Exhibit 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT ("Agreement") is made and entered into as of this
28th day of December, 2001, by and among Western Media Group Corporation, a
Minnesota corporation (the "Acquiror") and Med-Link USA, Inc. a New York
corporation (the "Acquiree").
RECITALS
A. The shareholders of the Acquiree listed on Exhibit 4(a) hereto (the
"Shareholders") own, in the aggregate, 100% of the outstanding capital
stock of the Acquiree.
B. The Acquiror is a reporting company for the purposes of the Securities
Exchange Act of 1934 (the "Exchange Act"), the common stock of which is
quoted on the over-the-counter bulletin board of the National Association
of Securities Dealers, Inc.
C. The Acquiror desires to acquire 100% of the issued and outstanding capital
stock of the Acquiree on the Closing Date (as defined below), and on the
terms set forth in Section 2, making the Acquiree a wholly owned subsidiary
of the Acquiror.
D. The Acquiree believes that it is in the best interests of the Shareholders
to exchange all of their shares of the Acquiree's capital stock on the
Closing Date, and on the terms set forth in Section 2.
E. It is the intention of the parties hereto that: (i), subject to the
provisions of Section 4(o) relating to fees in connection with the
introduction of Acquiree to Acquiror, the Acquiror shall acquire 100% of
the issued and outstanding capital stock of the Acquiree in exchange solely
for the amount of common and preferred shares of the Acquiror as is set
forth in Section 2 (the "Exchange"); (ii) the Exchange shall qualify as a
tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, and related rules and regulations thereunder; and (iii) the
Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933 (the "Act"),
and under the applicable securities laws of the states or jurisdictions
where the Shareholders reside.
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NOW, THEREFORE, in consideration for the mutual premises set forth herein and
for such other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. RECITALS AND DEFINITIONS.
(a) Each party to this Agreement represents and warrants for itself, as
applicable, that the foregoing recitals are true and correct in all material
respects, and acknowledges that they are incorporated herein and made a part
hereof.
(b) For purposes of this Agreement, the terms set forth below
shall have the following meanings:
ACQUIREE STATEMENTS - unaudited financial statements of the
Acquiree for the fiscal year ended December
31, 2000, and for the quarter ended March
31, 2001.
ACQUIROR STATEMENTS - Acquiror's financial statements, whether
audited or unaudited, as filed with the
Securities and Exchange Commission as of the
date of this agreement and as of the Closing
Date, as applicable.
ACQUIREE SUCCESSOR - the entity or entities (including, as
anticipated, Acquiree) that assumes the
business operations of the Acquiree after
the Closing, and the successors to such
entity or entities.
APPLICABLE PERIOD - for the purposes of calculating the Dividend
Deduction, shall be the period beginning the
year following the year in which the
Available Dividend Amount was last a
positive number thru the year prior to the
year for which the Available Dividend Amount
is being calculated.
AVAILABLE DIVIDEND shall equal fifty percent (50%) of (a) the
net profits, if any, of the Acquiree
Successor for the period of January 1 thru
December 31 of the applicable year less (b)
the Dividend Deduction; PROVIDED, HOWEVER
that such amount represents a positive
number.
DIVIDEND DEDUCTION - for purposes of calculating the Available
Dividend Amount in any given year shall be
(a) the sum of the net losses of the
Acquiree Successor for all of the years, if
any, in the Applicable Period that the
Acquiree Successor had net losses less (b)
the sum of the net profits of the Acquiree
Successor for all years, if any, in the
Applicable Period that the Acquiree
Successor had net profits.
CLOSING - the consummation of the Exchange
contemplated hereby.
CLOSING DATE - January 1, 2002 at 12:00 a.m. eastern
standard time, or, by mutual agreement of
the parties, the date on which all of the
actions necessary to effect the consummation
of the Exchange have taken place.
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COMMON SHARES - the 2,000,000 shares of Common Stock to be
issued to the Shareholders pursuant to this
Agreement.
COMMON STOCK - common stock, par value $0.001 per share, of
the Acquiror.
NON-PAID DIVIDEND
AMOUNT - for any given year shall equal (a) the
Available Dividend Amount for such year less
(b) the amount of payments distributed to
the holders of the Preferred Shares pursuant
to the provisions of Section 2 for such
years.
PREFERRED SHARES - the 200 shares of Preferred Stock to be
issued to the Shareholders pursuant to this
Agreement.
PREFERRED STOCK - 5,000,000 shares of undesignated preferred
stock authorized by the Amended Articles of
Incorporation of the Acquiror.
SHARES - the aggregate of the Common Shares and the
Preferred Shares to be issued pursuant to
this Agreement.
2. EXCHANGE OF SHARES.
The Acquiror and the Acquiree agree that, subject to the terms and
conditions set forth elsewhere herein, the Shareholders will exchange all of the
issued and outstanding shares of the capital stock of the Acquiree owned by them
for a total of 2,000,000 shares of Common Stock, and 400 shares of Preferred
Stock, making the Acquiree a wholly-owned subsidiary of the Acquiror. The
foregoing, along with the exchange and delivery of documents described elsewhere
herein will constitute the "Closing".
The holders of the Preferred Shares shall, in the aggregate, have the
right to receive from the Acquiree successor a yearly payment in an amount which
shall not exceed the Available Dividend Amount, if such amount is a positive
number. The decision on whether any payment to the holders of the Preferred
Shares will be made on the Available Dividend Amount for any year shall rest in
the sole discretion of the Board of Directors of the Acquiree Successor, which
determination shall be made by February 1 of the year following the year for
which the Available Dividend Amount was calculated. Acquiror shall in no event
be responsible for making any such payments on the Available Dividend Amount
from its own funds; therefore, Acquiree Successor shall not declare a payment
for any amount that exceeds its liquid cash flow. If Acquiree Successor declares
a payment to the holders of the Preferred Shares, which is less than the
Available Dividend Amount for any given year, the Non-paid Dividend Amount shall
not be available to be distributed to the holders of the Preferred Shares in any
succeeding year. The payment, if any, which is declared by Acquiree Successor to
be paid to the holders of the Preferred Shares shall be payable by March 31 of
each year commencing March 31, 2003 for the year-ending December 31 of the prior
year. The Preferred Shares shall not be transferable without the express written
consent of the Acquiror, unless such transfer is made pursuant to the death of
the holder of such Preferred Shares. Additionally, the Preferred Shares shall
carry no voting rights, shall have no liquidation preferences and shall carry no
other rights except for the right to receive the distributions described in this
paragraph.
For purposes of determining net profits or net losses of the Acquiree
Successor in calculating the Available Dividend Amount or Dividend Deduction, as
the case may be, for any given year, the determination of the Acquiror's
auditors at the time of such calculation shall be conclusive absent a showing of
fraud or willful misconduct on the part of such auditors; PROVIDED, HOWEVER,
that such auditor meets the qualifications of Regulation S-X promulgated under
the Act, and has never been barred from practice before the U.S. Securities and
Exchange Commission (the "SEC").
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Other than for the exchange of the Shares contemplated hereby and
subject to the provision of Section 4(o), the parties hereto do not contemplate
the exchange or payment of any other consideration, regardless of form, nor do
they contemplate any arrangement by which the Acquiror would dispose of its
controlling interest in the Acquiree.
The Shares to be issued to the Shareholders in connection with the
consummation of the Exchange will not be registered pursuant to the Act, and
will bear a restrictive legend indicating the restrictions on their
transferability.
Simultaneously with the Closing of this Exchange, the Shareholders will
deliver to Acquiror the certificates representing all of the outstanding shares
of Acquiree's capital stock owned by them, duly endorsed (or with duly executed
stock powers) so as to make Acquiror the sole owner thereof, free and clear of
all liens, claims and encumbrances, except as may be otherwise disclosed herein.
3. CLOSING AND POST-CLOSING. Closing of the Exchange will take place at
the offices of the Acquiror on the Closing Date.
(a) CONDITIONS OF CLOSING. The parties' respective obligations to
consummate the Exchange are as set forth below.
(i) The Acquiror's obligation to consummate the Exchange is
conditioned on the occurrence of, or waiver of, the
following:
(A) due diligence satisfactory to the Acquiror;
(B) approval of the Exchange by the Board of Directors of
the Acquiror;
(C) Acquiree shall have no more than four hundred (400)
shares of its common stock outstanding;
(D) Acquiree shall have retained a firm of independent
auditors to conduct a review of Acquiree's financial
statements for the Acquiree's two most recent annual
financial statements and other periods for which
audited financial statements or a review are required
under the Exchange Act;
(E) the representations and warranties of the Acquiree set
forth in this Agreement shall be true and correct in
all material respects on the date hereof and on the
Closing Date;
(F) all third-party consents reasonably deemed necessary by
the Acquiror shall have been received; and
(G) all documents, exhibits and schedules required to be
delivered by the Acquiree or the Shareholders hereunder
shall have been delivered, or waived by the Acquiror.
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(ii) The Acquiree's and Shareholders' obligation to consummate
the Exchange is conditioned on the occurrence of, or waiver
of, the following:
(A) due diligence satisfactory to the Acquiree;
(B) approval of the Exchange by the (x) Board of Directors
of the Acquiree and (y) Shareholders;
(C) Acquiror shall have no more than 20,000,000 shares of
Common Stock outstanding.
(D) the representations and warranties of the Acquiror set
forth in this Agreement shall be true and correct in
all material respects on the date hereof and on the
Closing Date;
(E) all third-party consents reasonably deemed necessary by
the Acquiree; and
(F) all documents, exhibits and schedules required to be
delivered by the Acquiror hereunder shall have been
delivered or waived by the Acquiree and the
Shareholders.
(b) CLOSING DELIVERIES BY THE ACQUIROR. At the Closing, the Acquiror
will deliver to the Acquiree and the Shareholders (as the case may be) the
following:
(i) certified copies of all corporate actions necessary to authorize
the execution, delivery and performance of this Agreement by the
Acquiror, and the consummation of the transactions contemplated
hereby; and
(ii) all other documents reasonably requested by the Acquiree or its
legal counsel and a majority of the Shareholders.
(c) CLOSING DELIVERIES BY THE ACQUIREE AND THE SHAREHOLDERS. At the
Closing, the Acquiree and the Shareholders (as the case may be) will deliver to
the Acquiror the following:
(i) certified copies of all corporate actions necessary to authorize
the execution, delivery and performance of this Agreement by each
of the Acquiree and each of the corporate Shareholders, if any,
and the consummation of the transactions contemplated hereby;
(ii) Certificates of good standing from the State of New York for the
Acquiree, current within thirty (30) calendar days of the Closing
Date;
(iii) investment letters signed by each of the Shareholders;
(iv) certifications from Xx. Xxxxxxx Xxxxx and/or Xxx Xxxxx (the "Key
Personnel") as to the truth and accuracy of Acquiree's
representations and warranties contained herein;
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(v) agreements from the Key Personnel relating to obligations not to
compete with Acquiror or the Acquiree Successor and relating to
certain confidentiality issues;
(vi) financial statements for the fiscal year ended December 31, 2000
and the nine months ended September 30, 2001; and
(vii) all other documents reasonably requested by the Acquiror.
(d) ACTIONS AT CLOSING. The following actions shall take place at, and
constitute the Closing:
(i) exchange of documents set forth under subsection (c), above; and
(ii) appointment of Xx. Xxxxxxx Xxxxx as a director of the Acquiror.
4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIREE AND THE SHAREHOLDERS. The
Acquiree, as a material inducement to the Acquiror to enter into this Agreement
and consummate the transactions contemplated hereby, makes the following
representations and warranties to the Acquiror. The representations and
warranties are true and correct in all material respects, to the best knowledge
of the Acquiree.
(a) SECURITIES HOLDERS. The Shareholders are the owners of record of
all of the issued and outstanding shares of the Acquiree's capital stock, and
are identified, along with their respective ownership, in Exhibit 4 (a) attached
hereto. The Shareholders are the only shareholders of the Acquiree, the number
of shares set forth opposite their respective names on Exhibit 4(a) are the
correct equity holdings of each such Shareholder, the total number of shares
listed on Exhibit 4(a) represent the total outstanding shares of the Acquiree,
and the Acquiree has never issued any certificates representing any equity
ownership of Acquiree.
(b) FINANCIAL STATEMENTS. Exhibit 4(b) consists of the Acquiree
Statements. The Acquiree Statements and financial information contained therein
present fairly the financial condition of the Acquiree and the results of its
operations for the periods covered. The Acquiree Statements are subject to
further revision prior to audit, which are not anticipated to have a materially
adverse impact on such Acquiree Statements. A "materially adverse impact" is any
increase in net liabilities or net expenses of more than 10% or any decrease in
net assets or net revenues of more than 10%.
(c) UNDISCLOSED LIABILITIES. The Acquiree does not have any liabilities
or obligations of any nature, fixed or contingent, matured or unmatured, that
are not shown or otherwise provided for in the Acquiree Statements, except for
liabilities and obligations arising subsequent to the date of the Acquiree
Statements in the ordinary course of business, none of which individually or in
the aggregate is materially adverse to the business or financial condition of
the Acquiree, other than those liabilities and obligations set forth in Exhibit
4(c).
(d) MATERIALLY ADVERSE CHANGE. Since the date of the Acquiree
Statements, the business of the Acquiree has been operated in the ordinary
course of business and, except as set forth in Exhibit 4(d), there has not been:
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(i) any materially adverse change in the business, condition
(financial or otherwise), results of operations, prospects,
properties, assets, liabilities, earnings, net worth, business or
prospects of Acquiree for such period or at any time during such
period;
(ii) any material damage, destruction or loss (whether or not covered
by insurance) affecting the Acquiree or its assets, properties,
or business;
(iii) any declaration, setting aside, or payment of any dividend or
other distribution in respect of any shares of capital stock of
Acquiree, or any direct or indirect redemption, purchase or other
acquisition of any such stock or any agreement to do so;
(iv) any issuance or sale by the Acquiree or agreement by the Acquiree
to sell or pledge any of the Acquiree's securities, nor have any
irrevocable proxies been given with respect to the Acquiree's
securities;
(v) any statute, rule, regulation or order adopted (including orders
of regulatory authorities with jurisdiction over the Acquiree or
its business) that materially and adversely affects the Acquiree
or its business or financial condition;
(vi) any material increase in the rate of compensation or in bonus or
commission payments payable or to become payable to any of the
salaried employees of the Acquiree; PROVIDED, HOWEVER, that this
paragraph shall not restrict or limit the Acquiree in any way
from hiring additional personnel who are needed for its
operation; or
(vii) any other events or conditions of any character that may
reasonably be expected to have a materially adverse effect on the
Acquiree or its business, financial condition or prospects.
(e) LITIGATION. Except as set forth in the Acquiree Statements or notes
thereto, or as set forth in Schedule 4(e) hereto, there are no actions, suits,
claims, investigations or legal, administrative or arbitration proceedings
pending or threatened against the Acquiree or its assets or its business,
whether at law or in equity or before or by any federal, state, municipal,
local, foreign or other governmental department, commission, board, bureau,
agency or instrumentality, nor does the Acquiree know of any basis for any such
action, suit, claim, investigation or proceeding.
(f) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. The Acquiree has complied
in all material respects with all federal, state, local or foreign laws,
ordinances, regulations and orders applicable to its business, including without
limitation, federal and state securities laws that, if not complied with, would
materially and adversely affect such business. The Acquiree has all federal,
state, local and foreign governmental licenses and permits necessary for the
conduct of its business. Such licenses and permits are in full force and effect.
The Acquiree is unaware of any violations of any such licenses or permits or of
any proceedings that are pending or threatened to revoke or limit the use of
such licenses or permits.
(g) DUE ORGANIZATION. The Acquiree is a corporation duly organized and
validly existing under the laws of New York; its status is active; it is
qualified to do business and is in good standing in the State of New York. The
Acquiree has the power to own its properties and assets and to carry on its
business as now presently conducted. The Certificate of Incorporation and Bylaws
of the Acquiree are attached hereto as composite Exhibit 4(g) and are made a
part hereof.
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(h) TAX MATTERS. The Acquiree has filed all federal, state and local
tax or related returns and reports due or required to be filed, which reports
accurately reflect in all material respects the amount of taxes due. Except as
disclosed on the Acquiree Statements, the Acquiree has paid all amounts of taxes
or assessments that would be delinquent if not paid as of the date of this
Agreement, other than taxes or charges being contested in good faith or not yet
finally determined. The Acquiree is not aware of any tax liens with respect to
any properties owned by the Acquiree.
(i) AGREEMENTS. Schedule 4(i) contains a true and complete list and
brief description of all material written or oral contracts, agreements,
mortgages, obligations, understandings, arrangements, restrictions, and other
instruments to which the Acquiree is a party or by which the Acquiree is a party
or by which it or its assets may be bound. True and correct copies of all items
set forth on Schedule 4(i) have been made available to the Acquiror. No event
has occurred that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a material default
by the Acquiree under any of the contracts or agreements set forth in Schedule
4(i). The Acquiree is not aware of any material default by the other parties to
such agreements.
(j) TITLE TO PROPERTY AND RELATED MATTERS. The Acquiree has good and
marketable title to all of its properties and assets, real, personal and mixed,
owned by it at the date of this Agreement of any kind or character, free and
clear of any liens or encumbrances, except as indicated in the Acquiree
Statements or on Exhibit 4(j) attached hereto. The Acquiree's assets are in good
operating condition and repair, reasonable wear and tear accepted. There does
not exist any condition that materially interferes with the use thereof in the
ordinary course of the Acquiree's business.
(k) LICENSES; TRADEMARKS; TRADE NAMES. A list of licenses, trademarks,
trade names, service marks, copyrights, patents or any applications for any of
the foregoing that relate to the Acquiree's business are set forth in Schedule
4(k).
(l) DUE AUTHORIZATION. This Agreement has been duly authorized,
executed and delivered by the Acquiree and constitutes a valid and binding
agreement of the Acquiree, enforceable in accordance with its terms except as
such enforcement may be limited in applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with any of
the provisions hereof, will violate in any material respect any order, writ,
injunction or decree of any court or governmental authority, or violate or
conflict with in any material respect or constitute a default under (or give
rise to any right of termination, cancellation or acceleration under) any
provisions of the Acquiree's Certificate of Incorporation or By-laws, the terms
or conditions or provisions of any note, bond, lease, mortgage, obligations,
agreement, understanding, arrangement or restriction of any kind to which the
Acquiree is a party or by which the Acquiree or its properties may be bound, or
violate in any material respect any statute, law, rule or regulation applicable
to the Acquiree. No consent or approval by any governmental authority is
required in connection with the execution and delivery by the Acquiree of this
Agreement or by the consummation of the transactions contemplated hereby.
(m) CAPITALIZATION. The authorized capitalization of the Acquiree is as
set forth on Schedule 4(m). All outstanding securities have been duly
authorized, validly issued, and are fully paid and non-assessable, and all such
securities were issued in compliance with applicable federal and state
securities law. There are no outstanding or presently authorized securities,
warrants, preemptive rights, subscription rights, options or related commitments
or agreements of any nature to issue any of the Acquiree's securities.
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(n) FULL DISCLOSURE. The Acquiree has disclosed to the Acquiror all
events, conditions and facts materially affecting the properties, business and
prospects of the Acquiree that are known to the Acquiree. The Acquiree has not
withheld disclosure of any events, conditions, and facts of which it may have
knowledge and that may materially and adversely affect the properties, business
or prospects of the Acquiree.
(o) BROKERAGE FEES. The Acquiree has retained Xxxxx Capital Partners,
Ltd., a New York corporation ("Xxxxx"), to locate a suitable public company with
which Acquiree could merge or consummate a share exchange transaction. Pursuant
to the agreement between Acquiree and Xxxxx, Xxxxx is entitled to compensation
in stock and/or cash upon the consummation of any such transaction. Based upon
conversations between Xxxxx, Acquiror and Acquiree, Xxxxx has agreed to accept
payment of 860,000 shares of Common Stock pursuant to its agreement with
Acquiree, and Acquiror hereby agrees to delivers such shares to Xxxxx within ten
(10) business days following the Closing Date. The consent of Xxxxx to payment
of 860,000 shares of Common Stock in satisfaction of all obligations of Acquiree
or Acquiror in connection with the Exchange is set forth as Exhibit 4(o) hereto.
Other than the agreement with Xxxxx, Acquiree has not incurred, nor will it
incur, any liability for brokerage or finder's fees or similar charges in
connection with this Agreement or the transactions contemplated hereby.
(p) SHARE OWNERSHIP. The shares of the Acquiree's capital stock to be
exchanged for the Shares in the Exchange are owned, of record and beneficially,
by the Shareholders, free and clear of all liens and encumbrances of any kind
and nature, and have not been sold, pledged, assigned or otherwise transferred.
There are no agreements to sell, pledge, assign or otherwise transfer such
securities.
(q) APPROVALS REQUIRED. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery by the Shareholder of this Agreement or the
consummation of the transactions described herein, except to the extent that the
Shareholder may be required to file reports in accordance with relevant
regulations under federal and state securities laws.
(r) SUBSIDIARIES. The Acquiree's subsidiaries are set forth in Schedule
4(r).
(s) EMPLOYEE BENEFIT PLANS. Neither the Acquiree nor any of its
subsidiaries has any employee benefit plans.
(t) DISCLOSURE OF INFORMATION.Acquiree and its Shareholders believe
they have received or have had full access to all the information they consider
necessary or appropriate to make an informed investment decision with respect to
the Common Stock and the Preferred Stock to be acquired by Acquiree under this
Agreement. Acquiree and its Shareholders have had an opportunity to ask
questions and receive answers from the Acquiror regarding the terms and
conditions of the offering of the Common Stock and the Preferred Stock and to
obtain additional information (to the extent the Acquiror possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Acquiree or its Shareholders or
to which Acquiree or its Shareholders had access. Neither Acquiree, nor its
Shareholders, has relied on any oral representation made by the Acquiror, or any
officer, director, agent or employee of Acquiror.
(u) INVESTMENT EXPERIENCE. Acquiree and its Shareholders understand
that the acquisition of the Common Stock and Preferred Stock involves
substantial risk. The Acquiree and its Shareholders have experience as an
investor in securities of companies in the development stage and acknowledges
that they can bear the economic risk of ownership of the Common Stock.
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(v) INVESTMENT KNOWLEDGE. Acquiree and each Shareholder, either alone,
or with a purchaser representative, has such knowledge and experience in
financial and business matters that he or she or it is capable of evaluating the
merits and risks of acquiring the Common Stock and Preferred Stock.
(w) RESTRICTED SECURITIES. Acquiree and its Shareholders understand
that the Common Stock is characterized as "restricted securities" under the Act
inasmuch as they are being acquired from Acquiror in a transaction not involving
a public offering and that under the Act, and applicable regulations thereunder,
such securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, Acquiree and its Shareholders
represent that they are familiar with Rule 144 and Regulation D of the SEC, as
presently in effect, and understand the resale limitations imposed thereby and
by the Act.
Acquiree and its Shareholders acknowledge that if any transfer of the Common
Stock is proposed to be made in reliance upon an exemption under the Act,
Acquiror may require an opinion of counsel satisfactory to Acquiror that such
transfer may be made pursuant to an applicable exemption under the Act. Acquiree
and its Shareholders acknowledge that, so long as appropriate, a legend similar
to the following may appear on the certificates representing the Common Stock:
THESE SHARES HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933. THE SHARES
EVIDENCED BY THIS CERTIFICATE CANNOT BE TRANSFERRED, OFFERED,
OR SOLD UNTIL AFTER _____ (ONE YEAR AFTER COMPLETION OF THE
OFFERING).
(x) FURTHER LIMITATIONS ON DISPOSITION.Without in any way limiting the
representations set forth above, Acquiree and its Shareholders further agree not
to make any disposition of all or any portion of the Common Stock except:
(i) pursuant to a registration statement under the Act covering
such disposition; or
(ii) pursuant to an exemption from registration under the Act,
including, without limitation, Rule 144, Rule 144A or
Regulation S thereunder.
(y) NO GENERAL SOLICITATION. Acquiree and its Shareholders have not
received any general solicitation or advertising regarding the offering of the
Common Stock or this Agreement.
(z) STANDSTILL. Since the date of the letter of intent between the
Acquiror and the Acquiree dated October 17, 2001, through the date of this
Agreement, neither the Acquiree, or any of its respective officers, directors,
employees, agents, consultants or shareholders has, and none of them will,
through the Closing Date:
(i) engage (or permit others to engage on their behalf) in
discussions with any party other than the Acquiror pertaining to
a possible business merger, combination, acquisition, reverse
acquisition, or similar transaction;
(ii) increase or otherwise alter the compensation structure for either
the Acquiree's or its subsidiaries' officers, directors, agents,
consultants, or affiliates;
(iii) enter into any contracts, commitments, or obligations other than
in the ordinary course of the business of the Acquiree and of its
subsidiaries, consistent with their respective business
practices;
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(iv) dispose of the assets of the Acquiree or its subsidiaries, other
than in the ordinary course of its business consistent with
previous activities; or
(v) otherwise take any actions that might reasonably be perceived to
be out of the ordinary course of business.
5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR. The Acquiror, as a material
inducement to the Acquiree to enter into this Agreement and consummate the
transactions contemplated hereby, jointly and severally make the following
representations and warranties to the Acquiree, which representations and
warranties are true and correct in all material respects at this date, to the
best knowledge of the Acquiror after due inquiry.
(a) SHARES. Certificates representing the Shares to be issued to the
Shareholders at the Closing will be delivered to each Shareholder within twenty
(20) business days following the Closing Date. The Shares to be delivered to the
Shareholders will be validly and legally issued, free and clear of all liens,
encumbrances, transfer fees and preemptive rights, and will be fully paid and
non-assessable.
(b) DUE ORGANIZATION. The Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota,
and is qualified to do business in each state where it is required to be
qualified and where such qualification is material to its business, and has the
corporate power to own its property and to carry on its business as now
presently conducted.
(c) DUE AUTHORIZATION. This Agreement has been duly authorized,
executed, and delivered by the Acquiror and constitutes a legal, valid and
binding obligation of the Acquiror, enforceable in accordance with its terms
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles. The execution, delivery and performance of this Agreement by the
Acquiror will not violate or conflict with in any material respect or constitute
a default under any provisions of applicable law, the Acquiror's Articles of
Incorporation or bylaws, or any agreement or instrument to which the Acquiror is
a party or by which it or its assets are bound. No consent of any federal,
state, municipal or other governmental authority is required by Acquiror for the
execution, delivery or performance of this Agreement by the Acquiror. No consent
of any party to any contract or agreement to which the Acquiror is a party or by
which any of its property or assets are subject is required for the execution,
delivery or performance of this Agreement by the Acquiror that has not been
obtained at the date of this Agreement.
(d) ACQUIROR'S STATEMENTS. The Acquiror Statements and financial
information contained therein were prepared in accordance with generally
accepted accounting principles and present fairly the financial condition of the
Acquiree and the results of its operations for the periods covered.
(e) UNDISCLOSED LIABILITIES. There are no liabilities, whether
contingent or otherwise, of the Acquiror or its subsidiary that have not been
disclosed on the Acquiror Statements or in notes thereto, nor is the Acquiror
aware of the basis for any such liability.
(f) MATERIALLY ADVERSE CHANGE. Since the date of the audited statements
included in the Acquiror Statements, there has been no materially adverse change
to the financial condition or operations of the Acquiror or its subsidiary, nor
does the Acquiror anticipate any such materially adverse change.
(g) LITIGATION. There are no actions, suits, claims, investigations or
legal, administrative or arbitration proceedings pending against the Acquiror or
its subsidiary, their respective assets or business, whether at law or in
equity, or before or by any federal, state, municipal, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality;
nor does the Acquiror know of a threat of, or any basis for, any such action,
suit, claim, investigation or proceeding, other than a threatened action by
Xxxxxxx.xxx, Inc. which is disclosed in Acquiror's SEC filings.
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(h) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. The Acquiror and its
subsidiary have complied in all material respects with all federal, state, local
or foreign laws, ordinances, regulations and orders applicable to its business,
including without limitation, federal and state securities laws that, if not
complied with, would materially and adversely affect such business. The Acquiror
and its subsidiary have all federal, state, local and foreign governmental
licenses and permits necessary for the conduct of their respective business.
Such licenses and permits are in full force and effect. The Acquiror does not
know of any violations of any such licenses or permits. No proceedings are
pending or, to the knowledge of the Acquiror, threatened, to revoke or limit the
use of such licenses or permits.
(i) TAX MATTERS. The Acquiror and its subsidiary have filed all
federal, state and local tax or related returns and reports due or required to
be filed, which reports accordingly reflect in all material respects the amount
of taxes due. The Acquiror has paid all amounts of taxes on assessments that
would be delinquent if not paid as of the date of this Agreement, other than
taxes or charges being contested in good faith (which are identified on Schedule
5(i) or not yet finally determined). The Acquiror is not aware of any tax liens
with respect to any properties owned by the Acquiree or its subsidiary.
(j) AGREEMENTS. Schedule 5(j) contains a true and complete list and
brief description of all material written or oral contracts, agreements,
mortgages, obligations, understandings, arrangements, restrictions, and other
instruments to which the Acquiror or its subsidiary is a party or by which the
Acquiror or its subsidiary, or their respective assets, may be bound. True and
correct copies of all items set forth on Schedule 5(j) will be made available to
the Acquiree before the Closing Date. No event has occurred that (whether with
or without notice, lapse of time or the happening or occurrence of any other
event) would constitute a material default by the Acquiror or its subsidiary (as
the case may be) under any of the contracts of agreements set forth in Schedule
5(j). The Acquiror is not aware of any material default by the other parties to
such agreements. In addition, no material violations have occurred pursuant to
any loan agreements to which the Acquiror is a party.
(k) CAPITALIZATION. As of the date of execution of this Agreement, the
Acquiror is authorized to issue 95 million shares of Common Stock. Acquiror is
authorized to issue five million shares of Preferred Stock, no series or classes
of which have been designated, and none of which is outstanding or will be
issued prior to the Closing Date.
(l) FULL DISCLOSURE. The Acquiror has disclosed to the Acquiree all
events, conditions and facts materially affecting the business and prospects of
the Acquiror. The Acquiror has not withheld disclosure of any events,
conditions, and facts of which it may have knowledge and that may materially and
adversely affect the business or prospects of the Acquiror.
(m) BROKERAGE FEES. The Acquiror has not incurred, and will not incur,
any liability for brokerage or finder's fees or similar charges in connection
with this Agreement.
(n) NO APPROVALS REQUIRED. No approval, authorization, consent, order
or other action of, or filing with, any person, firm or corporation or any
court, administrative agency or other governmental authority is required in
connection with the execution and delivery by the Acquiror of this Agreement or
the consummation of the transactions described herein, except to the extent that
the parties may be required to file reports in accordance with relevant
regulations under federal and state securities laws.
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(o) SUBSIDIARIES. The sole subsidiary of the Acquiror is K-Rad
Konsulting, LLC, a Delaware limited liability company, which is good standing in
the jurisdiction of its incorporation and is qualified to do business in all
jurisdictions where it is required to be qualified and where such qualification
is material to its business, and has the corporate power to own its property and
to carry on its business as now presently conducted.
(p) FURTHER DISCLOSURE. The Acquiree and the Shareholders are entitled
to rely on the accuracy and completeness of the Acquiree's filings made pursuant
to the Exchange Act, and represent that such filings are true and complete in
all material respects, and do not omit any information necessary to make the
information contained therein not misleading.
(q) SECURITIES LAWS. The Acquiror, and all holders of five percent (5%)
or more of the Acquiror's outstanding capital stock have complied in all
material respects with applicable federal and state securities laws, rules and
regulations. All shares of capital stock of the Acquiror have been issued in
accordance with applicable federal and state securities laws, rules and
regulations. There are no stop orders in effect with respect to any of the
Acquiror's securities. All outstanding securities are fully-paid and are
non-assessable.
(r) TRADABILITY. Bid and asked quotations for the Common Stock are posted on the
over-the-counter bulletin board of the National Association of Securities
Dealers, Inc. ("OTCBB"). A complete list of the market makers for the Common
Stock, and contact information where available, is attached as Exhibit 5(r).
Neither the Acquiror nor any of its officers or directors, is aware of or has
any reason to be aware of any claim, inquiry or investigation by a state or
federal regulatory authority, or the OTCBB, regarding trading in the Common
Stock or any related claim, inquiry or investigation.
6. INDEMNIFICATION.
(a) ACQUIREE INDEMNIFICATION. Acquiree hereby indemnifies and holds
harmless Acquiror and Acquiror's present and future officers, directors,
employees and agents with respect to any and all adverse consequences incurred
by any of them in connection with each and all of the following:
(i) Any misrepresentation or breach of any representation
or warranty made by Acquiree in this Agreement or in
any Schedule, Exhibit, or other document attached
hereto or delivered to the Acquiror by the Acquiree
or any officer of the Acquiree in connection with the
transactions contemplated hereby.
(ii) The breach of any covenant, agreement, or obligation
of Acquiree contained in this Agreement or any
Schedule or Exhibit hereto or any other instrument
specifically contemplated by this Agreement.
(iii) Any misrepresentation contained in any statement in
writing or certificate furnished by an officer of
Acquiree pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement.
(iv) Any liability or obligation of any kind or nature
that arises out of, or relates to, any pension,
retirement, profit sharing, deferred compensation,
bonus or other incentive plan, or any collective
bargaining agreement or other labor agreement,
including single or multi-employer plans or
agreements, to which Acquiree or any of its
affiliates is a party or by which any of them is
bound, other than assumed liabilities.
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(v) Any liability, obligation or claim for taxes owed by
Acquiree with respect to any period ending on or
before the Closing Date, except as such may be shown
on the Financial Statements.
(vi) Any misrepresentation in or omission from any list,
Schedule, Exhibit, certificate or other instrument
required to be furnished or specifically contemplated
to have been furnished pursuant to this Agreement to
Acquiror or its authorized representatives.
(vii) The Acquiree hereby and herewith acknowledges the
effect and operation of all laws concerning the
environmental condition of the Acquiree's assets
existing and applicable as of the Closing Date.
(viii) Any claim or assertion made against the Acquiree or
any of its subsidiaries, officers, directors or
affiliates arising in connection with any event,
transaction or circumstance that occurred or is
claimed to have occurred prior to the Closing Date.
(ix) Any liability or obligation of any kind or nature
that arises out of, or relates to any litigation
listed on Schedule 4(e).
(b) ACQUIROR INDEMNIFICATION. The Acquiror hereby indemnifies and holds
harmless the Acquiree and the Acquiree's officers, directors and employees in
respect of any and all adverse consequence incurred by any of them in connection
with each and all of the following:
(i) Any misrepresentation or breach of any warranty made
by Acquiror in this Agreement or in any Schedule,
Exhibit, or other document attached hereto or
delivered to Acquiree by Acquiror or any officer of
Acquiror in connection with the transactions
contemplated hereby;
(ii) The breach of any covenant, agreement, or obligation
of Acquiror contained in this Agreement or any
Schedule or Exhibit hereto or any other instrument
specifically contemplated by this Agreement;
(iii) Any misrepresentation contained in any statement in
writing or certificate furnished by an officer of the
Acquiror or an officer pursuant to this Agreement or
in connection with the transactions contemplated by
this Agreement, or any material omission by the
Acquiror, or any officer or representative of either
of them; and
(iv) Any claim or assertion made against the Acquiror
arising in connection with any event, transaction or
circumstance that occurred or is claimed to have
occurred prior to the Closing Date.
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(c) CLAIM FOR INDEMNIFICATION. Whenever any claims shall arise for
indemnification hereunder, the party seeking indemnification (the "Indemnitee")
shall promptly notify the other party (the "Indemnitor") of the claim and, when
known, the facts constituting the basis for such claim. If any claim for
indemnification hereunder results from or is in connection with any claim or
adverse consequence by a person who is not a party to this Agreement ("Third
Party Claim"), such notice shall also specify, if known, the amount or an
estimate of the amount of the liability arising there from. The Indemnitee shall
give the other party prompt notice of any such claim and the Indemnitor shall
undertake the defense thereof by representatives of its own choosing, reasonably
satisfactory to the Indemnitee, at the expense of the Indemnitor. The Indemnitee
shall have the right to participate in any such defense of a Third Party Claim
with advisory counsel of its own choosing, at its own expense. If the
Indemnitor, within a reasonable time after notice of any such Third Party Claim,
fails to defend, the Indemnitee or any subsidiary or affiliate of the Indemnitee
shall have the right to undertake the defense, compromise or settlement of such
Third Party Claim on behalf of, and for the account of, Indemnitor, at the
expense and risk of Indemnitor. Indemnitor shall not, without the Indemnitee's
written consent, settle or compromise any such Third Party Claim or
unconditional term thereof, the giving by the claimant or the plaintiff to
Indemnitee and/or Indemnitee's subsidiary or subsidiaries, or affiliate or
affiliates, as the case may be, an unconditional release from all liability in
respect of such Third Party Claim. Notwithstanding any provision herein to the
contrary, failure of Indemnitee to give any notice required by this Section
shall not constitute a waiver of Indemnitee's right to indemnification or a
defense to any claim by Indemnitee hereunder.
(d) PAYMENT OF INDEMNIFICATION. All indemnification hereunder shall be
effected upon demand by payment of cash or delivery of a certified or cashier's
check in the amount of the indemnification liability after determination in
accordance with the foregoing.
(e) SURVIVAL OF INDEMNIFICATION. The indemnities contained herein shall
survive the Closing.
(f) MINIMUM CLAIM. Neither the Acquiree nor the Acquiror shall have any
obligation to indemnify the other for any single claim or related series of
claims involving, in the aggregate, less than $5,000, unless the indemnification
is under Section 6(a)(ix).
7. MISCELLANEOUS.
(a) SURVIVAL. All of the representations, warranties, and covenants of
the parties contained in this Agreement shall survive the Closing through all
applicable statutes of limitation.
(b) PRESS RELEASES AND ANNOUNCEMENTS. No party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other party; PROVIDED, HOWEVER, that any party
may make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing party will advise the other party prior
to making the disclosure).
(c) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns other than the payment to Xxxxx specified in
Section 4(o).
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefits of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other party.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(g) NOTICES. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by certified or registered mail, return receipt requested and postage
prepaid, overnight courier, express mail, hand delivered or sent by facsimile
with receipt confirmed as follows:
If to Acquiror, at:
Western Media Group Corporation
00 Xxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Guzov, Xxxxxxxx & Xxxxxx, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
If to Acquiree and the Shareholders (collectively, at:
Med-Link USA, Inc.
000 Xxxxxxxxxxx Xx.
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
(h) GOVERNING LAW. This Agreement shall be governed by and constructed
in accordance with the internal laws (and not the law of conflicts) of the State
of New York.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the parties. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach or warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction declares that any term or provision
hereof is invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope duration, or area of the term or provision, to delete specific words
or phases, or to replace any invalid or unenforceable term or provision with a
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
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(k) EXPENSES. Acquiror will be responsible for its costs, fees and
expenses in connection with the Exchange. Acquiree will be responsible for its
costs, fees and expenses and those of its Shareholders in connection with the
Exchange.
(l) CONSTRUCTION.The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) SPECIFIC PERFORMANCE. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably if any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter (subject to the provisions below, in addition to any other remedy to
which it may be entitled, at law or in equity.)
(o) SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in Suffolk County, New York,
in any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
parties waives any defense of inconvenient forum or lis pendens alibi to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto.
(p) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral that may have related in any way to the subject matter
hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on as of the
date first above written.
WESTERN MEDIA GROUP CORPORATION MED-LINK USA, INC.
By: By:
--------------------------- --------------------------------
Xxxxxx Xxx, President Xx. Xxxxxxx Xxxxx, President
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