REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT (the "Agreement") is made and
entered into by and between The Internet Advisory Corporation, a Utah
Corporation (the "Corporation") and the individuals listed on Exhibit A
attached hereto and made part hereof (collectively hereinafter referred
to as the "Parties").
PREAMBLE:
WHEREAS, the Subscriber owns all of the authorized issued and
outstanding Common Stock of Sunrise Web Development, Inc., a corporation
organized under the laws of Florida (the "Subsidiary"); and
WHEREAS, the Subscriber desires to acquire up to four million
(4,000,000) shares of the Corporation's common stock, $.001 par value
(the "Stock") which, upon issuance, would constitute approximately 44% of
the Corporations authorized, issued and outstanding common stock; and
WHEREAS, the Subscriber desires to acquire the Stock, in
consideration for, among other things, their conveyance of all of its
common stock in the Subsidiary, which stock constitutes all of the
Subsidiary's authorized, issued and outstanding securities ( the
"Subsidiary Stock"), provided the such conveyance meets the tax free
exchange requirements of Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended ( the "Code").
NOW, THEREFORE, in consideration of the premises, as well as the
mutual covenants hereinafter set forth, the Parties, intending to be
legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
EXCHANGE PROVISIONS
1.1 Exchange
Subject to the hereinafter described conditions, the Corporation
hereby agrees to exchange up to four million (4,000,000) shares of
its common stock, $.001 par value (the "Stock"), with the
Subscriber for all of the capital stock of the Subsidiary. Four
million (4,000,000) shares will be delivered to the Subscriber at
the closing of this agreement.
1.2 Closing
The exchange of the Stock for the Subsidiary Stock shall take place
at the offices of Xxxxxxx X. Xxxxx, P.A., legal counsel to the
Subscriber as soon as reasonably practicable or at such later time
or different place as parties may mutually select. At the closing:
(a) The Subscriber shall tender to the Corporation
certificates representing all of the Subsidiary's
authorized, issued and Outstanding capital stock, duly
executed and in proper form for transfer to the
Corporation, together with such executed consents,
powers of attorney, stock powers and other items as
shall be required to convey such stock to the
Corporation, in compliance with all applicable laws;
and
(b) The Corporation shall tender to the Subscriber four
million (4,000,000) shares of the Stock and such other
items as shall be required to convey such stock to
Subscriber.
1.3 Exemption From Registration
(a) The Subscriber hereby represents, warrants, covenants and
acknowledges that:
(1) The Stock is being issued without registration under
the provisions of Section 5 of the Securities Act of
1933, as amended (the "Act") pursuant to exemptions
provided pursuant to Sections 3(b), 4(2) or 4(6)
thereof;
(2) All of the Stock will bear legends restricting its
transfer to United States residents, or its transfer,
sale, conveyance or hypothecation within the
jurisdictional boundaries of the United States, unless
such Stock is either registered under the provisions
of Section 5 of the Act and under applicable State
securities laws, or an opinion of legal counsel, in
form and substance satisfactory to legal counsel to
the Corporation is provided certifying that such
registration is not required as a result of applicable
exemptions there from;
(3) The Corporation's transfer agent shall be instructed
not to transfer any of the Stock unless the
Corporation advises it that such transfer is in
compliance with all applicable laws;
(4) The Subscriber is acquiring the Stock for investment
purposes only, and not with a view to further sale or
distribution; and
(5) The Subscriber and its advisors have been given and
had access to all reports filed by the Corporation
with the Securities and Exchange Commission and
examined all of the Corporation's books and records
and fully and completely questioned the Corporation's
officers and directors as to all matters involving the
Corporation and have received satisfactory responses.
(b) The Corporation hereby represents, warrants, covenants and
acknowledges that:
(1) The Subsidiary Stock is being transferred without
registration under the provisions of Section 5 of the
Act pursuant to exemptions provided pursuant to
Section 3(b), 4(2), 4(6) thereof;
(2) All of the Subsidiary Stock will bear legends
restricting its transfer to the United States
residents, or its transfer, sale, conveyance or
hypothecation within the jurisdictional boundaries of
the United States, unless such Subsidiary Stock is
either registered under the provisions of Section 5 of
the Act and under applicable State securities laws, or
an opinion of legal counsel is provided certifying
that such registration is not required as a result of
applicable exemptions there from;
(3) The Corporation shall not transfer any of the
Subsidiary Stock except in compliance with all
applicable laws;
(4) The Corporation is acquiring the Subsidiary Stock for
investment purposes only and not with a view to
further sale or distribution.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES
2.1 The Corporation
The Corporation hereby represents and warrants to the
Subscriber, as a material inducement to their entry into this
Agreement, that:
(a) The Corporation is, as of the date of this
Agreement, a validly existing Corporation,
organized pursuant to the laws of the State of
Utah, with all legal and corporate authority and
power to conduct its business and to own its
properties and that it possesses all necessary
permits and licenses required in connection with
the conduct of its business;
(b) The conduct of the Corporation's business is in
full compliance with all applicable Federal,
state and local governmental statutes, rules,
regulations, ordinances and decrees;
(c) Pursuant to its Articles of Incorporation the
Corporation is authorized to issue 50,000,000
Shares of Common Stock, $.001 par value.
Currently, there are 9,005,018 shares of Common
Stock outstanding. There are no other authorized
or outstanding securities of any class or of any
kind or character or, except as reflected in this
Agreement, there are no outstanding
subscriptions, options, warrants, or other
agreements or commitments obligating the
Corporation to issue or sell any additional
shares of the Corporation's capital stock or any
options or rights with respect thereto, or any
securities convertible into any shares of Stock
of any class;
(d) Upon issuance of the Stock, in accordance with
the provisions of Section 1.1 of Article One, the
Subscriber will become the owner of approximately
44% of the Corporation's authorized, issued and
outstanding Common Stack;
(e) The execution and delivery of this Agreement, the
consummation of the transactions herein
contemplated and compliance with the terms of
this Agreement will not result in breach of any
terms or provisions of, or constitute a default
under, the Articles of Incorporation or By-laws
of the Corporation; any indenture, other
agreement or instrument to which the Corporation
is a party or by which it or its assets are
bound; or any applicable regulation, judgment,
order or decree of any governmental
instrumentality or court, domestic or foreign,
having jurisdiction over the Corporation, its
securities or its properties;
(f) The Corporation is not a party to any written or
oral agreement which grants an option or right of
first refusal or other arrangement to acquire any
of the Stock or to any agreement that effects the
voting rights of any of the Stock, nor has the
Corporation made any commitment of any kind
relating to the issuance of shares of any of its
Stock, whether by subscription, right of
conversion, option or otherwise;
(g) The Corporation is not a party to any agreement
or understanding for the sale or exchange of
inventory or services for consideration other
than cash or at a discount in excess of normal
discount for quantity or cash payment;
(h) The Corporation has filed with the appropriate
governmental agencies all tax returns and tax
reports required to be filed; all Federal, state
and local income, franchise, sales, use,
occupation or other taxes due have been fully
paid or adequately reserved for; and the
Corporation is not a party to any action or
proceeding by any governmental authority for
assessment or collection of taxes, nor has any
claim for assessments been asserted against the
Corporation;
(i) There are presently no contingent liabilities,
factual circumstances, threatened or pending
litigation, contractually assumed obligations or
unasserted possible claims which are known to the
Corporation, which might result in material
adverse change in the future financial condition
or operations of the Corporation other than as
previously disclosed to the Subscriber or
reflected in the Corporation's financial
statements provided to the Subscriber;
(j) The execution, delivery and performance of this
Agreement and the transactions contemplated
hereby do not (except for the consents described
in Article Four hereof) require the consent,
authority or approval of any other person or
entity except such as has been obtained;
(k) No transactions have been entered into either by
or on behalf of the Corporation, other than in
the ordinary course of business nor have any acts
been performed (including within the definition
of the term performed the failure to perform any
required acts) which would adversely affect the
good will of the Corporation;
(l) The entering into of this Agreement and the
performance thereof has been duly and validly
authorized by all required Corporate action and
does not require any corporate consents other
than such as have been unconditionally obtained;
(m) The Corporation's Financial Statements for the
period ended December 31, 1998 have been audited
by independent certified public accountants and
have been prepared in accordance with generally
accepted accounting principles applied on a
consistent basis. They fairly present the
Corporation's financial condition, results of
operations, assets, liabilities, or business;
(n) The Corporation does not have any subsidiaries
other than those disclosed in the Corporation's
Financial Statements; and
(o) The Minute Books of the Corporation contain true,
correct and complete copies of the minutes of all
meetings of its organizers, shareholders and
Board of Directors from the date of its
organization to the present.
2.2 The Subscriber
The Subscriber hereby represents and warrants to the
Corporation, as a material inducement to the Corporation's entry
into this Agreement, that, to the best of its knowledge after
reasonably inquiry:
(a) The Subsidiary owns or leases all of the assets
described in the schedule of assets, a copy of
which is annexed hereto and made a part hereof as
Exhibit B, and as of the date of this Agreement
no events have occurred nor have any facts been
discovered which materially alters the
Subsidiary's assets;
(b) The Subsidiary is, as of the date of this
Agreement, a validly existing corporation,
organized pursuant to the laws of Florida and has
all corporate authority and power to conduct its
business and to own its properties and possesses
all necessary permits and licenses required in
connection with the conduct of its businesses;
(c) The conduct of the Subsidiary's business is in
full compliance with all applicable governmental
statues, rules, regulations, ordinances and
decrees;
(d) The Subsidiary has seven thousand five hundred
(7,500) shares of Common Stock. $1.00 par value,
authorized, of which one hundred (100) are
currently issued and outstanding, there being no
other outstanding securities of any class or of
any kind or character of the Subsidiary and,
except as reflected in this Agreement, there
being no outstanding subscriptions, options,
warrants, or other agreements or commitments
obligating the Subsidiary, to issue or sell any
additional shares of the Subsidiary's Stock or
any other options or rights with respect thereto,
or any securities convertible into any shares of
Stock of any class;
(e) The execution and delivery of this Agreement, the
consummation of the transactions herein
contemplated and compliance with the terms of
this Agreement will not result in a breach of any
terms or provisions of, or constitute a default
under, the Articles of Incorporation or Bylaws of
the Subsidiary; and indenture, other agreement or
instrument to which the Subsidiary is a party or
by which it or its assets are bound; or any
applicable regulation, judgment, order or decree
of any governmental instrumentality or court,
domestic or foreign, having jurisdiction over the
Subsidiary, its securities or its properties;
(f) The Subsidiary is not a part to any written or
oral agreement which grants an option or right of
first refusal or any other arrangement to acquire
any of its securities to any agreement that
affects the voting rights of any of its
securities, nor has the subsidiary made any
commitment of any kind relating to the issuance
of shares of any of its securities, whether by
subscription, right of conversion, option or
otherwise;
(g) The Subsidiary is not a party to any agreement
or understanding for the sale or exchange of
inventory or services for consideration other
than cash or at a discount in excess of normal
discount for quantity or cash payment;
(h) The Subsidiary has filed with the appropriate
governmental agencies all tax returns and tax
reports required to be filed; all income,
franchise, sales, use, occupation or other taxes
due have been fully paid or adequately reserved
for; and the Subsidiary is not a party to any
action or proceeding by any governmental
authority for assessment or collection of taxes,
nor has any claim for assessments been asserted
against the Subsidiary;
(i) There are presently no contingent liabilities,
factual circumstances, threatened or pending
litigation, contractually assumed obligations or
unasserted possible claims which might result in
a material adverse change in the future financial
condition or operations of the Subsidiary;
(j) The execution, delivered and performance of this
Agreement and the transactions contemplated
hereby do not require the consent, authority or
approval of any other person or entity except
such as have been obtained;
(k) No transactions have been entered into either by
or on behalf of the Subsidiary, other than in the
ordinary course of business nor have any acts
been performed (including within the definition
of the term performed the failure to perform any
required acts) which would adversely affect the
goodwill of the Subsidiary;
(l) The entering into of this Agreement and the
performance thereof has been duly and validly
authorized by all required corporate action and
does not require any consents other than such as
have been unconditionally obtained.
(m) The Subscriber in consideration of executing and
delivering of this Agreement by its Corporation,
covenants not to compete with this Corporation or
its subsidiaries in any manner what so ever, with
respect to the assets of the subsidiary or its
business as described in Exhibit A, on the world
wide web or any similar medium for a period of
two (2) years. Additionally; the Subscribers
agrees to convey all of the Subscriber's rights
to the assets and technology as described in
Exhibit A to the Corporation.
ARTICLE THREE
SPECIAL CONDITIONS
3.1 Each Party
The obligations of each party to this Agreement are subject to
the condition precedent that the other party's representations
and warranties contained in this Agreement shall be true,
correct and complete on and as of the date of Closing with the
same effect as though such representations and warranties were
made on and as of such date. The Parties agree that all
respective corporate financial and operational information
will be made available in a reasonable manner upon receipt of
this notice of request therefore. Each Party to this
Agreement will bear all its own costs in connection with this
transaction.
3.2 The obligations of each party to this Agreement are subject to
the condition precedent of Utah State law that the Board of
Directors of the Corporation will consist of no more than six
(6) directors, three (3) of whom shall be nominated by the
Corporation and three (3) of whom shall be nominated by the
Subsidiary. Further, By-laws of the Corporation shall clearly
provide that directors meetings may be held by telephone
conference and that a quorum of four (4) directors will be
required to authorize ordinary business transactions and five
(5) directors will be required to authorize all other
transactions including but not limited to amendments to the
Corporation's Articles and/or By-laws, dissolutions,
litigations, mergers, consolidations, redemption of shares,
declaration of dividends, issuance, sale or creation of
additional number or class of equity securities by the
Corporation or the transfer, sale or encumbrance of any of the
issued shares held by any inside shareholder of the
Corporation. The Subscriber in consideration of executing and
delivery of this Agreement by the Corporation provides,
however, that until a voting agreement is negotiated and
executed by the Corporation and the Subscriber, the Subscriber
shall vote all shares owned for the three (3) Corporations
nominees in addition to their own nominees.
ARTICLE FOUR
MISCELLANEOUS
4.1 Amendment
No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is evinced by a
written instrument, subscribed by the Party against which such
modification, waiver, discharge or change is sought.
4.2 Notice
All notices, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly
given on the first business day after mailing by the United
States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
TO THE CORPORATION: Internet Advisory Corporation
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
TO THE SUBSCRIBER: Sunrise Web Development, Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Or such addresses or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
4.3 Merger
This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties
with respect to the subject matter discussed herein. All prior
agreements whether written or oral are merged herein and shall be of
no force or effect.
4.4 Survival
The several representations, warranties, covenants, and special
conditions of the Parties contained herein shall survive the
execution hereof and shall be effective regardless of any
investigation that may have been made by or on behalf of any Party.
4.5 Severability
If any provision or any portion of this Agreement, other than one of
the conditions precedent, or the application of such provision or
any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision
any the remaining provisions of this Agreement or the application
of such provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby.
4.6 Governing Law and Venue
This agreement shall be construed in accordance with the laws of the
State of Florida and any proceeding arising between the Parties in
any matter pertaining or related to this Agreement shall, to the
extent permitted by law, be held in the City of Fort Lauderdale,
Florida.
4.7 Indemnification
Each Party hereby irrevocably agrees to indemnify and hold the
other parties harmless from any and all liabilities and damages
(including legal or other expenses incidental thereto), contingent,
or current to which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by the
indemnifying Party or as a consequence of the failure of the
indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise. In the event it becomes necessary to
enforce this indemnity through an attorney, with or without
litigation, the successful Party shall be entitled to recover from
the indemnifying Party, all costs incurred including reasonable
attorneys' fees throughout any negotiations, trials or appeals,
whether or not any including reasonable attorneys' fees throughout
any negotiations, trials or appeals, whether or not any suit is
instituted.
4.8 Litigation
In any action between the Parties to enforce any of the terms
of this Agreement or any other matter arising from this Agreement,
the prevailing Party shall be entitled to recover its costs and
expenses, including reasonable attorney's fees up to and including
all negotiations, trials and appeals, whether or not litigation is
initiated.
4.9 Benefit of Agreement
The term and provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties, their successors,
assigns, personal representatives, estate, heirs and legatees.
4.10 Captions
The Captions in this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the
scope of this Agreement or the intent of any provisions hereof.
4.11 Number and Gender
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the
identity of the Party or Parties, or their personnel
representatives, successors and assigns may require.
4.12 Further Assurances
The Parties agree to do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged or delivered and to perform
all such acts and deliver all such deeds, assignments, transfers,
conveyances, powers of attorney, assurances, stock certificates, and
other documents, as may, from time to time, be required herein to
effect the intent and purpose of this Agreement.
4.13 Status
Nothing in this Agreement shall be construed or shall
constitute a partnership, joint venture, employer-employee
relationship, lessor-lessee relationship, or principal-agent
relationship.
4.13 Counterparts
This Agreement may be executed in any number of counterparts.
All executed counterparts shall constitute one Agreement not
withstanding that all signatories to the original or the same
counterpart.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed effective as of the ______ day of December, 1999.
Signed, sealed and delivered CORPORATION:
In Our Presence: The Internet Advisory
Corporation
Xxxx Xxxxxxx By:/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx, President
_______________________
SUBSCRIBER:
By:/s/Xxxxxxx X. Xxxxxx, Esq.
Print Name: Xxxxxxx X. Xxxxx, Esq.
Schedule A
Description of Assets To Be Purchased by TIAC.
1. Sunrise Web Development, Inc., owns an interactive Internet Website and
Internet Browser. The Company will generate revenues from subscriber
membership fees and usage fees, as well as from other sources, which will
include advertising and commerce sales. The Company will provide subscribers
through its browser a global, interactive community offering a wide variety of
content, features and tools. the on-line community will have access to
content such as electronic mail services, public bulletin boards, the buddy
list feature, instant message services, public or private "meeting rooms/chat
rooms" for interactive conversations and live "auditorium" events. The
Company will generate three types of revenues, online services revenues from
subscribers and advertising revenues which will be generated from the
Company's base of subscribers as well as businesses. Advertising, commerce
and other revenues will consist of advertising and related revenues, the sale
of merchandise and transaction fees associated with electronic commerce as
well as other revenues such as royalty fees and development revenues. The
growth of the Company's revenues is expected to be driven primarily by: (1)
Growth in its subscriber base as well as growth in advertising, commerce and
other revenues. The growth of the subscriber base is dependent upon the
Company's ability to provide content that will allow it to acquire and retain
subscribers, and; (2) E-Commerce, the medium for the Company to preview and
sell club merchandise such as T-shirts, caps, calendars, videos etc. Users
will have the ability to order directly from the site. Additionally, the
Company has contracted with third parties to provide their merchandise under
the Company name and will subsequently receive a percentage of the profits.
2. Microsoft Internet Explorer, IEAK 5.0 External License.
3. One million, ($1,000,000), dollars in cash.
Sunrise Web Development, Inc.
Balance Sheet
December 31, 1999
Assets
Current Assets
Research & Development $ 140,000.00
Other Current Assets 1,000,000.00
Total current assets $1,140,000.00
Property and Equipment
Total Property and Equipment 0.00
Other Assets
Total Other Assets 0.00
Total Assets $1,140,000.00
Liabilities and Capital
Current Liabilities
Total current Liabilities 0.00
Long-Term Liabilities
Notes Payable-Noncurrent 140,000.00
Total Long-Term Liabilities 140,000.00
Total Liabilities 140,000.00
Capital
Common Stock 1,000,000.00
Net Income 0.00
Total Capital 1,000,000.00
Total Liabilities and Capital $1,140,000.00
