EXCHANGE AGREEMENT
Between
WATERFORD STERLING CORPORATION
and
WATERFORD FLORIDA, INC.
Dated January 31, 2001
TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WATERFORD FLORIDA
1.01 Organization.................................1
1.02 Capitalization...............................1
1.03 Financial Statements.........................2
1.04 Information..................................2
1.05 Options and Warrants.........................2
1.06 Absence of Certain Changes or Events.........2
1.07 Title and Related Matters....................3
1.08 Litigation and Proceedings...................3
1.09 Contracts....................................3
1.10 Material Contract Defaults...................4
1.11 No Conflict With Other Instruments...........4
1.12 Governmental Authorizations..................4
1.13 Compliance With Laws and Regulations.........4
1.14 Insurance....................................4
1.15 Approval of Agreement........................4
1.16 Material Transactions or Affiliations........4
1.17 Waterford Florida Schedules..................5
1.18 Payroll Taxes and Corporate Taxes............6
1.19 Valid Obligation.............................6
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WATERFORD STERLING
2.01 Organization.................................6
2.02 Capitalization...............................6
2.03 Subsidiaries and Predecessor Corporations....6
2.04 Filings; Books and Records...................6
2.05 Information..................................6
2.06 Options and Warrants.........................7
2.07 Absence of Certain Changes or Events.........7
2.08 Title and Related Matters....................7
2.09 Litigation and Proceedings...................7
2.10 Contracts....................................7
2.11 Material Contract Defaults...................8
2.12 No Conflict With Other Instruments...........8
2.13 Governmental Authorizations..................8
2.14 Compliance With Laws and Regulations.........8
2.15 Approval of Agreement........................8
2.16 Continuity of Business Enterprises...........8
2.17 Material Transactions or Affiliations........8
2.18 Labor Relations..............................8
2.19 Waterford Sterling Schedules.................8
2.20 Valid Obligation.............................9
ARTICLE III PLAN OF EXCHANGE
3.01 The Exchange.................................9
3.02 Closing......................................9
3.03 Closing Events...............................9
3.04 Termination..................................9
ARTICLE IV SPECIAL COVENANTS
4.01 Access to Properties and Records............10
4.02 Delivery of Books and Records...............11
4.03 Third Party Consents and Certificates.......11
4.04 Consent of Waterford Florida Shareholders...11
4.05 Actions Prior to Closing....................11
4.06 Sales Under Rule 144 or 145, If Applicable..11
4.07 Indemnification.............................12
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF WATERFORD STERLING
5.01 Accuracy of Representations and Performance of
Covenants...................................12
5.02 Officer's Certificates......................12
5.03 No Material Adverse Change..................12
5.04 Approval by Waterford Florida Shareholders..12
5.05 No Governmental Prohibitions................13
5.06 Consents....................................13
5.07 Other Items.................................13
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF WATERFORD FLORIDA AND
THE WATERFORD FLORIDA SHAREHOLDERS
6.01 Accuracy of Representations and Performance of
Covenants...................................13
6.02 Officer's Certificate.......................13
6.03 No Material Adverse Change..................13
6.04 No Governmental Prohibition.................13
6.05 Consents....................................13
6.06 Other Items.................................14
ARTICLE VII MISCELLANEOUS
7.01 Brokers.....................................14
7.02 Governing Law...............................14
7.03 Notices.....................................14
7.04 Attorney's Fees.............................14
7.05 Confidentiality.............................14
7.06 Public Announcements and Filings............15
7.07 Schedules; Knowledge........................15
7.08 Third Party Beneficiaries...................15
7.09 Expenses....................................15
7.10 Entire Agreement............................15
7.11 Survival; Termination.......................15
7.12 Counterparts................................15
7.13 Amendment or Waiver.........................15
7.14 Best Efforts................................15
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement")
is entered into as of this 31st day of January, 2001, by and between WATERFORD
STERLING CORPORATION, a Delaware corporation (hereinafter referred to as
"Waterford Sterling") and WATERFORD FLORIDA, INC., a Nevada corporation
(hereinafter referred to as "Waterford Florida"), upon the following premises:
Premises
WHEREAS, Waterford Sterling, formerly Skreem.com Corporation, is a
publicly held corporation organized under the laws of the State of Delaware;
WHEREAS, Waterford Florida, formerly Waterford Sterling Corporation, is
a privately held corporation organized under the laws of the State of Nevada and
engaged in marketing and distributing furniture to the hotel industry;
WHEREAS, Waterford Sterling agrees to acquire 100% of the issued and
outstanding securities of Waterford Florida in exchange for the issuance of
certain shares of Waterford Sterling (the "Exchange") and Waterford Florida
agrees to use its best efforts to cause its shareholders (the "Waterford Florida
Shareholders") to exchange their securities of Waterford Florida on the terms
described herein; and
WHEREAS, Waterford Sterling and Waterford Florida desire to set forth
the terms of the Exchange, which is intended to constitute a tax-free
reorganization pursuant to the provisions of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WATERFORD FLORIDA
As an inducement to, and to obtain the reliance of Waterford Sterling,
except as set forth on the Waterford Florida Schedules (as hereinafter defined),
Waterford Florida represents and warrants as follows:
Section 1.01 Organization. Waterford Florida is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being conducted,
including qualification to do business as a foreign corporation in the states or
countries in which the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification, except where
failure to be so qualified would not have a material adverse effect on its
business. Included in the Waterford Florida Schedules are complete and correct
copies of the restated articles of incorporation, and bylaws of Waterford
Florida as in effect on the date hereof. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Waterford Florida's articles of incorporation
or bylaws. Waterford Florida has taken all actions required by law, its articles
of incorporation, or otherwise to authorize the execution and delivery of this
Agreement. Waterford Florida has full power, authority, and legal right and has
taken all action required by law, its articles of incorporation, and otherwise
to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of Waterford
Florida consists of 30,000,000 shares of common stock, $.001 par value per
share, of which 7,000,000 shares are currently issued and outstanding. All
issued and outstanding shares are legally issued, fully paid, and non-assessable
and not issued in violation of the preemptive or other rights of any person.
1
Section 1.03 Financial Statements.
--------------------
(a) Included in the Waterford Florida Schedules is the unaudited
balance sheet and the related statements of operations of Waterford
Florida as of December 31, 2000.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles. The Waterford Florida balance
sheet presents a true and fair view as of the date of such balance
sheet of the financial condition of Waterford Florida. Waterford
Florida did not have, as of the dates of such balance sheets, except as
and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in the balance sheets or the notes thereto, prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of Waterford Florida in accordance with generally
accepted accounting principles.
(c) Waterford Florida has no liabilities with respect to the payment
of any federal, state, county,local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(d) Waterford Florida has filed all state, federal or local income
and/or franchise tax returns required to be filed by it from inception
to the date hereof. Each of such income tax returns reflects the taxes
due for the period covered thereby, except for amounts which, in the
aggregate, are immaterial.
(e) The books and records, financial and otherwise, of Waterford
Florida are in all material respects complete and correct and have been
maintained in accordance with good business and accounting practices.
(f) All of Waterford Florida's assets are reflected on its financial
statements, and, except as set forth in the Waterford Florida Schedules
or the financial statements of Waterford Florida or the notes thereto,
Waterford Florida has no material liabilities, direct or indirect,
matured or unmatured, contingent or otherwise.
Section 1.04 Information. The information concerning Waterford Florida set
forth in this Agreement and in the Waterford Florida Schedules is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
In addition, Waterford Florida has fully disclosed in writing to Waterford
Sterling (through this Agreement or the Waterford Florida Schedules) all
information relating to matters involving Waterford Florida or its assets or its
present or past operations or activities which (i) indicated or may indicate, in
the aggregate, the existence of a greater than $25,000 liability or diminution
in value, (ii) have led or may lead to a competitive disadvantage on the part of
Waterford Florida or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on Waterford Florida, its
assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing , including, but not limited to,
information relating to governmental, employee, environmental, litigation and
securities matters and transactions with affiliates.
Section 1.05 Options or Warrants. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
Waterford Florida common stock, except options, warrants, calls or commitments,
if any, to which Waterford Florida is not a party and by which it is not bound.
Section 1.06 Absence of Certain Changes or Events. Except as set forth in
this Agreement or the Waterford Florida Schedules, since December 31, 2000:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Waterford Florida or
(ii) any damage, destruction, or loss to Waterford Florida (whether or
not covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or condition of Waterford
Florida;
(b) Waterford Florida has not (i) declared or made, or agreed to
declare or make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or purchased or redeemed,
or agreed to purchase or redeem, any of its capital stock; (ii) waived
any rights of value which in the aggregate are outside of the ordinary
course of business or material considering the business of Waterford
Florida; (iii) made any material change in its method of management,
operation or accounting; (iv) entered into any other material
transaction other than sales in the ordinary course of its business;
(v) made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vi) increased the rate of
compensation payable or to become payable by it to any of its officers
or directors or any of its salaried employees whose monthly
compensation exceeds $1,000; or (vii) made any increase in any profit
sharing, bonus, deferred compensation, insurance, pension, retirement,
or other employee benefit plan, payment, or arrangement made to, for,
or with its officers, directors, or employees;
2
(c) Waterford Florida has not (i) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except as disclosed herein and
except liabilities incurred in the ordinary course of business; (ii)
paid or agreed to pay any material obligations or liability (absolute
or contingent) other than current liabilities reflected in or shown on
the most recent Waterford Florida balance sheet, and current
liabilities incurred since that date in the ordinary course of business
and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iii) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except assets,
properties, or rights not used or useful in its business which, in the
aggregate have a value of less than $1,000), or canceled, or agreed to
cancel, any debts or claims (except debts or claims which in the
aggregate are of a value of less than $1,000); (iv) made or permitted
any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material,
considering the business of Waterford Florida; or (v) issued,
delivered, or agreed to issue or deliver any stock, bonds or other
corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and
(d) to the best knowledge of Waterford Florida, Waterford Florida has
not become subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect the business,
operations, properties, assets, or condition of Waterford Florida.
Section 1.07 Title and Related Matters. Waterford Florida has good and
marketable title to all of its properties, inventory, interests in properties,
and assets, real and personal, which are reflected in the most recent Waterford
Florida balance sheet or acquired after that date (except properties, inventory,
interests in properties, and assets sold or otherwise disposed of since such
date in the ordinary course of business) free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Waterford Florida Schedules. Except as set forth in the Waterford Florida
Schedules, Waterford Florida owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with Waterford Florida's business. Except as set forth in the
Waterford Florida Schedules, no third party has any right to, and Waterford
Florida has not received any notice of infringement of or conflict with asserted
rights of others with respect to any product, technology, data, trade secrets,
know-how, propriety techniques, trademarks, service marks, trade names, or
copyrights which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse effect
on the business, operations, financial condition, income, or business prospects
of Waterford Florida or any material portion of its properties, assets, or
rights.
Section 1.08 Litigation and Proceedings. Except as set forth in the
Waterford Florida Schedules, there are no actions, suits, proceedings, or
investigations pending or, to the knowledge of Waterford Florida after
reasonable investigation, threatened by or against Waterford Florida or
affecting Waterford Florida or its properties, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind. Waterford Florida does not have any knowledge
of any material default on its part with respect to any judgment, order,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 1.09 Contracts.
---------
(a) Except as included or described in the Waterford Florida Schedules,
there are no "material" contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Waterford
Florida is a party or by which it or any of its assets, products,
technology, or properties are bound other than those incurred in the
ordinary course of business (as used in this Agreement, a "material"
contract, agreement, franchise, license agreement, debt instrument or
commitment is one which (i) will remain in effect for more than six (6)
months after the date of this Agreement or (ii) involves aggregate
obligations of at least twenty-five thousand dollars ($25,000));
3
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which Waterford Florida is a party or by which its
properties are bound and which are material to the operations of
Waterford Florida taken as a whole are valid and enforceable by
Waterford Florida in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally;
(c) Waterford Florida is not a party to or bound by, and the properties
of Waterford Florida are not subject to any contract, agreement, other
commitment or instrument; any charter or other corporate restriction;
or any judgment, order, writ, injunction, decree, or award which
materially and adversely affects, the business operations, properties,
assets, or condition of Waterford Florida; and
(d) Except as included or described in the Waterford Florida Schedules
or reflected in the most recent Waterford Florida balance sheet,
Waterford Florida is not a party to any oral or written (i) contract
for the employment of any officer or employee which is not terminable
on 30 days, or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or
retirement plan, (iii) agreement, contract, or indenture relating to
the borrowing of money, (iv) guaranty of any obligation, other than one
on which Waterford Florida is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for collection and
other guaranties of obligations which, in the aggregate do not exceed
more than one year or providing for payments in excess of $25,000 in
the aggregate; (vi) collective bargaining agreement; or (vii) agreement
with any present or former officer or director of Waterford Florida.
Section 1.10 Material Contract Defaults. Waterford Florida is not in
default in any material respect under the terms of any outstanding contract,
agreement, lease, or other commitment which is material to the business,
operations, properties, assets or condition of Waterford Florida and there is no
event of default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which Waterford Florida has not taken
adequate steps to prevent such a default from occurring.
Section 1.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Waterford Florida is a party or to which any
of its properties or operations are subject.
Section 1.12 Governmental Authorizations. Except as set forth in the
Waterford Florida Schedules, Waterford Florida has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, no authorization, approval, consent,
or order of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and delivery by
Waterford Florida of this Agreement and the consummation by Waterford Florida of
the transactions contemplated hereby.
Section 1.13 Compliance With Laws and Regulations. Except as set forth
in the Waterford Florida Schedules, to the best of its knowledge Waterford
Florida has complied with all applicable statutes and regulations of any
federal, state, or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets, or condition of Waterford Florida, or
except to the extent that noncompliance would not result in the occurrence of
any material liability for Waterford Florida.
Section 1.14 Insurance. All of the properties of Waterford Florida are
fully insured for their full replacement cost.
Section 1.15 Approval of Agreement. The board of directors of Waterford
Florida has authorized the execution and delivery of this Agreement by Waterford
Florida and has approved this Agreement and the transactions contemplated
hereby, and will recommend to the Waterford Florida Shareholders that the
Exchange be accepted by them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
Waterford Florida Schedules is a description of every contract, agreement, or
arrangement between Waterford Florida and any predecessor and any person who was
at the time of such contract, agreement, or arrangement an officer, director, or
person owning of record, or known by Waterford Florida to own beneficially, 5%
or more of the issued and outstanding common stock of Waterford Florida and
which is to be performed in whole or in part after the date hereof or which was
entered into not more than three years prior to the date hereof. Except as
disclosed in the Waterford Florida Schedules or otherwise disclosed herein, no
officer, director, or 5% shareholder of Waterford Florida has, or has had since
inception of Waterford Florida, any known interest, direct or indirect, in any
transaction with Waterford Florida which was material to the business of
Waterford Florida. There are no commitments by Waterford Florida, whether
written or oral, to lend any funds, or to borrow any money from, or enter into
any other transaction with, any such affiliated person.
4
Section 1.17 Waterford Florida Schedules. Waterford Florida has
delivered to Waterford Sterling the following schedules, which are collectively
referred to as the "Waterford Florida Schedules" and which consist of separate
schedules dated as of the date of execution of this Agreement, all certified by
the chief executive officer of Waterford Florida as complete, true, and correct
as of the date of this Agreement in all material respects:
(a) a schedule containing complete and correct copies of the articles
of incorporation, and bylaws of Waterford Florida in effect as of the date
of this Agreement;
(b) a schedule containing the financial statements of Waterford
Florida identified in paragraph 1.03(a);
(c) a Schedule 1.17(c) containing a list indicating the name and
address of each shareholder of Waterford Florida together with the number
of shares owned by him, her or it;
(d) a schedule containing a description of all real property owned by
Waterford Florida, together with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance, claim, or equity interest of
any nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
Waterford Florida carries on or proposes to carry on its business (except
those which, in the aggregate, are immaterial to the present or proposed
business of Waterford Florida);
(f) a schedule listing the accounts receivable and notes and other
obligations receivable of Waterford Florida as of December 31, 2000, or
thereafter other than in the ordinary course of business of Waterford
Florida, indicating the debtor and amount, and classifying the accounts to
show in reasonable detail the length of time, if any, overdue, and stating
the nature and amount of any refunds, set offs, reimbursements, discounts,
or other adjustments, which are in the aggregate material and due to or
claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other
obligations payable of Waterford Florida as of December 31, 2000, or that
arose thereafter other than in the ordinary course of the business of
Waterford Florida, indicating the creditor and amount, classifying the
accounts to show in reasonable detail the length of time, if any, overdue,
and stating the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments, which in the aggregate are material and
due to or claimed by Waterford Florida respecting such obligations;
(h) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of Waterford Florida since December 31, 2000, required to be
provided pursuant to section 1.07 hereof; and
(i) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Waterford
Florida Schedules by Sections 1.01 through 1.16.
Waterford Florida shall cause the Waterford Florida Schedules and the
instruments and data delivered to Waterford Sterling hereunder to be promptly
updated after the date hereof up to and including the Closing .
It is understood and agreed that not all of the schedules referred to
above have been completed or are available to be furnished by Waterford Florida.
Waterford Florida shall have until February 28, 2001 to provide such schedules.
If Waterford Florida cannot or fails to do so, or if Waterford Sterling acting
reasonably finds any such schedules or updates provided after the date hereof to
be unacceptable according to the criteria set forth below, Waterford Sterling
may terminate this Agreement by giving written notice to Waterford Florida
within five (5) days after the schedules or updates were due to be produced or
were provided. For purposes of the foregoing, Waterford Sterling may consider a
disclosure in the Waterford Florida Schedules to be "unacceptable" only if that
item would have a material adverse impact on the financial statements listed in
Section 1.03(a), taken as a whole.
5
Section 1.18 Payroll Taxes and Corporate Taxes. All of the payroll
taxes and corporate taxes owed by Waterford Florida up to the date of Closing
shall remain the responsibility of Waterford Florida.
Section 1.19 Valid Obligation. This Agreement and all agreements and
other documents executed by Waterford Florida in connection herewith constitute
the valid and binding obligation of Waterford Florida, enforceable in accordance
with its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF WATERFORD STERLING
As an inducement to, and to obtain the reliance of Waterford Florida
and the Waterford Florida Shareholders, except as set forth in the Waterford
Sterling Schedules (as hereinafter defined), Waterford Sterling represents and
warrants as follows:
Section 2.01 Organization. Waterford Sterling is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the Waterford
Sterling Schedules are complete and correct copies of the certificate of
incorporation and bylaws of Waterford Sterling as in effect on the date hereof.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, violate any provision of
Waterford Sterling's certificate of incorporation or bylaws. Waterford Sterling
has taken all action required by law, its certificate of incorporation, its
bylaws, or otherwise to authorize the execution and delivery of this Agreement,
and Waterford Sterling has full power, authority, and legal right and has taken
all action required by law, its certificate of incorporation, bylaws, or
otherwise to consummate the transactions herein contemplated.
Section 2.02 Capitalization. Waterford Sterling's authorized
capitalization consists of 30,000,000 shares of common stock, $.01 par value of
which 14,637,315 shares are issued and outstanding. All issued and outstanding
shares are legally issued, fully paid, and non-assessable and not issued in
violation of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. Waterford
Sterling does not have any predecessor corporation(s) or subsidiaries, and does
not own, beneficially or of record, any shares of any other corporation, except
as disclosed in Schedule 2.03. For purposes hereinafter, the term "Waterford
Sterling" also includes those subsidiaries, if any, set forth on Schedule 2.03.
Section 2.04 Filings: Books and Records.
(a) Waterford Sterling has no liabilities with respect to the payment
of any federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(b) The books and records, financial and otherwise, of Waterford
Sterling are in all material aspects complete and correct and have been
maintained in accordance with good business and accounting practices.
Section 2.05 Information. The information concerning Waterford Sterling
set forth in this Agreement and the Waterford Sterling Schedules is complete and
accurate in all material respects and does not contain any untrue statements of
a material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
In addition, Waterford Sterling has fully disclosed in writing to Waterford
Florida (through this Agreement or the Waterford Sterling Schedules) all
information relating to matters involving Waterford Sterling or its assets or
its present or past operations or activities which (i) indicated or may
indicate, in the aggregate, the existence of a greater than $250,000 liability
or diminution in value, (ii) have led or may lead to a competitive disadvantage
on the part of Waterford Sterling or (iii) either alone or in aggregation with
other information covered by this Section, otherwise have led or may lead to a
material adverse effect on the transactions contemplated herein or on Waterford
Sterling, its assets, or its operations or activities as presently conducted or
as contemplated to be conducted after the Closing , including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
6
Section 2.06 Options or Warrants. There are no existing options,
warrants, calls, or commitments of any character relating to the authorized and
unissued stock of Waterford Sterling, except as described in Schedule 2.06 (the
"Existing Rights").
Section 2.07 Absence of Certain Changes or Events. Since December 31,
2000.
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of Waterford Sterling or
(ii) any damage, destruction or loss to Waterford Sterling (whether or
not covered by insurance) materially and adversely affecting the
business, operations, properties, assets or condition of Waterford
Sterling;
(b) Waterford Sterling has not (i) declared or made, or agreed to
declare or make any payment of dividends or distributions of any assets
of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock; (ii) waived any
rights of value which in the aggregate are outside of the ordinary
course of business or material considering the business of Waterford
Sterling; (iii) made any material change in its method of management,
operation, or accounting; or (iv) entered into any transactions or
agreements other than in the ordinary course of business.
(c) to the best knowledge of Waterford Sterling, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future, may adversely affect, the business,
operations, properties, assets or condition of Waterford Sterling.
Section 2.08 Title and Related Matters. Waterford Sterling has good and
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Waterford
Sterling balance sheet or acquired after that date (except properties,
inventory, interest in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges, or encumbrances except (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not and
will not materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the Waterford Sterling Schedules. Except as set forth in the Waterford Sterling
Schedules, Waterford Sterling owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with Waterford Sterling's business. Except as set forth in the
Waterford Sterling Schedules, no third party has any right to, and Waterford
Sterling has not received any notice of infringement of or conflict with
asserted rights of others with respect to any product, technology, data, trade
secrets, know-how, propriety techniques, trademarks, service marks, trade names,
or copyrights which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse effect
on the business, operations, financial condition, income, or business prospects
of Waterford Sterling or any material portion of its properties, assets, or
rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or, to the knowledge Waterford Sterling
after reasonable investigation, threatened by or against Waterford Sterling or
affecting Waterford Sterling or its properties, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind except as disclosed in Schedule 2.09.
Waterford Sterling has no knowledge of any default on its part with respect to
any judgement, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator, or governmental agency or instrumentality or any circumstance
which after reasonable investigation would result in the discovery of such
default.
Section 2.10 Contracts.
----------
(a) Waterford Sterling is not a party to, and its assets, products,
technology and properties are not bound by, any material contract,
franchise, license agreement, agreement, debt instrument or other
commitments whether such agreement is in writing or oral, except as
disclosed in Schedule 2.10.
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which Waterford Sterling is a party or by which
its properties are bound and which are material to the operations of
Waterford Sterling taken as a whole are valid and enforceable by
Waterford Sterling in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally; and
7
(c) Waterford Sterling is not a party to or bound by, and the
properties of Waterford Sterling are not subject to any contract,
agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction,
decree, or award which materially and adversely affects, the business
operations, properties, assets, or condition of Waterford Sterling.
Section 2.11 Material Contract Defaults. Waterford Sterling is not in
default in any material respect under the terms of any outstanding contract,
agreement, lease, or other commitment which is material to the business,
operations, properties, assets or condition of Waterford Sterling and there is
no event of default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which Waterford Sterling has not taken
adequate steps to prevent such a default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which
Waterford Sterling is a party or to which any of its assets or operations are
subject.
Section 2.13 Governmental Authorizations. Waterford Sterling has all
licenses, franchises, permits, and other governmental authorizations, that are
legally required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, of registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by Waterford Sterling of this Agreement and the consummation by
Waterford Sterling of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
knowledge, Waterford Sterling has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity or
agency thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
Waterford Sterling or except to the extent that noncompliance would not result
in the occurrence of any material liability. This compliance includes, but is
not limited to, the filing of all reports to date with federal and state
securities authorities.
Section 2.15 Approval of Agreement. The board of directors of Waterford
Sterling has authorized the execution and delivery of this Agreement by
Waterford Sterling and has approved this Agreement and the transactions
contemplated hereby.
Section 2.16 Continuity of Business Enterprises. Waterford Sterling has
no commitment or present intention to liquidate Waterford Florida or sell or
otherwise dispose of a material portion of Waterford Florida's business or
assets following the consummation of the transactions contemplated hereby.
Section 2.17 Material Transactions or Affiliations. Except as disclosed
herein and in the Waterford Sterling Schedules, there exists no contract,
agreement or arrangement between Waterford Sterling and any predecessor and any
person who was at the time of such contract, agreement or arrangement an
officer, director, or person owning of record or known by Waterford Sterling to
own beneficially, 5% or more of the issued and outstanding common stock of
Waterford Sterling and which is to be performed in whole or in part after the
date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor 5% shareholder of Waterford Sterling
has, or has had since inception of Waterford Sterling, any known interest,
direct or indirect, in any such transaction with Waterford Sterling which was
material to the business of Waterford Sterling. Waterford Sterling has no
commitment, whether written or oral, to lend any funds to, borrow any money
from, or enter into any other transaction with, any such affiliated person.
Section 2.18 Labor Relations. Waterford Sterling has not had work
stoppage resulting from labor problems. To the knowledge of Waterford Sterling,
no union or other collective bargaining organization is organizing or attempting
to organize any employee of Waterford Sterling.
Section 2.19 Waterford Sterling Schedules. Waterford Sterling has
delivered to Waterford Florida the following schedules, which are collectively
referred to as the "Waterford Sterling Schedules" and which consist of separate
schedules, which are dated the date of this Agreement, all certified by the
chief executive officer of Waterford Sterling to be complete, true, and accurate
in all material respects as of the date of this Agreement:
8
(a) a schedule containing complete and accurate copies of the
certificate of incorporation and bylaws of Waterford Sterling as in effect
as of the date of this Agreement;
(b) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of Waterford Sterling since September 30, 2000, required to be
provided pursuant to section 2.07 hereof; and
(c) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Waterford
Sterling Schedules by Sections 2.01 through 2.18.
Waterford Sterling shall cause the Waterford Sterling Schedules and the
instruments and data delivered to Waterford Florida hereunder to be promptly
updated after the date hereof up to and including the Closing .
Section 2.20 Valid Obligation. This Agreement and all agreements and
other documents executed by Waterford Sterling in connection herewith constitute
the valid and binding obligation of Waterford Sterling, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing (as defined in Section 3.02),
Waterford Sterling shall issue 7,000,000 shares of Waterford Sterling common
stock to Waterford Florida to obtain 100% of the stock and ownership of
Waterford Florida which shall constitute 100% of the issued and outstanding
shares of Waterford Florida Common Stock. Each Waterford Florida Shareholder who
shall elect to accept the exchange offer described herein (the "Accepting
Shareholders"), shall assign, transfer and deliver, free and clear of all liens,
pledges, encumbrances, charges, restrictions or known claims of any kind,
nature, or description, the number of shares of common stock of Waterford
Florida set forth on Schedule 1.17(c) attached hereto, in the aggregate
constituting 100% of the issued and outstanding shares of common stock of
Waterford Florida held by each of such shareholders; the objective of such
Exchange being the acquisition by Waterford Sterling of 100% of the issued and
outstanding common stock of Waterford Florida. In the event the Exchange is
consummated, as provided in Section 5.05, but less than 100% of the common stock
of is delivered to Waterford Sterling, the number of shares issuable by
Waterford Sterling to the Waterford Florida Shareholders as described above
shall be reduced proportionately. At the Closing, each Waterford Florida
Shareholders shall, on surrender of his certificate or certificates representing
such Waterford Florida shares to Waterford Sterling or its registrar or transfer
agent, be entitled to receive a certificate or certificates evidencing his
proportionate interest in the Waterford Sterling shares. Upon consummation of
the transaction contemplated herein, assuming participation by all of the
Waterford Florida Shareholders, all of the shares of capital stock of Waterford
Florida shall be held by Waterford Sterling. Upon consummation of the
transaction contemplated herein, Waterford Sterling Corporation shall change its
name to Waterford Florida, Inc.
Section 3.02 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall take place at a mutually agreeable time and
place.
Section 3.03 Closing Events. At the Closing, Waterford Sterling, Waterford
Florida and each of the Accepting Shareholders shall execute, acknowledge, and
deliver (or shall ensure to be executed, acknowledged, and delivered) any and
all certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be so
delivered at or prior to the Closing, together with such other items as may be
reasonably requested by the parties hereto and their respective legal counsel in
order to effectuate or evidence the transactions contemplated hereby. Upon
Closing, this Agreement shall become effective as of December 31, 2000.
Section 3.04 Termination.
(a) This Agreement may be terminated by the board of directors of either
Waterford Sterling or Waterford Florida at any time prior to the Closing if:
9
(i) there shall be any actual or threatened action or
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the
judgement of such board of directors, made in good faith and
based upon the advice of its legal counsel, makes it
inadvisable to proceed with the Exchange; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions (which does not
include the Securities and Exchange Commission) or in the
judgement of such board of directors, made in good faith and
based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will
be obtained only on a condition or conditions which would be
unduly burdensome, making it inadvisable to proceed with the
Exchange.
In the event of termination pursuant to this paragraph (a) of Section 3.04, no
obligation, right or liability shall arise hereunder, and each party shall bear
its own costs and expenses incurred by it in connection with the negotiation,
drafting, and execution of this Agreement and the transactions herein
contemplated.
(b) This Agreement may be terminated by the board of directors of Waterford
Sterling at any time prior to the Closing if:
(i) there shall have been any change after the date of the
latest balance sheet of Waterford Florida in the assets,
properties, business, or financial condition of Waterford
Florida, which could have a materially adverse effect on the
financial statements of Waterford Florida listed in Section
1.04(a) taken as a whole, except any changes disclosed in the
Waterford Florida Schedules;
(ii) the board of directors of Waterford Sterling determines
in good faith that one or more of Waterford Sterling's
conditions to Closing has not occurred, through no fault of
Waterford Sterling.
(iii) Waterford Sterling takes the termination action
specified in Section 1.16 as a result of Waterford Florida's
Schedules or updates thereto which Waterford Sterling finds
unacceptable; or
(iv) Waterford Florida shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties
of Waterford Florida contained herein shall be inaccurate in
any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice
thereof.
If this Agreement is terminated pursuant to this paragraph (b) of Section
3.04, this Agreement shall be of no further force or effect, and no obligation,
right or liability shall arise hereunder, except that Waterford Florida shall
bear its own costs as well as the reasonable costs of Waterford Sterling in
connection with the negotiation, preparation, and execution of this Agreement
and qualifying the offer and sale of securities to be issued in the Exchange
under the registration requirements, or exemption from the registration
requirements, of state and federal securities laws.
(c) This Agreement may be terminated by the board of directors of Waterford
Florida at any time prior to the Closing if Waterford Sterling shall fail to
comply in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of Waterford
Sterling contained herein shall be inaccurate in any material respect, where
such noncompliance or inaccuracy has not been cured within thirty (30) days
after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (c) of
Section 3.04, Waterford Florida must provide written notice of its intention to
terminate and state reasons for such termination, whereby Waterford Sterling
shall have thirty (30) days to cure such items that are unacceptable to
Waterford Florida. In the event Waterford Sterling shall fail to cure such
items, this Agreement shall be of no further force or effect, and no obligation,
right or liability shall arise hereunder.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. Waterford Sterling and
Waterford Florida will each afford to the officers and authorized
representatives of the other full access to the properties, books and records of
Waterford Sterling or Waterford Florida, as the case may be, in order that each
may have a full opportunity to make such reasonable investigation as it shall
desire to make of the affairs of the other, and each will furnish the other with
such additional financial and operating data and other information as to the
business and properties of Waterford Sterling or Waterford Florida, as the case
may be, as the other shall from time to time reasonably request.
10
Section 4.02 Delivery of Books and Records. At the Closing, Waterford
Florida shall deliver to Waterford Sterling the originals of the corporate
minute books, books of account, contracts, records, and all other books or
documents of Waterford Florida now in the possession of Waterford Florida or its
representatives.
Section 4.03 Third Party Consents and Certificates. Waterford Sterling
and Waterford Florida agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.
Section 4.04 Consent of Waterford Florida Shareholders. Waterford
Florida shall use its best efforts to obtain the consent of all Waterford
Florida shareholders to participate in the Exchange.
Section 4.05 Actions Prior to Closing.
From and after the date of this Agreement until the Closing and except as
set forth in the Waterford Sterling Schedules or Waterford Florida Schedules or
as permitted or contemplated by this Agreement, Waterford Sterling (subject to
paragraph (d) below) and Waterford Florida respectively, will each:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear
and tear and damage due to casualty;
(iii)maintain in full force and effect insurance comparable in amount and
in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all obligations
and duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental
authorities.
Section 4.06 Sales Under Rule 144 or 145, If Applicable.
-------------------------------------------
(a) Waterford Sterling will use its best efforts to at all times comply
with the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including timely filing of all
periodic reports required under the provisions of the Exchange Act and
the rules and regulations promulgated thereunder.
(b) Upon being informed in writing by any such person holding
restricted stock of Waterford Sterling that such person intends to sell
any shares under Rule 144, Rule 145 or Regulation S promulgated under
the Securities Act (including any rule adopted in substitution or
replacement thereof), Waterford Sterling will certify in writing to
such person that it has filed all of the reports required to be filed
by it under the Exchange Act to enable such person to sell such
person's restricted stock under Rule 144, 145 or Regulation S, as may
be applicable in the circumstances, or will inform such person in
writing that it has not filed any such report or reports.
(c) If any certificate representing any such restricted stock is
presented to Waterford Sterling's transfer agent for registration of
transfer in connection with any sale theretofore made under Rule 144,
145 or Regulation S, provided such certificate is duly endorsed for
transfer by the appropriate person(s) or accompanied by a separate
stock power duly executed by the appropriate person(s) in each case
with reasonable assurances that such endorsements are genuine and
effective, and is accompanied by an opinion of counsel satisfactory to
Waterford Sterling and its counsel that the stock transfer has complied
with the requirements of Rule 144, 145 or Regulation S, as the case may
be, Waterford Sterling will promptly instruct its transfer agent to
register such shares and to issue one or more new certificates
representing such shares to the transferee and, if appropriate under
the provisions of Rule 144, 145 or Regulation S, as the case may be,
free of any stop transfer order or restrictive legend. The provisions
of this Section 4.06 shall survive the Closing and the consummation of
the transactions contemplated by this Agreement.
11
Section 4.07 Indemnification.
(a) Waterford Florida hereby agrees to indemnify Waterford Sterling and
each of the officers, agents and directors of Waterford Sterling as of
the date of execution of this Agreement against any loss, liability,
claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentations made under
Article I of this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement.
(b) Waterford Sterling hereby agrees to indemnify Waterford Florida and
each of the officers, agents, and directors of Waterford Florida and
each of the Waterford Florida Shareholders as of the date of execution
of this Agreement against any loss, liability, claim, damage, or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made under Article II of
this Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF WATERFORD STERLING
The obligations of Waterford Sterling under this Agreement are subject
to the satisfaction, at or before the Closing, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by Waterford Florida in this Agreement
were true when made and shall be true at the Closing with the same force and
effect as if such representations and warranties were made at and as of the
Closing (except for changes therein permitted by this Agreement). Waterford
Florida shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Waterford Florida
prior to or at the Closing. Waterford Sterling shall be furnished with a
certificate, signed by a duly authorized executive officer of Waterford Florida
and dated the Closing, to the foregoing effect.
Section 5.02 Officer's Certificate. Waterford Sterling shall have been
furnished with a certificate dated the Closing and signed by a duly authorized
officer of Waterford Florida to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of Waterford
Florida threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the Waterford Florida Schedules, by or against Waterford
Florida, which might result in any material adverse change in any of the assets,
properties, business, or operations of Waterford Florida.
Section 5.03 No Material Adverse Change. Prior to the Closing , there
shall not have occurred any change in the financial condition, business, or
operations of Waterford Florida nor shall any event have occurred which, with
the lapse of time or the giving of notice, is determined to be unacceptable
using the criteria set forth in Section 1.19.
Section 5.04 Approval by Waterford Florida Shareholders. The Exchange
shall have been approved, and shares delivered in accordance with Section 3.01,
by the holders of not less than one hundred percent (100%) of the outstanding
common stock of Waterford Florida, unless a lesser number is agreed to by
Waterford Sterling.
12
Section 5.05 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of Waterford Sterling and Waterford Florida after the Closing on the
basis as presently operated shall have been obtained.
Section 5.07 Other Items.
------------
(a) Waterford Sterling shall have received a list of Waterford
Florida's shareholders containing the name, address, and number of
shares held by each Waterford Florida shareholder as of the date of
Closing, certified by an executive officer of Waterford Florida as
being true, complete and accurate; and
(b) Waterford Sterling shall have received such further opinions,
documents, certificates or instruments relating to the transactions
contemplated hereby as Waterford Sterling may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF WATERFORD FLORIDA
AND THE FLORIDA SHAREHOLDERS
The obligations of Waterford Florida and the Waterford Florida
Shareholders under this Agreement are subject to the satisfaction, at or before
the Closing, of the following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by Waterford Sterling in this Agreement
were true when made and shall be true as of the Closing (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing. Additionally,
Waterford Sterling shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by
Waterford Sterling and the directors of Waterford Sterling shall have approved
the Exchange and the related transactions described herein.
Waterford Florida shall have been furnished with certificates, signed by duly
authorized executive officers of Waterford Sterling and dated the Closing , to
the foregoing effect.
Section 6.02 Officer's Certificate. Waterford Florida shall have been
furnished with certificates dated the Closing and signed by duly authorized
executive officers of Waterford Sterling, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of
Waterford Sterling threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement or,
to the extent not disclosed in the Waterford Sterling Schedules, by or against
Waterford Sterling, which might result in any material adverse change in any of
the assets, properties or operations of Waterford Sterling.
Section 6.03 No Material Adverse Change. Prior to the Closing, there
shall not have occurred any change in the financial condition, business or
operations of Waterford Sterling nor shall any event have occurred which, with
the lapse of time or the giving of notice, is determined to be unacceptable
using the criteria set forth in Section 2.20.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of Waterford Sterling and Waterford Florida after the Closing on the
basis as presently operated shall have been obtained.
13
Section 6.06 Other Items. Waterford Florida shall have received further
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Waterford Florida may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Brokers. Waterford Sterling and Waterford Florida agree
that, except as set out on Schedule 7.01 attached hereto, there were no finders
or brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution or consummation of this Agreement. Waterford Sterling
and Waterford Florida each agree to indemnify the other against any claim by any
third person other than those described above for any commission, brokerage, or
finder's fee arising from the transactions contemplated hereby based on any
alleged agreement or understanding between the indemnifying party and such third
person, whether express or implied from the actions of the indemnifying party.
Section 7.02 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States,.
Section 7.03 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to Waterford Sterling, to: Waterford Sterling Corporation
200 Knowles Avenue
Winter Park, Florida 32789
Attn: Thomas Tedrow
With copies to: David Loev, Esq.
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, Texas 77002
If to Waterford Florida, to: Waterford Florida, Inc.
200 Knowles Avenue
Winter Park, Florida 32789
Attn: Thomas Tedrow
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.04 Attorney's Fees. In the event that either party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the prevailing party shall be reimbursed by
the losing party for all costs, including reasonable attorney's fees, incurred
in connection therewith and in enforcing or collecting any judgement rendered
therein.
Section 7.05 Confidentiality. Each party hereto agrees with the other
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
14
Section 7.06 Public Announcements and Filings. Unless required by
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.07 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.08 Third Party Beneficiaries. This contract is strictly
between Waterford Sterling and Waterford Florida, and, except as specifically
provided, no director, officer, stockholder (other than the Waterford Florida
Shareholders), employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
Section 7.09 Expenses. Subject to Sections 3.04 and 7.04 above, whether
or not the Exchange is consummated, each of Waterford Sterling and Waterford
Florida will bear their own respective expenses, including legal, accounting and
professional fees, incurred in connection with the Exchange or any of the other
transactions contemplated hereby.
Section 7.10 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.11 Survival; Termination. The representations, warranties,
and covenants of the respective parties shall survive the Closing and the
consummation of the transactions herein contemplated for a period of two years.
Section 7.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.13 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing , this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.14 Best Efforts. Subject to the terms and conditions herein
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
15
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers, hereunto duly
authorized, as of the date first-above written.
ATTEST: WATERFORD STERLING CORPORATION.
/s/ Jacob Nyguen
- -------------------------------- BY: /s/ Thomas Tedrow
Secretary or Assistant Secretary ---------------------------------
Thomas Tedrow, President
ATTEST: WATERFORD FLORIDA, INC.
/s/ Jacob Nyguen BY: /s/ Thomas Tedrow
- -------------------------------- ---------------------------------
Secretary or Assistant Secretary Thomas Tedrow, President
The undersigned shareholders of Waterford Florida, Inc. hereby agree to
participate in the Exchange on the terms set forth above. Subject to Section
7.11 above, each of the undersigned hereby represents and affirms that he has
read each of the representations and warranties of Waterford Florida, Inc. set
out in Article I hereof and that, to the best of his knowledge, all of such
representations and warranties are true and correct.
/s/ Thomas Tedrow, individually
---------------------
/s/ Michael Reynolds, individually
---------------------
/s/ Quoc Nguyen, individually
---------------------
---------------------,individually
The undersigned officer of Waterford Sterling Corporation hereby agree
to approve the foregoing Agreement and the transactions contemplated thereby.
Subject to Section 7.11 above, the undersigned hereby represents and affirms
that he has read each of the representations and warranties of Waterford
Sterling Corporation set out in Article II hereof and that, to the best of his
knowledge, all of such representations and warranties are true and correct.
/s/ Thomas Tedrow
--------------------------------
THOMAS TEDROW, President