EXHIBIT 99.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT, dated as of February 1, 2000, is by and
among Score One, Inc., a Utah corporation (the "Company"); Xxx Xxxxx (the
"Shareholder"), Advanced Technology International Holdings, Inc., a British
Virgin Islands corporation ("ATHI"); and shareholders of ATHI listed on the
signature page (the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own 100% of the shares of common stock of ATHI, in the
denominations as set forth opposite their respective names on Schedule I to this
Agreement which shares constitute all of the issued and outstanding shares of
capital stock of ATHI (the "ATHI Shares"); and
WHEREAS, the Company desires to acquire from the Sellers, and the Sellers
desire to sell to the Company, all of the ATHI Shares in exchange for the
issuance by the Company of an aggregate of 16,300,000 post forward-split shares
(the "Company Shares") of the Company's common stock, par value $.001 per share
(the "Company Common Stock"), on the terms and conditions set forth below;
WHEREAS, the Shareholder of the Company will benefit from the transactions
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contemplated herein,
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1. Exchange of Shares. Subject to the terms and conditions of this
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Agreement, on the Closing Date (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Sellers
the number of authorized but unissued shares of Company Common Stock set forth
opposite such Seller's name set forth on Schedule I hereto, and
(b) each Seller agrees to deliver to the Company, the number
of authorized but unissued shares of Common Stock, par value $1.00 per share, of
ATHI set forth opposite such Seller's name on Schedule I hereto along with an
appropriately executed stock power endorsed in favor of the Company; and
(c) the Company currently has 2,200,000 shares of its $.001
par value common stock issued and outstanding. The parties hereto further
anticipate a 1.65:1 forward split on the Company's common stock thereby
resulting in 3,630,000 shares issued and outstanding. After giving effect to the
exchange of shares herein, the Company shall have 19,930,000 post forward-split
common stock shares issued and outstanding.
1.2. Time and Place of Closing. The closing of the transactions
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contemplated hereby (the "Closing") shall take place at the offices of Advanced
Technology International Holdings, Inc's. counsel on February 25, 2000 (the
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"Closing Date") at 10:00 A.M., Los Angeles time, or at such other place as the
Company and the Sellers may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
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The Company and the Shareholder represent and warrant to the best of their
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knowledge, to each of the Sellers that now and/or as of the Closing:
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2.1. Due Organization and Qualification; Subsidiaries; Due
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Authorization.
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(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of formation,
with full corporate power and authority to own, lease and operate its respective
business and properties and to carry on its respective business in the places
and in the manner as presently conducted or proposed to be conducted. The
Company is in good standing as a foreign corporation in each jurisdiction in
which the properties owned, leased or operated, or the business conducted, by it
requires such qualification except for any such failure, which when taken
together with all other failures, is not likely to have a material adverse
effect on the business of the Company and its Subsidiaries taken as a whole.
(b) The Company does not own, directly or indirectly, any
capital stock, equity or interest in any corporation, firm, partnership, joint
venture or other entity.
(c) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. The Company has taken all
corporate action necessary for the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and this Agreement
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its respective terms, except as may be affected
by bankruptcy, insolvency, moratoria 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 therefore may be brought.
2.2. No Conflicts or Defaults. The execution and delivery of this
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Agreement by the Company and the consummation of the transactions contemplated
hereby do not and shall not (a) contravene the Certificate of Incorporation or
By-laws of the Company or (b) with or without the giving of notice or the
passage of time (i) violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which the Company is a party
or by which the Company is bound, or any judgment, order or decree, or any law,
rule or regulation to which the Company is subject, (ii) result in the creation
of, or give any party the right to create, any lien, charge, encumbrance or any
other right or adverse interest ("Liens") upon any of the assets of the Company,
(iii) terminate or give any party the right to terminate, amend, abandon or
refuse to perform, any material agreement, arrangement or commitment to which
the Company is a party or by which the Company's assets are bound, or (iv)
accelerate or modify, or give any party the right to accelerate or modify, the
time within which, or the terms under which, the Company is to perform any
duties or obligations or receive any rights or benefits under any material
agreement, arrangement or commitment to which it is a party.
2.3. Capitalization. The authorized capital stock of the Company
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immediately prior to giving effect to the transactions contemplated hereby
consists of 25,000,000 shares of Common Stock of which 2,200,000 shares of $.001
par value Common Stock are issued and outstanding as of the date hereof and
5,000,000 shares of $.001 par value Preferred Stock authorized of which no
shares are issued or outstanding. All of the outstanding shares of Common Stock
are, and the Company Shares when issued in accordance with the terms hereof,
will be, duly authorized, validly issued, fully paid and nonassessable, and have
not been or, with respect to the Company Shares, will not be issued in violation
of any preemptive right of stockholders. The Company Shares are not subject to
any preemptive or subscription right, any voting trust agreement or other
contract, agreement, arrangement, option, warrant, call, commitment or other
right of any character obligating or entitling the Company to issue, sell,
redeem or repurchase any of its securities, and there is no outstanding security
of any kind convertible into or exchangeable for Common Stock. The Company has
not granted registration rights to any person.
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2.4. Financial Statements. Exhibit 2.4-EX to the Disclosure Schedule
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contains copies of the consolidated balance sheets of the Company at May 31,
1999, 1998, 1997 and from inception on June 7, 1996, and the related statements
of operations, stockholders' equity and cash flows for the fiscal years then
ended, including the notes thereto, as audited by Xxxxx Xxxxxx and Company,
certified public accountants (all such statements being the "Company Financial
Statements"). Exhibit 2.4-EX to the Disclosure Schedule also contains copies of
the consolidated balance sheets of the Company at November 30, 1999, and 1998
and from inception on June 7, 1996, and the related statements of operations,
stockholders' equity and cash flows for the six month period then ended prepared
by the Company's management. The Financial Statements, together with the notes
thereto, have been prepared in accordance with U.S. generally accepted
accounting principles applied on a basis consistent throughout all periods
presented, subject to audit adjustments, which are not expected to be material.
Such statements present fairly the financial position of the Company as of the
dates and for the periods indicated. The books of account and other financial
records of the Company have been maintained in accordance with good business
practices.
2.5. Further Financial Matters. The Company does not have any
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liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet or the notes thereto under
generally accepted accounting principles, but which are not reflected in the
Financial Statements.
2.6. Taxes. The Company has filed all United States federal, state,
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county, local and foreign national, provincial and local returns and reports
which were required to be filed on or prior to the date hereof in respect of all
income, withholding, franchise, payroll, excise, property, sales, use, value-
added or other taxes or levies, imposts, duties, license and registration fees,
charges, assessments or withholdings of any nature whatsoever (together,
"Taxes"), and has paid all Taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of the Company and adequate reserves therefore have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by the Company, as the case may be, such
judgments were reasonable under the circumstances) and complete in all material
respects. No tax return or tax return liability of the Company has been audited
or, presently under audit. The Company has not given or been requested to give
waivers of any statute of limitations relating to the payment of any Taxes (or
any related penalties, fines and interest). There are no claims pending or, to
the knowledge of the Company, threatened, against the Company for past due
Taxes. All payments for withholding taxes, unemployment insurance and other
amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of the Company,
including, without limitation, amounts payable pursuant to the Federal Insurance
Contributions Act, have been paid or shall be paid prior to the Closing and have
been duly provided for on the books and records of the Company and in the
Financial Statements.
2.7. Indebtedness; Contracts; No Defaults.
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(a) Item 2.7 of the Disclosure Schedule sets forth a true,
complete and correct list of all material instruments, agreements, indentures,
mortgages, guarantees, notes, commitments, accommodations, letters of credit or
other arrangements or understandings, whether written or oral, to which the
Company or any Subsidiary is a party (collectively, the "Operating Agreements").
(b) Except as disclosed in Item 2.7 of the Disclosure
Schedule, neither the Company, any Subsidiary, nor, to the Company's knowledge,
any other person or entity is in breach in any material respect of, or in
default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which the Company is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by the Company or, to the knowledge of the
Company, any other person or entity. The Company has not received any notice of
default under any contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the satisfaction of, or duly
waived by, the party claiming such default on or before the date hereof.
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2.8. Personal Property. The Company has good and marketable title to
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all of its tangible personal property and assets, including, without limitation,
all of the assets reflected in the Financial Statements that have not been
disposed of in the ordinary course of business and such property is free and
clear of all Liens or mortgages.
2.9. Real Property. Item 2.9 of the Disclosure Schedule sets forth a
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true and complete list of all real property owned by, or leased or subleased by
or to, the Company.
2.10. Compliance with Law. The Company is not conducting its
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respective business or affairs in violation of any applicable federal, state or
local law, ordinance, rule, regulation, court or administrative order, decree or
process, or any requirement of insurance carriers. The Company has not received
any notice of violation or claimed violation of any such law, ordinance, rule,
regulation, order, decree, process or requirement.
(a) The Company is in compliance with all applicable federal,
state, local and foreign laws and regulations relating to the protection of the
environment and human health. There are no claims, notices, actions, suits,
hearings, investigations, inquiries or proceedings pending or, to the knowledge
of the Company, threatened against the Company that are based on or related to
any environmental matters or the failure to have any required environmental
permits, and there are no past or present conditions that the Company has reason
to believe are likely to give rise to any material liability or other
obligations of the Company or any Subsidiary under any environmental laws.
2.11. Permits and Licenses. The Company has all certificates of
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occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. The Company has
not received any written or oral notice or claim pertaining to the failure to
obtain any material permit, certificate, license, approval or other
authorization required by any federal, state or local agency or other regulatory
body, the failure of which to obtain would materially and adversely affect its
business.
2.12. Ordinary Course. The Company has conducted its business,
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maintained its real property and equipment and kept its books of account,
records and files, substantially in the same manner as previously conducted,
maintained or kept and solely in the ordinary course.
2.13. No Adverse Changes. There have not been (a) any material adverse
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change in the business, prospects, the financial or other condition, or the
respective assets or liabilities of the Company as reflected in the Financial
Statements, (b) any material loss sustained by the Company, including, but not
limited to any loss on account of theft, fire, flood, explosion, accident or
other calamity, whether or not insured, which has materially and adversely
interfered, or may materially and adversely interfere, with the operation of the
Company's business, or (c) to the best knowledge of the Company, any event,
condition or state of facts, including, without limitation, the enactment,
adoption or promulgation of any law, rule or regulation, the occurrence of which
materially and adversely does or would affect the results of operations or the
business or financial condition of the Company.
2.14. Litigation. There is no claim, dispute, action, suit, proceeding
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or investigation pending or, to the knowledge of the Company, threatened,
against or affecting the business of the Company, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12-month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
; and (c) the Company has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation or any matter disclosed in respect of its business.
2.15. Insurance. The Company does not currently maintain any form of
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insurance.
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2.16. Certificate of Incorporation and By-laws; Minute Books. The
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copies of the Certificate of Incorporation and By-laws (or similar governing
documents) of the Company, and all amendments to each are true, correct and
complete. The minute books of the Company contains true and complete records of
all meetings and consents in lieu of meetings of their respective Board of
Directors (and any committees thereof), or similar governing bodies, since the
time of their respective organization. The stock books of the Company are true,
correct and complete.
2.17. Employee Benefit Plans. The Company does not maintain, nor has
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the Company maintained in the past, any employee benefit plans ("as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company, former employees, their
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company, any entity required to be aggregated in a controlled group or
affiliated service group with the Company for purposes of ERISA or the Internal
Revenue Code of 1986 (the "Code") (including, without limitation, under Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant
time ("Benefit Plans").
2.18. Patents; Trademarks and Intellectual Property Rights. The Company
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does not own or possesses any patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, Internet web site(s) or
proprietary rights of any nature.
2.19. Brokers. All negotiations relative to this Agreement and the
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transactions contemplated hereby have been carried out by the Company directly
with the Sellers without the intervention of any Person on behalf of the Company
in such a manner as to give rise to any valid claim by any Person against any
Seller for a finder's fee, brokerage commission or similar payment.
2.20. Affiliate Transactions. Except as disclosed in Item 2.20 of the
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Disclosure Schedule neither the Company nor any officer, director or employee of
the Company (or any of the relatives or Affiliates of any of the aforementioned
Persons) is a party to any agreement, contract, commitment or transaction with
the Company or affecting the business of the Company, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used in or
necessary to the Company which will subject the Sellers to any liability or
obligation from and after the Closing Date.
2.21. Trading. The Company Common Stock is currently listed for trading
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on the OTC Bulletin Board, and the Company has received no notice that its
Common Stock is subject to being delisted there from.
2.22. Compliance. The Company and its Shareholder, have complied with
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all applicable foreign, federal and state laws, rules and regulations,
including, without limitation, the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Securities Act and is current
in its filings.
2.23. Filings. None of the filings made by the Company under the
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Securities Act or the Exchange act make any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers represents and warrants, jointly and severally to the
Company that now and/or as of the Closing:
3.1. Due Organization and Qualification; Subsidiaries; Due
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Authorization.
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(a) ATHI and each Subsidiary of ATHI is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of formation, with full corporate power and authority to own,
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lease and operate its respective business and properties and to carry on its
respective business in the places and in the manner as presently conducted or
proposed to be conducted. ATHI and each Subsidiary is in good standing as a
foreign corporation in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
for any such failure, which when taken together with all other failures, is not
likely to have a material adverse effect on the business of ATHI and its
Subsidiaries taken as a whole.
(b) ATHI does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm, partnership, joint venture
or other entity, other than those (each, a "Subsidiary" and together, the
"Subsidiaries") set forth in Item 2.1 of the Disclosure Schedule of even date
herewith, which accompanies this Agreement and is incorporated herein by
reference (the "Disclosure Schedule"). Except as set forth in Item 2.1 of the
Disclosure Schedule, each Subsidiary is wholly owned by ATHI, all the
outstanding shares of capital stock of each Subsidiary are owned free and clear
of all Liens (as hereinafter defined), there is no contract, agreement,
arrangement, option, warrant, call, commitment or other right of any character
obligating or entitling any Subsidiary to issue, sell, redeem or repurchase any
of its securities, and there is no outstanding security of any kind convertible
into or exchangeable for securities of any Subsidiary.
(c) Each of ATHI and the Sellers has all requisite power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. Each of ATHI and the Sellers has
taken all corporate action necessary for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and this
Agreement constitutes the valid and binding obligation of each of ATHI and the
Sellers, enforceable against each of ATHI and the Sellers in accordance with its
respective terms, except as may be affected by bankruptcy, insolvency, moratoria
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 therefore may
be brought.
3.2. No Conflicts or Defaults. The execution and delivery of this
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Agreement by each of ATHI and the Sellers and the consummation of the
transactions contemplated hereby do not and shall not (a) contravene the
Certificate of Incorporation or By-laws of ATHI or the governing documents of
any Seller, if applicable, or (b) with or without the giving of notice or the
passage of time, (i) violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which ATHI, any of the
Subsidiaries or any Seller is a party or by which ATHI, any of the Subsidiaries
or any Seller or any of their respective assets are bound, or any judgment,
order or decree, or any law, rule or regulation to which ATHI, any of the
Subsidiaries or any Seller or any of their respective assets are subject, (ii)
result in the creation of, or give any party the right to create, any Lien upon
any of the assets of ATHI or any of the Subsidiaries, (iii) terminate or give
any party the right to terminate, amend, abandon or refuse to perform, any
material agreement, arrangement or commitment to which ATHI or any of the
Subsidiaries is a party or by which ATHI or any of the Subsidiaries or any of
their respective assets are bound, or (iv) accelerate or modify, or give any
party the right to accelerate or modify, the time within which, or the terms
under which, ATHI or any of the Subsidiaries is to perform any duties or
obligations or receive any rights or benefits under any material agreement,
arrangement or commitment to which it is a party.
3.3. Capitalization. The authorized capital stock of ATHI immediately
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prior to giving effect to the transactions contemplated hereby consists of
50,000 shares of ATHI Common Stock, par value $1.00 per share of which as of the
date hereof 1000 shares of Common Stock are issued and outstanding. Set forth in
Item 2.3 of the Disclosure Schedule is a list of all Stockholders of ATHI,
setting forth their names, addresses and number of shares owned. All of the
outstanding shares of ATHI Common Stock are, and ATHI Shares when transferred in
accordance with the terms hereof, will be, duly authorized, validly issued,
fully paid and nonassessable, and have not been or, with respect to ATHI Shares,
will not be transferred in violation of any rights of third parties. The ATHI
Shares are not subject to any preemptive or subscription right, any voting trust
agreement or other contract, agreement, arrangement, option, warrant, call,
commitment or other right of any character obligating or entitling ATHI to
issue, sell, redeem or repurchase any of its securities, and there is no
outstanding security of any kind convertible into or exchangeable for Common
Stock.
3.4. Financial Statements. Exhibit 2 to the Disclosure Schedule
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contains copies of the consolidated balance sheets of ATHI at September 30,
1999, and the related statements of operations, stockholders' equity and cash
flows for the period then ended, including the notes thereto, as audited by BDO
Xxxxxxx, certified public
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accountants (all such statements being the "ATHI Financial Statements"). Such
financial statements indicate that ATHI has gross sales and net profits in
excess of $16,000,000 and $2,600,000 respectively. The Financial Statements,
together with the notes thereto, have been prepared in accordance with U.S.
generally accepted accounting principles applied on a basis consistent
throughout all periods presented, subject to audit adjustments, which are not
expected to be material. Such statements present fairly the financial position
of ATHI as of the dates and for the periods indicated. The books of account and
other financial records of ATHI have been maintained in accordance with good
business practices.
3.5. Further Financial Matters. Except as set forth in Item 3.5 to the
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Disclosure Schedule, neither ATHI nor any of the Subsidiaries has any material
liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet or the notes thereto under
generally accepted accounting principles, but which are not reflected in the
Financial Statements.
3.6. Taxes. Except as indicated in Item 3.6 of the Disclosure
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Schedule, each of ATHI and the Subsidiaries has filed all United States federal,
state, county, local and foreign national, provincial and local tax returns and
reports which were required to be filed on or prior to the date hereof, and has
paid all Taxes (and any related penalties, fines and interest) which have become
due pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent its liability for any Taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of ATHI and adequate
reserves therefore have been established. All such returns and reports filed on
or prior to the date hereof have been properly prepared and are true, correct
(and to the extent such returns reflect judgments made by ATHI or a Subsidiary,
as the case may be, such judgments were reasonable under the circumstances) and
complete in all material respects. Except as indicated in 3.6 of the Disclosure
Schedule, no extension for the filing of any such return or report is currently
in effect. Except as indicated in Item 3.6 of the Disclosure Schedule, no tax
return or tax return liability of ATHI or any Subsidiary has been audited or,
presently under audit. All taxes and any penalties, fines and interest which
have been asserted to be payable as a result of any audits have been paid.
Except as indicated in Item 3.6 of the Disclosure Schedule, neither ATHI nor any
Subsidiary has given or been requested to give waivers of any statute of
limitations relating to the payment of any Taxes (or any related penalties,
fines and interest). There are no claims pending or, to the knowledge of ATHI,
threatened, against ATHI or any Subsidiary for past due Taxes. Except as
indicated in Item 3.6 of the Disclosure Statement, all payments for withholding
taxes, unemployment insurance and other amounts required to be paid for periods
prior to the date hereof to any governmental authority in respect of employment
obligations of ATHI and each Subsidiary, including, without limitation, amounts
payable pursuant to the Federal Insurance Contributions Act, have been paid or
shall be paid prior to the Closing and have been duly provided for on the books
and records of ATHI and in the Financial Statements.
3.7. Indebtedness; Contracts; No Defaults.
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(a) Item 3.7 of the Disclosure Schedule sets forth a true,
complete and correct list of all material instruments, agreements, indentures,
mortgages, guarantees, notes, commitments, accommodations, letters of credit or
other arrangements or understandings, whether written or oral, to which ATHI or
any Subsidiary is a party (collectively, the "ATHI Operating Agreements"). An
agreement shall not be considered material for the purposes of this Section
3.7(a) if it provides for expenditures or receipts of less than $100,000 and has
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been entered into by ATHI or a Subsidiary in the ordinary course of business.
The ATHI Operating Agreements constitute all of the contracts, agreements,
understandings and arrangements required for the operation of the business of
ATHI and the Subsidiaries or which have a material effect thereon. Copies of all
such material written ATHI Operating Agreements have previously been delivered
or otherwise made available to the Company and such copies are true, complete
and correct as of the date hereof.
(b) Except as disclosed in Item 3.7 of the Disclosure
Schedule, neither ATHI, any Subsidiary, nor, to ATHI's knowledge, any other
person or entity is in breach in any material respect of, or in default in any
material respect under, any material contract, agreement, arrangement,
commitment or plan to which ATHI or any Subsidiary is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by ATHI or any Subsidiary or, to the
knowledge of ATHI, any other person or entity. Neither ATHI nor any
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Subsidiary has received any notice of default under any contract, agreement,
arrangement, commitment or plan to which it is a party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
3.8. Personal Property. Except as set forth in Item 3.8 of the
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Disclosure Schedule, each of ATHI and the Subsidiaries has good and marketable
title to all of its tangible personal property and assets, including, without
limitation, all of the assets reflected in the Financial Statements that have
not been disposed of in the ordinary course of business since September 30,
1999, free and clear of all Liens or mortgages, except for any Lien for current
taxes not yet due and payable and such restrictions, if any, on the disposition
of securities as may be imposed by federal or applicable state securities laws.
3.9. Real Property.
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(a) Item 3.9 of the Disclosure Schedule sets forth a true and
complete list of all real property owned by, or leased or subleased by or to,
ATHI and its Subsidiaries (the "ATHI Real Property").
(b) Except as set forth in Item 3.9 of the Disclosure
Statement, each lease to which ATHI is a party is valid, binding and in full
force and effect with respect to ATHI or a Subsidiary, as the case may be, and,
to the knowledge of ATHI, all other parties thereto; no notice of default or
termination under any such lease is outstanding.
3.10. Compliance with Law.
-------------------
(a) Except as set forth in Item 3.10 of the Disclosure
Schedule, neither ATHI nor any Subsidiary is conducting its respective business
or affairs in material violation of any applicable federal, state or local law,
ordinance, rule, regulation, court or administrative order, decree or process,
or any requirement of insurance carriers. Neither ATHI nor any Subsidiary has
received any notice of violation or claimed violation of any such law,
ordinance, rule, regulation, order, decree, process or requirement.
(b) Each of ATHI and the Subsidiaries is in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations relating to the protection of the environment and human health.
There are no claims, notices, actions, suits, hearings, investigations,
inquiries or proceedings pending or, to the knowledge of ATHI, threatened
against ATHI or any of the Subsidiaries that are based on or related to any
environmental matters or the failure to have any required environmental permits,
and there are no past or present conditions that ATHI has reason to believe are
likely to give rise to any material liability or other obligations of ATHI or
any Subsidiary under any environmental laws.
3.11. Permits and Licenses. Except as set forth in Item 3.11 of the
--------------------
Disclosure Schedule, each of ATHI and the Subsidiaries has all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. Except as set
forth in Item 3.11 of the Disclosure Schedule, as of the date hereof, neither
ATHI nor any Subsidiary has received any written or oral notice or claim
pertaining to the failure to obtain any material permit, certificate, license,
approval or other authorization required by any federal, state or local agency
or other regulatory body, the failure of which to obtain would materially and
adversely affect its business.
3.12. Ordinary Course. Except as set forth in Item 3.12 of the
---------------
Disclosure Schedule, since December 31, 1999, each of ATHI and the Subsidiaries
has conducted its business, maintained its real property and equipment and kept
its books of account, records and files, substantially in the same manner as
previously conducted, maintained or kept and solely in the ordinary course; it
being understood and acknowledged that ATHI has been substantially reducing its
operations for some time.
3.13. No Adverse Changes. Except as set forth in Item 3.13 of the
------------------
Disclosure Schedule, since December 31, 1999, there has not been (a) any
material adverse change in the business, prospects, the financial or
8
other condition, or the respective assets or liabilities of ATHI and the
Subsidiaries as reflected in the Financial Statements, (b) any material loss
sustained by ATHI or any Subsidiary, including, but not limited to any loss on
account of theft, fire, flood, explosion, accident or other calamity, whether or
not insured, which has materially and adversely interfered, or may materially
and adversely interfere, with the operation of ATHI's or any Subsidiary's
business, or (c) to the best knowledge of ATHI, any event, condition or state of
facts, including, without limitation, the enactment, adoption or promulgation of
any law, rule or regulation, the occurrence of which materially and adversely
does or would affect the results of operations or the business or financial
condition of ATHI or any Subsidiary; it being understood and acknowledged that
ATHI has been substantially reducing its operations for some time.
3.14. Litigation. (a) Except as set forth in Item 3.14 of the
----------
Disclosure Schedule, there is no claim, dispute, action, suit, proceeding or
investigation pending or, to the knowledge of ATHI, threatened, against or
affecting the business of ATHI or any Subsidiary, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of ATHI, has any such claim, dispute, action, suit, proceeding or
investigation been pending or threatened, during the 12-month period preceding
the date hereof; (b) there is no outstanding judgment, order, writ, ruling,
injunction, stipulation or decree of any court, arbitrator or federal, state,
local, foreign or other governmental authority, board, agency, commission or
instrumentality, against or materially affecting the business of ATHI or any
Subsidiary; and (c) neither ATHI nor any Subsidiary has received any written or
verbal inquiry from any federal, state, local, foreign or other governmental
authority, board, agency, commission or instrumentality concerning the possible
violation of any law, rule or regulation or any matter disclosed in respect of
its business.
3.15. Insurance. ATHI and the Subsidiaries maintain insurance against
---------
all risks customarily insured against by companies in its industry. All such
policies are in full force and effect, and neither ATHI nor any Subsidiary has
received any notice from any insurance company suspending, revoking, modifying
or canceling (or threatening such action) any insurance policy issued to ATHI.
3.16. Certificate of Incorporation and By-laws; Minute Books. The
------------------------------------------------------
copies of the Certificate of Incorporation and By-laws (or similar governing
documents) of ATHI and each Subsidiary, and all amendments to each are true,
correct and complete. The minute books of ATHI and each Subsidiary contain true
and complete records of all meetings and consents in lieu of meetings of their
respective Board of Directors (and any committees thereof), or similar governing
bodies, since the time of their respective organization. The stock books of ATHI
and each Subsidiary are true, correct and complete.
3.17. Employee Benefit Plans. Except as set forth in Item 3.17 of the
----------------------
Disclosure Schedule, neither ATHI nor any Subsidiary maintains, nor has ATHI or
any Subsidiary maintained in the past, any employee benefit plans ("as defined
in Section 3(3) of the "ERISA"), or any plans, programs, policies, practices,
arrangements or contracts (whether group or individual) providing for payments,
benefits or reimbursements to employees of ATHI or any Subsidiary, former
employees, their beneficiaries and dependents under which such employees, former
employees, their beneficiaries and dependents are covered through an employment
relationship with ATHI, any Subsidiary or any entity required to be aggregated
in a controlled group or affiliated service group with ATHI for purposes of
ERISA or the Internal Revenue Code of 1986 (the "Code") (including, without
limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA, at any relevant time ("ATHI Benefit Plans").
3.18. Patents; Trademarks and Intellectual Property Rights. Each of
----------------------------------------------------
ATHI and the Subsidiaries owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, internet web site(s) proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, and neither ATHI nor any
Subsidiary is bound by, or a party to, any options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
3.19. Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by ATHI directly with the
Sellers without the intervention of any Person on behalf of ATHI in
9
such a manner as to give rise to any valid claim by any Person against any
Seller for a finder's fee, brokerage commission or similar payment.
3.20. Subsidiaries. Item 3.20 of the Disclosure Statements sets forth
------------
all the Subsidiaries of ATHI. All the outstanding shares of capital stock of, or
other equity interests in, each such subsidiary have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by ATHI, free
and clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Each Subsidiary of ATHI is wholly owned by
ATHI.
3.21. Purchase for Investment.
-----------------------
(a) Such Seller is acquiring the Company Shares for investment
for such Seller's own account and not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and such Seller has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Such Seller further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Company Shares.
(b) Such Seller understands that the Company Shares are not
registered under the Act on the ground that the sale and the issuance of
securities hereunder is exempt from registration under the Act pursuant to
Section 4(2) thereof, and that the Company's reliance on such exemption is
predicated on such Seller's representations set forth herein. Such Seller is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Act.
3.22. Investment Experience. Such Seller acknowledges that it can bear
---------------------
the economic risk of its investment, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Company Shares.
3.23. Information. The Sellers have carefully reviewed such
-----------
information, as each Seller deemed necessary to evaluate an investment in the
Company Shares. To the full satisfaction of each Seller, it has been furnished
all materials that it has requested relating to the Company and the issuance of
the Company Shares hereunder, and each Seller has been afforded the opportunity
to ask questions of representatives of the Company to obtain any information
necessary to verify the accuracy of any representations or information made or
given to the Sellers. Notwithstanding the foregoing, nothing herein shall
derogate from or otherwise modify the representations and warranties of the
Company set forth in this Agreement, on which each of the Sellers has relied in
making an exchange of the ATHI Shares of the Company Shares.
3.24. Restricted Securities. Such Seller understands that the Company
---------------------
Shares may not be sold, transferred, or otherwise disposed of without
registration under the Act or an exemption there from, and that in the absence
of an effective registration statement covering the Company Shares or any
available exemption from registration under the Act, the Company Shares must be
held indefinitely. Such Seller is aware that the Company Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company.
ARTICLE IV
INDEMNIFICATION
4.1. Indemnity of the Company and the Shareholder. The Company and the
-------------------------------------------- -------
Shareholder agree to defend, indemnify and hold harmless each Seller from and
-----------
against, and to reimburse each Seller with respect to, all liabilities, losses,
costs and expenses, including, without limitation, reasonable attorneys' fees
and disbursements, asserted against or incurred by such Seller by reason of,
arising out of, or in connection with any material breach of any representation
or warranty contained in this Agreement made by the Company or the Shareholder
------------------
or in any
10
document or certificate delivered by the Company or the Shareholder pursuant to
------------------
the provisions of this Agreement or in connection with the transactions
contemplated thereby.
4.2. Indemnity of the Company. Each of the Sellers agrees to jointly
------------------------
and severally defend, indemnify and hold harmless the Company from and against,
and to reimburse the Company with respect to, all liabilities, losses, costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, asserted against or incurred by such Seller by reason of, arising
out of, or in connection with any material breach of any representation or
warranty contained in this Agreement and made by the Company or in any document
or certificate delivered by the Company pursuant to the provisions of this
Agreement or in connection with the transactions contemplated thereby.
4.3. Indemnification Procedure.
-------------------------
A party (an "Indemnified Party") seeking indemnification shall give prompt
notice to the other party (the "Indemnifying Party") of any claim for
indemnification arising under this Article 4. The Indemnifying Party shall have
the right to assume and to control the defense of any such claim with counsel
reasonably acceptable to such Indemnified Party, at the Indemnifying Party's own
cost and expense, including the cost and expense of reasonable attorneys' fees
and disbursements in connection with such defense, in which event the
Indemnifying Party shall not be obligated to pay the fees and disbursements of
separate counsel for such in such action. In the event, however, that such
Indemnified Party's legal counsel shall determine that defenses may be available
to such Indemnified Party that are different from or in addition to those
available to the Indemnifying Party, in that there could reasonably be expected
to be a conflict of interest if such Indemnifying Party and the Indemnified
Party have common counsel in any such proceeding, or if the Indemnified Party
has not assumed the defense of the action or proceedings, then such Indemnifying
Party may employ separate counsel to represent or defend such Indemnified Party,
and the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party. No settlement of any such claim or payment
in connection with any such settlement shall be made without the prior consent
of the Indemnifying Party which consent shall not be unreasonably withheld.
ARTICLE V
DELIVERIES
5.1. Items to be delivered to ATHI prior to or at Closing by the
-----------------------------------------------------------
Company.
-------
(a) articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificate of good standing in the
Company's state of incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and
shareholder meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of
the Company;
(f) copies of all SEC filings;
(g) resolution from the Company's current directors appointing
designees of ATHI to the Company's Board of Directors;
(h) letters of resignation from the Company's current officers
and directors to be effective upon Closing and after the
appointments described in this section;
11
(i) certificates representing 16,300,000 post forward-split
shares of the Company's $.001 par value common stock issued
in the denominations as set forth opposite their respective
names on Schedule I to this Agreement, duly authorized,
validly issued, fully paid for and non-assessable;
(j) copies of board, and if applicable, shareholder resolutions
approving this transaction and authorizing the issuances of
the shares hereto;
(k) any other document reasonably requested by ATHI that it
deems necessary for the consummation of this transaction
5.2. Items to be delivered to the Company prior to or at Closing by
--------------------------------------------------------------
ATHI.
----
(a) articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificate of good standing in the
Company's state of incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and
shareholder meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of
the Company;
(f) resolution from ATHI current directors appointing designees
of ATHI to the Company's Board of Directors;
(g) certificates representing 100% of ATHI's common stock as set
forth opposite their respective names on Schedule I to this
Agreement, duly authorized, validly issued, fully paid for
and non-assessable;
(h) copies of board, and if applicable, shareholder resolutions
approving this transaction and authorizing the issuances of
the shares hereto;
(i) any other document reasonably requested by the Company that
-----------------------------------------------------------
it deems necessary for the consummation of this transaction
-----------------------------------------------------------
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions Precedent to Closing. The obligations of the Parties
-------------------------------
under this Agreement shall be and are subject to fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) That each of the representations and warranties of the
Parties contained herein shall be true and correct at the
time of the Closing date as if such representations and
warranties were made at such time;
(b) That the Parties shall have performed or complied with all
agreements, terms and conditions required by this
Agreement to be performed or complied with by them prior
to or at the time of the Closing;
(c) That the Parties shall be satisfied with the results of
their due diligence and review of the other books and
records.
12
6.2. Conditions to Obligations of Sellers. The obligations of Seller
------------------------------------
shall be subject to fulfillment prior to or at the Closing, of each of the
following conditions:
(a) shall have paid all of the costs and expenses of the
Company and themselves associated with the acquisition of
the ATHI Shares by the Company;
(b) As of the Closing, the Company shall have no assets and no
liabilities whatsoever, contingent or otherwise.
(c) The Company shall have entered into a registration rights
agreement with all the Sellers and the Financial
Consultants (as hereinafter defined), in the form attached
as Exhibit 6.2(c) (the "Registration Rights Agreement").
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time before
-----------
or, at Closing, by:
(a) The mutual agreement of the Constituent Parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a
party shall be materially untrue or fail to be
accomplished;
(ii) Any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain
or prevent the consummation of this Agreement; or
(iii) The conditions precedence to Closing are not
satisfied.
(c) Upon termination of this Agreement for any reason, in
accordance with the terms and conditions set forth in this
paragraph, each said party shall bear all costs and
expenses as each party has incurred and no party shall be
liable to the other.
ARTICLE VIII
MISCELLANEOUS
8.1. Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Closing Date for so long as the applicable statute of limitations
shall remain open. Each of the parties hereto is executing and carrying out the
provisions of this agreement in reliance upon the representations, warranties
and covenants and agreements contained in this agreement or at the closing of
the transactions herein provided for and not upon any investigation which it
might have made or any representations, warranty, agreement, promise or
information, written or oral, made by the other party or any other person other
than as specifically set forth herein.
8.2. Access to Books and Records. During the course of this
---------------------------
transaction through Closing, each party agrees to make available for inspection
all corporate books, records and assets, and otherwise afford to each other and
their respective representatives, reasonable access to all documentation and
other information concerning the business, financial and legal conditions of
each other for the purpose of conducting a due diligence investigation thereof.
Such due diligence investigation shall be for the purpose of satisfying each
party as to the business, financial and legal condition of each other for the
purpose of determining the desirability of consummating the proposed
transaction. The Parties further agree to keep confidential and not use for
their own benefit, except in
13
accordance with this Agreement any information or documentation obtained in
connection with any such investigation.
8.3. Further Assurances. If, at any time after the Closing, the
------------------
parties shall consider or be advised that any further deeds, assignments or
assurances in law or that any other things are necessary, desirable or proper to
complete the merger in accordance with the terms of this agreement or to vest,
perfect or confirm, of record or otherwise, the title to any property or rights
of the parties hereto, the Parties agree that their proper officers and
directors shall execute and deliver all such proper deeds, assignments and
assurances in law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights and otherwise to carry out
the purpose of this Agreement, and that the proper officers and directors the
parties are fully authorized to take any and all such action.
8.4. Notice. All communications, notices, requests, consents or
------
demands given or required under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered to, or received by prepaid
registered or certified mail or recognized overnight courier addressed to, or
upon receipt of a facsimile sent to, the party for whom intended, as follows, or
to such other address or facsimile number as may be furnished by such party by
notice in the manner provided herein:
If to the Company:
0000 Xxxx 0000 Xxxxx, Xxxxx 000
Xxxxx, Xxxx 00000
Attention: Xxx Xxxxx President
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Sellers:
At the respective addresses of the Sellers set forth
on Schedule 1 hereto.
Xxxxx X. Xxxxxxxx, Esq.
Loeb & Loeb, LLP.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
8.5. Entire Agreement. This Agreement, the Disclosure Schedule and any
----------------
instruments and agreements to be executed pursuant to this Agreement, sets forth
the entire understanding of the parties hereto with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings with
respect to its subject matter and may not be waived or modified, in whole or in
part, except by a writing signed by each of the parties hereto. No waiver of any
provision of this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance. Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such provision.
8.6. Successors and Assigns. This Agreement shall be binding upon,
----------------------
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be assigned by
any party hereto except with the prior written consent of the other parties,
which consent shall not be unreasonably withheld.
8.7. Governing Law. This Agreement shall in all respects be governed
-------------
by and construed in accordance with the laws of the State of California are
----------
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles.
14
8.8. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.9. Construction. Headings contained in this Agreement are for
------------
convenience only and shall not be used in the interpretation of this Agreement.
References herein to Articles, Sections and Exhibits are to the articles,
sections and exhibits, respectively, of this Agreement. The Disclosure Schedule
is hereby incorporated herein by reference and made a part of this Agreement. As
used herein, the singular includes the plural, and the masculine, feminine and
neuter gender each includes the others where the context so indicates.
8.10. Severability. If any provision of this Agreement is held to be
------------
invalid or unenforceable by a court of competent jurisdiction, this Agreement
shall be interpreted and enforceable as if such provision were severed or
limited, but only to the extent necessary to render such provision and this
Agreement enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first set forth above.
Score One, Inc.
By:
---------------------------
Xxx Xxxxx
President
By:
---------------------------
Xxx Xxxxx
The Shareholder
Advanced Technology International Holdings, Inc.
--------------------------------------------------
Name:
Title: President
Sellers:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Sellers:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
15
SCHEDULE I
Seller's Name and Address Number of ATHI Shares Number of Company Shares
------------------------- --------------------- -----------------------
16
DISCLOSURE SCHEDULE
2.4 Financial Statements attached as Exhibit 2.4-EX
2.7 The Company has two loans from a related party,
which bear interest at the rate of 10% per annum. The loans in the
amount of $5,000 each are due March 31, 2000 and January 1, 2001
respectively. The funds were loaned to the Company to fund its
revival and finance its becoming a reporting company under the
Securities Exchange Act of 1934.
2.9 Only asset is approximately $4,715 in cash held
in account at Zion's National Bank, Salt Lake City, Utah. It is
anticipated that all funds will be expended by Closing for expenses
related to this transaction.
2.20 Only those discussed in Item 2.7 of this schedule. However,
arrangements may be made for their payment or cancellation by Closing.
17
