STOCK EXCHANGE AGREEMENT
entered into by and between
RESORT WORLD ENTERPRISES, INC.
a Nevada corporation,
and
REMEDENT USA, INC.,
an Arizona corporation,
Effective as of October 2, 1998
Phoenix, Arizona
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and
entered into on the dates set forth below, to be effective as of October 2,
1998, by and between RESORT WORLD ENTERPRISES, INC., a Nevada corporation
("RWEI"), REMEDENT USA, INC., an Arizona corporation ("REME").
The persons listed in Exhibit A are all of the shareholders of
REME. Such persons are referred to herein as the "Acquired Company's
Shareholders." REME is sometimes referred to herein as the "Acquired Company"
because the transactions described below will result in the acquisition of REME
by RWEI. RWEI, the Acquired Company and the Acquired Company's Shareholders are
referred to collectively herein as the "Parties" and sometimes individually as a
"Party."
Recitals
A. On August 31, 1998, RWEI and the Acquired Company signed a letter of
intent (the "Letter of Intent").
B. The Letter of Intent provides for RWEI (and its shareholders, as
required) (a) to change the corporate name of RWEI to Remedent USA, Inc., (b) to
approve and elect a new board of directors selected by REME, (c) to acquire all
of the issued and outstanding stock of REME in exchange for 9,666,120 shares of
newly issued and restricted common stock (the "Acquisition Stock") of RWEI that
will be issued to the Acquired Company Shareholders, (d) to obtain and to accept
the resignation of all existing RWEI officers and directors, (e) to complete any
and all delinquent regulatory filings for RWEI, (f) to provide due diligence
materials to REME, and (g) at Closing (defined below), for Xxxx Xxxxxxxxxxx and
his son, major shareholders of RWEI, to allow their existing stock in RWEI,
consisting of 7,341,400 shares, to be redeemed in exchange for the stock of the
two operating subsidiaries of RWEI. The Acquisition Stock will be issued in
exchange for all of the issued and outstanding stock of the Acquired Company
(the "Acquired Company's Stock").
C. The Letter of Intent provides for the Acquired Company's
Shareholders to transfer to RWEI, in exchange for the Acquisition Stock, all of
the Acquired Company's Stock.
D. The Parties wish to enter into this Agreement to confirm and
definitively provide for transactions that are contemplated in the Letter of
Intent. When executed and delivered by the Parties as provided below, this
Agreement shall supersede and replace the Letter of Intent so far as the
transactions provided for in this Agreement are concerned. Other provisions of
the Letter of Intent, if any, that are not otherwise provided for in this
Agreement, shall survive execution of this Agreement by the Parties unless
superseded by any other agreements.
Agreement
THEREFORE, in consideration of the mutual covenants and
conditions herein contained, and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties, intending
to be legally bound, hereby agree as follows.
ARTICLE
I.
SHARE EXCHANGES
A. Stock Exchanges. RWEI hereby agrees to sell, convey, assign and
transfer the Acquisition Stock to the Acquired Company's Shareholders
in exchange for their sale, conveyance, assignment and transfer to
RWEI of the Acquired Company's Stock. The Acquired Company's
Shareholders and the Acquired Company hereby agree to sell, convey,
assign and transfer the Acquired Company's Stock to RWEI in exchange
for sale, conveyance, assignment and transfer to the Acquired
Company's Shareholders of the Acquisition Stock. Unless the Acquired
Company's Shareholders otherwise direct, the Acquisition Stock shall
be transferred to them in the same proportions as the Acquired
Company's Shareholders currently own the Acquired Company's Stock, as
shown in Exhibit A.
B. Closing. Consummation of the transactions described in this Agreement
(the "Closing") will occur at 9:00 a.m. on or before October 2, 1998
(the "Closing Date") at the offices of Corporate Architects, Inc. in
Scottsdale, Arizona or at such other location as is mutually agreeable
to the Parties.
C. Restrictions on Transferability of the Acquisition Stock. At the
Closing, RWEI shall convey to the Acquired Company's Shareholders
good, valid and marketable title to the Acquisition Stock, free and
clear of any and all encumbrances, claims, liens, security interests,
pledges or mortgages of any kind. The Parties hereby agree that the
Acquisition Stock, once acquired by the Acquired Company's
Shareholders, will be subject to the restrictions of SEC Rule 144.
Unless and until the Acquisition Stock is registered under the
Securities Act of 1933 or the Securities Exchange Act of 1934, or
until the restrictions under Rule 144 lapse, no Acquired Company's
Shareholder shall be entitled to transfer all or any share of the
Acquisition Stock to any person or party, unless the Acquired
Company's Shareholder first provides RWEI with an acceptable opinion
of counsel that the proposed transfer will not violate any applicable
law, rule or regulation or any provision of this Agreement. RWEI shall
be entitled to place a restrictive legend on all certificates
evidencing ownership of the Acquisition Stock that provides notice of
the provisions of this paragraph and other applicable provisions of
this Agreement.
D. Stock Conveyed by the Acquired Company's Shareholders. At the Closing
the Acquired Company's Shareholders shall convey to RWEI good, valid
and marketable title to the Acquired Company's Stock, free and clear
of any and all encumbrances, claims, liens, security interests,
pledges or mortgages of any kind. Following delivery to RWEI of the
Acquired Company's Stock, the Acquired Company shall deliver a new
stock certificate to RWEI that replaces the Acquired Company's Stock
certificate delivered to RWEI as delivered above. The new certificate
shall be issued in the name of RWEI.
ARTICLE
II. DELIVERIES BY RWEI AT THE CLOSING
A. Deliveries by RWEI. In addition to all other items required to be
delivered by RWEI at the Closing under this Agreement, RWEI shall
deliver all of the following items to the Acquired Company
Shareholders, unless an item described below is to be delivered to a
single Party. RWEI shall deliver:
1. the Acquisition Stock to the Acquired Company's Shareholders, by
delivery to the Acquired Company's Shareholders of one or more
share certificates evidencing ownership of the Acquisition Stock,
issued by RWEI in the name of the Acquired Company's
Shareholders;
2. a certified copy of RWEI's articles of incorporation, amended as
necessary to authorize issuance of the Acquisition Stock,
together with a certificate of RWEI's Secretary, confirming that
the Acquisition Stock has been duly issued as required in this
Agreement;
3. a current Certificate of Good Standing of RWEI, issued by the
Secretary of State of the State of Nevada;
4. corporate records of RWEI consisting of at least the following:
certified copies of RWEI's bylaws, complete minute books and a
copy of RWEI's stock transfer ledger;
5. a balance sheet of RWEI dated as of December 31, 1997, prepared
by RWEI's controller or accountant in accordance with generally
accepted accounting principles consistently applied;
6. certificates of the Secretary and the Vice President or the
President of RWEI verifying the accuracy and authenticity of all
corporate records, other materials, disclosures or documents of
RWEI delivered or provided by RWEI at the Closing, and confirming
the accuracy on the Closing Date of all representations and
warranties of RWEI contained herein;
7. resignations of all officers and members of the board of
directors of RWEI, effective as of or prior to the Closing Date;
8. certified copies of resolutions of the board of directors of RWEI
authorizing execution and delivery of this Agreement by RWEI and
consummation by RWEI of all of the transactions that are
contemplated herein;
9. a legal opinion of RWEI's counsel addressed to the Acquired
Company in form that is mutually agreeable to the Parties; and
10. copies of all contracts, loan agreements, memoranda and other
documents or instruments (in an amount of $5,000 or more) to
which RWEI is a party or by which it is bound or to which it or
any of its assets is subject.
B. Other Documents and Instruments. RWEI shall also deliver any and all
such other documents and instruments of conveyance, assignment and
transfer, and such other items, as may be reasonably requested or
necessary in order to vest good and marketable title to the
Acquisition Stock in the Acquired Company's Shareholders, on or prior
to the date of the Closing. All instruments and other documents or
instruments exchanged by the Parties shall be in form as needed to
effectuate the transactions contemplated by this Agreement or to
evidence the same, and shall include any third party consents to the
transactions contemplated herein that may be required by the
provisions of any contracts, agreements or obligations to which RWEI
is a party or pursuant to which a change in the stock ownership of
RWEI is deemed to constitute an assignment or transfer requiring such
consent or approval. These additional conveyances and transfers shall
be made by RWEI with a view toward placing the Acquired Company's
Shareholders, on or prior to the date of the Closing in actual
possession and full and complete ownership of the Acquisition Stock as
provided herein.
III. ARTICLE
DELIVERIES BY THE ACQUIRED COMPANY'S SHAREHOLDERS
AT THE CLOSING
A. Deliveries by the Acquired Company's Shareholders. In addition to all
other items required to be delivered by the Acquired Company's
Shareholders at the Closing under this Agreement, at the Closing the
Acquired Company's Shareholders shall deliver all of the following
items to RWEI. The Acquired Company's Shareholders shall deliver:
1. the Acquired Company's Stock, by delivery to RWEI of one or more
share certificates evidencing ownership of the Acquired Company's
Stock, endorsed in blank by the Acquired Company's Shareholders
in the name of RWEI;
2. certified copies of the Acquired Company's articles of
incorporation, together with certificates of the Acquired
Company's confirming that the Acquired Company's Stock has been
duly transferred on the books and records, and in the stock
transfer ledgers of the Acquired Company, as required in this
Agreement;
3. a current Certificate of Good Standing of the Acquired Company,
issued by the Secretary of State of the State of Arizona.
4. corporate records of the Acquired Company's Shareholders
consisting of at least the following: certified copies of the
Acquired Company Shareholders' bylaws, complete minute books and
a copy of the Acquired Company's Shareholders' stock transfer
ledger;
5. a balance sheet of the Acquired Company dated as of June 30,
1998, prepared by the controller or accountant of the Acquired
Company in accordance with generally accepted accounting
principles consistently applied;
6. certificates of the Secretary and the Vice President or the
President of the Acquired Company verifying the accuracy and
authenticity of all corporate records, other materials,
disclosures or documents pertaining to the Acquired Company
delivered or provided by the Acquired Company's Shareholders at
the Closing, and confirming the accuracy on the Closing Date of
all representations and warranties of the Acquired Company's
Shareholders and the Acquired Company as contained herein;
7. certified copies of resolutions of the board of directors of the
Acquired Company authorizing execution and delivery of this
Agreement by the Acquired Company and consummation by the
Acquired Company of all of the transactions that are contemplated
herein;
8. copies of all contracts of $5,000 (U.S.) or more, loan
agreements, memoranda and other documents or instruments to which
the Acquired Company is a party or by which it is bound or to
which it or any of its assets is subject.
9. In addition, the Acquired Company shall provide RWEI with
evidence, reasonably satisfactory to RWEI, that the shares of
Xxxx Xxxxxxxxxxx and his son have been redeemed, by exchange of
the stock of the two operating subsidiaries of RWEI for all of
the shares of RWEI that are currently owned by Xxxx Xxxxxxxxxxx
and his son, except for 215,000 shares that they shall be
entitled to continue to own after the closing. At a minimum, such
evidence shall include copies of the share certificates owned by
Xxxx Xxxxxxxxxxx and his son, marked "canceled" and evidence of
issuance to Xxxx Xxxxxxxxxxx and his son of the stock of RWEI's
two operating subsidiaries.
B. Other Documents and Instruments. The Acquired Company shall also
deliver to RWEI any and all such other documents and instruments of
conveyance, assignment and transfer, and such other items, as may be
reasonably requested or necessary in order to vest good and marketable
title to the Acquired Company's Stock in RWEI on or prior to the date
of the Closing. All instruments and other documents or instruments
exchanged by the Parties shall be in form as needed to effectuate the
transactions contemplated by this Agreement or to evidence the same,
and shall include any third party consents to the transactions
contemplated herein that may be required by the provisions of any
contracts, agreements or obligations to which the Acquired Company is
a party or pursuant to which a change in the stock ownership of the
Acquired Company is deemed to constitute an assignment or transfer
requiring such consent or approval. These additional conveyances and
transfers shall be made by the Acquired Company with a view toward
placing RWEI on, or prior to, the date of the Closing in actual
possession and ownership of all of the Acquired Company's Stock as
provided herein.
IV. ARTICLE
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX hereby represents and warrants to, and covenants with,
the Acquired Company Shareholders that the representations and warranties
provided below are true, correct, accurate and complete in any and all respects
as of the effective date of this Agreement, and that the same will be true,
correct, accurate and complete on and as of the date of the Closing (as though
made then and as though the Closing were substituted for the date of this
Agreement throughout the following), except as may be set forth in the
Disclosure Schedule attached hereto (the "RWEI Disclosure Schedule"). The RWEI
Disclosure Schedule will be arranged in paragraphs and subparagraphs that
correspond to the designation of subparagraphs below.
A. Organization of RWEI. RWEI is a corporation that is duly organized,
validly existing, and in good standing in all material respects under
the laws of the State of Nevada.
B. Authorization of Transaction. RWEI has full actual and legal corporate
power and corporate authority to execute and deliver this Agreement
and to perform its obligations hereunder.
C. Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of RWEI, enforceable against RWEI in
accordance with this Agreement's terms.
D. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby by RWEI will (i) to RWEI's knowledge, violate any statute, law,
regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency,
or state or federal court to which RWEI or the Acquisition Stock are
subject or any provision of the articles of incorporation or bylaws or
similar governing rules or documents of RWEI, (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any
governmental rule, law or regulation of any state or federal court or
under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage or instrument of indebtedness
or under any other arrangement to which RWEI is a party or by which it
or the Acquisition Stock are bound or to which it or any of the
Acquisition Stock is subject, (iii) nor result in the imposition of
any lien, encumbrance, claim or security interest in, to or affecting
any of the Acquisition Stock. To its knowledge, RWEI does not need to
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any state or federal government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except those that will be
obtained or made prior to Closing or those which would fail to have a
material adverse effect on the ability of RWEI to consummate the
transactions contemplated by this Agreement.
E. The Acquisition Stock. As of the date of Closing, the Acquisition
Stock will constitute, in the aggregate, 78.6 percent of all of the
issued and outstanding common stock of RWEI, with the rights,
privileges and preferences that are described in RWEI's articles of
incorporation. As of the date of Closing the Acquisition Stock will
have been duly and validly issued and is and will be nonassessable.
The Acquisition Stock will be restricted stock, consistent with
Section 1.3 of this Agreement. Title to the Acquisition Stock will be
in the name of the Acquired Company's Shareholders in the official
records of RWEI and in the records of RWEI's stock transfer agent, if
any.
F. Litigation. To RWEI's knowledge, RWEI is not subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or
charge nor is it a party or threatened to be made a party to any
charge, complaint, action, suit, proceeding, hearing, or investigation
of or in any court or quasi-judicial or administrative agency of any
federal, state or local jurisdiction or before any arbitrator that
relates in any way, directly or indirectly, to the transactions
contemplated in this Agreement. RWEI has no actual reason to believe
that any charge, complaint, action, suit, proceeding, hearing, or
investigation will or may be brought or threatened against RWEI in
connection with the transactions contemplated in this Agreement.
G. Material Information. As of the Closing, no representation or warranty
by RWEI, nor any statement or certificate furnished or to be furnished
to the Acquired Company's Shareholders pursuant hereto or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit
to state any material fact necessary to make the representation,
warranty, statement or certificate not misleading. At or prior to the
Closing RWEI will deliver to the Acquired Company's Shareholders a
Disclosure Document (the "RWEI Disclosure Document") that provides the
Acquired Company's Shareholders with all material information
concerning RWEI and the Acquisition Stock, as required by Rule 10b-5
of the Securities and Exchange Commission, and RWEI and the Acquired
Company's Shareholders will take all actions and steps that are
necessary to cause the Acquired Company's Shareholders' acquisition of
the Acquisition Stock to be qualified under Regulation D of the
Securities and Exchange Commission as a private placement of
securities and to be similarly qualified under applicable provisions
of state laws. The Parties will cooperate with each other in signing
documents and forms to be filed with federal and state regulatory
agencies to accomplish the results contemplated in this paragraph.
H. Documentation. Prior to the Closing RWEI will deliver to the Acquired
Company's Shareholders, materially correct, accurate and complete
copies of all of the contracts in an amount of $5,000 or more, and
agreements and documents that comprise or relate to RWEI or the
Acquisition Stock in any way. As to each such contract, agreement, or
document (collectively, each "Contract"):
1. the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is
in full force and effect as of the Closing Date;
2. to the extent permitted by applicable law, after the Closing, to
the best of RWEI's knowledge, each Contract will continue to be
legal, valid, binding, enforceable, and in full force and effect
on identical terms following the Closing;
3. to the knowledge of RWEI, no party to the Contract is in breach
or default, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default or permit
termination, modification, or acceleration of the Contract;
4. to the knowledge of RWEI, no party to the Contract has
repudiated, breached or anticipatorily breached any provision
thereof, nor is there any reason to think that any such is likely
to occur or may occur in the future;
5. to the knowledge of RWEI, there are no disputes, oral agreements,
or forbearance programs in effect as to the Contract; and
6. to the knowledge of XXXX, XXXX has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the Contract.
I. Legal Compliance.
1. To its knowledge, RWEI has complied in all material respects with
all laws (including rules and regulations thereunder) of federal,
state and local governments (and all agencies thereof), and no
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or
commenced against any of RWEI alleging any failure to comply with
any such law or regulation.
2. RWEI has complied in all material respects with all applicable
laws (including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and equal employment
opportunities.
J. Receipt of Disclosure Schedule. Prior to Closing, RWEI received and
reviewed a copy of the Acquired Company's Disclosure Schedule
described in Section 5.10 below, had discussions with representatives
of the Acquired Company and the Acquired Company's Shareholders, and
received from such representatives all such additional documents and
information as RWEI requested.
K. Restricted Stock. RWEI understands that the Acquired Company's Stock
will not be registered with the Securities and Exchange Commission,
and that transferability of the Acquired Company's Stock will be
subject to the provisions and restrictions of state and federal
securities laws.
L. Registration Representations. RWEI is the sole party in interest
agreeing to purchase the Acquired Company's Stock by entering into
this Agreement. RWEI is acquiring the Acquired Company's Stock for
investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated in the previous
paragraph, RWEI is aware that as of the date of Closing the Acquired
Company's Stock has not been and will not be registered under the 1933
Act.
M. Third Party Consents. All third parties whose consent to the
transactions contemplated in this Agreement are listed in the
Disclosure Schedule. The Disclosure Schedule also indicates the
contract, agreement, permit or other relationship to the third party
that gives rise to the need for the third party's consent.
N. Due Diligence Period. During the time period from the effective date
of this Agreement until the Closing date (the "Due Diligence Period"),
RWEI shall be entitled to investigate the Acquired Company, review its
files, visit the Acquired Company's business premises and to talk with
officers and employees of the Acquired Company and to meet with any
and all other third parties, public and private, and to perform such
other due diligence reviews and investigations pertaining to the
transactions contemplated in this Agreement as RWEI determines is
necessary or proper.
V. ARTICLE
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ACQUIRED COMPANY'S SHAREHOLDERS
The Acquired Company's Shareholders represent and warrant to,
and covenant with, RWEI that the representations and warranties provided below
are true, correct, accurate and complete in all respects as of the effective
date of this Agreement, and that the same will be true, correct, accurate and
complete on and as of the date of the Closing (as though made then and as though
the Closing were substituted for the date of this Agreement throughout the
following), except as may be set forth in the Disclosure Schedule attached
hereto (the "Acquired Company's Shareholders' Disclosure Schedule"). The
Acquired Company's Shareholders' Disclosure Schedule will be arranged in
paragraphs and subparagraphs that correspond to the designation of subparagraphs
below.
A. Organization of the Acquired Company. The Acquired Company is a
corporation that is duly organized, validly existing, and in good
standing in all material respects under the laws of the State of
Arizona. The description of the Acquired Company's Stock that is
contained in Exhibit A attached is a true, correct, complete and
accurate description. The Acquired Company's Shareholders own 100% of
all of the issued and outstanding stock of the Acquired Company's
Stock. There are no warrants, options, convertible securities or other
interests or rights to acquire the Acquired Company's Stock.
B. Authorization of Transaction. The Acquired Company has full actual and
legal corporate power and corporate authority to execute and deliver
this Agreement and to perform its obligations hereunder.
C. Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of the Acquired Company and the Acquired
Company's Shareholders, enforceable against each of them in accordance
with this Agreement's terms.
D. Noncontravention. Neither the execution and delivery of this Agreement
by the Acquired Company and the Acquired Company's Shareholders, nor
the consummation by any of them of the transactions contemplated
hereby, will (i) violate any statute, law, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which the Acquired
Company or the Acquired Company's Shareholders or the Acquired
Company's Stock are subject, or any provision of the articles of
incorporation or bylaws or similar governing rules or documents of the
Acquired Company, (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or
require any notice under any governmental rule, law or regulation or
under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage or instrument of indebtedness
or under any other arrangement to which the Acquired Company or the
Acquired Company's Shareholders is a party or by which any of them is
bound or to which any of them is subject, (iii) nor result in the
imposition of any lien, encumbrance, claim or security interest in, to
or affecting any assets of the Acquired Company or the Acquired
Company's Stock. No Acquired Company or Acquired Company Shareholder
needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
E. Documentation. Prior to the Closing, the Acquired Company and/or the
Acquired Company's Shareholders will deliver to RWEI true, correct,
accurate and complete copies of all of the contracts, agreements and
documents that comprise or relate to the Acquired Company or the
Acquired Company's Stock in any way. As to each such contract,
agreement, or document (collectively, each "Contract"):
1. the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is
in full force and effect as of the Closing Date;
2. to the extent permitted by applicable law, after the Closing,
each Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
3. no party to the Contract is in breach or default, and no event
has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification, or acceleration of the Contract;
4. no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any
reason to think that any such is likely to occur or may occur in
the future;
5. there are no disputes, oral agreements, or forbearance programs
in effect as to the Contract; and
6. no Acquired Company nor Acquired Company's Shareholders have
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the Contract.
F. Litigation. Neither the Acquired Company nor any of the Acquired
Company's Shareholders is subject to any unsatisfied judgment, order,
decree, stipulation, injunction, or charge nor is it a party or
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state or local
jurisdiction or before any arbitrator that relates in any way,
directly or indirectly, to the transactions contemplated in this
Agreement. No Acquired Company or Acquired Company's Shareholder has
any reason to believe that any charge, complaint, action, suit,
proceeding, hearing, or investigation will or may be brought or
threatened against any Acquired Company in connection with the
transactions contemplated in this Agreement.
G. Legal Compliance.
1. The Acquired Company has complied with all laws (including rules
and regulations thereunder) of federal, state and local
governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand,
or notice has been filed or commenced against the Acquired
Company alleging any failure to comply with any such law or
regulation.
2. The Acquired Company has complied in all material respects with
all applicable laws (including rules and regulations thereunder)
relating to the employment of labor, employee civil rights, and
equal employment opportunities.
H. Material Information. As of the Closing, no representation or warranty
by the Acquired Company or the Acquired Company's Shareholders, nor
any statement or certificate furnished or to be furnished to any
person or Party pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of
a material fact, or omits or will omit to state any material fact
necessary to make the representation, warranty, statement or
certificate not misleading. At or prior to the Closing the Acquired
Company's Shareholders will deliver to RWEI a Disclosure Document (the
"Acquired Company's Disclosure Document") that provides RWEI with all
material information concerning the Acquired Company, as required by
Rule 10b-5 of the Securities and Exchange Commission, and the Acquired
Company's Shareholders and RWEI will take all actions and steps that
are necessary to cause the Acquired Company's Shareholders'
acquisition of the Acquisition Stock to be qualified under Regulation
D of the Securities and Exchange Commission as a private placement of
securities and to be similarly qualified under applicable provisions
of state laws. The Parties will cooperate with each other in signing
documents and forms to be filed with federal and state regulatory
agencies to accomplish the results contemplated in this paragraph.
I. Receipt of Disclosure Schedule. Prior to making the decision to
acquire the Acquisition Stock as provided herein, the Acquired Company
and the Acquired Company's Shareholders received and reviewed a copy
of the Disclosure Schedule described in Section 4.10, had discussions
with representatives of RWEI and received from such representatives
such additional documents and information as the Acquired Company's
Shareholder requested. Each of the Acquired Company's Shareholders
acknowledges that he or she is sophisticated and experienced in
matters relating to RWEI and its planned business activities as
described in the Disclosure Schedule.
J. Restricted Stock. Each of the Acquired Company's Shareholders
understands that the Acquisition Stock will be restricted stock, not
registered with the Securities and Exchange Commission. Unless and
until the Acquisition Stock is registered under the Securities
Exchange Act of 1934, no Acquired Company's Shareholder shall be
entitled to transfer all or any share of the Acquisition Stock unless
the Acquired Company's Shareholder first provides RWEI with an
acceptable opinion of counsel that the proposed transfer will not
violate any applicable law, rule or regulation or any provision of
this Agreement. RWEI shall be entitled to place a restrictive legend
on all certificates evidencing ownership of the Acquisition Stock that
provides notice of the provisions of this paragraph and other
applicable provisions of this Agreement. Unless otherwise provided in
this Agreement, each of the Acquired Company's Shareholders shall be
prohibited from trading the Acquisition Stock for a period of two
years after the date of the Closing.
K. Registration Representations. Each of the Acquired Company
Shareholders is the sole party in interest agreeing to purchase the
Acquisition Stock by entering into this Agreement. The Acquired
Company's Shareholders are acquiring the Acquisition Stock for the
Acquired Company's Shareholders' own account, for investment purposes
only and not with a view to the resale or other distribution thereof,
in whole or in part. As stated above, the Acquired Company's
Shareholders is aware that as of the date of Closing the Acquisition
Stock has not been and will not be registered under the 1933 Act and
that RWEI provides no assurance that the Acquisition Stock will ever
be registered under such act. Each of the Acquired Company's
Shareholders is willing and able and agrees to bear the economic risk
of investment in the Acquisition Stock for an indefinite period of
time, and each is capable of bearing that risk. Each of the Acquired
Company's Shareholders is knowledgeable with respect to the financial,
tax and business aspects of ownership of the Acquisition Stock and of
the business operations conducted by RWEI, or the Acquired Company has
been represented by a person with such knowledge and expertise in
connection with acquisition of the Acquisition Stock.
L. Third Party Consents. All third parties, if any, whose consent to the
transactions contemplated in this Agreement are listed in the
Disclosure Schedule. The Disclosure Schedule also indicates the
contract, agreement, permit or other relationship to the third party
that gives rise to the need for the third party's consent.
M. Due Diligence Period. During the time period from the effective date
of this Agreement until the Closing date (the "Due Diligence Period"),
the Acquired Company's Shareholders shall be entitled to investigate
RWEI, review its files, to visit RWEI's business premises and to talk
with officers and employees of RWEI and to meet with any and all other
third parties, public and private, and to perform such other due
diligence reviews and investigations pertaining to the transactions
contemplated in this Agreement as any Acquired Company's Shareholder
determines is necessary or proper. The Acquired Company's Shareholders
have received the financial statements of RWEI dated through December
31, 1997, and deems them sufficient for purposes of entering into this
transaction.
N. Financial Statements. Attached to this Agreement as Exhibit B are
balance sheets (the "Financial Statements") of the Acquired Company.
The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied, and are
true and accurate. Since the date of the Financial Statements, there
has been no change in the financial condition of the Acquired Company.
The Acquired Company have no liabilities, commitments or obligations,
contingent or otherwise, not shown on the Financial Statements. The
most recent balance of the Acquired Company shows it to own
unencumbered assets with a value of at least $400,000.
VI. ARTICLE
CONDITIONS PRECEDENT
A. Conditions Precedent to the Obligations of RWEI. The following are
conditions precedent to the obligation of RWEI to sell and convey the
Acquisition Stock to the Acquired Company's Shareholders and to
receive an assignment of the Acquired Company's Stock at the Closing.
Any condition listed below may be waived by RWEI at or prior to the
Closing Date.
1. Delivery to RWEI of all information and materials required to be
delivered under any provision of this Agreement;
2. Receipt of all necessary third party consents;
3. Performance by each Acquired Company Shareholder of all of his or
her or its obligations under this Agreement that are required to
be performed prior to Closing;
4. True and correct representations and warranties by the Acquired
Company and the Acquired Company's Shareholders in connection
with this Agreement; and
5. Discovery of no materially adverse information at or prior to the
Closing concerning the Acquired Company.
B. Conditions Precedent to the Obligations of the Acquired Company's
Shareholders. The following are conditions precedent to the
obligations of Acquired Company's Shareholders to sell and transfer
the Acquired Company Stock to RWEI, and to acquire the Acquisition
Stock from RWEI, at the Closing. Any condition listed below may be
waived by the Acquired Company's Shareholders at or prior to the
Closing.
1. Delivery to the Acquired Company's Shareholders of all
information and materials required to be delivered by RWEI under
any provision of this Agreement;
2. Receipt of all necessary third party consents;
3. Performance by RWEI of all of its obligations under this
Agreement that are required to be performed prior to Closing;
4. Receipt of evidence of satisfactory completion of the
transactions involving Xxxx Xxxxxxxxxxx and his son that are
described above; and
5. Discoveryof no materially adverse information at or prior to the
Closing concerning RWEI.
C. Survival of Representations and Warranties. The representations and
warranties of the Parties contained in this Agreement shall survive
the Closing and shall continue to be the obligations of the Parties
for a period of two years after the date of the Closing.
ARTICLE
VII.
GENERAL PROVISIONS
A. Costs and Fees. If any Party breaches any term of this Agreement, the
breaching Party agrees to pay the non-breaching Party all reasonable
attorneys' fees, expert witness fees, investigation costs, costs of
tests and analysis, travel and accommodation expenses, deposition and
trial transcript costs, court costs and other costs and expenses
incurred by the non-breaching Party in enforcing this Agreement or
preparing for legal or other proceedings, at the trial or appellate
level, whether or not such proceedings are instituted. If any legal or
other proceedings are instituted, the Party prevailing in any such
proceeding shall be paid all of the aforementioned costs, expenses and
fees by the other Party, and if any judgment is secured by such
prevailing Party, all such costs, expenses, and fees shall be included
in such judgment, attorneys' fees to be set by the court and not by
the jury. References in this paragraph to "legal proceedings" refer to
litigation as well as arbitration proceedings and any other similar or
related proceedings.
B. Waiver. No delay by a Party in exercising any right or remedy shall
constitute a waiver of a Party's rights under this Agreement, and no
waiver by any Party of the breach of any covenant of this Agreement by
the other shall be construed as a waiver of any preceding or
succeeding breach of the same or any other covenant or condition of
this Agreement.
C. Indemnification. Each Party (the "Indemnifying Party") shall protect,
indemnify and hold harmless the other Party and its directors,
officers, employees, agents, affiliates and representatives (each an
"Indemnified Party") against any and all costs, expenses, damages
(whether such damages are general, special, consequential, limited,
direct or indirect or incidental), liabilities or losses, including
attorneys' fees, caused by, for or on account of the Indemnifying
Party's negligence, gross negligence or willful misconduct or failure
to perform its obligations under this Agreement or the negligence,
gross negligence or willful misconduct of the Indemnifying Party's
directors, officers, employees, agents affiliates or representatives.
1. If an Indemnified Party intends to seek indemnification under
this paragraph from any Indemnifying Party with respect to any
action or claim, the Indemnified Party shall give the
Indemnifying Party notice of such claim or action upon the
receipt of actual knowledge or information by the Indemnified
Party of any possible claim or of the commencement of such claim
or action, which period shall in no event be later than the
earlier of (i) fifteen business days prior to the last day of
responding to such claim or action or (ii) one half of the period
allowed for responding to such claim or action or, if no time
period for responding exists, as soon as reasonably possible. The
Indemnifying Party shall have no liability under this paragraph
for any claim or action for which such notice is not provided,
unless the failure to give such notice does not prejudice the
Indemnifying Party.
2. The Indemnifying Party shall have the right to assume the defense
of any such claim or action, at its sole cost and expense, with
counsel designated by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party: provided, however, that if
the defendants in any such action include both the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall
have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those
available to the Indemnifying party, the Indemnified Party shall
have the right to select separate counsel, at the Indemnifying
Party's expense, to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such
Indemnified Party.
3. Should any Indemnified Party be entitled to indemnification under
this Section as a result of a claim by a third party, and should
the Indemnifying Party fail to assume the defense of such claim
or action, the Indemnified Party may, at the expense of the
Indemnifying Party, contest or, (with the prior consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld) settle such claim or action. Except to the extent
expressly provided herein, no Indemnified Party shall settle any
claim or action with respect to which it has sought or intends to
seek indemnification pursuant to this Section without the prior
written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed.
4. If an Indemnifying Party is obligated to indemnify and hold any
Indemnified Party harmless under this Agreement, the amount owing
to the Indemnified Party shall be the amount of such Indemnified
Party's actual out-of-pocket loss, net of any insurance or other
recovery.
5. The duty to indemnify under this Agreement will continue in full
force and effect for a period of two years with respect to any
loss, liability, damage or other expense based on facts or
conditions which occurred prior to such termination.
D. Notices. No notice, consent, approval or other communication provided
for herein or given in connection herewith shall be validly given,
made, delivered or served unless it is in writing and delivered
personally, sent by overnight courier, or sent by registered or
certified United States mail, postage prepaid, with return receipt
requested, to the addresses for each Party set forth below. Any Party
hereto may from time to time change its address by notice to the other
Parties given in the manner provided herein. Notices, consents,
approvals, and communications by mail shall be deemed delivered upon
the earlier of forty-eight (48) hours after deposit in the United
States mail in the manner provided above or upon delivery to the
respective addresses set forth above if delivered personally or sent
by overnight courier. Addresses of the Parties are the following:
To RWEI:
PAUL'S OF THE NORTH SHORE 000 Xxxxxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
To the Acquired Company:
REMEDENT USA, INC.
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
E. Interpretation and Time. The captions of the paragraphs of this
Agreement are for convenience only and shall not govern or influence
the interpretation hereof. This Agreement is the result of
negotiations between the Parties and, accordingly, shall not be
construed for or against any Party regardless of which Party drafted
this Agreement or any portion thereof. Time is of the essence under
this Agreement.
F. Successors and Assigns. All of the provisions hereof shall inure to
the benefit of and be binding upon the successors and assigns of the
Parties.
G. No Partnership. This Agreement is not intended to, and nothing
contained in this Agreement shall, create any partnership, joint
venture or other similar arrangement between the Parties.
H. Further Documents. Each of the Parties shall execute and deliver all
such other and additional documents and perform all such acts, in
addition to execution and delivery of this Agreement and performance
of the Party's obligations hereunder, as are reasonably required from
time to time in order to carry out the purposes, matters and
transactions that are contemplated in this Agreement.
I. Incorporation of Exhibits. All exhibits attached to this Agreement are
by this reference incorporated herein.
J. Governing Law. This Agreement shall be governed by the laws of the
State of Arizona, without giving effect to the conflict of law
provisions or principles of the State of Arizona.
K. Date of Performance. If the date of performance of any obligation or
the last day of any time period provided for herein should fall on a
Saturday, Sunday or legal holiday, then said obligation shall be due
and owing, and said time period shall expire, on the first day
thereafter which is not a Saturday, Sunday or legal holiday. Except as
may otherwise be set forth herein, any performance provided for herein
shall be timely made if completed no later than 5:00 p.m., Phoenix,
Arizona time, on the day of performance.
L. Counterparts. This Agreement may be executed in any number of
counterparts. This Agreement may be signed by original signatures or
by fax signatures. Any set of counterparts of this Agreement, whether
faxed or originals or both, showing signatures by all Parties, taken
together, shall constitute a single copy of this Agreement.
M. Resolution of Disputes. In the event of any dispute between the
Parties as to their rights and obligations under this Agreement,
including, but not limited to, any question as to whether or not a
Party has performed its obligations fully or remedied an alleged
breach, and any and all other disputes arising under this Agreement,
shall be resolved as follows.
1. The Parties shall submit their dispute to at least four (4) hours
of mediation in accordance with the mediation procedures of
American Arbitration Association ("AAA").
2. In the event the dispute does not then settle within 15 calendar
days after the first mediation session, the Parties agree to
submit the dispute to binding arbitration in accordance with the
arbitration procedures of the AAA except as modified in this
Agreement. The arbitration hearing shall be conducted no later
than 45 calendar days after the first mediation session.
3. The arbitrator or arbitrators conducting the arbitration hearing
shall render the arbitration decision in writing, which writing
shall explain the reasoning and bases for the decision.
4. The Parties agree to share equally the costs of mediation.
However, if the dispute is settled through arbitration, the
prevailing Party shall be entitled to recover all costs incurred,
including reasonable attorneys' fees, to enforce its rights
hereunder, in addition to any damages recovered, as provided in
"Costs and Fees" above.
N. Severability. If any term or provision of this Agreement shall, to any
extent, be determined by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby, and each term and provision of this Agreement shall
be valid and be enforceable to the fullest extent permitted by law.
O. Assignment. No Party shall assign this Agreement, nor any interest
arising herein, without the written consent of the other Parties.
P. Recitals. The recitals set forth above are a part of this Agreement.
Q. Jurisdiction and Venue. Venue for and jurisdiction over any legal
proceedings available to the Parties hereunder shall lie in the
appropriate courts of the State of California, located in Los Angeles,
California.
IN WITNESS WHEREOF, the Parties hereto have hereunder affixed
their signatures on the dates set forth below to be effective as of the date
first set forth above.
RESORT WORLD ENTERPRISES, INC., a
Nevada corporation,
Date:__________________________ By:_______________________________________
Name:____________________________________
Its:_______________________________________
REMEDENT USA, INC., an Arizona corporation,
Date:__________________________ By:_______________________________________
Name:____________________________________
Its:_______________________________________
