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EXHIBIT 10.2
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
WINTHROP INDUSTRIES, INC.,
MEDIA CAPITAL SUBSIDIARY, INC.
AND
COMPASS KNOWLEDGE GROUP, INC.
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TABLE OF CONTENTS
1. Plan of Reorganization.......................................1
2. Terms of Merger..............................................2
3. Delivery of Shares...........................................5
4. Representations of Compass...................................5
5. Representations of WII and Xxxxx.............................7
6. Closing.....................................................13
7. Conditions Precedent to the Obligations
of Compass..................................................13
8. Conditions Precedent to the Obligation of
WII and WII Sub.............................................15
9. Indemnification.............................................15
10. Nature and Survival of Representations......................15
11. Documents at Closing........................................16
12. Finder's Fees...............................................17
13. Miscellaneous...............................................17
Signature Page...........................................................19
Exhibit A - Plan and Articles of Merger
Exhibit B - Compass Shareholder Schedule
Exhibit C - Certificate of Amendment to Articles of Incorporation of WII
Exhibit D - Investment Letter
Exhibit E - Form of Certificate of Designation of Series A Preferred Stock
(i)
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement")
is entered into effective as of this day of November, 1999, by and among
Winthrop Industries, Inc., a Nevada corporation (hereinafter "WII"); Media
Capital Subsidiary, Inc., a newly-formed Florida corporation (hereinafter "WII
Sub"); Xxxx Xxxxx, the sole director of WII and WII Sub (hereinafter "Xxxxx");
and Compass Knowledge Group, Inc., a Florida corporation (hereinafter
"Compass").
RECITALS:
WHEREAS, WII desires to acquire Compass as a wholly-owned subsidiary
and to issue shares of WII common stock to the shareholders of Compass upon the
terms and conditions set forth herein. WII Sub is a wholly-owned subsidiary
corporation of WII which shall be merged into Compass, whereupon Compass shall
be the surviving corporation of said merger and shall become a wholly-owned
subsidiary of WII (WII Sub and Compass are sometimes collectively hereinafter
referred to as the "Constituent Corporations").
WHEREAS, the boards of directors of WII and Compass, respectively, deem
it advisable and in the best interests of such corporations and their respective
shareholders that WII Sub merge with and into Compass pursuant to this Agreement
and the Plan and Articles of Merger in the form attached hereto as Exhibit "A"
and pursuant to applicable provisions of law (such transaction hereafter
referred to as the "Merger").
WHEREAS, WII Sub has an authorized capitalization consisting of 5,000
shares of no par value common stock, of which 1,000 shares shall be issued and
outstanding and owned by WII as of the closing of the Merger Compass has an
authorized capitalization consisting of 25,000,000 shares of common stock, $.01
par value ("Compass Common Stock"), of which 9,750,000 shares are issued and
outstanding, or reserved for issuance, as of the date hereof; and 5,000,000
authorized shares of preferred stock, $.001 par value, of which 5,000 have been
designated as Series A Senior Convertible Preferred Stock ("Preferred Stock").
Compass has 2,000 shares of Preferred Stock outstanding. All of said outstanding
shares of Compass Common Stock and Preferred Stock are owned by the shareholders
of Compass as set forth on the attached Exhibit "B" (hereafter "Compass
Shareholders").
NOW THEREFORE, for the mutual consideration set out herein, and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. PLAN OF REORGANIZATION. The parties hereto do hereby agree that WII
Sub shall be merged with and into Compass upon the terms and conditions set
forth herein. It is the intention of the parties hereto that this transaction
qualify as a tax-free reorganization under Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended, and related sections thereunder.
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2. TERMS OF MERGER. In accordance with the provisions of this Agreement
and the requirements of applicable law, WII Sub shall be merged with and into
Compass as of the Effective Date (the terms "Closing" and "Effective Date" are
defined in Section 6 hereof). Compass shall be the surviving corporation
(hereinafter sometimes the "Surviving Corporation") and the separate existence
of WII Sub shall cease when the Merger shall become effective. Consummation of
the Merger shall be upon the following terms and subject to the following
conditions:
(a) CORPORATE EXISTENCE.
(1) At the Effective Date, the Surviving Corporation shall
continue its corporate existence as a Florida corporation and (i) it
shall thereupon and thereafter possess all rights, privileges, powers,
franchises and property (real, personal and mixed) of each of the
Constituent Corporations; (ii) all debts due to either of the
Constituent Corporations, on whatever account, all causes in action and
all other things belonging to either of the Constituent Corporations
shall be taken and deemed to be transferred to and shall be vested in
the Surviving Corporation by virtue of the Merger without further act
or deed; and (iii) all rights of creditors and all liens upon any
property of any of the Constituent Corporations shall be preserved
unimpaired, limited in lien to the property affected by such liens
immediately prior to the Effective Date, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the
Surviving Corporation.
(2) At the Effective Date, (i) the Articles of Incorporation
and the By-laws of the Surviving Corporation, as existing immediately
prior to the Effective Date, shall be and remain the Articles of
Incorporation and By-Laws of the Surviving Corporation; (ii) the
members of the Board of Directors of the Surviving Corporation holding
office immediately prior to the Effective Date shall remain as the
members of the Board of Directors of the Surviving Corporation (if on
or after the Effective Date a vacancy exists on the Board of Directors
of the Surviving Corporation, such vacancy may thereafter be filled in
a manner provided by applicable law and the By-laws of the Surviving
Corporation); and (iii) until the Board of Directors of the Surviving
Corporation shall otherwise determine, all persons who hold offices of
the Surviving Corporation at the Effective Date shall continue to hold
the same offices of the Surviving Corporation.
(b) EVENTS OCCURRING AT CLOSING.
(1) WII shall have authorized 50,000,000 shares of $.001 par
value common stock and 5,000,000 shares of $.001 par value preferred
stock. The preferred stock shall be subject to issuance in such series
and with such rights, preferences and designations as determined in the
sole discretion of the board of directors. WII shall file a Certificate
of Designation with the State of Nevada, designating 5,000 shares of
its authorized preferred stock as Series A Senior Convertible Preferred
Stock with rights and preferences as set forth in Exhibit "E".
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(2) WII shall have 3,000,000 shares of its common stock issued
and outstanding and no other shares of capital stock issued or
outstanding not taking into effect the shares to be issued under this
Agreement.
(3) WII shall have and will demonstrate to the reasonable
satisfaction of Compass that it has no material assets and no debts,
liabilities, liens and/or judgments, contingent or fixed, other than
the proceeds of the WII Financing as described herein.
(4) WII shall have completed its private offering under
Regulation D, Rule 506, as promulgated by the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended, of up
to 2,650,000 shares of its common stock at $2.00 per share pursuant to
its Private Placement Memorandum dated November 1, 1999 (the
"Memorandum"). The gross proceeds of this offering (the "WII
Financing") shall be $5,300,000. However, the transactions completed
herein may be consummated upon receipt by WII of at least $4,000,000 in
good funds under the WII Financing. All proceeds, less agreed upon
costs, shall be delivered to the control of new management of WII at
Closing in good funds. The WII Financing shall have been completed in
compliance with all applicable state and federal securities laws and
the securities sold shall be delivered at Closing to the investors in
the WII Financing.
(c) CONVERSION OF SECURITIES.
As of the Effective Date and without any action on the part of
WII, WII Sub, Compass or the holders of any of the securities of any of these
corporations each of the following shall occur:
(1) Each share of Compass Common Stock issued and outstanding
immediately prior to the Effective Date shall be converted into one
share of WII Common Stock up to a maximum aggregate amount of 9,750,000
shares of WII Common Stock. All such shares of Compass Common Stock
shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and each certificate previously evidencing any
such shares shall thereafter represent the right to receive, upon the
surrender of such certificate in accordance with the provisions of
Section 3 hereof, certificates evidencing such number of shares of WII
Common Stock, respectively, into which such shares of Compass Common
Stock were converted. The holders of such certificates previously
evidencing shares of Compass Common outstanding immediately prior to
the Effective Date shall cease to have any rights with respect to such
shares of Compass Common except as otherwise provided herein or by law;
(2) Each share of Compass Series A Preferred Stock issued and
outstanding immediately prior to the Effective Date shall be converted
into one share of WII Series A
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Preferred Stock up to a maximum aggregate amount of 2,000 shares of WII
Series A Preferred Stock. All such shares of Compass Series A Preferred
Stock shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance with the
provisions of Section 3 hereof, certificates evidencing such number of
shares of WII Common Stock, respectively, into which such shares of
Compass Series A Preferred Stock were converted. The holders of such
certificates previously evidencing shares of Compass Series A Preferred
Stock outstanding immediately prior to the Effective Date shall cease
to have any rights with respect to such shares of Compass Series A
Preferred Stock except as otherwise provided herein or by law;
(3) Any shares of Compass capital stock held in the treasury
of Compass immediately prior to the Effective Date shall automatically
be canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto;
(4) Each share of capital stock of WII Sub issued and
outstanding immediately prior to the Effective Date shall remain in
existence as one share of common stock of the Surviving Corporation,
all of which shall be owned by WII;
(5) The shares of WII Common Stock previously issued and
outstanding immediately prior to the Merger will remain outstanding,
subject to the provisions of Section 2(b)(5) hereof, so that after
conversion of the Compass Common and Preferred Stock, and the WII
Financing, WII shall have no more than 15,400,000 shares of WII Common
Stock outstanding and 2,000 shares of Preferred Stock outstanding.
(6) 500,000 of the 9,750,000 shares to be issued by WII to the
shareholders of Compass shall be held by the Company for delivery to
the University of Florida Health Services, Inc. ("UFHS") pending
reaching an agreement with UFHS regarding an exchange of such shares
for the ownership of UFHS in Intellicus, L.C. In the event such an
agreement is not concluded within thirty days of Closing (or such
reasonable period as extended by the parties), the 500,000 shares shall
be cancelled on the books and records of WII.
(d) OTHER MATTERS.
(1) There shall be no stock dividend, stock split,
recapitalization, or exchange of shares with respect to or rights
issued in respect of WII's Common Stock after the date hereof and there
shall be no dividends paid on WII's Common Stock after the date hereof,
in each case through and including the Effective Date.
(2) Compass and WII shall have received all requisite director
and shareholder approval of all matters set forth herein and no
shareholder of Compass or WII shall have exercised any dissenters
rights under applicable corporate law.
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(3) WII shall file an amendment to its Articles of
Incorporation with the Secretary of State of the State of Nevada in
substantially the form attached hereto as Exhibit "B" effecting an
amendment to its Articles of Incorporation to reflect a name change to
Compass Knowledge Holdings, Inc. or such other new name as selected by
Compass, to authorize 5,000,000 shares of blank check preferred stock,
and to put of record the 3.33 to 1 reverse stock split, reducing its
outstanding shares of common stock to 3,000,000 shares from 10,000,000
shares, as set forth in the attached Exhibit "B". All references herein
to shares of common stock of WII to be issued or as outstanding give
effect to the 3.33 to 1 reverse split unless otherwise stated.
(4) WII shall file a Certificate of Designation covering 5,000
shares of Series A Preferred Stock in the form attached hereto as
Exhibit "E".
(5) WII shall adopt a Stock Option Plan at Closing to include
up to 1,500,000 shares of its common stock. The Plan shall include
"incentive" stock options under Section 422 of the Internal Revenue
Code of 1986, as amended and other options and similar rights. WII
shall grant options under said plan to existing optionholders of
Compass in exchange for their Compass options, at Closing, exercisable
at $.75 per share, as designated by Compass subject to the reasonable
approval of WII.
(6) The resignation of the existing WII officer and director
and appointment of new officers and directors as directed by Compass.
3. DELIVERY OF SHARES. On or as soon as practicable after the Effective
Date, Compass will use its best efforts to cause the Compass Shareholders to
surrender for cancellation certificates representing their shares of Compass
Common Stock, against delivery of certificates representing the shares of WII
Common Stock for which the Compass shares are to be converted in the Merger.
Until surrendered and exchanged as herein provided, each outstanding certificate
which, prior to the Effective Date, represented an Compass stock certificate
shall be deemed for all corporate purposes to evidence ownership of the same
number of shares of WII Common Stock into which the Compass certificate shall
have been so converted.
4. REPRESENTATIONS OF COMPASS. Compass hereby represents and warrants
as follows, which warranties and representations shall also be true as of the
Effective Date:
(a) Except as noted on Exhibit "B", the Compass Shareholders
listed on the attached Exhibit "B" are the sole owners of record and
beneficially of the issued and outstanding capital stock of Compass.
(b) The Compass Common Stock and Preferred Stock constitutes
duly authorized, validly issued shares of capital stock of Compass,
fully paid and nonassessable and are the only capital shares of Compass
outstanding.
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(c) The Compass unaudited financial statements as of June 30,
1999, and the audited Intelicus, L.C. financial statements of December
31, 1998 and 1997, which have been delivered to WII (hereinafter
referred to as the "Compass Financial Statements") are materially
complete, accurate and fairly present the financial condition of the
named indited as of the date thereof and the results of its operations
for the periods covered. Other than as set forth in any schedule
attached hereto, there are no material liabilities or obligations,
either fixed or contingent, not disclosed in the Compass Financial
Statements or in any exhibit thereto or notes thereto other than
contracts or obligations in the ordinary course of business; and no
such contracts or obligations in the ordinary course of business
constitute liens or other liabilities which materially alter the
financial condition of Compass as reflected in the Compass Financial
Statements. Compass has or will have at Closing, good title to all
assets shown on the Compass Financial Statements subject only to
dispositions and other transactions in the ordinary course of business,
the disclosures set forth therein and liens and encumbrances of record.
The Compass financial statement have been prepared in accordance with
generally accepted accounting principles consistently applied (except
as may be indicated therein or in the notes thereto).
(d) Since June 30, 1999, there have not been any material
adverse changes in the financial position of Compass except changes
arising in the ordinary course of business, which changes will in no
event materially and adversely affect the financial position of
Compass.
(e) Compass is not a party to any material pending litigation
or, to its best knowledge, any governmental investigation or
proceeding, not reflected in the Compass Financial Statements, and to
its best knowledge, no material litigation, claims, assessments or any
governmental proceedings are threatened against Compass.
(f) Compass is in good standing in its state of incorporation,
and is in good standing and duly qualified to do business in each state
where required to be so qualified except where the failure to so
qualify would have no material negative impact on Compass.
(g) Compass has, or by the Effective Date will have, filed all
material tax, governmental and/or related forms and reports (or
extensions thereof) due or required to be filed and has (or will have)
paid or made adequate provisions for all taxes or assessments which
have become due as of the Effective Date.
(h) Compass has not materially breached any material agreement
to which it is a party. Compass has previously given WII copies or
access thereto of all material contracts, commitments and/or agreements
to which Compass is a party including all relationships or dealings
with related parties or affiliates.
(i) Compass has no subsidiary corporations except those
disclosed in the Memorandum.
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(j) Compass has made its corporate financial records, minute
books, and other corporate documents and records available for review
to present management of WII prior to the Effective Date, during
reasonable business hours and on reasonable notice.
(k) The execution of this Agreement does not materially
violate or breach any material agreement or contract to which Compass
is a party and this Agreement has been duly authorized by all
appropriate and necessary corporate action and Compass, to the extent
required, has obtained all necessary approvals or consents required by
any agreement to which Compass is a party.
(l) Information regarding Compass which is set forth in the
Memorandum or which is otherwise used in connection with the Merger is
true, complete and accurate in all material respects.
(m) Compass shall use its most diligent and reasonable best
efforts to cause WII to become a reporting company with the S.E.C. on a
timely basis so as to maintain its listing on the OTCBB.
5. REPRESENTATIONS OF WII, WII SUB AND XXXXX. WII, WII Sub and Xxxxx
hereby jointly and severally represent and warrant as follows, each of which
representations and warranties shall continue to be true as of the Effective
Date:
(a) As of the Effective Date, the shares of WII Common Stock
and Preferred Stock to be issued and delivered to the Compass
Shareholders hereunder will, when so issued and delivered, constitute
duly authorized, validly and legally issued shares of WII capital
stock, fully-paid and nonassessable and free of all liens and
encumbrances.
(b) WII has the corporate power to enter into this Agreement
and to perform its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been or will be duly authorized by the respective Boards of
Directors of WII and WII Sub and by WII as the sole shareholder of WII
Sub. The execution and performance of this Agreement will not
constitute a material breach of any agreement, indenture, mortgage,
license or other instrument or document to which WII or WII Sub is a
party and will not violate any judgment, decree, order, writ, rule,
statute, or regulation applicable to WII, WII Sub or their properties.
The execution and performance of this Agreement will not violate or
conflict with any provision of the respective Certificate of
Incorporation or by-laws of WII or WII Sub.
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(c) WII has delivered to Compass a true and complete copy of
its (i) audited financial statements for the fiscal years ended
December 31, 1998 and 1997, and unaudited interim financial statements
for the period ended September 30, 1999, (the "WII Financial
Statements"). The WII Financial Statements are complete, accurate and
fairly present the financial condition of WII as of the dates thereof
and the results of its operations for the periods then ended. There are
no material liabilities or obligations either fixed or contingent not
reflected therein. The WII audited financial statements have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in
the notes thereto) and fairly present the financial position of WII as
of the dates thereof and the results of its operations and changes in
financial position for the periods then ended. WII Sub has no financial
statements because it is currently being formed for the purpose of
effectuating the Merger and it has no assets, liabilities, contracts or
obligations of any kind other than as received or incurred in
connection with its incorporation in Florida. WII has no subsidiaries
except for WII Sub, and WII Sub has no subsidiaries.
(d) Since September 30, 1999, there have not been any material
adverse changes in the financial condition of WII. At Closing, WII will
have no material assets and no liabilities of any kind other than the
cash proceeds from the WII Financing.
(e) Neither WII nor WII Sub is a party to or the subject of
any pending litigation, claims, or governmental investigation or
proceeding not reflected in the WII Financial Statements or otherwise
disclosed herein, and there are no lawsuits, claims, assessments,
investigations, or similar matters, to the best knowledge of Xxxxx,
threatened or contemplated against or affecting WII Sub, WII, its
management or its properties.
(f) WII and WII Sub are each duly organized, validly existing
and in good standing under the laws of the jurisdiction of their
incorporation; each has the corporate power to own its property and to
carry on its business as now being conducted and is duly qualified to
do business in any jurisdiction where so required except where the
failure to so qualify would have no material negative impact.
(g) WII and WII Sub have filed all federal, state, county and
local income, excise, property and other tax, governmental and/or
related returns, forms, or reports, which are due or required to be
filed by it prior to the date hereof and have paid or made adequate
provision in the WII Financial Statements for the payment of all taxes,
fees, or assessments which have or may become due pursuant to such
returns or pursuant to any assessments received. Neither WII nor WII
Sub is delinquent or obligated for any tax, penalty, interest,
delinquency or charge.
(h) WII's authorized capital stock presently consists of: (i)
50,000,000 shares of Common Stock, $.001 par value, of which 10,000,000
shares are presently issued and outstanding, not giving effect to the
reverse split.. WII Sub's capitalization consists of 5,000
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shares of no par value common stock ("WII Sub's Common Stock"), of
which 1,000 shares outstanding, all of which owned by WII, free and
clear of all liens, claims and encumbrances. All outstanding shares of
capital stock of WII and WII Sub are, or shall be at Closing, validly
issued, fully paid and nonassessable. There are no existing options,
calls, warrants, preemptive rights, registration rights or commitments
of any character relating to the issued or unissued capital stock or
other securities of either WII or WII Sub.
(i) WII and WII Sub have (and at the Closing they will have)
disclosed in writing all events, conditions and facts materially
affecting the business, financial conditions or results of operations
of either WII or WII Sub.
(j) The corporate financial records, minute books, and other
documents and records of WII and WII Sub have been made available to
Compass prior to the Closing.
(k) WII has not breached, nor is there any pending, or to the
knowledge of management, any threatened claim that WII has breached,
any of the terms or conditions of any agreements, contracts or
commitments to which it is a party or by which it or its properties is
bound. The execution and performance hereof will not violate any
provisions of applicable law or any agreement to which WII is subject.
WII hereby represents that it is not a party to any material contract
or commitment other than appointment documents with its transfer agent,
and that it has disclosed to Compass all relationships or dealings with
related parties or affiliates.
(l) WII has complied with the provisions for registration
under the Securities Act of 1933 and all applicable blue sky laws in
connection with its initial public stock offering. There are no
outstanding, pending or threatened stop orders or other actions or
investigations relating thereto.
(m) All information regarding WII which has been provided to
Compass by WII or set forth in any document disseminated to the public
or filed with the NASD or the Securities and Exchange Commission is
true, complete and accurate in all material respects.
(n) WII is in compliance with, and WII has operated any
businesses previously owned or operated by it in compliance with, all
applicable laws, orders, rules and regulations of all governmental
bodies and agencies, including applicable securities laws and
regulations and environmental laws and regulations, except where such
noncompliance has and will have, in the aggregate, no material adverse
effect. WII has not received notice of any noncompliance with the
foregoing.
(o) Without limiting the foregoing, WII and any other person
or entity for whose conduct WII is legally held responsible are in
material compliance with all applicable federal, state, regional, local
or provincial laws, statutes, ordinances, judgments, rulings and
regulations relating to any matters of pollution, protection of the
environment, health
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or safety, or environmental regulation or control (collectively,
?Environmental Laws?). Neither WII nor any other person or entity for
whose conduct WII is legally responsible, has (i) received any notice,
demand, request for information, or administrative inquiry relating to
any violation of an Environmental Law or the institution of any suit,
action, claim or proceeding alleging such violation or investigation by
any governmental authority or any third party of any such violation,
(ii) manufactured, generated, treated, stored, handled, processed,
released, transported or disposed of any hazardous substance on, under,
from or at any of WII?s properties or any other properties, (iii)
become aware or received notice of the release or disposal of any
hazardous substances in violation of any applicable Environmental Law,
on, under or at any of WII?s properties or any other properties, (iv)
become aware or received notice of any actual or potential material
liability on the part of WII for the response to or remediation of any
hazardous substance at or arising from any of WII?s properties or any
other properties owned or operated by WII or any other person for whose
conduct WII is legally responsible, or (v) become aware of or received
notice of any actual or potential liability on the part of WII for the
costs of response to or remediation of hazardous substances at or
arising from any properties owned or operated by WII or any other
person for whose conduct WII is or may be held responsible. For
purposes of this Agreement, the term ?hazardous substance? shall mean
any toxic or hazardous materials or substances, including asbestos,
buried contaminants, chemicals, flammable explosives, radioactive
materials or petroleum and petroleum products and any substances
defined as, or included in the definition of, ?hazardous substances,?
?hazardous wastes,? ?hazardous materials? or ?toxic substances? under
any Environmental Law. No Environmental Law imposes any obligation upon
WII arising out of or as a condition to any transaction contemplated
hereby, including, without limitation, any requirement to modify or to
transfer any permit or license, any requirement to file any notice or
other submission with any governmental authority, the placement of any
notice, acknowledgment, or covenant in any land records, or the
modification of or provision of notice under any agreement, consent
order, or consent decree.
(p) WII has filed all required documents, reports and
schedules with the SEC and NASD since February 13, 1997 (collectively,
the "WII SEC Documents"). As of their respective dates, the WII SEC
Documents complied in all material respects with the requirements of
the Securities Act or the NASD rules and regulations, as the case may
be, and, at the respective times they were filed, none of the WII SEC
Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements (including, in
each case, any notes thereto) of WII included in the WII SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted
accounting principles (except as may be indicated therein or in the
notes thereto) applied on a consistent basis during the periods
involved
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(except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position
of WII as of the respective dates thereof and the results of its
operations and its cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments
and to any other adjustments described therein). WII has not, since
February 13, 1997, made any change in the accounting practices or
policies applied in the preparation of financial statements.
(q) Except as and to the extent specifically disclosed in this
Agreement and those that are specifically reflected or reserved against
as to amount in the latest balance sheet contained in the WII
Financials, there is no basis for the assertion against WII of any
material liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise and whether due or to become due,
including, without limitation, any liability for taxes and interest,
penalties and other charges payable with respect thereto. Except as set
forth in this Agreement, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (a) result in any payment (whether severance pay, unemployment
compensation or otherwise) becoming due from WII to any employee,
director or officer or former employee, director or officer of WII, (b)
increase any benefits otherwise payable to any employee, director or
officer or former employee, director or officer of WII, or (c) result
in the acceleration of the time of payment or vesting of any such
benefits.
(r) No patent, formula, process, trade secret, trademark,
trade name, assumed name or copyright used by WII, including all
intellectual property used in the operation of the business of WII
(collectively, the ?WII Intellectual Property?), infringes on any
patent, copyright, trademark or other intellectual property right of
any person, or violates the terms of any agreements related thereto,
nor have there been any claims of infringement or to WII?s knowledge,
threatened against WII.
(s) No aspect of WII?s business, operations or assets is of
such character as would restrict WII from carrying on the business of
Compass and its subsidiaries as it is presently being conducted.
(i) WII has no consultants or independent contractors
to whom it is paying compensation for services.
(ii) WII no material contracts, commitments,
arrangements, or understandings relating to its business,
operations, financial condition, or prospects. For purposes of
this Section, ?material? means payment or performance of a
contract, commitment, arrangement or understanding entered
into in the ordinary course of business which is expected to
(i) involve payments in excess of $10,000 per year, (ii) have
a duration exceeding one (1) year, or (iii) any contract,
commitment, arrangement or understanding entered into not in
the ordinary course of business.
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(iii) Other than this Agreement and the transactions
contemplated hereby, there are no outstanding contracts,
commitments or bids, or services, development or sales
proposals.
(iv) There are no outstanding lease or purchase
commitments of WII.
(t) No representation or warranty by WII contained in this
Agreement and no statement contained in any certificate or schedule
furnished pursuant to the provisions hereof contains or shall contain
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein not misleading.
There is no current event or condition of any kind or character
pertaining to WII that may reasonably be expected to have a material
adverse effect on WII or Compass and its subsidiaries. Except as
specifically indicated elsewhere in this Agreement, all documents
delivered by WII in connection herewith have been and will be complete
originals, or exact copies thereof.
(u) Assuming all such consents and approvals have been
obtained and assuming the appropriate filings and mailings are made by
WII under the Securities Act and the NASD and with the Secretary of
State of Florida and Nevada, the execution and delivery by WII of this
Agreement and the closing documents and the consummation by WII of the
transactions contemplated hereby do not and will not require the
consent, approval or action of, or any filing or notice to, any
corporation, firm, person or other entity or any public, governmental
or judicial authority (except for such consents, approvals, actions,
filing or notices the failure of which to make or obtain will not in
the aggregate have a material adverse effect); (b) violate in any
material respect the terms of any material instrument, document or
agreement to which WII is a party, or by which WII or the property of
WII is bound, or be in conflict in any material respect with, result in
a material breach of or constitute (upon the giving of notice or lapse
of time or both) a material default under any such instrument, document
or agreement, or result in the creation of any lien upon any of the
property or assets of WII; (c) violate in any respect the terms of any
instrument, document or agreement to which WII is a party, or by which
WII or the property of WII is bound, or be in conflict in any respect
with, result in a breach of or constitute (upon the giving of notice or
lapse of time or both) a default under any such instrument, document or
agreement, or result in the creation of any lien upon any of the
property or assets of WII if the aggregate effect of all such
violations listed in this subsection (c) results in a material adverse
effect on WII taken as a whole; (d) violate WII?s Articles of
Incorporation or Bylaws; or (e) violate any order, writ, injunction,
decree, judgment, ruling, law, rule or regulation of any federal,
state, county, municipal, or foreign court or governmental authority
applicable to WII, or its business or assets. WII is not subject to, or
a party to, any mortgage, lien, lease, agreement, contract, instrument,
order, judgment or decree or any other material restriction of any kind
or
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character which would prevent or hinder the continued operation of
the business of WII and Compass after the closing.
6. CLOSING. The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually determined by the parties
hereto when all conditions precedent have been met and all required documents
have been delivered, which Closing is expected to be on or about November 15,
1999, or such later date as mutually agreed to by all parties hereto. The
"Effective Date" of the Merger shall be that date on which executed copies of
the attached Plan and Articles of Merger is filed with the Secretary of State of
Florida.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COMPASS. All obligations
of Compass under this Agreement are subject to the fulfillment, prior to or as
of the Closing and/or the Effective Date, as indicated below, of each of the
following conditions:
(a) The representations and warranties by or on behalf of WII,
WII Sub and Xxxxx contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof shall be true in
all material respects at and as of the Closing and Effective Date as
though such representations and warranties were made at and as of such
time.
(b) WII and WII Sub shall have performed and complied with all
covenants, agreements, and conditions set forth in, and shall have
executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them prior to
or at the Closing including the successful completion of the WII
Financing.
(c) On or before the Closing, the shareholders of WII by
majority written consent, the sole director of WII and WII Sub, and WII
as sole shareholder of WII Sub shall have approved in accordance with
applicable state corporation law the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein.
(d) On or before the Closing Date, WII and WII Sub shall have
delivered certified copies of resolutions of the sole shareholder and
director of WII Sub and of the sole director and shareholders of WII
approving and authorizing the execution, delivery and performance of
this Agreement and authorizing all of the necessary and proper action
to enable WII and WII Sub to comply with the terms of this Agreement
including the election of Compass's nominees to the Board of Directors
of WII, the adoption of an Employee Stock Option Plan in the form
provided by Compass and all matters outlined herein.
(e) The Merger shall be permitted by applicable state law and
WII shall have sufficient shares of its capital stock authorized to
complete the Merger.
(f) At Closing, Xxxxx shall have resigned in writing from his
positions as sole
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director and officer of WII effective upon the election and appointment
of the Compass nominees as set forth in the Memorandum or as otherwise
designated by Compass.
(g) At the Closing, all instruments and documents delivered to
Compass Shareholders pursuant to the provisions hereof shall be
reasonably satisfactory to legal counsel for Compass.
(h) At the Closing, upon consummation of the Merger, WII shall
have the same authorized and issued capital as at present except as
described in Section 2(b)(2) hereof.
(i) The shares of restricted WII capital stock to be issued to
Compass Shareholders at Closing will be validly issued, nonassessable
and fully-paid under Nevada corporation law and will be issued in a
nonpublic offering in compliance with all federal, state and applicable
securities laws.
(j) Compass shall have received the advice of its tax advisor
that this transaction is a tax free reorganization as to the exchanging
Compass common shareholders.
(k) Compass shall have received all necessary and required
approvals and consents from required parties and its shareholders.
(l) At the Closing, WII and WII Sub shall have delivered to
Compass an opinion of its counsel dated as of the Closing to the effect
that:
(i) WII and WII Sub, each is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of incorporation;
(ii) This Agreement has been duly authorized,
executed and delivered by WII and WII Sub and is a valid and
binding obligation of WII and WII Sub enforceable in
accordance with its terms;
(iii) WII and WII Sub each through its Board of
Directors and stockholders have taken all corporate action
necessary for performance under this Agreement;
(iv) The documents executed and delivered to Compass
and Compass Shareholders hereunder are valid and binding in
accordance with their terms and vest in Compass Shareholders,
as the case may be, all right, title and interest in and to
the shares of WII's Common Stock and Preferred Stockto be
issued pursuant to Section 2 hereof, and the shares of WII
capital stock when issued will be duly and validly issued,
fully-paid and nonassessable; and
(v) WII and WII Sub each has the corporate power to
execute, deliver and perform under this Agreement.
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(vi) Legal counsel for WII and WII Sub is not aware
of any liabilities, claims or lawsuits involving WII or WII
Sub.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF WII AND WII SUB. All
obligations of WII and WII Sub under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
(a) The representations and warranties by Compass contained in
this Agreement or in any certificate or document delivered pursuant to
the provisions hereof shall be true in all material respects at and as
of the Closing as though such representations and warranties were made
at and as of such time.
(b) Compass shall have performed and complied with, in all
material respects, all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by them prior to or
at the Closing;
(c) Compass shall cause at or as soon as practicable after
Closing, each of its shareholders to deliver to WII, a letter commonly
known as an "Investment Letter," in substantially the form attached
hereto as Exhibit "D", acknowledging that the shares of WII Common
Stock are being acquired by said shareholders for investment purposes.
(d) Compass shall deliver an opinion of its legal counsel to
the effect that:
(i) Compass is a corporation duly organized, validly
existing and in good standing under the laws of the state of
its incorporation;
(ii) This Agreement has been duly authorized,
executed and delivered by Compass.
9. INDEMNIFICATION. For a period of two years from the Closing, Xxxxx,
WII and WII Sub agree to jointly and severally indemnify and hold harmless
Compass, its officers, directors and employees, and Compass agrees to indemnify
and hold harmless Xxxxx, WII and WII Sub, against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fees incident to
any of the foregoing, resulting from any material misrepresentations made by an
indemnifying party to an indemnified party, an indemnifying party's breach of
covenant or warranty or an indemnifying party's nonfulfillment of any agreement
hereunder, or from any material misrepresentation in or omission from any
certificate furnished or to be furnished hereunder. Subject to a threshold limit
of $50,000 and except as otherwise covered by insurance.
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10. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for two
years from the Closing. All of the parties hereto are executing and carrying out
the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement and not upon
any investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
11. DOCUMENTS AT CLOSING. At the Closing, the following documents shall
be delivered:
(a) Compass will deliver, or will cause to be delivered, to
WII the following:
(i) a certificate executed by the President and
Secretary of Compass to the effect that all representations
and warranties made by Compass under this Agreement are true
and correct as of the Closing, the same as though originally
given to WII or WII Sub on said date;
(ii) a certificate from the state of Compass's
incorporation dated at or about the Closing to the effect that
Compass is in good standing under the laws of said state;
(iii) Investment Letters in the form attached hereto
as Exhibit "D" executed by each Compass Common Shareholder,
some of which may be delivered after Closing;
(iv) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant
to the provisions of this Agreement;
(v) executed copies of the Plan and Articles of
Merger for filing; and certified copies of resolutions adopted
by the shareholders and directors of Compass authorizing the
Merger; and
(vi) all other items, the delivery of which is a
condition precedent to the obligations of WII and WII Sub, as
set forth herein.
(vii) the legal opinion required by Section 8(d)
hereof.
(b) WII and WII Sub will deliver or cause to be delivered to Compass:
(i) stock certificates representing those securities
of WII to be issued as a part of the Merger as described in
Section 2 hereof;
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(ii) a certificate of the President/Secretary of WII
and WII Sub, respectively, to the effect that all
representations and warranties of WII and WII Sub made under
this Agreement are true and correct as of the Closing, the
same as though originally given to Compass on said date;
(iii) certified copies of resolutions adopted by
WII's and WII Sub's Board of Directors and WII's and WII Sub's
Stockholders authorizing the Merger and all related matters;
(iv) certificates from the jurisdiction of
incorporation of WII and WII Sub dated at or about the Closing
Date that each of said corporations is in good standing under
the laws of said state;
(v) opinion of WII's counsel as described in Section
7(l) above;
(vi) Net proceeds from WII Financing;
(vii) such other instruments and documents as are
required to be delivered pursuant to the provisions of this
Agreement;
(viii) resignation of Xxxxx as the sole officer and
director of WII and WII Sub; and
(ix) all other items, the delivery of which is a
condition precedent to the obligations of Compass, as set
forth in Section 7 hereof, including the net proceeds of the
WII Financing.
12. FINDER'S FEES. Xxxxx, WII and WII Sub, jointly and severally,
represent and warrant to Compass, and Compass represents and warrants to each of
Xxxxx, WII and WII Sub, that none of them, or any party acting on their behalf,
has incurred any liabilities, either express or implied, to any "broker" of
"finder" or similar person in connection with this Agreement or any of the
transactions contemplated hereby, other than as described in the Memorandum. In
this regard, Xxxxx, WII and WII Sub, jointly and severally, on the one hand, and
Compass on the other hand, will indemnify and hold the other harmless from any
claim, loss, cost or expense whatsoever (including reasonable fees and
disbursements of counsel) from or relating to any such express or implied
liability, other than as described in the Memorandum.
13. MISCELLANEOUS.
(a) Further Assurances. At any time, and from time to time,
after the Effective Date, each party will execute such additional
instruments and take such action as may be reasonably requested by the
other party to confirm or perfect title to any property
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transferred hereunder or otherwise to carry out the intent and purposes
of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder
may be waived in writing by the party to whom such compliance is owed.
(c) Termination. All obligations hereunder may be terminated
at the discretion of either party's Board of Directors if (i) the
closing conditions specified in Sections 7 and 8 are not met by October
29, 1999, (with the exception of the delivery of the Investment
Letters) unless unanimously extended, or (ii) any of the
representations and warranties made herein have been materially
breached.
(d) Amendment. This Agreement may be amended only in writing
as agreed to by all parties hereto.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
in person or sent by prepaid first class registered or certified mail,
return receipt requested to the last known address of the noticed
party.
(f) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
(h) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors and assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits
including the Plan and Articles of Merger attached hereto as Exhibit
"A" is the entire agreement of the parties covering everything agreed
upon or understood in the transaction. There are no oral promises,
conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to
be unenforceable the balance of the Agreement shall remain in full
force and effect.
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(l) Responsibility and Costs. Whether the Merger is
consummated or not, all fees, expenses and out-of-pocket costs and
expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred by the parties
hereto shall be borne solely and entirely by the party that has
incurred such costs and expenses, unless the failure to consummate the
Merger constitutes a breach of the terms hereof, in which event the
breaching party shall be responsible for all costs of all parties
hereto.
(m) Applicable Law. This Agreement shall be construed and
governed by the laws of the State of Nevada.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
MEDIA CAPITAL SUBSIDIARY, INC. WINTHROP INDUSTRIES, INC.
By: By:
------------------------------- --------------------------------
Xxxx Xxxxx, President/Secretary Xxxx Xxxxx, President/Secretary
--------------------------------
Xxxx Xxxxx, individually
COMPASS KNOWLEDGE GROUP, INC.
By:
----------------------------
Xxx Xxxxxx, President
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STOCKHOLDERS OF COMPASS
KNOWLEDGE GROUP, INC.
--------------------------------
Xxx Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, Xx.
CloverLeaf Capital Advisors, LLC
By:
-----------------------------
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EXHIBIT "A"
TO AGREEMENT AND PLAN OF REORGANIZATION
PLAN AND ARTICLES OF MERGER
24
EXHIBIT "B"
TO AGREEMENT AND PLAN OF REORGANIZATION
LIST OF COMPASS COMMON STOCKHOLDERS
COMMON SHARES TO BE
NAME ISSUED AT CLOSING
---- -------------------
Xxxxxx X. Xxxxxx, Xx. 4,809,289
Xxx Xxxxxx 3,482,587
University of Florida Health Services, Inc. 500,000
Cloverleaf Capital Advisors, LLC 767,250
Xxxxx Xxxxxxx 130,874
Xxxxxxx Xxxxxxxx 60,000
---------
9,750,000
=========
SERIES A PREFERRED STOCKHOLDERS
NAME SHARES
---- ------
Pioneer Ventures Associates 2,000
Limited Partnership
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EXHIBIT "C"
TO AGREEMENT AND PLAN OF REORGANIZATION
AMENDMENT TO ARTICLES OF INCORPORATION OF WII
26
EXHIBIT "D"
TO AGREEMENT AND PLAN OF REORGANIZATION
INVESTMENT LETTER
27
EXHIBIT "E"
TO AGREEMENT AND PLAN OF REORGANIZATION
FORM OF CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK
