
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Prior to the Closing, the Corporation will deliver the following to the
Subscriber, which shall be held in escrow until completion of the Closing:
(a) Certificates for the Stock, in denominations as directed by Subscriber.
(b) An opinion from the Corporation's legal counsel that the issuance of the
Stock as contemplated by this Agreement will meet the requirements of the
exemption from registration requirements provided by Section 4.2 of the
Securities Act of 1933, as amended.
(c) A certification from the Corporation's chief financial officer indicating
that, after a review of the Corporation's books and records from the date
of the Corporation's latest financial statements annexed hereto until the
fifth day prior to Closing, such review did not give such officer cause to
believe that any materially detrimental matters have occurred, or that
there have been any materially detrimental changes in the financial
condition of the Corporation, other than as disclosed in this Agreement.
4.4 CLOSING COSTS.
Except as expressly provided in this Agreement, each Party shall pay their
own Closing costs.
ARTICLE FIVE
BROKER
5.1 THE SUBSCRIBER.
The Subscribers and the Subsidiary represent and warrant to the
Corporation that it will not be subject to and will indemnify and hold it
harmless against any claims of brokers for commissions or other compensation in
connection with this Agreement and the consummation of the transactions
contemplated hereby.
5.2 THE CORPORATION.
The Corporation hereby represents and warrants to the Subsidiary that it
will not be subject to and will indemnify and hold it harmless against any
claims of brokers for commissions or other compensation in connection with this
Agreement and the consummation of the transactions contemplated hereby.
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ARTICLE SIX
COVENANTS
6.1 MAINTENANCE OF SUBSIDIARY:
Except as approved by the Corporation's Chief Executive Officer:
(a) The Subsidiary shall not sell or transfer any of the its material assets,
real, personal, tangible or intangible, other than in the ordinary course
of business, without the Corporation's explicit prior written consent.
(b) The Subsidiary will keep all of its material assets in good standing,
order and repair and shall cause any and all necessary remedies and
repairs thereto to be made on or before the Closing.
(c) The Subsidiary shall preserve all of its contractual rights in good
standing.
(d) The operations of the several affiliated entities which comprise the total
business of which the Subsidiary has been a part since its inception will
be consolidated as to ownership and control under the Subsidiary, in a
manner resulting in the control and ownership thereof by the Subsidiary,
and, as a consequence of the transactions contemplated by this Agreement,
all such assets and operations shall become the indirect property (through
ownership of the Subsidiary's capital stock) of the Corporation.
6.2 COOPERATION.
The Corporation and the Subsidiary and their agents shall have reasonable
access to the premises and assets of the other for the purpose of familiarizing
themselves with the operations of each others business. The Subsidiary and the
Corporation agree to cooperate with each other and to render a reasonable amount
of assistance in the orderly integration of the business of the Subsidiary into
the Corporation's operations and the familiarization of the Parties therewith.
6.3 POST CLOSING LEGAL ACTIVITIES
(a) Xxx X. Xxxxxx, Xx. P.A., which serves as an attorney to the Subscribers
have been asked to assist the Corporation's general counsel to prepare and
file all required reports of the transactions contemplated by this
Agreement with the Securities and Exchange Commission, such reports to
include a detailed report of special event on Form 8-K, any required proxy
materials, and such other matters as, in the opinion of management, may be
required.
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(b) The Parties hereby covenant and agree to fully cooperate with Xxx X.
Xxxxxx, Xx. P.A. in the timely preparation and filing of all such
materials and reports, which are due on or before the tenth day following
Closing.
ARTICLE SEVEN
MISCELLANEOUS
7.1 AMENDMENT.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
7.2 NOTICE.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
TO THE CORPORATION: Xxx Xxxxx, Jr., President
Wasatch International Corporation
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
TO THE SUBSCRIBERS: Xxx Xxxxxxxxxxx
000 Xxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Xxxxx X. Xxxxxxxx
0000 X.X. 0 Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
TO THE SUBSIDIARY: Xxx Xxxxxxxxxxx, President
Resort Marketing Group, Inc.
000 Xxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth. Copies of any
notice shall also be sent to Xxx X. Xxxxxx, Xx., P.A., General Counsel to the
Subscriber, by facsimile transmission to (000) 000-0000.
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7.3 MERGER.
This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with respect to
the subject matter discussed herein. All prior agreements whether written or
oral are merged herein and shall be of no force or effect.
7.4 SURVIVAL.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and Closing hereon and shall
be effective regardless of any investigation that may have been made or may be
made by or on be half of any Party.
7.5 SEVERABILITY.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
7.6 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
7.7 INDEMNIFICATION.
Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including legal or
other expenses incidental thereto), contingent, current, or inchoate to which
they or any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise. In the event it be comes necessary to enforce this
indemnity through an attorney, with or without litigation, the successful Party
shall be entitled to recover from the indemnifying Party, all costs incurred
including reasonable attorneys' fees throughout any negotiations, trials or
appeals, whether or not any suit is instituted.
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7.8 LITIGATION.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing
Party shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials
and appeals, whether or not litigation is initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
(1) First, the issue shall be submitted to mediation before a mediation
service in West Palm Beach, Florida to be selected by lot from six
alternatives to be provided, two by each Party. The mediation
efforts shall be concluded within ten business days after their
initiation unless the Parties unanimously agree to an extended
mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the instigation of any Party, lawsuit may be
commenced.
(3) Expenses of mediation shall be borne by the Subsidiary, if
successful. Expenses of mediation, if unsuccessful and of
arbitration shall be borne by the Party or Parties against whom the
arbitration decision is rendered. If the terms of the arbitral award
do not establish a prevailing Party, then the expenses of
unsuccessful mediation and arbitration shall be borne equally by the
Parties.
7.9 BENEFIT OF AGREEMENT.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
7.10 CAPTIONS.
The captions in this Agreement are for convenience and reference only and
in no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
7.11 NUMBER AND GENDER.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
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7.12 FURTHER ASSURANCES.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
7.13 STATUS.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of purchaser and seller.
7.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts. All executed
counterparts shall constitute one Agreement notwithstanding that all signatories
are not signatories to the original or the same counterpart. Execution by
exchange of facsimile transmission shall be deemed legally sufficient to bind
the signatory; however, the Parties shall, for aesthetic purposes, prepare a
fully executed original version of this Agreement, which shall be the document
filed with the Securities and Exchange Commission.
7.15 EXHIBIT INDEX.
Exhibit Description
------- -----------
0.2 Description of the Subsidiary's Business
1.3 Subsidiary's Liabilities
2.1 Corporation's Warranty Exceptions
2.2 Subsidiary's Warranty Exceptions
2.2(a) List of Assets Owned or Leased by the
Subsidiary and its Affiliates.
2.2(j) Subsidiary's Financial Statements
2.2(y) Subsidiary's Insurance Policies or Binders
2.3 Subscriber's Warranty Exceptions
2.3(c) Questionnaires
2.3(d) Regulation SB Disclosure Narrative
4.2(d) Investment Letter
* * *
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the 13th day of August, 1997.
Witnesses: STERLING WORLDWIDE CORPORATION
By: /s/ Xxxx M. E. Greyling
------------------------------------- ------------------------------------
Xxxx M. E. Greyling,President
Attest: /s/ Xxxx M. E. Greyling
------------------------------------- -------------------------------
(CORPORATE SEAL) Xxxx M. E. Greyling, Corporate
Secretary
RESORT MARKETING GROUP, INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxx Xxxxxxxxxxx
------------------------------------- -----------------------------------
Xxx Xxxxxxxxxxx, President
/s/ Xxxxx X. Xxxxxxxx Attest: /s/ Xxx Xxxxxxxxxxx
------------------------------------- -------------------------------
(CORPORATE SEAL) Xxx Xxxxxxxxxxx, Secretary
SUBSCRIBERS
/s/ Xxxxx X. Xxxxxxxx /s/ Xxx Xxxxxxxxxxx
------------------------------------- ----------------------------------------
XXX XXXXXXXXXXX
-------------------------------------
/s/ Xxxxx X. Xxxxxxxx /s/ XXXXX X. XXXXXXXX
------------------------------------- ----------------------------------------
XXXXX X. XXXXXXXX
-------------------------------------
Please Initial: Corporation: ______ Subsidiary: LS/PS Subscribers: LS/PS
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