Exhibit 2.1
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.
ARTICLE III 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. Discovery of 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:___________________________
