STOCK EXCHANGE AGREEMENT
Agreement dated as of February 9, 2000 between WAMEX Holdings, Inc., a New
York corporation, ("WAMEX"), on the one hand, and M. Richard Cutler ("Cutler"),
Brian A. Lebrecht ("Lebrecht") and Vi Bui ("Bui") on the other hand. Each of
Cutler, Lebrecht, and Bui shall be referred to as a "Shareholder" and
collectively as the "Shareholders."
1. THE ACQUISITION.
1.1_ Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, WAMEX shall sell
the WAMEX Shares (defined below) to the Shareholders and the Shareholders shall
purchase the WAMEX Shares from WAMEX, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. WAMEX will exchange 47,500 shares of its
restricted common stock (the "WAMEX Shares") for 570,000 shares of the Common
Stock of Conchology, Inc. ("Conchology"), representing 95% of the outstanding
common shares of Conchology (the "Conchology Shares"). The WAMEX Shares shall
be issued and delivered to the Shareholders as set forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the WAMEX
Shares for the Conchology Shares (the "Closing") shall take place at the offices
of the Cutler Law Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA
92660 no later than the close of business (Orange County California time) on
Thursday, February 10, 2000 or at such other place, date and time as the parties
may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholders
shall deliver the following to WAMEX:
1. Certificates representing the Conchology Shares, duly endorsed for
transfer to WAMEX and accompanied by appropriate stock powers; the Shareholders
shall immediately change those certificates for, and to deliver to WAMEX at the
Closing, a certificate representing the Conchology Shares registered in the name
of WAMEX (without any legend or other reference to any Encumbrance other than
appropriate federal securities law limitations).
2. The documents contemplated by Section 3.
3. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholders at the Closing and any other documents or
records relating to Conchology's business reasonably requested by WAMEX in
connection with this Agreement.
2.3 Deliveries by WAMEX. At the Closing, WAMEX shall deliver the
following to the Shareholders:
a. The WAMEX Shares for further delivery to the Shareholders as contemplated
by section 1.
2. The documents contemplated by Section 4.
3. All other documents, instruments and writings required by this Agreement
to be delivered by WAMEX at the Closing.
3. CONDITIONS TO WAMEX'S OBLIGATIONS.
The obligations of WAMEX to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by WAMEX:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits WAMEX's
acquisition of the Conchology Shares or the WAMEX Shares or that will require
any divestiture as a result of WAMEX's acquisition of the Conchology Shares or
that will require all or any part of the business of WAMEX to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on WAMEX or
Conchology if this Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholders set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholders shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of WAMEX's acquisition of the Conchology Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, the
Shareholders, and each of them, shall have resigned as an officer, director and
employee of Conchology.
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholders to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholders:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits WAMEX's
acquisition of the Conchology Shares or the Shareholder's acquisition of the
WAMEX Shares or that will require any divestiture as a result of WAMEX's
acquisition of the Shares or the Shareholder's acquisition of the WAMEX Shares
or that will require all or any part of the business of WAMEX or Conchology to
be held separate and no litigation or proceedings seeking the issuance of such
an injunction, order or decree or seeking to impose substantial penalties on
WAMEX or Conchology if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of WAMEX set forth in this Agreement shall be
true and complete in all material respects as of the Closing Date as though made
at such time, and (b) WAMEX shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of WAMEX's acquisition of the Conchology Shares and the
Shareholder's acquisition of the WAMEX Shares shall have been obtained and shall
be in full force and effect.
4.4 Exchange of shares held by Conchology shareholders. WAMEX hereby
agrees, represents, and warrants that, upon the receipt of a request from any
shareholder of Conchology, WAMEX will exchange that shareholder's shares of
Conchology for restricted shares of WAMEX at the rate of one (1) WAMEX share for
every twelve (12) Conchology shares, resulting in the issuance of an aggregate
of 2,500 WAMEX restricted shares. A list of shareholders is attached at Exhibit
A.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
The Shareholders represent and warrant to WAMEX that, to the Knowledge of
the Shareholders (which limitation shall not apply to Section 5.3), and except
as set forth in a Conchology Disclosure Letter:
5.1 Organization of Conchology; Authorization. Conchology is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Nevada. This Agreement constitutes a valid and binding
obligation of the Shareholders, enforceable against them in accordance with its
terms.
5.2 Capitalization. The authorized capital stock of Conchology
consists of 22,000,000 authorized shares, consisting of 20,000,000 common
shares, par value $0.001, and 2,000,000 preferred shares, par value $0.001, of
which 600,000 common shares and no preferred shares are presently issued and
outstanding. No shares have been registered under state or federal securities
laws. As of the Closing Date, all of the issued and outstanding shares of
common stock of Conchology are validly issued, fully paid and non-assessable.
As of the Closing Date there will not be outstanding any warrants, options or
other agreements on the part of Conchology obligating Conchology to issue any
additional shares of common or preferred stock or any of its securities of any
kind. Except as otherwise set forth herein, Conchology will not issue any
shares of capital stock from the date of this Agreement through the Closing
Date.
5.3 No Conflict as to Conchology. Neither the execution and delivery of
this Agreement nor the consummation of the sale of the Conchology Shares to
WAMEX will (a) violate any provision of the certificate of incorporation or
by-laws of Conchology or (b) violate, be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under any agreement to which Conchology is a party or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to Conchology.
5.4 Ownership of Conchology Shares. The delivery of certificates to
WAMEX provided in Section 2.2 will result in WAMEX's immediate acquisition of
record and beneficial ownership of the Conchology Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws. There are
no outstanding options, rights, conversion rights, agreements or commitments of
any kind relating to the issuance, sale or transfer of any Equity Securities or
other securities of Conchology.
5.5 No Conflict as to Conchology and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of the sale of the
Conchology Shares to WAMEX will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of Conchology or any
of its Subsidiaries or (b) violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any of its
obligations under, or cause the acceleration of the maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any
Encumbrance upon any property or assets of Conchology or any of its
Subsidiaries under, any material agreement or commitment to which Conchology or
any of its Subsidiaries is a party or by which any of their respective property
or assets is bound, or to which any of the property or assets of Conchology or
any of its Subsidiaries is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other Governmental
Body applicable to Conchology or any of its Subsidiaries except, in the case of
violations, conflicts, defaults, terminations, accelerations or Encumbrances
described in clause (b) of this Section 5.5, for such matters which are not
likely to have a material adverse effect on the business or financial condition
of Conchology and its Subsidiaries, taken as a whole.
5.6 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by Conchology or WAMEX or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by Conchology or the consummation of the sale of the Conchology Shares
to WAMEX.
5.7 Other Consents. No consent of any Person is required to be obtained
by Conchology or WAMEX to the execution, delivery and performance of this
Agreement or the consummation of the sale of the Conchology Shares to WAMEX,
including, but not limited to, consents from parties to leases or other
agreements or commitments, except for any consent which the failure to obtain
would not be likely to have a material adverse effect on the business and
financial condition of Conchology or WAMEX.
5.8 Financial Statements. Conchology has delivered to WAMEX
consolidated balance sheets of Conchology and its Subsidiaries as at September
30, 1999, and statements of income and changes in financial position for the
period from inception to the period then ended, together with the report thereon
of Conchology's independent accountant (the "Conchology Financial Statements").
5.9 Title to Properties. Either Conchology or one of its Subsidiaries
owns all the material properties and assets that they purport to own (real,
personal and mixed, tangible and intangible), including, without limitation, all
the material properties and assets reflected in the Conchology Financial
Statements, and all the material properties and assets purchased or otherwise
acquired by Conchology or any of its Subsidiaries since the date of the
Conchology Financial Statements. All properties and assets reflected in the
Conchology Financial Statements are free and clear of all material Encumbrances
and are not, in the case of real property, subject to any material rights of
way, building use restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever except, with respect to all such properties
and assets, (a) mortgages or security interests shown on the Conchology
Financial Statements as securing specified liabilities or obligations, with
respect to which no default (or event which, with notice or lapse of time or
both, would constitute a default) exists, and all of which are listed in the
Conchology Disclosure Letter, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the
Conchology Financial Statements (such mortgages and security interests being
limited to the property or assets so acquired), with respect to which no default
(or event which, with notice or lapse of time or both, would constitute a
default) exists, (c) as to real property, (i) imperfections of title, if any,
none of which materially detracts from the value or impairs the use of the
property subject thereto, or impairs the operations of Conchology or any of its
Subsidiaries and (ii) zoning laws that do not impair the present or anticipated
use of the property subject thereto, and (d) liens for current taxes not yet
due. The properties and assets of Conchology and its Subsidiaries include all
rights, properties and other assets necessary to permit Conchology and its
Subsidiaries to conduct Conchology's business in all material respects in the
same manner as it is conducted on the date of this Agreement.
5.10 No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by Conchology or any of its
Subsidiaries is subject to any governmental decree or order to be sold or is
being condemned, expropriated or otherwise taken by any Governmental Body or
other Person with or without payment of compensation therefor, which action is
likely to have a material adverse effect on the business or financial condition
of WAMEX and its Subsidiaries, taken as a whole.
5.11 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Conchology or any of its Subsidiaries which is
likely to have a material adverse effect on the business or financial condition
of Conchology, WAMEX and any of their Subsidiaries, taken as whole, or which
would require a payment by Conchology or its subsidiaries in excess of $2,000
in the aggregate or which questions or challenges the validity of this
Agreement. Neither Conchology nor any or its Subsidiaries is subject to any
judgment, order or decree that is likely to have a material adverse effect on
the business or financial condition of Conchology, WAMEX or any of their
Subsidiaries, taken as a whole, or which would require a payment by Conchology
or its subsidiaries in excess of $2,000 in the aggregate.
5.12 Absence of Certain Changes. Since the date of the Conchology Financial
Statements, neither Conchology nor any of its Subsidiaries has:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Conchology and its Subsidiaries, taken as a
whole, or made any disposition of any of its material properties or assets other
than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
3. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
11. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
12. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $2,000 in the aggregate;
13. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
15. entered into any collective bargaining or union contract or agreement;
or
16. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Conchology
and its subsidiaries taken as a whole.
5.13 No Material Adverse Change. Since the date of the Conchology Financial
Statements, there has not been any material adverse change in the business or
financial condition of Conchology and its Subsidiaries taken as a whole.
5.14 Contracts and Commitments. Neither Conchology nor any of its
Subsidiaries is a party to any:
1. Contract or agreement (other than purchase or sales orders entered into
in the ordinary course of business) involving any liability on the part of
Conchology or one of its Subsidiaries of more than $2,000 and not cancelable by
Conchology or the relevant Subsidiary (without liability to Conchology or such
Subsidiary) within 60 days;
2. Except with respect to the lease on its business location, lease of
personal property involving annual rental payments in excess of $2,000 and not
cancelable by Conchology or the relevant Subsidiary (without liability to
Conchology or such Subsidiary) within 90 days;
3. Except with respect to the options referenced above, Employee bonus,
stock option or stock purchase, performance unit, profit-sharing, pension,
savings, retirement, health, deferred or incentive compensation, insurance or
other material employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired employees of
Conchology or any of its Subsidiaries;
4. Commitment, contract or agreement that is currently expected by the
management of Conchology to result in any material loss upon completion or
performance thereof;
5. Contract, agreement or commitment that is material to the business of
Conchology and its Subsidiaries, taken as a whole, with any officer, employee,
agent, consultant, advisor, salesman, sales representative, value added
reseller, distributor or dealer; or
6. Employment agreement or other similar agreement that contains any
severance or termination pay, liabilities or obligations.
All such contracts and agreements are in full force and effect. Neither
Conchology nor any or its Subsidiaries is in breach of, in violation of or in
default under, any agreement, instrument, indenture, deed of trust, commitment,
contract or other obligation of any type to which Conchology or any of its
Subsidiaries is a party or is or may be bound that relates to the business of
Conchology or any of its Subsidiaries or to which any of the assets or
properties of Conchology or any of its Subsidiaries is subject, the effect of
which breach, violation or default is likely to materially and adversely affect
the business or financial condition of Conchology and its Subsidiaries, taken as
a whole. WAMEX has not guaranteed or assumed and specifically does not guarantee
or assume any obligations of Conchology or any of its Subsidiaries.
5.15 Labor Relations. Neither Conchology nor any of its Subsidiaries is a
party to any collective bargaining agreement. Except for any matter which is not
likely to have a material adverse effect on the business or financial condition
of Conchology and its Subsidiaries, taken as a whole, (a) Conchology and each of
its Subsidiaries is in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice, (b) there is no unfair
labor practice complaint against Conchology or any of its Subsidiaries pending
before the National Labor Relations Board, (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against Conchology
or any of its Subsidiaries, (d) no representation question exists respecting the
employees of Conchology or any of its Subsidiaries, (e) neither Conchology nor
any of its Subsidiaries has experienced any strike, work stoppage or other labor
difficulty, and (f) no collective bargaining agreement relating to employees of
Conchology or any of its Subsidiaries is currently being negotiated.
5.16 Employee Benefit Plans. No material employee pension and welfare
benefit plans covering employees of Conchology is (1) a multi-employer plan as
defined in Section 3(37) of ERISA, or (2) a defined benefit plan as defined in
Section 3(35) of ERISA, any listed individual account pension plan is duly
qualified as tax exempt under the applicable sections of the Code, each listed
benefit plan and related funding arrangement, if any, has been maintained in all
material respects in compliance with its terms and the provisions of ERISA and
the Code.
5.17 Compliance with Law. The operations of Conchology and its Subsidiaries
have been conducted in accordance with all applicable laws and regulations of
all Governmental Bodies having jurisdiction over them, except for violations
thereof which are not likely to have a material adverse effect on the business
or financial condition of Conchology and its Subsidiaries, taken as a whole, or
which would not require a payment by Conchology or its Subsidiaries in excess
of $2,000 in the aggregate, or which have been cured. Neither Conchology nor
any of its Subsidiaries has received any notification of any asserted present or
past failure by it to comply with any such applicable laws or regulations.
Conchology and its Subsidiaries have all material licenses, permits, orders or
approvals from the Governmental Bodies required for the conduct of their
businesses, and are not in material violation of any such licenses, permits,
orders and approvals. All such licenses, permits, orders and approvals are in
full force and effect, and no suspension or cancellation of any thereof has been
threatened.
5.18 Tax Matters.
1. Conchology and each of its Subsidiaries (1) has filed all nonconsolidated
and noncombined Tax Returns and all consolidated or combined Tax Returns that
include only Conchology and/or its Subsidiaries and not Seller or its other
Affiliates (for the purposes of this Section 5.19, such tax Returns shall be
considered nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and has paid any Tax due through the date hereof with
respect to the time periods covered by such nonconsolidated and noncombined Tax
Returns and shall timely pay any such Taxes required to be paid by it after the
date hereof with respect to such Tax Returns and (2) shall prepare and timely
file all such nonconsolidated and noncombined Tax Returns required to be filed
after the date hereof and through the Closing Date and pay all Taxes required to
be paid by it with respect to the periods covered by such Tax Returns; (B) all
such Tax Returns filed pursuant to clause (A) after the date hereof shall, in
each case, be prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with such Tax
Return most recently filed in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not reflect any new
elections or the adoption of any new accounting methods or conventions or other
similar items, except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
2. All consolidated or combined Tax Returns (except those described in
subparagraph (a) above) required to be filed by any person through the date
hereof that are required or permitted to include the income, or reflect the
activities, operations and transactions, of Conchology or any of its
Subsidiaries for any taxable period have been timely filed, and the income,
activities, operations and transactions of Conchology and Subsidiaries have
been properly included and reflected thereon. Conchology shall prepare and file,
or cause to be prepared and filed, all such consolidated or combined Tax Returns
that are required or permitted to include the income, or reflect the activities,
operations and transactions, of Conchology or any Subsidiary, with respect to
any taxable year or the portion thereof ending on or prior to the Closing Date,
including, without limitation, Conchology's consolidated federal income tax
return for such taxable years. Conchology will timely file a consolidated
federal income tax return for the taxable year ended December 31, 1999 and such
return shall include and reflect the income, activities, operations and
transactions of Conchology and Subsidiaries for the taxable period then ended,
and hereby expressly covenants and agrees to file a consolidated federal income
tax return, and to include and reflect thereon the income, activities,
operations and transactions of Conchology and Subsidiaries for the taxable
period through the Closing Date. All Tax Returns filed pursuant to this
subparagraph (b) after the date hereof shall, in each case, to the extent that
such Tax Returns specifically relate to Conchology or any of its Subsidiaries
and do not generally relate to matters affecting other members of Conchology's
consolidated group, be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and conventions) with the
Tax Return most recently filed in the relevant jurisdictions prior to the date
hereof, except as otherwise required by law or regulation. Conchology has paid
or will pay all Taxes that may now or hereafter be due with respect to the
taxable periods covered by such consolidated or combined Tax Returns.
3. Neither Conchology nor any of its Subsidiaries has agreed, or is
required, to make any adjustment (x) under Section 481(a) of the Code by reason
of a change in accounting method or otherwise or (y) pursuant to any provision
of the Tax Reform Act of 1986, the Revenue Act of 1987 or the Technical and
Miscellaneous Revenue Act of 1988.
4. Neither Conchology nor any of its Subsidiaries or any predecessor or
Affiliate of the foregoing has, at any time, filed a consent under Section
341(f)(1) of the Code, or agreed under Section 341(f)(3) of the Code, to have
the provisions of Section 341(f)(2) of the Code apply to any sale of its stock.
5. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to Conchology or its Subsidiaries, or their assets or
operations and no power of attorney granted by Conchology or any of its
Subsidiaries with respect to any Tax matter is currently in force.
6. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to Conchology, its Subsidiaries
or their assets or operations.
7. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
8. No property of Conchology is "tax-exempt use property " within the
meaning of Section 168(h) of the Code nor property that Conchology and/or its
Subsidiaries will be required to treat as being owned by another person pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act of 1986.
9. There have been delivered or made available to WAMEX true and complete
copies of all income Tax Returns (or with respect to consolidated or combined
returns, the portion thereof) and any other Tax Returns requested by WAMEX as
may be relevant to Conchology, its Subsidiaries, or their assets or operations
for any and all periods ending after December 31, 1998, or for any Tax years
which are subject to audit or investigation by any taxing authority or entity.
10. There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Conchology or its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
5.19 Environmental Matters.
1. At all times prior to the date hereof, Conchology and its Subsidiaries
have complied in all material respects with applicable environmental laws,
orders, regulations, rules and ordinances relating to the Properties (as
hereinafter defined), the violation of which would have a material adverse
effect on the business or financial condition of Conchology and its
Subsidiaries, taken as a whole, or which would require a payment by Conchology
or its Subsidiaries in excess of $2,000 in the aggregate, and which have been
duly adopted, imposed or promulgated by any legislative, executive,
administrative or judicial body or officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that are material
to the operations of Conchology and its Subsidiaries, taken as a whole, are in
full force and effect.
3. Neither Conchology nor any of its Subsidiaries has released or caused to
be released on or about the properties currently owned or leased by Conchology
or any of its Subsidiaries (the "Properties") any (i) pollutants, (ii)
contaminants, (iii) "Hazardous Substances," as that term is defined in Section
101(14) of the Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term in defined in Section 9001 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended,
which would be required to be remediated by any governmental agency with
jurisdiction over the Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date hereof, which
remediation would have a material adverse effect on the business or financial
condition of Conchology and its Subsidiaries, taken as a whole.
5.20 Brokers or Finders. Conchology and the Shareholders have not employed
any broker or finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the sale of the
Conchology Shares to WAMEX.
5.21 Absence of Certain Commercial Practices. Neither Conchology nor any of
its Subsidiaries has, directly or indirectly, paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent, government official or other party, in the United States or
any other country, which is in any manner related to the business or operations
of Conchology or its Subsidiaries, which Conchology or one of its Subsidiaries
knows or has reason to believe to have been illegal under any federal, state or
local laws of the United States or any other country having jurisdiction; and
neither Conchology nor any of its Subsidiaries has participated, directly or
indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers in violation of any applicable law or regulation.
5.22 Transactions with Directors and Officers. Conchology and its
Subsidiaries do not engage in business with any Person in which any of
Conchology's directors or officers has a material equity interest. No director
or officer of Conchology owns any property, asset or right which is material to
the business of Conchology and its Subsidiaries, taken as a whole.
5.23 Borrowing and Guarantees. Conchology and its Subsidiaries (a) do not
have any indebtedness for borrowed money, (b) are not lending or committed to
lend any money (except for advances to employees in the ordinary course of
business), and (c) are not guarantors or sureties with respect to the
obligations of any Person.
6. REPRESENTATIONS AND WARRANTIES OF WAMEX.
WAMEX represents and warrants to the Shareholders that, to the Knowledge of
WAMEX (which limitation shall not apply to Section 6.3), and except as set forth
in a WAMEX Disclosure Letter:
6.1 Organization of WAMEX; Authorization. WAMEX is a corporation duly
organized, validly existing and in good standing under the laws of Delaware with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
WAMEX and this Agreement constitutes a valid and binding obligation of WAMEX;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of WAMEX consists of
100,000,000 shares of common stock, par value $0.012 per share. As of January
31, 2000, WAMEX had approximately 28,000,000 shares of common stock issued and
outstanding. As of the Closing Date, all of the issued and outstanding shares
of common stock of WAMEX are validly issued, fully paid and non-assessable. The
Common Stock of WAMEX is presently listed and trading on the Nasdaq
Over-the-Counter Bulletin Board under the symbol "WAMX."
6.3 Ownership of WAMEX Shares. The delivery of certificates to
Conchology provided in Section 2.3 will result in the Shareholders immediate
acquisition of record and beneficial ownership of the WAMEX Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
6.4 No Conflict as to WAMEX and Subsidiaries. Neither the execution
and delivery of this Agreement nor the consummation of the sale of the WAMEX
Shares to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of WAMEX or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of WAMEX or any of its Subsidiaries under, any material
agreement or commitment to which WAMEX or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of WAMEX or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to WAMEX or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of WAMEX and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by WAMEX or Conchology or
any of either of their Subsidiaries in connection with the execution, delivery
and performance of this Agreement by WAMEX or the consummation of the sale of
the WAMEX Shares to the Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by Conchology or WAMEX to the execution, delivery and performance of this
Agreement or the consummation of the sale of the WAMEX Shares to the
Shareholders, including, but not limited to, consents from parties to leases or
other agreements or commitments, except for any consent which the failure to
obtain would not be likely to have a material adverse effect on the business and
financial condition of Conchology or WAMEX.
6.7 Financial Statements. WAMEX has delivered to the Shareholders
consolidated balance sheets of WAMEX and its Subsidiaries as at December 31,
1999 and 1998, and statements of income and changes in financial position for
each of the years in the two-year period then ended, together with the report
thereon of WAMEX's independent accountant (the "WAMEX Financial Statements").
Such WAMEX Financial Statements and notes fairly present the consolidated
financial condition and results of operations of WAMEX and its Subsidiaries as
at the respective dates thereof and for the periods therein referred to, all in
accordance with generally accepted United States accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto, and shall be utilizable in any SEC filing in compliance with Rule
310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian A.
Lebrecht, and Vi Bui, WAMEX has not employed any broker or finder or incurred
any liability for any brokerage or finder's fees or commissions or similar
payments in connection with the sale of the WAMEX Shares to the Shareholders.
6.9 Purchase for Investment. WAMEX is purchasing the Conchology Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholders and WAMEX shall (a) give to the other and its
authorized representatives reasonable access to all plants, offices, warehouse
and other facilities and properties of Conchology or WAMEX, as the case may be,
and to its books and records, (b) permit the other to make inspections thereof,
and (c) cause its officers and its advisors to furnish the other with such
financial and operating data and other information with respect to the business
and properties of such party and its Subsidiaries and to discuss with such and
its authorized representatives its affairs and those of its Subsidiaries, all as
the other may from time to time reasonably request.
7.3 Exclusivity. From the date hereof until the earlier of the Closing
or the termination of this Agreement, the Shareholders shall not solicit or
negotiate or enter into any agreement with any other Person with respect to or
in furtherance of any proposal for a merger or business combination involving,
or acquisition of any interest in, or (except in the ordinary course of
business) sale of assets by, Conchology, except for the exchange of the WAMEX
Shares for the Conchology Shares from the Shareholders.
7.4 Regulatory Matters. The Shareholders and WAMEX shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF CONCHOLOGY'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use their best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, Conchology shall cause conduct its businesses in all
material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, Conchology shall (a) preserve substantially intact the business
organization of Conchology; and (b) preserve in all material respects the
present business relationships and good will of Conchology and each of its
Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, Conchology shall not cause or permit any amendment of its
certificate of incorporation or by-laws (or other governing instrument) and
shall not:
1. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
2. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
3. reclassify, split up or otherwise change any of its Equity Securities;
d. be party to any merger, consolidation or other business combination;\
4. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of Conchology and its
Subsidiaries, taken as a whole, except in the ordinary course of business; or
5. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, Conchology shall not:
1. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
2. create any material Encumbrance on any of its material properties or
assets;
3. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
4. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
5. make any capital expenditure or acquire any property or assets;
6. enter into any agreement that materially restricts WAMEX, Conchology or
any of their Subsidiaries from carrying on business;
7. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the Conchology Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the date of the
Conchology Financial Statements; or
8. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
1. By written agreement of the Shareholders and WAMEX at any time.
2. By WAMEX, by notice to the Shareholders at any time, if one or more of
the conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
3. By the Shareholders, by notice to WAMEX at any time, if one or more of
the conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to WAMEX:
3040 Nostrand Avenue
Marine Park, NY 11229
Attn: Mitchell H. Cushing, CEO
Facsimile (_____) ____________________
(b) If to the Shareholders:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of Conchology shall
be needed in connection with any merger or consolidation of WAMEX with or into
another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, and
entered into as of the date first above written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
___________________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
___________________________________ ___________________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
___________________________________
Vi Bui
EXHIBIT A
CONCHOLOGY SHAREHOLDERS
CONCHOLOGY, INC. WAMEX HOLDINGS, INC.
NO. NAME SHARES PERCENT SHARES
- --- ----------------- -------------------- -------- ------
1 M. Richard Cutler 438,000 73.00% 36,500
2 Brian A. Lebrecht 99,000 16.50% 8,250
3 Vi Bui 33,000 5.50% 2,750
4 Albert Aimers 6,000 1.00% 500
5 Jeff Willmann 6,000 1.00% 500
6 James Stubler 6,000 1.00% 500
7 Andre Pechong 4,000 0.60% 333
8 Urban Smedeby 4,000 0.60% 333
9 Jack Thompsen 4,000 0.60% 334
Total 600,000 50,000