EXECUTION COPY
MERGER AGREEMENT
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THIS MERGER AGREEMENT (the "AGREEMENT") is entered into this 15th day of
August, 2002, by and among ALTRIMEGA HEALTH CORPORATION, a Nevada corporation
("PARENT"), ALTRIMEGA ACQUISITION CO., a wholly-owned subsidiary of the Parent
and a Nevada corporation ("MERGER SUB"), CREATIVE HOLDINGS, INC., a South
Carolina corporation (the "COMPANY"), and the individuals listed on SCHEDULE A
attached hereto (individually, a "SHAREHOLDER" and collectively, the
"SHAREHOLDERS").
RECITALS:
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A. The Shareholders own all of the outstanding capital stock of the
Company. The authorized capital stock of the Company consists of 20,000,000
shares of common stock, par value $.001 per share, 3,200,000 of which are issued
and outstanding (the "COMPANY COMMON STOCK").
B. The Shareholders desire to exchange the Company Common Stock for
newly-issued shares of common stock, par value $0.001 per share of Parent (the
"PARENT'S COMMON STOCK"), on the terms and conditions set forth herein.
C. Upon the terms and subject to the conditions set forth in this
Agreement, the Company shall merge with and into Merger Sub (the "Merger") with
Merger Sub surviving, in accordance with the Nevada Revised Statutes (the
"NRS").
D. For the purposes hereof, references to the Company shall mean Creative
Holdings, Inc., up to and including the Closing Date and thereafter shall mean
Merger Sub, which shall include the operations of the Company.
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual premises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. THE MERGER AND RELATED TRANSACTIONS.
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1.1. MERGER. In accordance with the provisions of this Agreement,
the NRS and other applicable law, on the Closing Date (as defined below), the
Company shall be merged with and into Merger Sub, which shall be the surviving
corporation (hereinafter sometimes referred to as the "SURVIVING Corporation")
and shall continue its corporate existence under the laws of the State of Nevada
as a wholly-owned subsidiary of Parent. As of the Closing, the name of the
Merger Sub shall be Creative Holdings and Marketing Corporation and the separate
existence of the Company shall cease. On the Closing Date and by virtue of the
Merger and without any action on the part of the Shareholders, all of the then
issued and outstanding shares of capital stock of the Company shall be
automatically canceled and shall entitle the Shareholders to receive the Merger
Consideration set forth in Section 1.2 hereof.
1.2. MERGER CONSIDERATION AND PAYMENT.
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1.2.1. MERGER CONSIDERATION. In consideration of the Merger,
Parent shall issue newly-issued shares of Parent's Common Stock to the
Shareholders (the "PARENT SHARES," also hereinafter sometimes referred to as the
"MERGER CONSIDERATION") in the denominations set forth opposite each
Shareholder's name on SCHEDULE A attached hereto in exchange for all of the
Company Common Stock. The total number of shares of Parent's Common Stock issued
to all Shareholders shall be equal to a total of 320,000,000 shares.
1.2.2. MANNER OF PAYMENT. At Closing, 20,000,000 shares of
Parent's Common Stock shall be issued and delivered to the Shareholders. Upon
consummation of the Merger and an amendment to Parent's Articles of
Incorporation increasing the authorized Parent Common Stock to 800,000,000, the
remaining 300,000,000 shares of Parent's Common Stock shall be issued and
delivered to the Shareholders as soon as practicable thereafter.
1.3. CLOSING. The parties to this Agreement shall file Articles of
Merger (as defined below) pursuant to the NRS, cause the Merger to become
effective and consummate the other transactions contemplated by this Agreement
(the "CLOSING") no later than August 16, 2002; provided, in no event shall the
Closing occur prior to the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof. The date of the Closing is referred to herein as the
"CLOSING DATE." The Closing shall take place at the offices of counsel to
Parent, or at such other place as may be mutually agreed upon by Parent and the
Shareholders. At the Closing, (i) the Shareholders shall deliver to Parent the
original stock certificates representing the Company Common Stock, together with
stock powers duly executed in blank; and (ii) the Parent shall deliver to the
Shareholders stock certificates representing the Parent Shares.
1.4. PLAN OF MERGER; ARTICLES OF MERGER. The parties to this
Agreement shall cause the Company and Merger Sub to enter into a plan of merger
on the date hereof, a copy of which is attached hereto as EXHIBIT "B" (the "PLAN
OF MERGER"), and, at the Closing, to execute the Articles of Merger in the form
attached hereof as EXHIBIT "C" (the "ARTICLES OF MERGER"). The Articles of
Merger shall be filed with the Secretary of State of Nevada on the Closing Date
in accordance with the NRS.
1.5. APPROVAL OF MERGER. By his execution of this Agreement, each
Shareholder hereby ratifies, approves and adopts the Plan of Merger for all
purposes under the NRS. On or before the execution of this Agreement, the
respective Boards of Directors of Parent, Merger Sub and the Company shall have
approved this Agreement, the Plan of Merger and the transactions contemplated
hereby and thereby.
2. ADDITIONAL AGREEMENTS.
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2.1. ACCESS AND INSPECTION, ETC. The Company and the Shareholders
have allowed and shall allow Parent and its authorized representatives full
access during normal business hours from and after the date hereof and prior to
the Closing Date to all of the properties, books, contracts, commitments and
records of the Company for the purpose of making such investigations as Parent
may reasonably request in connection with the transactions contemplated hereby,
and shall cause the Company to furnish Parent such information concerning its
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affairs as Parent may reasonably request. The Company and the Shareholder have
caused and shall cause the personnel of the Company to assist Parent in making
such investigation and shall use his best efforts to cause the counsel,
accountants, and other non-employee representatives of the Company to be
reasonably available to Parent for such purposes. The Shareholders shall cause
the Company to comply with all obligations of the Company under this Agreement.
2.2. CONFIDENTIAL TREATMENT OF INFORMATION. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Exhibits and Schedules hereto), all
matters relating hereto and all data and information obtained with respect to
the other parties or their business, except such data or information as is
published or is a matter of public record, or as compelled by legal process. In
the event this Agreement is terminated pursuant to Section 10 hereof, each party
shall promptly return to the other(s) any statements, documents, schedules,
exhibits or other written information obtained from them in connection with this
Agreement, and shall not retain any copies thereof.
2.3. PUBLIC ANNOUNCEMENTS. After the date hereof and prior to the
Closing, none of the parties hereto shall make any press release, statement to
employees or other disclosure of this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties, except as may be
required by law. Neither the Company nor the Shareholders shall make any such
disclosure unless Parent shall have received prior notice of the contemplated
disclosure and has had adequate time and opportunity to comment on such
disclosure, which shall be satisfactory in form and content to Parent and its
counsel.
2.4. SECURITIES LAW COMPLIANCE. The issuance of the Parent Shares to
the Shareholders hereunder shall not be registered under the Securities Act of
1933, as amended, by reason of the exemption provided by Section 4(2) thereof,
and such shares may not be further transferred unless such transfer is
registered under applicable securities laws or, in the opinion of Parent's
counsel, such transfer complies with an exemption from such registration. All
certificates evidencing the Parent Shares to be issued to the Shareholders shall
be legended to reflect the foregoing restriction.
2.5. REGISTRATION. Parent shall prepare and file with the United
States Securities and Exchange Commission (the "SEC") a registration statement
on Form S-1, SB-2 or on such other form as available, registering 32,750,000 of
the Parent Shares. Parent shall use its best efforts to cause such registration
statement to be declared effective by the SEC as soon as practicable.
2.6. BEST EFFORTS. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use its best efforts in good faith to
take or cause to be taken as promptly as practicable all reasonable actions that
are within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.
2.7. FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including,
without limitation, all necessary stock powers and such other instruments of
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transfer as may be necessary or desirable to transfer ownership of the Company
Common Stock and to consummate the transactions contemplated by this Agreement.
2.8. NONCOMPETITION.
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2.8.1. NON-INTERFERENCE. From and after the date hereof and
during the Restricted Period, no Shareholder shall induce or solicit any
employee of Parent and/or the Surviving Corporation or any person doing business
with Parent and/or the Surviving Corporation or to terminate his or her
employment or business relationship with Parent and/or the Surviving Corporation
or otherwise interfere with any such relationship.
2.8.2. CONFIDENTIALITY. The Shareholders agree and acknowledge
that, by reason of the nature of the Shareholders' ownership interest in Parent
and/or the Surviving Corporation, each Shareholder will have or may have access
to and become informed of confidential and secret information which is a
competitive asset of Parent and/or the Surviving Corporation ("CONFIDENTIAL
INFORMATION"), including, without limitation, technology, any lists of
customers, financial statistics, research data or any other statistics and plans
contained in profit plans, capital plans, critical issue plans, strategic plans
or marketing or operation plans or other trade secrets of Parent and/or the
Surviving Corporation and any of the foregoing which belong to any person or
company but to which the Shareholders have had access by reason of their
relationship with Parent and/or the Surviving Corporation. The Shareholders
agree faithfully to keep in strict confidence, and not, either directly or
indirectly, to make known, divulge, reveal, furnish, make available or use any
such Confidential Information. The Shareholders acknowledge that all manuals,
instruction books, price lists, information and records and other information
and aids relating to Parent and/or the Surviving Corporation's business, and any
and all other documents containing Confidential Information furnished to the
Shareholders by Parent and/or the Surviving Corporation or otherwise acquired or
developed by the Shareholders, shall at all times be the property of Parent
and/or the Surviving Corporation. Upon the termination of this Agreement, each
Shareholder shall return to Parent and/or the Surviving Corporation any such
property or documents which are in their possession, custody or control, but the
Shareholders' obligation of confidentiality shall survive such termination and
unless any such Confidential Information shall have become, through no fault of
the Shareholder, generally known to the trade. The obligations of the
Shareholder under this subsection are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which the Shareholder
may have to Parent and/or the Surviving Corporation under general legal or
equitable principles. Notwithstanding the above, however, Parent and/or the
Surviving Corporation acknowledges that each Shareholder may have extensive
experience in the general industry in which Parent and/or the Surviving
Corporation operate, and these restrictions are not intended to prevent a
Shareholder from using his knowledge of the industry. These restrictions only
apply to confidential information which is owned by Parent and/or the Surviving
Corporation, or was learned by a Shareholder as a shareholder of Parent.
2.8.3. REMEDIES. It is expressly agreed by the Shareholders
and Parent that the provisions in this Section 2 are reasonable for purposes of
preserving for Parent and/or the Surviving Corporation its business, goodwill
and Confidential Information. It is also agreed that if any provision is found
by a court having jurisdiction to be unreasonable because of scope, area or
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time, then that provision shall be amended to correspond in scope, area and time
to that considered reasonable by a court and as amended shall be enforced and
the remaining provisions shall remain effective. In the event any breach of
these provisions by any Shareholder, the parties recognize and acknowledge that
a remedy at law will be inadequate and Parent and/or the Surviving Corporation
may suffer irreparable injury. The Shareholders consent to injunctive and other
appropriate equitable relief without the posting of a bond upon the institution
of proceedings therefor by Parent and/or the Surviving Corporation in order to
protect Parent and/or the Surviving Corporation 's rights. Such relief shall be
in addition to any other relief to which Parent and/or the Surviving Corporation
may be entitled at law, in equity, or under any other agreement between each
Shareholder and Parent and/or the Surviving Corporation. The provisions of this
Section 2.8 (including the subsections) shall survive the termination of this
Agreement.
2.9. CERTAIN TAX MATTERS.
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(a) SECTION 338(H)(10) ELECTION. The Company and the
Shareholders will join with Parent in making an election under Code
ss.338(h)(10) of the Internal Revenue Code of 1986, as amended (the "CODE") (and
any corresponding election under state, local, and foreign tax law) with respect
to the Merger (a "SECTION 338(H)(10) ELECTION").
(b) ALLOCATION OF MERGER CONSIDERATION. Parent and the
Shareholders agree that the Merger Consideration and the liabilities of the
Company (plus other relevant items) will be allocated to the assets of the
Company for all purposes (including tax and financial accounting) in a manner
consistent with the fair market values set forth on Schedule 2.9 hereto. Parent,
the Company and the Shareholders shall file all tax returns (including amended
returns and claims for refund) and information reports in a manner consistent
with such values.)
(c) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
Parent shall prepare or cause to be prepared and filed or cause to be filed all
tax returns for the Company for all periods ending on or prior to the Closing
Date which are filed after the Closing Date. To the extent permitted by
applicable law, the Shareholders shall include any income, gain, loss, deduction
or other tax items for such periods on their tax returns in a manner consistent
with the Schedule K-1s furnished by the Company to the Shareholders for such
periods. The Shareholders shall reimburse Parent for any taxes of the Company
with respect to such period within fifteen (15) days after payment by Parent or
the Company.
(d) COOPERATION ON TAX MATTERS.
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(i) Parent, the Company and the Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of tax returns pursuant to this Section 2.9 and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company and the Shareholders agree (A) to
retain all books and records with respect to tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
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the expiration of the statute of limitations (and, to the extent notified by
Parent or any Shareholder, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Company or any Shareholder, as the case may
be, shall allow the other party to take possession of such books and records.
(ii) Parent and the Shareholders further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other person as may be necessary
to mitigate, reduce or eliminate any tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
2.10. RELEASE OF CLAIMS BY EACH SHAREHOLDER. Effective as of the
Closing Date, and except for any obligations arising out of this Agreement, each
Shareholder, and his successors, predecessors, assigns, agents, advisors, legal
representatives, partners and all persons acting by, through or under him,
hereby release the Company and each of its successors, predecessors, assigns,
agents, advisors, officers, directors, employees, legal representatives,
partners and all persons acting by, through or under each of them, from any and
all claims, obligations, causes of action, actions, suits, contracts,
controversies, agreements, promises, damages, demands, costs, attorneys' fees
and liabilities of any nature whatsoever from the beginning of time up to and
including the Closing Date, in law or at equity, whether known now or on the
Closing Date, anticipated or unanticipated, suspected or claimed, fixed or
contingent, liquidated or unliquidated, arising out of, in connection with or
relating to any matter, cause or thing whatsoever.
2.11. NO-SHOP. From the date hereof until the termination of this
Agreement, neither the Company nor any Shareholder shall, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of their employees or officers) relating
to an Acquisition Proposal. As used herein, "ACQUISITION PROPOSAL" means any
proposal or offer involving a liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or substantially all of
the assets of, or equity interest in, the Company or other similar transaction
or business combination involving the Company. Each of the Company and each
Shareholder shall immediately cease and cause to be terminated all discussions
or negotiations with third parties with respect to any Acquisition Proposal, if
any, exiting on the date hereof.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS.
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To induce Parent and Merger Sub to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company and the
Shareholders jointly and severally represent and warrant to and covenant with
Parent and Merger Sub as follows:
3.1. ORGANIZATION; COMPLIANCE. The Company is a corporation duly
organized, validly existing and in good standing under the laws of South
Carolina. The Company is: (a) entitled to own or lease its properties and to
carry on its business as and in the places where such business is now conducted,
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and (b) duly licensed and qualified in all jurisdictions where the character of
the property owned by it or the nature of the business transacted by it makes
such license or qualification necessary, except where the failure to do so would
not result in a material adverse effect on the Company. Schedule 3.1 lists all
locations where the Company has an office or place of business and the nature of
the ownership interest in such property (fee, lease, or other).
3.2. CAPITALIZATION AND RELATED MATTERS.
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(a) The Company has an authorized capital consisting of
20,000,000 shares of common stock, $.001 par value per share, 3,200,000 of which
are issued and outstanding at the date hereof. All shares of Company Common
Stock are duly and validly issued, fully paid and nonassessable. No shares of
Company Common Stock (i) were issued in violation of the preemptive rights of
any shareholder, or (ii) are held as treasury stock.
(b) There are not outstanding any securities
convertible into capital stock of the Company nor any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, such capital stock or securities convertible into
such capital stock. The Company: (i) is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any of
its capital stock; or (ii) has no liability for dividends or other distributions
declared or accrued, but unpaid, with respect to any capital stock.
(c) The Shareholders are, and will be at Closing, the
record and beneficial owner of three million two hundred thousand (3,200,000)
shares of Company Common Stock, free and clear of all claims, liens, options,
agreements, restrictions, and encumbrances whatsoever and no Shareholder is a
not party to any agreement, understanding or arrangement, direct or indirect,
relating to the Company Common Stock, including, without limitation, agreements,
understandings or arrangements regarding voting or sale of such stock.
3.3. SUBSIDIARIES. The Company owns (a) no shares of capital stock
of any other corporation, including any joint stock company, and (b) no other
proprietary interest in any company, partnership, trust or other entity,
including any limited liability company.
3.4. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
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(a) This Agreement is a valid and binding agreement of
the Company and the Shareholders, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy or similar laws
affecting the enforcement of creditors' rights generally, and the availability
of equitable remedies. The Company and the Shareholders have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the documents to be delivered by them in connection with the
Closing and to perform their obligations under this Agreement.
(b) Except as set forth in Schedule 3.4, the execution
and delivery of this Agreement by the Company and the Shareholders does not, and
the consummation of the transactions contemplated hereby will not, constitute a
breach or violation of the charter or bylaws of the Company, or a default under
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any of the terms, conditions or provisions of (or an act or omission that would
give rise to any right of termination, cancellation or acceleration under) any
note, bond, mortgage, lease, indenture, agreement or obligation to which the
Company or any Shareholder is a party, pursuant to which the Company or any
Shareholder otherwise receives benefits, or to which any of the properties of
the Company or any Shareholder is subject, or violate any judgment, order,
decree, statute or regulation applicable to the Company or any Shareholder or by
which any of them may be subject.
3.5. CORPORATE RECORDS. The statutory records, including the stock
register and minute books of the Company, fully reflect all issuances, transfers
and redemptions of its capital stock, currently show and will correctly show the
total number of shares of its capital stock issued and outstanding on the date
hereof and on the Closing Date, the charter or other organizational documents
and all amendments thereto, the bylaws as amended and currently in force. To the
knowledge of the Shareholders, the books of account, minute books, stock record,
books, and other records of the Company, all of which have been made available
to Parent, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
Shareholders, the Board of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such Shareholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
3.6. FINANCIAL STATEMENTS.
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(a) The Company and the Shareholders have delivered to
Parent the unaudited balance sheet of the Company as of July 31, 2002, (the
"BALANCE SHEET") and the related statements of income, shareholders' equity and
cash flows of the Company for the period ended July 31, 2002. All the foregoing
financial statements, and any financial statements delivered pursuant to Section
3.6(c) below, are referred to herein collectively as the "COMPANY FINANCIAL
STATEMENTS."
(b) The Company Financial Statements have been and will
be prepared in accordance with GAAP throughout the periods involved, subject, in
the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet), applied on a
consistent basis, and fairly reflect and will reflect in all material respects
the financial condition of the Company as at the dates thereof and the results
of the operations of the Company for the periods then ended, and are true and
complete and are consistent with the books and records of the Company.
(c) Until Closing, the Company will furnish to Parent
unaudited interim financial statements of the Company for each month subsequent
to July 31, 2002 as soon as practicable but in any event within thirty (30) days
after the close of any such month.
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3.7. LIABILITIES. The Company has no debt, liability or obligation
of any kind, whether accrued, absolute, contingent or otherwise, except: (a)
those reflected on the Balance Sheet, including the notes thereto, and (b)
liabilities incurred in the ordinary course of business since incorporating in
June, 2002, none of which have had or will have a material adverse effect on the
financial condition of the Company.
3.8. ABSENCE OF CHANGES. Except as described in Schedule 3.8, from
July 31, 2002 to the date of this Agreement:
(a) there has not been any adverse change in the
business, assets, liabilities, results of operations or financial condition of
the Company or in its relationships with suppliers, customers, employees,
lessors or others, other than changes in the ordinary course of business, none
of which, singularly or in the aggregate, have had or will have a material
adverse effect on the business, properties or financial condition of the
Company;
(b) there has not been any: (i) change in the Company's
authorized or issued capital stock, retirement, or other acquisition by the
Company of any shares of any such capital stock; (ii) a declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock, except as set forth on Schedule 3.28; (iii) amendment to the Articles of
Incorporation or Bylaws of the Company; (iv) increase by the Company of any
bonuses, salaries, or other compensation to any shareholder, director, officer,
or (except in the ordinary course of business) employee or entry into any
employment, severance, or similar agreement with any director, officer, or
employee; (v) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company; (vi) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company; (vii) cancellation or waiver of any
claims or rights with a value to the Company in excess of $10,000; (viii)
material change in the accounting methods used by the Company; or (ix)
agreement, whether oral or written, by the Company to do any of the foregoing;
and
(c) the Company has complied with the covenants and
restrictions set forth in Section 5 to the same extent as if this Agreement had
been executed on, and had been in effect since, July 31, 2002.
3.9. TITLE TO PROPERTIES. The Company has good and marketable title
to all of its properties and assets, real and personal, including, but not
limited to, those reflected in the Balance Sheet (except as since sold or
otherwise disposed of in the ordinary course of business, or as expressly
provided for in this Agreement), free and clear of all encumbrances, liens or
charges of any kind or character except: (a) those securing liabilities of the
Company incurred in the ordinary course (with respect to which no default
exists); (b) liens of 2002 real estate and personal property taxes; and (c)
imperfections of title and encumbrances, if any, which, in the aggregate (i) are
not substantial in amount; (ii) do not detract from the value of the property
subject thereto or impair the operations of the Company; and (iii) do not have a
material adverse effect on the business, properties or assets of the Company.
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3.10. COMPLIANCE WITH LAW. The business and activities of the Company
has at all times been conducted in accordance with its Articles of Incorporation
and Bylaws and any applicable law, regulation, ordinance, order, License (as
defined below), permit, rule, injunction or other restriction or ruling of any
court or administrative or governmental agency, ministry, or body, except where
the failure to do so would not result in a material adverse effect on the
Company.
3.11. TAXES. The Company has duly filed all federal, state, and
material local and foreign tax returns and reports, and all returns and reports
of all other governmental units having jurisdiction with respect to taxes
imposed on it or on its income, properties, sales, franchises, operations or
employee benefit plans or trusts, all such returns were complete and accurate
when filed, and all taxes and assessments payable by the Company have been paid
to the extent that such taxes have become due. The Company has withheld proper
and accurate amounts from its employees for all periods in full compliance with
the tax withholding provisions of applicable foreign, federal, state and local
tax laws. There are no waivers or agreements by the Company for the extension of
time for the assessment of any taxes. There are not now any examinations of the
income tax returns of the Company pending, or any proposed deficiencies or
assessments against the Company of additional taxes of any kind.
3.12. REAL PROPERTIES. Except as listed in Schedule 3.12, the
Company's interest in the Barefoot Properties (located in Myrtle Beach, South
Carolina) is free and clear of all encumbrances.
3.13. LEASES OF REAL PROPERTY. All leases pursuant to which the
Company is a lessee of any real property (the "LEASES") are listed in Schedule
3.13 and are valid and enforceable in accordance with their terms. There is not
under any of such Leases any material default or any claimed material default by
the Company or any event of default or event which with notice or lapse of time,
or both, would constitute a material default by the Company and in respect to
which the Company has not taken adequate steps to prevent a default on its part
from occurring. The copies of the Leases heretofore furnished to Parent are
true, correct and complete, and such Leases have not been modified in any
respect since the date they were so furnished, and are in full force and effect
in accordance with their terms. The Company is lawfully in possession of all
real properties of which they are a lessee (the "LEASED PROPERTIES").
3.14. CONTINGENCIES. Except as disclosed on Schedule 3.14, there are
no actions, suits, claims or proceedings pending, or to the knowledge of the
Shareholders threatened against, by or affecting, the Company in any court or
before any arbitrator or governmental agency that may have a material adverse
effect on the Company or which could materially and adversely affect the right
or ability of any Shareholder to consummate the transactions contemplated
hereby. To the knowledge of the Shareholders, there is no valid basis upon which
any such action, suit, claim, or proceeding may be commenced or asserted against
the Company. There are no unsatisfied judgments against the Company and no
consent decrees or similar agreements to which the Company is subject and which
could have a material adverse effect on the Company.
3.15. INTELLECTUAL PROPERTY RIGHTS. The Company has: (a) the
exclusive right to use the name Creative Holdings, Inc., and the use of such
name does not conflict with or infringe upon the rights of any other person, and
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(b) made all material filings and publications required to register and perfect
such exclusive right. The Company is not, and will not be, subject to any
liability, direct or indirect, for infringement damages, royalties, or
otherwise, by reason of (a) the use of the name "Creative Holdings" in or
outside the United States or (b) the business operations of the Company, at any
time prior to the Closing Date. The Company has not registered the name
"Creative Holdings" for trademark or use rights with any state or federal agency
for exclusive use. The state of South Carolina granted incorporation under the
name Creative Holdings, Inc.
3.16. MATERIAL CONTRACTS. Schedule 3.16 contains a complete list of
all contracts of the Company, which involve consideration in excess of the
equivalent of $10,000 or have a term of one year or more (the "MATERIAL
CONTRACTS"). The Company has delivered to Parent a true, correct and complete
copy of each of the written contracts, and a summary of each oral contract,
listed on Schedule 3.16. Except as disclosed in Schedule 3.16: (a) the Company
has performed all material obligations to be performed by it under all such
contracts, and is not in material default thereof, and (b) no condition exists
or has occurred which with the giving of notice or the lapse of time, or both,
would constitute a material default by the Company or accelerate the maturity
of, or otherwise modify, any such contract, and (c) all such contracts are in
full force and effect. No material default by any other party to any of such
contracts is known or claimed by the Company or any Shareholder to exist.
3.17. INSURANCE. Schedule 3.17 contains a complete list of all
policies of insurance presently maintained by the Company all of which are, and
will be maintained through the Closing Date, in full force and effect; and all
premiums due thereon have been paid and the Company has not received any notice
of cancellation with respect thereto. The Company has heretofore delivered to
Parent or its representatives a true, correct and complete copy of each such
insurance policy.
3.18. EMPLOYMENT AND LABOR MATTERS. Schedule 3.18 sets forth the
name, position, employment date, and 2001 compensation (base and bonus) of each
employee of the Company who earned $25,000 or more in 2001 or is anticipated to
earn $25,000 or more in 2002. The Company is not a party to any collective
bargaining agreement (whether industry wide or on a company level) or agreement
of any kind with any union or labor organization. There has not been any attempt
by any union or other labor organization to organize the employees of the
Company at any time in the past five (5) years. Except as disclosed in Schedule
3.18, the Company is not a party to or bound by any employment contract,
consulting agreement, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement. The Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
3.19. EMPLOYEE BENEFIT MATTERS.
------------------------
(a) Except as disclosed in Schedule 3.19, the Company
does not provide, nor is it obligated to provide, directly or indirectly, any
benefits for employees other than salaries, sales commissions and bonuses,
including, but not limited to, any pension, profit sharing, stock option,
11
retirement, bonus, hospitalization, insurance, severance, vacation or other
employee benefits (including any housing or social fund contributions) under any
practice, agreement or understanding.
(b) Each employee benefit plan maintained by or on
behalf of the Company or any other party (including any terminated pension
plans) which covers or covered any employees or former employees of the Company
(collectively, the "EMPLOYEE BENEFIT PLAN") is listed in Schedule 3.19. The
Company has delivered to Parent true and complete copies of all such plans and
any related documents. With respect to each such plan: (i) no litigation,
administrative or other proceeding or claim is pending, or to the knowledge of
the Shareholders, threatened or anticipated involving such plan; (ii) there are
no outstanding requests for information by participants or beneficiaries of such
plan; and (iii) such plan has been administered in compliance in all material
respects with all applicable laws and regulations.
(c) The Company has timely made payment in full of all
contributions to all of the Employee Benefit Plans which the Company was
obligated to make prior to the date hereof; and there are no contributions
declared or payable by the Company to any Employee Benefit Plan which, as of the
date hereof, has not been paid in full. The Company has no employees at the time
of merger, nor has it ever had any employees.
3.20. POSSESSION OF FRANCHISES, LICENSES, ETC. The Company: (a)
possess all material franchises, certificates, licenses, permits and other
authorizations (collectively, the "LICENSES") from governmental authorities,
political subdivisions or regulatory authorities that are necessary for the
ownership, maintenance and operation of its business in the manner presently
conducted; (b) are not in violation of any provisions thereof; and (c) have
maintained and amended, as necessary, all Licenses and duly completed all
filings and notifications in connection therewith.
3.21. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.21:
(i) the Company is not in violation, in any material respect, of any
Environmental Law (as defined below); (ii) the Company has received all permits
and approvals with respect to emissions into the environment and the proper
collection, storage, transport, distribution or disposal of Wastes (as defined
below) and other materials required for the operation of its business at present
operating levels; and (iii) the Company is not liable or responsible for any
material clean up, fines, liability or expense arising under any Environmental
Law, as a result of the disposal of Wastes or other materials in or on the
property of the Company (whether owned or leased), or in or on any other
property, including property no longer owned, leased or used by the Company. As
used herein, (a) "ENVIRONMENTAL LAWS" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree (foreign or domestic)
regulating, relating to, or imposing liability or standards of conduct
concerning, Wastes, or the environment; and (b) "WASTES" means and includes any
hazardous, toxic or dangerous waste, liquid, substance or material (including
12
petroleum products and derivatives), the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
3.22. INVENTORIES. At Closing, the Company and the Shareholders will
deliver to Parent a complete and accurate list, as of a date not more than five
(5) business days prior to the Closing Date, of the products, materials and
supplies and spare parts (the "INVENTORY") then owned by the Company. Except as
otherwise provided on Schedule 3.22, the Inventory, as of the Closing Date: (a)
will represent items of a quality and quantity usable and saleable in the
ordinary course of business at the book value reflected as of the Closing Date,
(b) will be free from defects, (c) will not be obsolete, (d) will conform in all
material respects to customary trade standards for such inventory in the
Company's current markets and (e) will be sold, subject to any applicable
reserves for inventory obsolescence shown on the Company's books and records
(which reserves are adequate and calculated consistent with past practice),
within two hundred forty (240) days of the Closing Date for an amount at least
equal to its book value. There are no express or implied warranty obligations of
the Company which, singularly or in the aggregate, will have a material adverse
effect on the business, properties or financial condition of the Company. As of
closing, the Company has no inventory items.
3.23. ACCOUNTS RECEIVABLE. On the Closing Date, the Company and the
Shareholders will deliver to Parent a complete and accurate list, as of a date
not more than five (5) business days prior to the Closing Date, of the accounts
and notes receivable due to the Company (including, without limitation,
receivables from advances to employees and the Shareholders), which includes an
aging of all accounts and notes receivable showing amounts due in thirty (30)
day aging categories (collectively, the "ACCOUNTS RECEIVABLES"). As of the
Closing Date, the Accounts Receivables: (a) will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business; (b) will be current and collectible net of any applicable
reserves shown on the Company's books and records (which reserves are adequate
and calculated consistently with past practice); (c) subject to such reserves,
will be collected in full, without any set-off, within one hundred fifty (150)
days after the Closing Date; and (d) are not and will not be subject to any
contest, claim, defense or right of set-off, other than rebates and returns in
the ordinary course of business. As of closing, the Company has no accounts
receivable.
3.24. AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as
disclosed on Schedule 3.24, and except as disclosed in the Company Financial
Statements, the Company is not a party to any contract, agreement, lease or
transaction with, or any other commitment to, (a) any Shareholder, (b) any
person related by blood, adoption or marriage to any Shareholder, (c) any
director or officer of the Company, (d) any corporation or other entity in which
any of the foregoing parties has, directly or indirectly, at least five percent
(5.0%) beneficial interest in the capital stock or other type of equity interest
in such corporation or other entity, or (e) any partnership in which any such
party is a general partner or a limited partner having a five percent (5%) or
more interest therein (any or all of the foregoing being herein referred to as a
"RELATED PARTY" and, collectively, as the "RELATED PARTIES"). Without limiting
the generality of the foregoing, except as set forth in Schedule 3.24, and
except as disclosed in the Company Financial Statements no Related Party,
directly or indirectly, owns or controls any assets or properties which are used
in the business of the Company.
13
3.25. BUSINESS PRACTICES. Except as disclosed on Schedule 3.25, the
Company has not, at any time, directly or indirectly, made any contributions or
payment, or provided any compensation or benefit of any kind, to any municipal,
county, state, federal or foreign governmental officer or official, or any other
person charged with similar public or quasi-public duties, or any candidate for
political office. The Company's books, accounts and records (including, without
limitation, customer files, product packaging and invoices) accurately describe
and reflect, in all material respects, the nature and amount of the Company's
products, purchases, sales and other transactions. Without limiting the
generality of the foregoing, the Company has not engaged, directly or
indirectly, in: (a) the practice known as "double-invoicing;" or (b) the
incorrect or misleading labeling, marketing or sale of refurbished goods as new
goods or the sale of rebuilt goods as original manufactured equipment.
3.26. CONDITION AND SUFFICIENCY OF ASSETS. The buildings and
equipment leased or owned by the Company are generally in good operating
condition and repair, and are adequate for the uses to which they are being put.
The buildings and equipment of the Company are sufficient for the continued
conduct of the Company's business after the Closing in substantially the same
manner as conducted prior to the Closing.
3.27. NOT USED.
--------
3.28. DIVIDENDS AND OTHER DISTRIBUTIONS. Schedule 3.28 sets forth the
dates and amounts of all dividends and other distributions declared, paid or
payable by the Company to the Shareholders between January 1, 1999 and the date
hereof, which Schedule 3.28 shall be updated as of the Closing Date to set forth
all dividends and other distributions through the Closing Date.
3.29. LITIGATION. There is no suit, action or proceeding pending, and
no person has overtly-threatened in a writing delivered to the Company or the
Shareholders to commence any suit, action or proceeding, against or affecting
the Company that would, individually or in the aggregate, have a material
adverse effect on the Company, nor is there any judgment, decree, injunction, or
order of any governmental entity or arbitrator outstanding against, or, to the
knowledge of the Company, pending investigation by any governmental entity
involving, the Company or any Shareholders that individually or in the aggregate
would have a material adverse effect on the Company.
3.30. FULL DISCLOSURE. No representation or warranty of the
Shareholders contained in this Agreement, and none of the statements or
information concerning the Company contained in this Agreement and the
Schedules, contains or will contain as of the date hereof and as of the Closing
Date any untrue statement of a material fact nor will such representations,
warranties, covenants or statements taken as a whole omit a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
14
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
-------------------------------------------------------
To induce the Shareholders to enter into this Agreement and to consummate
the transactions contemplated hereby, each of Parent and Merger Sub represent
and warrant to and covenants with the Shareholders as follows:
4.1. ORGANIZATION. Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Parent and each of its subsidiaries is entitled to own or lease
its properties and to carry on its business as and in the places where such
business is now conducted, and Parent and each of its subsidiaries is duly
licensed and qualified in all jurisdictions where the character of the property
owned by it or the nature of the business transacted by it makes such license or
qualification necessary, except where such failure would not result in a
material adverse effect on Parent or its subsidiaries.
4.2. CAPITALIZATION AND RELATED MATTERS.
----------------------------------
(a) Parent has authorized capital stock consisting of
50,000,000 shares of common stock, par value $.001 per share, of which
22,020,000 shares were issued and outstanding as of the date hereof, and
10,000,000 shares of preferred stock, none of which are issued. Parent owns all
of the outstanding capital stock of Merger Sub. The Parent Shares will be, when
issued, duly and validly authorized and fully paid and non-assessable, and will
be issued to the Shareholder free of all encumbrances, claims and liens
whatsoever. (b) Except as set forth in Schedule 4.2, and except for employee
stock options to purchase shares of the Parent's Common Stock, Parent does not
have outstanding any securities convertible into capital stock, nor any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock.
4.3. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
-------------------------------------------
(a) Subject to Parent's Board of Directors approval
contemplated by Section 7.6 hereof, the execution and delivery of this Agreement
and the performance of the transactions contemplated hereby have been duly and
validly authorized and approved by Parent, Merger Sub and this Agreement is a
valid and binding agreement of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms, except as such enforcement may be
limited by bankruptcy or similar laws affecting the enforcement of creditors'
rights generally, and the availability of equitable remedies.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub does not, and the consummation of the transactions
contemplated hereby will not, constitute a breach or violation of the charter or
bylaws of Parent or Merger Sub, or a default under any of the terms, conditions
or provisions of (or an act or omission that would give rise to any right of
termination, cancellation or acceleration under) any material note, bond,
mortgage, lease, indenture, agreement or obligation to which Parent or any of
15
its subsidiaries is a party, pursuant to which any of them otherwise receive
benefits, or by which any of their properties may be bound.
4.4. FINANCIAL STATEMENTS. Parent has delivered to the Company the
consolidated audited balance sheets of Parent as of December 31, 2001, the
consolidated unaudited balance sheet as of December 31, 2001, the consolidated
audited statement of income for the two fiscal years ended December 31, 2001,
and the unaudited statement of income for the six (6) months ended June 30, 2002
(collectively, the "PARENT FINANCIAL STATEMENTS"). The Parent Financial
Statements have been prepared in accordance with GAAP, applied on a consistent
basis (except that the unaudited statements do not contain all the disclosures
required by GAAP), and fairly reflect in all material respects the consolidated
financial condition of Parent and its subsidiaries as at the dates thereof and
the consolidated results of Parent's operations for the periods then ended.
Since June 30, 2002, there has been no material adverse change in the assets or
liabilities, in the business or condition, financial or otherwise, of Parent, or
in its results of operations.
4.5. LIABILITIES. Neither Parent nor any of its subsidiaries has any
material debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, except (a) those reflected on the Parent Financial
Statements, including the notes thereto, and (b) liabilities incurred in the
ordinary course of business since December 31, 2001, none of which have had or
will have a material adverse affect on the financial condition of Parent and its
subsidiaries taken as a whole.
4.6. CONTINGENCIES. There are no actions, suits, claims or
proceedings pending or, to the knowledge of Parent's management, threatened
against, by or affecting Parent or any of its subsidiaries in any court or
before any arbitrator or governmental agency which could have a material adverse
effect on Parent or its subsidiaries or which could materially and adversely
affect the right or ability of Parent to consummate the transactions
contemplated hereby. To the knowledge of Parent, there is no valid basis upon
which any such action, suit, claim or proceeding may be commenced or asserted
against Parent or its subsidiaries. There are no unsatisfied judgments against
Parent and no consent decrees or similar agreements to which Parent or its
subsidiaries is subject and which could have a material adverse effect on Parent
or its subsidiaries or which could materially and adversely affect the right or
ability of Parent to consummate the transactions contemplated hereby.
4.7. FULL DISCLOSURE. No representation or warranty of Parent
contained in this Agreement, and none of the statements or information
concerning Parent contained in this Agreement and the Schedules, contains or
will contain as of the date hereof and as of the Closing Date any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5. CONDUCT OF BUSINESS OF THE COMPANY PENDING CLOSING.
--------------------------------------------------
The Company and the Shareholders covenant and agree that between the date
hereof and the Closing Date:
16
5.1. BUSINESS IN THE ORDINARY COURSE. Except as set forth in
Schedule 5.1, the business of the Company shall be conducted only in the
ordinary course, and consistent with past practice. Without limiting the
generality of the foregoing, and except as set forth in Schedule 5.1 or as
otherwise approved in writing by Parent:
(a) the Company shall not enter into any contract,
agreement or other arrangement which would constitute a Material Contract,
except for contracts to sell or supply goods or services to customers in the
ordinary course of business at prices and on terms substantially consistent with
the prior operating practices of the Company;
(b) except for sales of personal property in the
ordinary course of its business, the Company shall not sell, assign, transfer,
mortgage, convey, encumber or otherwise dispose of, or cause the sale,
assignment, transfer, mortgage, conveyance, encumbrance or other disposition of
any of the assets or properties of the Company or any interest therein;
(c) the Company shall not acquire any material assets,
except expenditures made in the ordinary course of business as reasonably
necessary to enable the Company to conduct its normal business operations and to
maintain its normal inventory of goods and materials, at prices and on terms
substantially consistent with current market conditions and prior operating
practices;
(d) the Company shall maintain in full force and effect
all insurance policies referred to in Section 3.17 hereof or other insurance
equivalent thereto;
(e) the books, records and accounts of the Company
shall be maintained in the usual, regular and ordinary course of business on a
basis consistent with prior practices and in accordance with GAAP;
(f) the Company shall use its best efforts to preserve
its business organization, to preserve the good will of its suppliers, customers
and others having business relations with the Company, and to retain the
services of key employees and agents of the Company after the Closing Date on
terms acceptable to Parent;
(g) except as they may terminate in accordance with the
terms of this Agreement, the Company shall keep in full force and effect, and
not cause a default of any of its obligations under, each of its contracts and
commitments;
(h) the Company shall duly comply in all material
respects with all laws applicable to it and to the conduct of its business;
(i) the Company shall not create, incur or assume any
liability or indebtedness, except in the ordinary course of business consistent
with past practices;
(j) the Company shall not make or commit to make any
capital expenditures in excess of ten thousand dollars ($10,000) in the
aggregate;
17
(k) other than as contemplated in this Agreement, the
Company shall not apply any of its assets to the direct or indirect payment,
discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of the Shareholder or any Related Party; and
(l) neither the Company nor the Shareholders shall take
or omit to take any action which would render any of the Shareholders'
representations or warranties untrue or misleading, or which would be a breach
of any of the Shareholders' covenants.
5.2. NO MATERIAL CHANGES. The Company shall not, without the prior
written consent of Parent which consent shall not be unreasonably withheld,
materially alter its organization, capitalization, or financial structure,
practices or operations. Without limiting the generality of the foregoing:
(a) no change shall be made in the Articles of
Incorporation or Bylaws of the Company;
(b) no change shall be made in the authorized or issued
capital stock of the Company;
(c) the Company shall not issue or grant any right or
option to purchase or otherwise acquire any of its capital stock or other
securities;
(d) no dividend or other distribution or payment shall
be declared or made with respect to any of the capital stock of the Company; and
(e) no change shall be made affecting the banking
arrangements of the Company.
5.3. COMPENSATION. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of the Company, and no bonus or profit-sharing payment or
other arrangement (whether current or deferred) shall be made to or with any
such director, officer, employee or agent, except in the ordinary course of
business and consistent with prior practices.
5.4. NOTIFICATION. Each party to this Agreement shall promptly
notify the other parties in writing of the occurrence, or threatened occurrence,
of any event that would constitute a breach or violation of this Agreement by
any party or that would cause any representation or warranty made by the
notifying party in this Agreement to be false or misleading in any respect. The
Shareholders will promptly notify Parent of any event of which the Shareholders
obtain knowledge which could have a material adverse effect on the business,
assets, financial condition or prospects of the Company. The Shareholders shall
have the right to update the Schedules to this Agreement immediately prior to
Closing; provided, if such update discloses any breach of a representation,
warranty, covenant or obligation of the Shareholders and/or the Company, Parent
shall have the right to then exercise its available rights and remedies
hereunder.
18
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
-----------------------------------------
The obligation of the Shareholders and Parent to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, on
or before the Closing, of each of the following conditions; any or all of which
may be waived in whole or in part by the joint agreement of Parent Company and
the Shareholders:
6.1. ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving Parent, any of its subsidiaries, the Shareholders or the Company when
considered in light of the effect of the within transactions) shall constitute a
violation of law or give rise to material liability on the part of the
Shareholders, the Company or Parent or its subsidiaries.
6.2. CONSENTS. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including, without limitation, the consents listed on
Schedule 6.2.
7. CONDITIONS TO OBLIGATIONS OF PARENT.
-----------------------------------
All obligations of Parent to consummate the transactions contemplated by
this Agreement are subject to the fulfillment and satisfaction of each and every
of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by Parent:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
the Shareholders in connection with the transactions contemplated by this
Agreement shall be true, correct and complete in all material respects (except
for representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
7.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The Shareholders and
the Company shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by him
and/or by the Company prior to or on the Closing Date.
7.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of the Company shall
have occurred, no substantial part of the assets of the Company not
substantially covered by insurance shall have been destroyed due to fire or
other casualty, and no event shall have occurred which has had or will have a
material adverse effect on the business, assets, financial condition or
prospects of the Company.
19
7.4. CERTIFICATE OF THE SHAREHOLDERS. The Shareholders shall have
executed and delivered, or caused to be executed and delivered, to Parent one or
more certificates, dated the Closing Date, certifying in such detail as Parent
may reasonably request to the fulfillment and satisfaction of the conditions
specified in Sections 7.1 through 7.3 above.
7.5. BOARD APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the unanimous approval of the
Parent's Board of Directors.
7.6. SATISFACTORY RESULTS OF INSPECTION. The results of the
inspection referred to in Section 2.1 hereof shall be satisfactory to the Parent
in its sole discretion.
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
---------------------------------------------
All of the obligations of the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part by the Shareholders:
8.1. INTENTIONALLY OMITTED.
---------------------
8.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
Parent in connection with the transactions contemplated by this Agreement shall
be true and correct in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be
true, correct and complete in all respects) when made and shall be deemed to be
made again at and as of the Closing Date and shall be true at and as of such
time in all material respects (except for representations and warranties which
are by their terms qualified by materiality, which shall be true, correct and
complete in all respects).
8.3. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Parent and Merger
Sub shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by Parent
and/or Merger Sub prior to or on the Closing Date.
8.4. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of Parent and its
subsidiaries, taken as a whole, shall have occurred, no substantial part of the
assets of Parent and its subsidiaries, taken as a whole, shall have been
destroyed due to fire or other casualty, and no event shall have occurred which
has had, or will have a material adverse effect on the business, assets,
financial condition or prospects of Parent and its subsidiaries, taken as a
whole.
8.5. CERTIFICATE OF PARENT. Parent shall have delivered to the
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying to the fulfillment and satisfaction of the conditions
specified in Sections 8.1 through 8.3 above.
20
9. INDEMNITY.
---------
9.1. INDEMNIFICATION BY SHAREHOLDERS. Subject to Section 9.5, the
Shareholders (hereinafter, collectively, called the "SHAREHOLDER Indemnitors")
shall jointly and severally defend, indemnify and hold harmless Parent and
Merger Sub and their direct and indirect parent corporations, subsidiaries
(including the Company after Closing) and affiliates, their officers, directors,
employees and agents (hereinafter, collectively, called "PARENT INDEMNITEES")
against and in respect of any and all loss, damage, liability, fine, penalty,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement (collectively, "PARENT LOSSES"), suffered or incurred by any Parent
Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach
or non-fulfillment of any agreement of the Shareholders contained in this
Agreement or in any certificate, schedule, instrument or document delivered to
Parent by or on behalf of the Shareholders or the Company pursuant to the
provisions of this Agreement (without regard to materiality thresholds contained
therein); and
(b) any liabilities of the Company of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, (i) existing as of the date of the Balance
Sheet, and required to be shown therein in accordance with GAAP, to the extent
not reflected or reserved against in full in the Balance Sheet; or (ii) arising
or occurring between July 1, 2002 and the Closing Date, except for liabilities
arising in the ordinary course of business, none of which shall have a material
adverse effect on the Company.
9.2. INDEMNIFICATION BY PARENT. Subject to Section 9.5, Parent and
Merger Sub (hereinafter called the "PARENT INDEMNITOR") shall jointly and
severally defend, indemnify and hold harmless the Shareholders (hereinafter
called "SHAREHOLDER INDEMNITEES") against and in respect of any and all loss,
damage, liability, cost and expense, including reasonable attorneys' fees and
amounts paid in settlement (collectively, "SHAREHOLDER LOSSES"), suffered or
incurred by Shareholder Indemnitees by reason of or arising out of:
(a) any misrepresentation, breach of warranty or breach
or non-fulfillment of any material agreement of Parent contained in this
Agreement or in any other certificate, schedule, instrument or document
delivered to the Shareholders by or on behalf of Parent pursuant to the
provisions of this Agreement (without regard to materiality thresholds contained
therein); and
(b) any liabilities of the Company of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, arising from Parent's ownership or operation
of the Company after Closing, but only so long as such liability is not the
result of an act or omission of the Company or any Shareholder occurring prior
to the Closing. Parent Losses and Shareholder Losses are sometimes collectively
referred to as "INDEMNIFIABLE LOSSES."
9.3. DEFENSE OF CLAIMS.
-----------------
(a) Each party seeking indemnification hereunder (an
"INDEMNITEE"): (i) shall provide the other party or parties (the "INDEMNITOR")
written notice of any claim or action by a third party arising after the Closing
21
Date for which an Indemnitor may be liable under the terms of this Agreement,
within ten (10) days after such claim or action arises and is known to
Indemnitee, and (ii) shall give the Indemnitor a reasonable opportunity to
participate in any proceedings and to settle or defend any such claim or action.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by the Indemnitor. If the Indemnitor wishes to
assume the defense of such claim or action, the Indemnitor shall give written
notice to the Indemnitee within ten (10) days after notice from the Indemnitee
of such claim or action, and the Indemnitor shall thereafter assume the defense
of any such claim or liability, through counsel reasonably satisfactory to the
Indemnitee, provided that Indemnitee may participate in such defense at their
own expense, and the Indemnitor shall, in any event, have the right to control
the defense of the claim or action.
(b) If the Indemnitor shall not assume the defense of,
or if after so assuming it shall fail to defend, any such claim or action, the
Indemnitee may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitee, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitee for the
amount of all expenses, legal and otherwise, incurred by the Indemnitee in
connection with the defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against
any Indemnitee in any action covered by the indemnification hereunder, or any
lien attaches to any of the assets of any of the Indemnitee, the Indemnitor
shall immediately upon such entry or attachment pay such judgment in full or
discharge such lien unless, at the expense and direction of the Indemnitor, an
appeal is taken under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
Indemnitee is compelled to do so.
9.4. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. TIME LIMITATION. No party shall be responsible
hereunder for any Indemnifiable Loss unless the Indemnitee shall have provided
such party with written notice containing a reasonable description of the claim,
action or circumstances giving rise to such Indemnifiable Loss within three (3)
years after the Closing Date (the "INDEMNITY NOTICE PERIOD"); provided, however,
that:
(a) with respect to any Indemnifiable Loss resulting or
arising from any breach of a representation or warranty of the Shareholders
relating to taxes, or any tax liability of the Company arising or relating to
22
periods prior to the Closing Date, the Indemnity Notice Period shall extend for
the full duration of the statute of limitations; and
(b) there shall be no limit on the Indemnity Notice
Period for indemnity claims: (i) against the Shareholders for Indemnifiable
Losses arising or resulting from a breach of a representation or warranty
relating to Environmental Laws, or any liability which relates to the handling
or disposal of Wastes or the failure to comply with any Environmental Law; and
(ii) against any party based on fraud or intentional breach or
misrepresentation.
9.5.2. CAPS ON LOSSES. The aggregate liability of the
Shareholders after the Closing for Parent Losses shall not exceed an amount
equal to the Merger Consideration paid to the Shareholders. The aggregate
liability of Parent and Merger Sub after the Closing for Seller Losses shall not
exceed the Merger Consideration paid to the Shareholders.
9.5.3. BASKET. No party shall have any liability hereunder for
Indemnifiable Losses after the Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnifiable Losses for which the Shareholder or Parent and Merger Sub as a
group, as applicable, are responsible under this Agreement exceeds Twenty-Five
Thousand ($25,000) Dollars (the "BASKET"); provided that once such Basket is
exceeded for the Shareholders or Parent and Merger Sub as a group, as
applicable, the responsible party or parties shall be responsible for all
Indemnifiable Losses, from the first dollar as if such Basket never existed; and
further provided that this Section 9.5.3 shall not limit in any respect
indemnity claims: (a) based upon fraud or intentional breach or intentional
misrepresentation; (b) arising from a breach by the Parent Indemnitor of any
covenant contained in this Agreement; (c) arising from a breach by the
Shareholders of any representation or warranty contained in Section 3.2 hereof;
or (d) related to any tax or tax liability of the Company for periods prior to
the Closing Date.
10. TERMINATION.
-----------
10.1. TERMINATION. This Agreement may be terminated at any time on or
prior to the Closing:
(a) By mutual consent of Parent and the Shareholder; or
(b) At the election of Parent if: (i) Shareholder has
breached or failed to perform or comply with any of his representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 7 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been consummated by
August 31, 2002; or
(c) At the election of the Shareholders if: (i) Parent
or the Merger Sub has breached or failed to perform or comply with any of its
representations, warranties, covenants or obligations under this Agreement; or
(ii) any of the conditions precedent set forth in Section 6 or 8 is not
satisfied as and when required by this Agreement; or (iii) if the Closing has
not been consummated by August 31, 2002.
23
10.2. MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("TERMINATION NOTICE") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("TERMINATING PARTY") to the
other party or parties (collectively, the "TERMINATED PARTY"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (a) its obligations under Sections 2.2 and
2.3; or (b) liability for its intentional breach of any representation, warranty
or covenant contained herein, or its intentional failure to comply with the
terms and conditions of this Agreement or to perform its obligations hereunder.
11. MISCELLANEOUS.
-------------
11.1. NOTICES.
-------
(a) All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person, or upon the
expiration of four (4) days after the date sent, if sent by federal express (or
similar overnight courier service) to the parties at the following addresses:
(i) If to Parent of Merger Sub: Altrimega Health Corporation
5600 Bell Street, Suite 111
Amarillo, Texas 79106
Attn: Kelly Magee
with a copy to: Clayton E. Parker, Esq.
Kirkpatrick & Lockhart LLP
201 South Biscayne Blvd.
Suite 2000, Miami Center
Miami, Florida 33131
(ii) If to a Shareholder: The name and address as listed
on the SCHEDULE A attached
----------
hereto.
(b) Notices may also be given in any other manner
permitted by law, effective upon actual receipt. Any party may change the
address to which notices, requests, demands or other communications to such
party shall be delivered or mailed by giving notice thereof to the other parties
hereto in the manner provided herein.
24
11.2. SURVIVAL. Except as provided in the next sentence, the
representations, warranties, agreements and indemnifications of the parties
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive any investigation heretofore or
hereafter made by the parties and the consummation of the transactions
contemplated herein and shall continue in full force and effect after the
Closing, subject to the limitations of Section 9.5. The representations,
warranties and agreements of the Company contained in this Agreement shall not
survive the Closing.
11.3. COUNTERPARTS; INTERPRETATION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular section or paragraph. References to
"INCLUDING" means including without limiting the generality of any description
preceding such term. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.
11.4. GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Nevada, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or federal
courts in Horry County, South Carolina, U.S.A. Each of the parties hereby
irrevocably submits to the jurisdiction of any state or federal court sitting in
Horry County, South Carolina. Each party hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any such action in Horry County, South Carolina.
11.5. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors; provided,
however, that no Shareholder may assign this Agreement or any rights hereunder,
in whole or in part.
11.6. PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable. If any terms of this Agreement not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof shall constitute their agreement with
respect to the subject matter hereof and all such remaining terms shall remain
in full force and effect. To the extent legally permissible, any illegal,
invalid or unenforceable provision of this Agreement shall be replaced by a
25
valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
11.7. WAIVER. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on the
part of a party hereto to exercise, and no delay in exercising, any right, power
or remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
11.8. HEADINGS. The headings as to contents of particular paragraphs
of this Agreement are inserted for convenience only and shall not be construed
as a part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.9. EXPENSES. Except as otherwise expressly provided herein, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by Parent or the
Shareholder as each party incurs such expenses, and none of such expenses shall
be charged to or paid by the Company.
11.10. FINDER'S FEES. Parent represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the Parent to be paid for or on account of the transactions
contemplated hereby. The Shareholders represent to Parent that no broker, agent,
finder or other party has been retained by Shareholders or the Company in
connection with the transactions contemplated hereby and that no other fee or
commission has been agreed by the Shareholders or the Company to be paid for or
on account of the transactions contemplated hereby.
11.11. GENDER. Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.12. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
11.13. ATTORNEYS FEES. In the event of any litigation arising under
the terms of this Agreement, the prevailing party or parties shall be entitled
to recover its or their reasonable attorneys fees and court costs from the other
party or parties.
11.14. OPPORTUNITY TO HIRE COUNSEL; ROLE OF KIRKPATRICK & LOCKHART
LLP. The Shareholders acknowledges that they have been advised and have been
given an opportunity to hire counsel with respect to this Agreement and the
transactions contemplated hereby. The Shareholders further acknowledges that the
law firm of Kirkpatrick & Lockhart LLP has solely represented the Parent in
26
connection with this Agreement and the transactions contemplated hereby and no
other person.
11.15. TIME IS OF THE ESSENCE. It is understood and agreed among the
parties hereto that time is of the essence in this Agreement and this applies to
all terms and conditions contained herein.
11.16. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
27
IN WITNESS WHEREOF, the parties have executed this Agreement to be duly
executed by their duly authorized officers as of the day and year first above
written.
PARENT:
ALTRIMEGA HEALTH CORPORATION
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
ALTRIMEGA ACQUISITION CO.
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
THE COMPANY:
CREATIVE HOLDINGS, INC.
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
CHICORA BEACH HOLIDAY
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
John F. Smith, III
SEA CHILDREN'S TRUST 1, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
INTERNATIONAL RESORT & GOLF RESOURCES
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
DGI, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
DPI, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
HENDRIX & GANDY
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
Candy Horner
------------------------------------
Tom Horner
------------------------------------
David L. Gilbert
WOFFORD CAPITAL
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
Mary Jane Gandy
------------------------------------
Elizabeth Gandy
------------------------------------
Wilson Gandy
------------------------------------
Lynn S. Carr
CHICORA BEACH HOLIDAY
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
John F. Smith, III
SEA CHILDREN'S TRUST 1, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
DPI, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
David Gilbert
------------------------------------
Sam Puglia
ROGER VAN WIE FOR SEACOAST CHILD, TRUST
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
Forrest Truitt
------------------------------------
Townes Walker
QUICKSTEP, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
GREAT WEST, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
John W. Gandy
GANDY ASSOCIATES, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
GANDY FAMILY INVESTMENTS, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
CAPITAL PROPERTIES CONSULTANTS, LLC
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
------------------------------------
Sleepy Hollow Partners
RESERVED FOR INVESTMENT BANKERS
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
SCHEDULE A
----------
SHAREHOLDERS OF CREATIVE HOLDINGS, INC.
---------------------------------------
NAME NUMBER OF
SHARES
Chicora Beach Holiday 6,750,000
John F. Smith, III 3,375,000
Sea Children's Trust 1,350,000
International Resort & Golf Resources 540,000
DGI, LLC 607,500
DPI, LLC 135,000
Hendrix & Gandy 337,500
Candy & Tom Horner 540,000
David L. Gilbert 270,000
Wofford Capital 3,240,000
Mary Jane Gandy 135,000
Elizabeth Gandy 675,000
Wilson Gandy 675,000
Lynn S. Carr 337,500
Chicora Beach Holiday 2,200,000
John F. Smith, III 2,200,000
Sea Children's Trust 880,000
DPI, LLC 220,000
David Gilbert 440,000
Sam Puglia 2,200,000
Roger Van Wie For Seacoast Child. Trust 880,000
Forrest Truitt 880,000
Townes Walker 220,000
Quickstep, LLC 80,073,750
Great West LLC 80,073,750
John W. Gandy 20,073,750
Gandy Associates, LLC 20,000,000
Gandy Family Investments, LLC 40,000,000
Capital Properties Consultants, LLC 26,691,250
Sleepy Hollow Partners 4,000,000
Schedule A
SCHEDULE 3.24
An agreement to establish a web-site for the Company was made with and completed
by a related party to a shareholder. The total amount of the transaction was
$700.00, which was approved by the majority shareholder of the Parent.