EXCHANGE AGREEMENT
Between
NOVUS LABORATORIES, INC.
and
THE WORLD GOLF LEAGUE, INC.
Dated January 31, 2003
TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WORLD GOLF LEAGUE
1.01 Organization 1
1.02 Capitalization 1
1.03 Subsidiaries and Predecessor Corporations 1
1.04 Financial Statements
1.05 Information 2
1.06 Options and Warrants 2
1.07 Absence of Certain Changes or Events 2
1.08 Title and Related Matters 3
1.09 Litigation and Proceedings 3
1.10 Contracts 3
1.11 Material Contract Defaults 4
1.12 No Conflict With Other Instruments 4
1.13 Governmental Authorizations 4
1.14 Compliance With Laws and Regulations 4
1.15 Approval of Agreement 4
1.16 Material Transactions or Affiliations 4
1.17 World Golf League Schedules 5
1.18 Valid Obligation 6
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF NOVUS LABORATORIES
2.01 Organization 6
2.02 Capitalization 6
2.03 Subsidiaries and Predecessor Corporations 6
2.04 Financial Statements 6
2.05 Information 7
2.06 Options and Warrants 7
2.07 Absence of Certain Changes or Events 7
2.08 Title and Related Matters 8
2.09 Litigation and Proceedings 8
2.10 Contracts 8
2.11 Material Contract Defaults 9
2.12 No Conflict With Other Instruments 9
2.13 Governmental Authorizations 9
2.14 Compliance With Laws and Regulations 9
2.15 Approval of Agreement 9
2.16 Continuity of Business Enterprises 9
2.17 Material Transactions or Affiliations 9
2.18 Novus Laboratories Schedules 10
2.19 Valid Obligation 10
ARTICLE III PLAN OF EXCHANGE
3.01 The Exchange 11
3.02 Anti-Dilution 11
3.03 Closing 11
3.04 Closing Events 11
3.05 Termination 11
ARTICLE IV SPECIAL COVENANTS
4.01 Access to Properties and Records 13
4.02 Delivery of Books and Records 13
4.03 Third Party Consents and Certificates 13
4.04 Accredited Status 13
4.05 Consent of World Golf League Shareholders 13
4.06 Designation of Directors and Officers 13
4.07 Exclusive Dealing Rights 13
4.08 Actions Prior to Closing 14
4.09 Indemnification 15
4.10 Limitation of Subsequent Corporate Actions 16
4.11 Indemnification of Subsequent Corporate Actions
4.12 Name Change
4.13 Audited Financial Statements
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF NOVUS LABORATORIES
5.01 Accuracy of Representations and Performance of Covenants 16
5.02 Officer's Certificates 16
5.03 No Material Adverse Change 16
5.04 Approval by World Golf League Shareholders 16
5.05 No Governmental Prohibitions 16
5.06 Consents 16
5.07 Other Items 16
5.08 Accredited Status of World Golf League Shareholders 16
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF WORLD GOLF LEAGUE AND
THE WORLD GOLF LEAGUE SHAREHOLDERS
6.01 Accuracy of Representations and Performance of Covenants 17
6.02 Officer's Certificate 17
6.03 No Material Adverse Change 17
6.04 No Governmental Prohibition 17
6.05 Consents 17
6.06 Other Items 17
6.07 Good Standing 17
ARTICLE VII MISCELLANEOUS
7.01 No Bankruptcy and No Criminal Convictions 18
7.02 Brokers 18
7.03 Governing Law 18
7.04 Notices 18
7.05 Attorney's Fees 19
7.06 Confidentiality 19
7.07 Public Announcements and Filings 19
7.08 Schedules; Knowledge 19
7.09 Third Party Beneficiaries 19
7.10 Expenses 19
7.11 Entire Agreement 19
7.12 Survival; Termination 19
7.13 Counterparts 19
7.14 Amendment or Waiver 19
7.15 Best Efforts 20
7.16 Faxed Copies 20
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is entered
into as of this 31st day of January, 2003 by and between NOVUS LABORATORIES,
INC., a Delaware corporation (hereinafter referred to as the "Company") and THE
WORLD GOLF LEAGUE, INC., a Florida corporation (hereinafter referred to as
"World Golf"), upon the following premises:
Premises
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WHEREAS, the Company is a publicly held corporation organized under the
laws of the State of Delaware;
WHEREAS, World Golf is a privately held corporation organized under the
laws of the State of Florida;
WHEREAS, management of the constituent corporations have determined that it
is in the best interest of the parties that the Company acquire 100% of the
issued and outstanding securities of World Golf in exchange for the issuance of
certain shares of the Company (the "Exchange") and World Golf agrees to use its
best efforts to cause its shareholders (the " World Golf Shareholders") to
exchange their securities of World Golf on the terms described herein; and
WHEREAS, the Company and World Golf desire to set forth the terms of the
Exchange, which is intended to constitute a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
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NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WORLD GOLF
As an inducement to, and to obtain the reliance of the Company, except as
set forth on the World Golf Schedules (as hereinafter defined), World Golf
represents and warrants as follows:
Section 1.01 Organization. World Golf is a corporation duly organized,
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validly existing, and in good standing under the laws of the State of Florida
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the World Golf Schedules are complete and correct copies of the articles of
incorporation, and bylaws of World Golf as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of World Golf
's articles of incorporation or bylaws. World Golf has taken all actions
required by law, its articles of incorporation, or otherwise to authorize the
execution and delivery of this Agreement. World Golf has full power, authority,
and legal right and has taken all action required by law, its articles of
incorporation, and otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of World
--------------
Golf consists of100,000,000 shares of common stock, no par value per share, of
which 6,896,150 shares are currently issued and outstanding, $162,500 of Series
A preferred stock, and $927,000 of Series B preferred stock. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the preemptive or other rights of any person.
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Section 1.03 Subsidiaries and Predecessor Corporations. World Golf
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does not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 1.03. For purposes hereinafter, the term "World Golf"
--------------
also includes those subsidiaries, if any, set forth on Schedule 1.03.
--------------
Section 1.04 Financial Statements.
--------------------
(a) Included in the World Golf Schedules are the unaudited World Golf
balance sheet as of December 31, 2001 and December 31, 2002, and the related
statements of operations and cash flows for the period from January 1, 2001
through December 31, 2001 and from January 1, 2002 through December 31, 2002.
(b) World Golf has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(c) World Golf has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the aggregate, are immaterial.
(d) The books and records, financial and otherwise, of World Golf are
in all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of World Golf's assets are reflected on its financial
statements, and, except as set forth in the World Golf Schedules or the
financial statements of World Golf or the notes thereto, World Golf has no
material liabilities, direct or indirect, matured or unmatured, contingent or
otherwise.
Section 1.05 Information. The information concerning World Golf set
-----------
forth in this Agreement and in the World Golf Schedules is complete and accurate
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, World Golf has fully disclosed in writing to the Company (through this
Agreement or the World Golf Schedules) all information relating to matters
involving World Golf or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than $25,000 liability or diminution in value, (ii) have led or may
lead to a competitive disadvantage on the part of World Golf or (iii) either
alone or in aggregation with other information covered by this Section,
otherwise have led or may lead to a material adverse effect on the transactions
contemplated herein or on World Golf, its assets, or its operations or
activities as presently conducted or as contemplated to be conducted after the
Closing Date, including, but not limited to, information relating to
governmental, employee, environmental, litigation and securities matters and
transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of World Golf of any character relating to the
authorized and unissued World Golf common stock, except options, warrants, calls
or commitments, if any, to which World Golf is not a party and by which it is
not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in this Agreement or the World Golf Schedules, since December 31, 2002:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of World Golf or (ii) any damage,
destruction, or loss to World Golf (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets,
or condition of World Golf;
(b) World Golf has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are outside of
the ordinary course of business or material considering the business of World
Golf; (iv) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction other than sales in
the ordinary course of its business; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its salaried employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
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(c) World Golf has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except as disclosed herein and except liabilities incurred in the
ordinary course of business; (ii) paid or agreed to pay any material obligations
or liability (absolute or contingent) other than current liabilities, and
current liabilities incurred in the ordinary course of business and professional
and other fees and expenses in connection with the preparation of this Agreement
and the consummation of the transactions contemplated hereby; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights (except assets, properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $5,000), or canceled, or
agreed to cancel, any debts or claims (except debts or claims which in the
aggregate are of a value of less than $1,000); or (iv) made or permitted any
amendment or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the business of
World Golf; and
(d) To the best knowledge of World Golf, World Golf has not become
subject to any law or regulation which materially and adversely affects, or in
the future may adversely affect the business, operations, properties, assets, or
condition of World Golf.
Section 1.08 Title and Related Matters. World Golf has good and
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marketable title to all of its properties, inventory, interests in properties,
and assets, real and personal, or acquired after that date (except properties,
inventory, interests in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business) free and clear of all liens,
pledges, charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
World Golf Schedules. Except as set forth in the World Golf Schedules, World
Golf owns, free and clear of any liens, claims, encumbrances, royalty interests,
or other restrictions or limitations of any nature whatsoever, any and all
products it is currently manufacturing, including the underlying technology and
data, and all procedures, techniques, marketing plans, business plans, methods
of management, or other information utilized in connection with World Golf 's
business. Except as set forth in the World Golf Schedules, no third party has
any right to, and World Golf has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, propriety techniques, trademarks, service marks,
trade names, or copyrights which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a materially
adverse effect on the business, operations, financial condition, income, or
business prospects of World Golf or any material portion of its properties,
assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the
----------------------------
World Golf Schedules, there are no actions, suits, proceedings, or
investigations pending or, to the knowledge of World Golf after reasonable
investigation, threatened by or against World Golf or affecting World Golf or
its properties, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. World Golf does not have any knowledge of any material default on its
part with respect to any judgment, order, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality
or of any circumstances which, after reasonable investigation, would result in
the discovery of such a default.
Section 1.10 Contracts.
---------
(a) Except as included or described in the World Golf Schedules, there
are no "material" contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which World Golf is a party or by which it
or any of its assets, products, technology, or properties are bound other than
those incurred in the ordinary course of business (as used in this Agreement, a
"material" contract, agreement, franchise, license agreement, debt instrument or
commitment is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations of at
least twenty-five thousand dollars ($25,000));
3
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which World Golf is a party or by which its properties are
bound and which are material to the operations of World Golf taken as a whole
are valid and enforceable by World Golf in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(c) World Golf is not a party to or bound by, and the properties of
World Golf are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of World Golf; and
(d) Except as included or described in the World Golf Schedules, World
Golf is not a party to any oral or written (i) contract for the employment of
any officer or employee which is not terminable on 30 days, or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other than
one on which World Golf is a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one year or
providing for payments in excess of $25,000 in the aggregate; (v) collective
bargaining agreement; or (vi) agreement with any present or former officer or
director of World Golf.
Section 1.11 Material Contract Defaults. World Golf is not in default
--------------------------
in any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of World Golf and there is no event of default
in any material respect under any such contract, agreement, lease, or other
commitment in respect of which World Golf has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which World Golf is a party or to which any of its
properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
----------------------------
World Golf Schedules, World Golf has all licenses, franchises, permits, and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date hereof.
Except for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by World Golf of this
Agreement and the consummation by World Golf of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
------------------------------------
in the World Golf Schedules, to the best of its knowledge World Golf has
complied with all applicable statutes and regulations of any federal, state, or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of World Golf or except to the
extent that noncompliance would not result in the occurrence of any material
liability for World Golf.
Section 1.15 Approval of Agreement. The board of directors of World
-----------------------
Golf has authorized the execution and delivery of this Agreement by World Golf
and has approved this Agreement and the transactions contemplated hereby, and
will recommend to the World Golf Shareholders that the Exchange be accepted by
them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
--------------------------------------
World Golf Schedules is a description of every contract, agreement, or
arrangement between World Golf and any predecessor and any person who was at the
time of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by World Golf to own beneficially, 5% or more of the
issued and outstanding common stock of World Golf and which is to be performed
in whole or in part after the date hereof or which was entered into not more
than three years prior to the date hereof. Except as disclosed in the World
Golf Schedules or otherwise disclosed herein, no officer, director, or 5%
shareholder of World Golf has, or has had since inception of World Golf, any
known interest, direct or indirect, in any transaction with World Golf which was
material to the business of World Golf. There are no commitments by World Golf,
whether written or oral, to lend any funds, or to borrow any money from, or
enter into any other transaction with, any such affiliated person.
4
Section 1.17 World Golf Schedules. World Golf has delivered to the
----------- ---------
Company the following schedules, which are collectively referred to as the "
World Golf Schedules" and which consist of separate schedules dated as of the
date of execution of this Agreement, all certified by the chief executive
officer of World Golf as complete, true, and correct as of the date of this
Agreement in all material respects:
(a) a schedule containing complete and correct copies of the articles
of incorporation, and bylaws of World Golf in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of World Golf identified
in paragraph 1.04(a);
(c) a Schedule 1.17(b) containing a list indicating the name and address of
each shareholder of World Golf together with the number of shares owned by him,
her or it;
(d) a schedule containing a description of all real property owned by
World Golf, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations
(or requests or applications therefor) pursuant to which World Golf carries on
or proposes to carry on its business (except those which, in the aggregate, are
immaterial to the present or proposed business of World Golf);
(f) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or condition of
World Golf since December 31, 2002, required to be provided pursuant to section
1.07 hereof; and
(g) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the World Golf
Schedules by Sections 1.01 through 1.17.
World Golf shall cause the World Golf Schedules and the instruments and
data delivered to the Company hereunder to be promptly updated after the date
hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by World Golf. World Golf
shall have until February 17, 2003 to provide such schedules. If World Golf
cannot or fails to do so, or if the Company acting reasonably finds any such
schedules or updates provided after the date hereof to be unacceptable according
to the criteria set forth below, the Company may terminate this Agreement by
giving written notice to World Golf within five (5) days after the schedules or
updates were due to be produced or were provided. For purposes of the
foregoing, the Company may consider a disclosure in the World Golf Schedules to
be "unacceptable" only if that item would have a material adverse impact on the
financial condition of World Golf, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by World Golf in connection herewith constitute the
valid and binding obligation of World Golf, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of World Golf and the World
Golf Shareholders, except as set forth in the Company Schedules (as hereinafter
defined), the Company represents and warrants as follows:
5
Section 2.01 Organization. The Company is a corporation duly
------------
organized, validly existing, and in good standing under the laws of the State of
Delaware and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the Company
Schedules are complete and correct copies of the certificate of incorporation
and bylaws of the Company as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Company's certificate
of incorporation or bylaws. The Company has taken all action required by law,
its certificate of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement, and the Company has full power,
authority, and legal right and has taken all action required by law, its
certificate of incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 Capitalization. The Company's authorized capitalization
--------------
consists of 50,000,000 shares of common stock, par value $.001 of which
8,000,000 shares will be issued and outstanding at the Closing as defined in
Section 3.03 (the "Original Company Shares"). All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company
-------------------------------------------
does not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 2.03. For purposes hereinafter, the term "Company" also
-------------
includes those subsidiaries, if any, set forth on Schedule 2.03.
--------------
Section 2.04 Financial Statements.
----------------------
(a) Included in the Company Schedules are (i) the audited balance
sheets of the Company and the related statements of operations and cash flows as
of and for the twelve months ended December 31, 2001 and (ii) the unaudited
balance sheets of the Company and the related statements of operations and cash
flows for the nine months ended September 30, 2002.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. The Company balance sheets present fairly as of their
respective dates the financial condition of the Company. As of the date of such
balance sheets, except as and to the extent reflected or reserved against
therein, the Company had no liabilities or obligations (absolute or contingent)
which should be reflected in the balance sheets or the notes thereto prepared in
accordance with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the value of the
assets of the Company, in accordance with generally accepted accounting
principles. The statements of operations, stockholders' equity and cash flows
reflect fairly the information required to be set forth therein by generally
accepted accounting principles.
(c) The Company has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(d) The books and records, financial and otherwise, of the Company are
in all material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of the Company's assets are reflected on its financial
statements, and, except as set forth in the Company Schedules or the financial
statements of the Company or the notes thereto, the Company has no material
liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning the Company set
------------
forth in this Agreement and the Company Schedules is complete and accurate in
all material respects and does not contain any untrue statements of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, the Company has fully disclosed in writing to World Golf (through this
Agreement or the Company Schedules) all information relating to matters
involving the Company or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than $5,000 liability or diminution in value, (ii) have led or may
lead to a competitive disadvantage on the part of the Company or (iii) either
alone or in aggregation with other information covered by this Section,
otherwise have led or may lead to a material adverse effect on the transactions
contemplated herein or on the Company, its assets, or its operations or
activities as presently conducted or as contemplated to be conducted after the
Closing Date, including, but not limited to, information relating to
governmental, employee, environmental, litigation and securities matters and
transactions with affiliates.
6
Section 2.06 Options or Warrants. There are no existing options,
----------------------
warrants, calls, or commitments of any character relating to the authorized and
unissued stock of the Company, other than those disclosed in the Company
Schedules.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
-------------------------------------
in Exhibit 2.07, or permitted in writing by World Golf, since the date of the
most recent Company balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company or (ii) any damage,
destruction or loss to the Company (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets
or condition of the Company;
(b) The Company has not and will not (i) amend its certificate of
incorporation or bylaws except to reflect the name change and affect a stock
split; (ii) declare or make, or agree to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchase or redeem, or agree to purchase or redeem, any of its capital stock;
(iii) waive any rights of value which in the aggregate are outside of the
ordinary course of business or material considering the business of the Company;
(iv) make any material change in its method of management, operation, or
accounting; (v) enter into any transaction or agreement other than in the
ordinary course of business; (vi) make any accrual or arrangement for or payment
of bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii) increase the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its salaried employees whose monthly compensation exceed
$1,000; or (viii) make any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement, made to, for or with its officers, directors, or
employees;
(c) The Company has not (i) granted or agreed to grant any options or
warrants; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or agreed to
pay any material obligations or liabilities (absolute or contingent) other than
current liabilities reflected in or shown on the most recent the Company balance
sheet and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transaction
contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than $1,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value less than $1,000); and
(v) made or permitted any amendment or termination of any contract, agreement,
or license to which it is a party if such amendment or termination is material,
considering the business of the Company; and
(d) to the best knowledge of the Company, it has not become subject to
any law or regulation which materially and adversely affects, or in the future,
may adversely affect, the business, operations, properties, assets or condition
of the Company.
Section 2.08 Title and Related Matters. The Company has good and
-----------------------------
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Company
balance sheet or acquired after that date (except properties, inventory,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Company Schedules. Except as set forth in the Company Schedules, the Company
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has any
right to, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of the Company or any material portion of its
properties, assets, or rights.
7
Section 2.09 Litigation and Proceedings. There are no actions, suits,
---------------------------
proceedings or investigations pending or, to the knowledge of the Company after
reasonable investigation, threatened by or against the Company or affecting the
Company or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind except as disclosed in Schedule 2.09. The Company has no
-------------
knowledge of any default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator, or
governmental agency or instrumentality or any circumstance which after
reasonable investigation would result in the discovery of such default.
Section 2.10 Contracts.
----------
(a) The Company is not a party to, and its assets, products, technology
and properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral, except as disclosed in Schedule 2.10.
-------------
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which the Company is a party or by which its properties are
bound and which are material to the operations of the Company taken as a whole
are valid and enforceable by the Company in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(c) The Company is not a party to or bound by, and the properties of
the Company are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of the Company; and
(d) Except as included or described in the Company Schedules or
reflected in the most recent Company balance sheet, the Company is not a party
to any oral or written (i) contract for the employment of any officer or
employee which is not terminable on 30 days, or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, (iii) agreement, contract, or indenture relating to
the borrowing of money, (iv) guaranty of any obligation, other than one on which
the Company is a primary obligor, for the borrowing of money or otherwise,
excluding endorsements made for collection and other guaranties of obligations
which, in the aggregate do not exceed more than one year or providing for
payments in excess of $25,000 in the aggregate; (v) collective bargaining
agreement; or (vi) agreement with any present or former officer or director of
the Company.
Section 2.11 Material Contract Defaults. The Company is not in default
--------------------------
in any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of the Company and there is no event of default
in any material respect under any such contract, agreement, lease, or other
commitment in respect of which the Company has not taken adequate steps to
prevent such a default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
-----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or to which any of its assets or operations are subject.
8
Section 2.13 Governmental Authorizations. The Company has all
-----------------------------
licenses, franchises, permits, and other governmental authorizations, that are
legally required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal
and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, of registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
-------------------------------------
knowledge, the Company has complied with all applicable statutes and regulations
of any federal, state, or other applicable governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports to date with federal and state securities
authorities.
Section 2.15 Approval of Agreement. The board of directors of the
------------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Continuity of Business Enterprises. The Company has no
-------------------------------------
commitment or present intention to liquidate World Golf or sell or otherwise
dispose of a material portion of World Golf's business or assets following the
consummation of the transactions contemplated hereby.
Section 2.17 Material Transactions or Affiliations. Except as
-----------------------------------------
disclosed herein and in the Company Schedules, there exists no contract,
agreement or arrangement between the Company and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by the Company to own
beneficially, 5% or more of the issued and outstanding common stock of the
Company and which is to be performed in whole or in part after the date hereof
or was entered into not more than three years prior to the date hereof. Neither
any officer, director, nor 5% shareholder of the Company has, or has had since
inception of the Company, any known interest, direct or indirect, in any such
transaction with the Company which was material to the business of the Company.
The Company has no commitment, whether written or oral, to lend any funds to,
borrow any money from, or enter into any other transaction with, any such
affiliated person.
Section 2.18 The Company Schedules. The Company has delivered to World
----------------------
Golf the following schedules, which are collectively referred to as the "Company
Schedules" and which consist of separate schedules, which are dated the date of
this Agreement, all certified by the chief executive officer of the Company to
be complete, true, and accurate in all material respects as of the date of this
Agreement:
(a) a schedule containing complete and accurate copies of the certificate
of incorporation and bylaws of the Company as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of the Company
identified in paragraph 2.04(b);
(c) a Schedule 2.18(c) containing a list indicating the name and
address of each shareholder of the Company together with the number of shares
owned by him, her or it;
(d) a schedule containing a description of all real property owned by
the Company, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations
(or requests or applications therefor) pursuant to which the Company carries on
or proposes to carry on its business (except those which, in the aggregate, are
immaterial to the present or proposed business of the Company);
(f) a schedule listing the accounts receivable and notes and other
obligations receivable of the Company as of December 31, 2002, or thereafter
other than in the ordinary course of business of the Company, indicating the
debtor and amount, and classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments which are in
the aggregate material and due to or claimed by such debtor;
9
(g) a schedule listing the accounts payable and notes and other
obligations payable of the Company as of December 31, 2002, or that arose
thereafter other than in the ordinary course of the business of the Company,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the nature
and amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which in the aggregate are material and due to or claimed by the
Company respecting such obligations;
(h) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or condition of
the Company since December 31, 2002 required to be provided pursuant to section
2.07 hereof; and
(i) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Company Schedules
by Sections 2.01 through 2.18.
The Company shall cause the Company Schedules and the instruments and data
delivered to World Golf hereunder to be promptly updated after the date hereof
up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by the Company. The
Company shall have until January 31, 2002 to provide such schedules. If the
Company cannot or fails to do so, or if World Golf acting reasonably finds any
such schedules or updates provided after the date hereof to be unacceptable
according to the criteria set forth below, World Golf may terminate this
Agreement by giving written notice to the Company within five (5) days after the
schedules or updates were due to be produced or were provided. For purposes of
the foregoing, World Golf may consider a disclosure in the Company Schedules to
be "unacceptable" only if that item would have a material adverse impact on the
financial statements listed in Section 2.04(b), taken as a whole.
Section 2.19 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith constitute the
valid and binding obligation of the Company, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
-------------
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
each World Golf Shareholder who shall elect to accept the exchange offer
described herein (the "Accepting Shareholders"), shall assign, transfer and
deliver, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature, or description, the number of
shares of common stock, Series A preferred stock, and Series B preferred stock
of WORLD GOLF set forth on Schedule 1.16(b) attached hereto, in the aggregate
----------------
constituting a minimum of 80% of the issued and outstanding shares of common
stock, Series A preferred stock, and Series B preferred stock of World Golf held
by each of such shareholders; the objective of such Exchange being the
acquisition by the Company of 100% of the issued and outstanding common stock,
Series A preferred stock, and Series B preferred stock of World Golf. In
exchange for the transfer of shares of common stock, Series A preferred stock,
and Series B preferred stock by the World Golf Shareholders, the Company shall
issue to the World Golf Shareholders an aggregate of up to 12,000,000 shares of
common stock of the Company (the "Initial Shares"), on the following basis:
2.1813 shares of the Company for every $1 of Series A preferred stock; 1.98304
shares of the Company for every $1 of Series B preferred stock; and 1.41648
shares of Company common stock for every share of World Golf common stock. At
the Closing, each World Golf Shareholder shall, on surrender of his certificate
or certificates representing such World Golf shares to the Company or its
registrar or transfer agent, be entitled to receive a certificate or
certificates evidencing his proportionate interest in the Initial Shares. Upon
consummation of the transaction contemplated herein, assuming participation by
all of the World Golf Shareholders, all of the shares of capital stock of World
Golf shall be held by the Company. As additional consideration for the World
Golf Shareholders to exchange their shares, Novus shareholders have agreed to
place 3,000,000 of their shares in escrow with Xxxxx X. Xxxx, Attorney at Law,
to be released upon Imperium Capital, Inc. and/or another entity designated by
the Company raising capital to be utilized in World Golf's business of a minimum
of $500,000, of which the parties agree that $50,000 has already been raised.
In the event Imperium Capital and/or parties designated by the Company do not
raise a minimum of $500,000, the 3,000,000 shares of Company common stock shall
be returned to the Company for cancellation. In the event Imperium Capital
and/or parties designated by the Company do not raise a minimum of $1,000,000,
which includes the $500,000 mentioned above, the World Golf Shareholders shall
receive an aggregate of 3,000,000 shares of newly issued restricted stock to be
distributed on a pro rata basis.
10
Section 3.02 Anti-Dilution. The number of shares of the Company's
--------------
common stock issuable upon exchange pursuant to Section 3.01 shall be
appropriately adjusted to take into account any other stock split, stock
dividend, reverse stock split, recapitalization, or similar change in the
Company common stock which may occur (i) between the date of the execution of
this Agreement and the Closing Date, as to the Initial Shares, and (ii) between
the date of the execution of this Agreement and the release date, as to the
Additional Shares.
Section 3.03 Closing. The closing ("Closing") of the transactions
--------
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than February 17, 2003, subject
to the right of the Company or World Golf to extend such Closing Date by up to
an additional ten (10) days. Such Closing shall take place at a mutually
agreeable time and place.
Section 3.04 Closing Events. At the Closing, the Company, World Golf
----------------
and each of the World Golf Accepting Shareholders shall execute, acknowledge,
and deliver (or shall ensure to be executed, acknowledged, and delivered) any
and all certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be so
delivered at or prior to the Closing, together with such other items as may be
reasonably requested by the parties hereto and their respective legal counsel in
order to effectuate or evidence the transactions contemplated hereby. Among
other things, the Company shall provide an opinion of counsel acceptable to
World Golf as to such matters as World Golf may reasonably request, which shall
include, but not be limited to, a statement, to the effect that to such
counsel's best knowledge, after reasonable investigation, from inception until
the Closing Date, the Company has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity or
agency thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability (such compliance including, but not being
limited to, the filing of all reports to date with federal and state securities
authorities).
Section 3.05 Termination.
------------
(a) This Agreement may be terminated by the board of directors of
either the Company or World Golf at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement and
which, in the judgment of such board of directors, made in good faith and
based upon the advice of its legal counsel, makes it inadvisable to proceed
with the Exchange; or
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the Exchange.
In the event of termination pursuant to this paragraph (a) of Section 3.05, no
obligation, right or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated by the board of directors of the
Company at any time prior to the Closing Date if:
11
(i) the board of directors of the Company determines in good faith
that one or more of the Company's conditions to Closing has not occurred,
through no fault of the Company.
(ii) The Company takes the termination action specified in Section
1.17 as a result of World Golf Schedules or updates thereto which the
Company finds unacceptable; or
(iii) World Golf shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of World Golf contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (b) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that Purchaser shall bear the costs
in connection with the negotiation, preparation, and execution of this Agreement
and qualifying the offer and sale of securities to be issued in the Exchange
under the registration requirements, or exemption from the registration
requirements, of state and federal securities laws.
(c) This Agreement may be terminated by the board of directors of World
Golf at any time prior to the Closing Date if:
(i) there shall have been any change after the date of the latest
balance sheet of the Company in the assets, properties, business or
financial condition of the Company, which could have a material adverse
effect on the financial statements of the Company listed in Section 2.04(a)
and 2.04(b) taken as a whole, except any changes disclosed in the Company
Schedules;
(ii) the board of directors of World Golf determines in good faith
that one or more of World Golf's conditions to Closing has not occurred,
through no fault of World Golf;
(iii) World Golf takes the termination action specified in Section
2.18 as a result of the Company Schedules or updates thereto which World
Golf finds unacceptable;
(iv) on or before January 31, 2003, World Golf notifies the Company
that World Golf's investigation pursuant to Section 4.01 below has
uncovered information which it finds unacceptable by the same criteria set
forth in Section 2.18; or
(v) The Company shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of the Company contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (c) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that the Company shall bear the costs
as well as the reasonable costs of the Company incurred in connection with the
negotiation, preparation and execution of this Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records.
----------------------------------
The Company and World Golfwill each afford to the officers and authorized
representatives of the other full access to the properties, books and records of
the Company or, as the case may be, in order that each may have a full
opportunity to make such reasonable investigation as it shall desire to make of
the affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of the Company or World Golf, as the case may be, as the other shall
from time to time reasonably request. Without limiting the foregoing, as soon as
practicable after the end of each fiscal quarter (and in any event through the
last fiscal quarter prior to the Closing Date), the Company shall provide World
Golf with quarterly internally prepared and unaudited financial statements.
12
Section 4.02 Delivery of Books and Records. At the Closing, World Golf
------------------------------
shall deliver to the Company copies of the corporate minute books, books of
account, contracts, records, and all other books or documents of World Golf now
in the possession of World Golf or its representatives.
Section 4.03 Third Party Consents and Certificates. The Company and
----------------------------------------
World Golf agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein contemplated.
Section 4.04 Accredited Status. All of the World Golf Shareholders
-------------------
participating in the Share Exchange must represent that they are accredited
investors as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933.
Section 4.05 Consent of World Golf Shareholders. World Golf shall use
------------------------------------
its best efforts to obtain the consent of all World Golf Shareholders to
participate in the Exchange.
Section 4.06 Designation of Directors and Officers. On or before the
-----------------------------------------
Closing Date, the Company's board of directors shall consist of a maximum of
five directors of which one director shall be appointed by Imperium Capital,
Inc. Xxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxx Xxxxxxx, and Xxxx Xxxxx shall serve as
Company directors and Xxxx Xxxxxxx shall be elected Chief Executive Officer of
the Company.
Section 4.07 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
---------------------------
Daylight Time on February 17, 2003.
(a) In recognition of the substantial time and effort which the Company
has spent and will continue to spend in investigating World Golf and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
World Golf, nor any of its officers, employees, representatives or agents will
directly or indirectly solicit or initiate any discussions or negotiations with,
or, except where required by fiduciary obligations under applicable law as
advised by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort or attempt by, any corporation, partnership, person or
other entity or group (other than the Company and its directors, officers,
employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the common stock of World Golf) or
similar transactions involving World Golf (all such transactions being referred
to as " World Golf Acquisition Transactions"). If World Golf receives any
proposal with respect to a World Golf Acquisition Transaction, it will
immediately communicate to the Company the fact that it has received such
proposal and the principal terms thereof.
(b) In recognition of the substantial time and effort which World Golf
has spent and will continue to spend in investigating the Company and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
the Company, nor any of its officers, employees, representatives or agents will
directly or indirectly solicit or initiate any discussions or negotiations with,
or, except where required by fiduciary obligations under applicable law as
advised by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort or attempt by, any corporation, partnership, person or
other entity or group (other than World Golf and its directors, officers,
employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the common stock of the Company or
similar transactions involving the Company (all such transactions being referred
to as "Company Acquisition Transactions"). If the Company receives any proposal
with respect to a Company Acquisition Transaction, it will immediately
communicate to World Golf the fact that it has received such proposal and the
principal terms thereof.
Section 4.08 Actions Prior to Closing.
----------------------------
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the Company Schedules or World Golf Schedules or as
permitted or contemplated by this Agreement, the Company (subject to paragraph
(d) below) and World Golf respectively, will each:
13
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and all
rules, regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither the Company nor World Golf will:
(i) make any changes in their articles or certificate of incorporation
or bylaws, except as otherwise provided in this Agreement;
(ii) take any action described in Section 1.07 in the case of World
Golf, or in Section 2.07, in the case of the Company (all except as
permitted therein or as disclosed in the applicable party's schedules);
(iii) enter into or amend any contract, agreement, or other instrument
of any of the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or other instrument
in the ordinary course of business involving the sale of goods or services;
or
(iv) sell any assets or discontinue any operations (other than the
Divestiture), sell any shares of capital stock (other than as contemplated
in Section 4.06 hereof and the sale of securities underlying existing
warrants or options of the Company) or conduct any similar transactions
other than in the ordinary course of business.
Section 4.09 Indemnification.
----------------
(a) World Golf hereby agrees to indemnify the Company and each of the
officers, agents and directors of the Company as of the date of execution of
this Agreement against any loss, liability, claim, damage, or expense
(including, but not limited to, any and all expense whatsoever reasonably
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they may
become subject arising out of or based on any inaccuracy appearing in or
misrepresentations made under Article I of this Agreement. The indemnification
provided for in this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement.
(b) The Company hereby agrees to indemnify World Golf and each of the
officers, agents, and directors of World Golf and each of the World Golf
Shareholders as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made under Article II of this Agreement. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of this
Agreement.
14
Section 4.10 Limitation of Subsequent Corporate Actions.
-----------------------------------------------
It is expressly understood and agreed that the Company, the shareholders of
World Golf, and their affiliates, will take all steps necessary to ensure that:
(1) there shall be no reverse split of the Company's common stock for a
period of twelve months following this Agreement;
(2) that the assets of World Golf shall remain in the Company as part of its
business operations; and
(3) that no shares of the Company's common stock shall be registered
pursuant to an S-8 registration statement for a period of twelve months
following this Agreement.
Notwithstanding items (1), (2), and (3), Imperium Capital, Inc. may waive such
conditions stated above, with a written waiver.
Section 4.11 Indemnification of Subsequent Corporate Actions.
----------------------------------------------------
(a) No officer, director, controlling shareholder, agent or representative
of the Company, or any other person currently affiliated with the Company, has
offered or agreed to assist in the promotion, market making, development,
enhancement, or support of the Company's business, capital raising, or
securities market.
(2) World Golf hereby represents and warrants that it will indemnify and
hold harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the Company,
from any decisions, activities, or conduct of the Company contemporaneous with,
or subsequent to this Agreement.
Section 4.12 Name Change. Prior to the Closing, the Company shall amend
------------
its certificate of incorporation to effect a name change to The World Golf
League, Inc.
Section 4.13 Audited Financial Statements. The Company shall file audited
----------------------------
financial statements of World Golf as required by the Securities and Exchange
Commission within 75 days from the Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
---------------------------------------------------------
The representations and warranties made by World Golf in this Agreement were
true when made and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement). World
Golf shall have performed or complied with all covenants and conditions required
by this Agreement to be performed or complied with by World Golf prior to or at
the Closing. The Company shall be furnished with a certificate, signed by a
duly authorized executive officer of World Golf and dated the Closing Date, to
the foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
-----------------------
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of World Golf to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of World Golf
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the World Golf Schedules, by or against World Golf,
which might result in any material adverse change in any of the assets,
properties, business, or operations of World Golf.
15
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
-----------------------------
there shall not have occurred any change in the financial condition, business,
or operations of World Golf nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 1.06.
Section 5.04 Approval by World Golf Shareholders. The Exchange shall
-------------------------------------
have been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than one hundred percent (100%) of the outstanding common
stock of World Golf, unless a lesser number is agreed to by the Company.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
---------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and World Golf after the Closing Date on the basis as
presently operated shall have been obtained.
Section 5.07 Other Items.
-------------
(a) The Company shall have received a list of World Golf 's
shareholders containing the name, address, and number of shares held by each
World Golf shareholder as of the date of Closing, certified by an executive
officer of World Golf as being true, complete and accurate; and
(b) The Company shall have received such further opinions, documents,
certificates or instruments relating to the transactions contemplated hereby as
the Company may reasonably request.
Section 5.08 Accredited Status. All of the World Golf Shareholders
-------------------
participating in the Share Exchange must represent that they are accredited
investors as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF WORLD GOLF
AND THE WORLD GOLF SHAREHOLDERS
The obligations of World Golf and the World Golf Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
---------------------------------------------------------
The representations and warranties made by the Company in this Agreement were
true when made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, the Company shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
the Company and shall have satisfied the conditions described below prior to or
at the Closing:
(a) Immediately prior to the Closing, the Company shall have no more
than an aggregate of 8,000,000 shares of common stock issued and outstanding
and 0 shares of preferred stock, excluding any shares issuable pursuant to the
Exchange.
16
(b) The directors of the Company shall have approved the Exchange and
the related transactions described herein.
World Golf shall have been furnished with certificates, signed by duly
authorized executive officers of the Company and dated the Closing Date, to the
foregoing effect.
Section 6.02 Officer's Certificate. World Golf shall have been
-----------------------
furnished with certificates dated the Closing Date and signed by the duly
authorized executive officer of the Company, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of the
Company threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Company Schedules, by or against the Company, which
might result in any material adverse change in any of the assets, properties or
operations of the Company.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
-----------------------------
there shall not have occurred any change in the financial condition, business or
operations of the Company nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 2.18.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
---------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and World Golf after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.06 Other Items. World Golf shall have received further
-------------
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as World Golf may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions.
----------------------------------------------
None of the Parties to the Agreement, nor their officers, directors or
affiliates, promoter or control person, nor any predecessor, thereof have been
subject to the following:
(3) Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer within the past five years;
(4) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(5) Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and
(6) Being found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission (the "SEC") or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.
Section 7.02 Brokers. The Company and World Golf agree that, except as
--------
set out on Schedule 7.02 attached hereto, there were no brokers or finders
involved in bringing the parties together or who were instrumental in the
negotiation, execution or consummation of this Agreement. The Company and World
Golf each agree to indemnify the other against any claim by any third person
other than those described above for any commission, brokerage, or finder's fee
arising from the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
17
Section 7.03 Governing Law. This Agreement shall be governed by,
---------------
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Delaware without giving effect to principles of conflicts of law
thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States, (b) by execution and delivery of this Agreement, irrevocably submits to
and accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives
any and all rights such party may now or hereafter have to object to such
jurisdiction.
Section 7.04 Notices. Any notice or other communications required or
--------
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to the Company, to: NOVUS LABORATORIES, INC.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
If to WORLD GOLF, to: THE WORLD GOLF LEAGUE, INC.
000 Xxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000
With copies to: Xxxxx X. Xxxx, Attorney at Law
0000 Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
-----------------
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the prevailing party shall be reimbursed
by the losing party for all costs, including reasonable attorney's fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
----------------
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
------------------------------------
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
18
Section 7.08 Schedules; Knowledge. Each party is presumed to have full
---------------------
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.09 Third Party Beneficiaries. This contract is strictly
----------------------------
between the Company and World Golf, and, except as specifically provided, no
director, officer, stockholder (other than the World Golf Shareholders),
employee, agent, independent contractor or any other person or entity shall be
deemed to be a third party beneficiary of this Agreement.
Section 7.10 Expenses. Subject to Sections 3.05 and 7.05 above,
---------
whether or not the Exchange is consummated, the Company will bear the expenses,
including legal, accounting and professional fees, incurred in connection with
the Exchange or any of the other transactions contemplated hereby.
Section 7.11 Entire Agreement. This Agreement represents the entire
------------------
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
-----------------------
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.
Section 7.13 Counterparts. This Agreement may be executed in multiple
-------------
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.14 Amendment or Waiver. Every right and remedy provided
----------------------
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
-------------
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a faxed
-------------
signature will constitute an original signature.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
NOVUS LABORATORIES, INC.
BY: /s/ Xxxx Xxxxxxxxxxx
-------------------------
Xxxx Xxxxxxxxxxx
Chief Executive Officer
THE WORLD GOLF LEAGUE, INC.
BY: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
19
The undersigned World Golf Shareholders hereby agree to participate in the
Exchange on the terms set forth above. Subject to Section 7.12 above, each of
the undersigned hereby represents and affirms that he has read each of the
representations and warranties of World Golf set out hereof and that, to the
best of his knowledge, all of such representations and warranties are true and
correct. PLEASE RETURN ORIGINAL STOCK CERTIFICATE ALONG WITH THIS EXCHANGE
AGREEMENT.
/s/ Xxxxxxx X. Xxxxxxx, individually No. of Shares 4,000,000
----------------------- ----------
Xxxxxxx X. Xxxxxxx , Printed Name
---------------------
/s/ Xxxx Xxxxxxxx , individually No. of Shares 400,000
--------------------- ----------
Xxxx Xxxxxxxx , Printed Name
---------------------
/s/ Xxxxxxx Xxxxxxx , individually No. of Shares 55,000
----------------------- ----------
Xxxxxxx Xxxxxxx , Printed Name
---------------------
/s/ Xxxxx Vaneo , individually No. of Shares 272,000
--------------------- ----------
Xxxxx Vaneo , Printed Name
---------------------
/s/ Xxxxx Xxxxxxxx , individually No. of Shares 400,000
----------------------- ----------
Xxxxx Xxxxxxxx , Printed Name
---------------------
20
