AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made
this 10th day of January, 1997, among Chaos Group, Inc., a Nevada
corporation ("Chaos"); Clear Vision, Inc., a Nevada corporation,
any and all its subsidiaries and fictitious names (hereinafter
collectively referred to as "CVI" and its shareholders
(hereinafter "Shareholders").
Chaos wishes to acquire all the issued and outstanding stock
of CVI for and in exchange for stock of Chaos, in a stock for
stock transaction intending to qualify as a tax-free exchange
pursuant to 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended. The parties intend for this Plan to represent the
terms and conditions of such tax-free reorganization, which Plan
the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the
Shareholders of CVI agree to assign, transfer, and deliver to
Chaos, free and clear of all liens, pledges, encumbrances,
charges, restrictions or known claims of any kind, nature or
description, all of their shares of CVI stock, and Chaos agrees
to acquire such shares on the date thereof, or as soon as
practicable thereafter, by issuing and delivering in exchange
therefore solely common shares of Chaos's stock, par value
$0.001, in the aggregate of 6,985,415 shares, subject to the
provisions of this Plan, which shall represent, as a result
thereof, approximately eighty seven percent (87%) of the then
issued and outstanding shares of Chaos. Subsequent to the date
hereof, the Shareholders shall, upon the surrender of the CVI
certificates representing their respective beneficial and record
ownership of all of the issued and outstanding shares of CVI to
Chaos, as soon as practicable hereafter, and further provided an
exemption from the registration provisions of Section 5 of the
Securities Act of 1933 is available for the issuance thereof, the
Shareholders shall be entitled to receive a certificate(s)
evidencing shares of the exchanged Chaos stock as provided for
herein. Upon the consummation of the transaction contemplated
herein, Chaos shall be the beneficial and record owner of all of
the issued and outstanding stock of CVI.
1.2 Anti-Dilution. For all relevant purposes of this Plan,
the number of Chaos shares to be issued and delivered pursuant to
this Plan shall be appropriately adjusted to take into account
any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in Chaos common stock, which
may occur between the date of the execution of this Plan and the
date of the delivery of such shares.
1.3 Delivery of Certificates. The Shareholders shall transfer
to Chaos at the closing provided for in Section 2 (the ""losing""
the shares of common stock of CVI listed opposite their
respective names on Exhibit A hereto (the "CVI shares") in
exchange for shares of the common stock of Chaos as outlined
above in Section 1.1 hereof (the "Chaos Stock"). All of such
shares of Chaos of Chaos as outlined above in Section 1.1 hereof
(the "Chaos Stock"). All of such shares of Chaos stock shall be
issued at the closing to the Shareholders, in the numbers shown
opposite their respective names in Exhibit "A". The transfer of
CVI shares by the Shareholders shall be effected by the delivery
to Chaos at the Closing of certificates representing the
transferred shares endorsed in blank or accompanied by stock
powers executed in blank, with all signatures guaranteed by a
national bank and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution hererof,
and from time to time thereafter, the Shareholders shall execute
such additional instruments and take such other action as Chaos
may request in order to more effectively sell, transfer and
assign clear title and ownership in the CVI shares to Chaos.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be
held at the law offices of Xxxxxx X. Xxxxxxx, Esq. On or before
February 28, 1997 or at such other time or place as may be
mutually agreed upon in writing by the parties. The Closing may
also be accomplished by wire, express mail or other courier
service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized
representatives. In any event, the closing of the transactions
contemplated by this Plan shall be effected as soon as
practicable after all of the conditions contained herein have
been satisfied.
2.2 Closing Events. At the Closing, each of the respective
parties hereto shall execute, acknowledge and deliver (or shall
cause to be executed, acknowledged, and delivered) any
agreements, resolutions, rulings, or other instruments required
by this Plan to be so delivered at or prior to 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 transaction contemplated hereby.
Section 3
Representations, Warranties and Covenants of Chaos
Chaos represents and warrants to, and covenants with, the
Shareholders and CVI as follows:
3.1 Corporate Status. Chaos is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Nevada. Chaos has full 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 on all material respects as it is now being
conducted, and there is no jurisdiction 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 Chaos schedules (defined below) are complete and correct
copies of its Articles of Incorporation and By-Laws as in effect
on the date hereof. The execution and delivery of this Plan does
not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Chaos' Articles of
Incorporation or By-Laws. Chaos has taken all action required by
law, its Articles of Incorporation, its By-Laws, or otherwise, to
authorize the execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of Chaos as of
the date hereof consists of 20,000,000 common shares, par value
$0.001. The common shares of Chaos issued and outstanding are
fully paid, non-assessable shares. There are no outstanding
options, warrants, or calls or any understanding, agreements,
commitments, contracts or promises with respect to the issuance
of Chaos's common stock or with regard to any options, warrants
or other contractual rights to acquire any of Chaos's authorized
but unissued common shares.
3.3 Financial Statements.
(a) Chaos hereby warrants and covenants to CVI that the
audited financial statements for its period ended July 31, 1996,
fairly and accurately represent the financial condition of Chaos
and that the same will be prepared along with the period ended as
of the date of Closing, for consolidation by an independent
public accountant, which shall be prepared in accordance with
generally accepted accounting principles consistently applied, on
or before the expiration of forty-five days from the date of
Closing.
(b) Chaos hereby warrants and represents that the audited
financial statements for the periods set forth in subparagraph
(a) supra, fairly and accurately represent the financial
condition of Chaos as submitted heretofore to CVI for examination
and review.
3.3 Conduct of Business. Chaos is a development stage company
and has not engaged in any operational activities prior to the
date hereof.
3.4 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of Chaos,
threatened by or against or effecting Chaos at law or in equity,
or before any governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind; Chaos does not
have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.5 Books and Records. From the date hereof, and for any
reasonable period subsequent thereto, Chaos and its present
management will (I) give to the Shareholders and CVI, or their
duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other
corporate documents and properties so that the Shareholders and
CVI, or their duly authorized representatives, may inspect them;
and (ii) furnish such information concerning the properties and
affairs of Chaos as the Shareholders and CVI, or their duly
authorized representatives, may reasonably request. Any such
request to inspect Chaos's books shall be directed to Chaos'
counsel, Xxxxxx X. Xxxxxxx, at the address set forth herein under
Section 10.4 Notices.
3.6 Confidentiality. Until the Closing (and thereafter if there
is no Closing), Chaos and its representatives will keep
confidential any information which they obtain from the
Shareholders or from CVI concerning its properties, assets and
the proposed business operations of CVI. If the terms and
conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on February 28, 1997 or
otherwise waived or extended in writing to a date mutually
agreeable to the parties hereto, Chaos will return to CVI all
written matter with regard to CVI obtained in connection with the
negotiations or consummation of this Plan.
3.7 Conflict with Other Instruments. The transactions
contemplated by this Plan will not result in the breach of any
term or provision of, or constitute a default under any
indenture, mortgage, deed of trust, or there material agreements
or instrument to which Chaos was or is a party, or to which any
of its assets or operations are subject, and will not conflict
with any provision of the Articles of Incorporation or By-Laws of
Chaos.
3.8 Corporate Authority. Chaos has full corporate power and
authority to enter into this Plan and to carry out its
obligations hereunder and will deliver to the Shareholders and
CVI, or their respective representatives, at the Closing, a
certified copy of resolutions of its Board of Directors
authorizing execution of this Plan by its officers and performance thereunder.
3.9 Consent of Shareholders. Chaos hereby warrants and
represents that the Shareholders of Chaos, being the owners of a
majority of the issued and outstanding stock of the Corporation
consented in writing to the authorization to execute an Agreement
and Plan of Reorganization as between Chaos and CVI pursuant to a
stock-for-stock transaction in which Chaos would acquire all of
the issued and outstanding shares of CVI in exchange for the
issuance of a total of 6,985,415 common shares of Chaos.
3.10 Special Covenants and Representations Regarding the
Exchanged Chaos Stock. The consummation of this Plan and the
transactions herein contemplated include the issuance of the
exchanged Chaos shares to the Shareholders, which constitutes an
offer and sale of securities under the Securities Act of 1933, as
amended, and applicable states' securities laws. Such
transaction shall be consummated in reliance on exemptions from
the registration and prospectus requirements of such statues
which depend interlace on the circumstances under which the
Shareholders acquire such securities. In connection with the
reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing,
Shareholders shall cause to be delivered to Chaos a Letter(s) of
Investment Intent in the form attached hereto as Exhibit C and
incorporated herein by reference.
3.11 Undisclosed or Contingent Liabilities. Chaos hereby
represents and warrants that it has no undisclosed or contingent
liabilities which have not been disclosed to CVI.
3.12 Information. The information concerning Chaos set forth in
this Plan, and the Chaos schedules attached hereto, are complete
and accurate in all material respects and do not contain, or will
not contain, when delivered, any untrue statement or a material
fact or omit to state a material fact the omission of which would
be misleading to CVI in connection with this Plan.
3.13 Title and Related Matters. Chaos has good and marketable
title to all of its properties, interests in properties, and
assets, real and personal, which are reflected, or will be
reflected, in the Chaos balance sheets, free and clear of any and
all liens and encumbrances.
3.14 Contracts or Agreements. Chaos is not bound by any material
contracts, agreements or obligations which it has not already
disclosed to CVI.
3.15 Governmental Authorizations. Chaos has all licenses,
franchises, permits and other government authorizations that are
legally required to enable it to conduct its business in all
material respects as conducted on the date hereof.
3.16 Compliance with Laws and Regulations. Chaos has complied
with all applicable statutes and regulations of any federal,
state, or other applicable jurisdiction or agency thereof, except
to the extent that noncompliance would not materially and
adversely effect the business, operations, properties, assets, or
condition of chaos or except to the extent that noncompliance
would not result in the occurrence of any material liability, not
otherwise disclosed to CVI.
3.17 Approval of Plan. The Board of Directors of Chaos has
authorized the execution and delivery of this Plan by Chaos and
have approved the Plan and the transactions contemplated hereby.
Chaos has full power, authority, and legal right to enter into
this Plan and to consummate the transactions contemplated hereby.
3.18 Investment Intent. Chaos is acquiring the CVI shares to be
transferred to it under this Plan for investment and no with a
view to the sale or distribution thereof, and Chaos has no
commitment or present intention to liquidate CVI or to sell or
otherwise dispose of the CVI shares.
3.19 Unregistered Shares and Access to Information. Chaos
understands that the offer and sale of the CVI shares have not
been registered with or reviewed by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or with
or by any state securities law administrator, and no federal,
state securities law administrator has reviewed or approved any
disclosure or other material concerning CVI or the CVI shares.
Chaos has been provided with and reviewed all information
concerning CVI, the CVI shares as it has considered necessary or
appropriate as a prudent and knowledgeable investor to enable it
to make an informed investment decision concerning the CVI
shares. Chaos has made an investigation as to the merits and
risks of its acquisition of the CVI Shares and has had the
opportunity to ask questions of, and has received satisfactory
answers from, the officers and directors of CVI concerning CVI,
the CVI shares and related matters, and has had an opportunity to
obtain additional information necessary to verify the accuracy of
such information and to evaluate the merits and risks of the
proposed acquisition of the CVI shares.
3.20 Chaos Schedules. Chaos has delivered to CVI the following
items listed below, hereafter referred to as the "Chaos
Schedules", which is hereby incorporated by reference and made a
part hereof. A certification executed by a duly authorized
officer of Chaos on or about the date within the Plan is executed
to certify that the Chaos Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and By-Laws
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officer's Certificate as required under Section 6.2 of the Plan;
(f) Opinion of counsel as required under Section 6.4 of the Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of CVI
CVI represents and warrants to, and covenants with, the
Shareholders and Chaos as follows:
4.1 Corporate Status. CVI is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Nevada incorporated on February 22, 1995. CVI has full
corporate power and is dully 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 on all material respects as
it is now being conducted, and there is no jurisdiction 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 CVI schedules (defined below) are complete and
correct copies of its Articles of Incorporation and By-Laws as in
effect on the date hereof. The execution and delivery of this
Plan does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of CVI's
Articles of Incorporation or By-Laws. CVI has taken all action
required by law, its Articles of Incorporation, its By-Laws, or
otherwise, to authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of CVI as of
the date hereof consists of 20,000,000 common shares. As of the
date hereof all common shares of CVI issued and outstanding are
fully paid, non-assessable shares. There are no outstanding
options, warrants, or calls or any understanding, agreements,
commitments, contracts or promises with respect to the issuance
of CVI's common stock or with regard to any options, warrants or
other contractual rights to acquire any of CVI's authorized but
unissued common shares.
4.3 Conduct of Business. CVI has been in the business of CVI as
organized for the purpose of manufacturing and selling
advertising materials which employ a patented "luminite" gel
technology. CVI has acquired the non-exclusive right to market
signs and signage type products that employ this patented
technology. In addition, CVI has acquired a large format digital
printer that allows it to produce other forms of advertising
signage.
It is the management's intent to develop CVI into a source for a
variety of advertising signs, banners, posters, etc. The company
plans to provide both source materials and operations, the
Company's wholly owned subsidiary would provide teams of
advertising specialists to retailers for consultation, advice and
promotional planning with the expectation that CVI's product will
be employed by the retailer in the execution of the advertising
promotion.
The centerpiece for CVI's products is the "luminite" gel signs.
These signs employ a translucent sign that is illuminated by
means of a back-lit light box. The resulting sign provides a
brilliant visual presentation. The company hopes that this
"luminite" gel technology will compete successfully with neon
signs and other similar products.
The company plans eventually to establish a leasing division or
wholly owned subsidiary that would work in conjunction with CVI.
This leasing operation would purchase the hardware required for
the use of "luminite" gel signs. These light boxes would be
leased to the retailers by the new leasing company. Management
believes that by offering hardware leases with the "luminite" gel
signs, the Company will be able to compete more successfully
against existing alternative signage products.
CVI will use its best efforts to maintain and preserve its
business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of Chaos,
enter into any material commitments except in the ordinary course
of business.
CVI agrees that CVI will conduct itself in the following manner
pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be
made in the Certificate of Incorporation or Bylaws of CVI.
(b) Capitalization, etc. CVI will not make any change in its
authorized or issued shares of any class, declare or pay any
dividend or other distribution, or issue, encumber, purchase or
otherwise acquire any of its shares of any class.
4.4 Options, Warrants and Rights. Although CVI intends to
enact and put into effect various management and employee benefit
plans in the near future, as of the date hereof, CVI has no
options, warrants or stock appreciation rights related to the
authorized but unissued CVI common stock. There are no existing
options, warrants, calls, or commitments or any character
relating to the authorized and unissued CVI common stock, except
options, warrants, calls, or commitments, if any, to which CVI is
not a party and by which it is not bound.
4.5 Title to Property. CVI has good and marketable title to all
of its properties and assets, real and personal, proprietary or
otherwise, as will be reflected in the balance sheets of CVI, and
the properties and assets of CVI are subject to no mortgage,
pledge, lien or encumbrance, unless as otherwise disclosed in its
financial statements.
4.8 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of CVI,
threatened by or against of effecting CVI at law or in equity, or
before any governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind; CVI does not have
any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
4.9 Books and Records. From the date hereof, and for any
reasonable period subsequent thereto, CVI and its present
management will (i) give to the Shareholders and CVI, or their
duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts, and
other corporate documents and properties so that the Shareholders
and CVI, or their duly authorized representatives, may inspect
them; (ii) furnish such information concerning the properties and
affairs of CVI as the Shareholders and CVI, or their duly
authorized representatives, may reasonably request. Any such
request to inspect CVI's books shall be directed to CVI's
representative, at the address set forth herein under Section
10.4 Notices.
4.10 Confidentiality. Until the Closing (and thereafter if there
is no Closing), CVI and its representatives will keep
confidential any information which they obtain from the
Shareholders or from CVI concerning its properties, assets and
the proposed business operations of CVI. If the terms and
conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on February 28, 1997 or
otherwise waived or extended in writing to a date mutually
agreeable to the parties hereto, CVI will return all written
matter with regard to Chaos obtained in connection with the
negotiations or consummation of this Plan.
4.11 Investment Intent. The Shareholders represent and covenant
that they are acquiring the unregistered and restricted common
shares of Chaos to be delivered to them under this Plan for
investment purposes and not with a view to the subsequent sale or
distribution thereof, and as agreed, supra, the Shareholders,
their successors and assigns agree to execute and deliver to
Chaos on the date of Closing or no later than the date on which
the restricted shares are issued and delivered to the
Shareholders, their assigns, or designees, and Investment Letter
similar in form to that attached hereto as Exhibit C.
4.12 Unregistered Shares and Access to Information. CVI and the
Shareholders understand that the offer and sale of Chaos shares
to be exchanged for the CVI shares have not been registered with
or reviewed by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or with or by any state
securities law administrator, and no federal or state securities
law administrator has reviewed or approved any disclosure or
other material facts concerning Chaos or Chaos stock. CVI and
the Shareholders have been provided with and reviewed all
information concerning Chaos and Chaos shares, to be exchanged
for the CVI shares as they have considered necessary or
appropriate as prudent and knowledgeable investors to enable them
to make informed investment decisions concerning the Chaos
shares, to be exchanged for the CVI shares. CVI and the
Shareholders have made an investigation as to the merits and
risks of their acquisition of the Chaos shares, to be exchanged
for the CVI shares and have had the opportunity to ask questions
of, and have received satisfactory answers from, the officers and
directors of Chaos concerning Chaos shares to be exchanged for
CVI shares and related matters, and have had an opportunity to
obtain additional information necessary to verify the accuracy of
such information and to evaluate the merits and risks of the
proposed acquisition of the Chaos shares to be exchanged for the
CVI shares.
4.13 Title to Shares. The Shareholders are the beneficial and
record owners, free and clear of any liens and encumbrances, of
whatever kind or nature, of all of the shares of CVI of whatever
class or series, which the Shareholders have contracted to
exchange.
4.14 Contracts.
(a) Set forth in the CVI Schedules are copies or descriptions
of all material contracts which written or oral, all agreements,
franchises, licenses, or other commitments to which CVI is a
party or by which CVI or its properties are bound.
(b) Except as may be set forth in the CVI Schedules, CVI is not
a party to any contract, agreement, corporate restriction, or
subject to any judgment, order, writ, injunction, decree, or
award, which materially and adversely effect the business,
operations, properties, assets, or conditions of CVI.
(c) Except as set forth in the CVI Schedules, CVI is not a party
to any material oral or written (i) contract for employment of
any officer which is not terminable on 30 days (or less) notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance, or any other retirement plan of arrangement covered by
Title IV of the Employee Retirement Income Security Act, as
amended, or otherwise covered; (iii) agreement providing for the
sale, assignment or transfer of any of its rights, assets or
properties, whether tangible or intangible, except sales of its
property in the ordinary course of business with a value of less
than $2,000; or (iv) waiver of any right of any value which in
the aggregate is extraordinary or material concerning the assets
or properties scheduled by CVI, except for adequate value and
pursuant to contract. CVI has not entered into any material
transaction which is not listed in the CVI Schedules or reflected
in the CVI financial statements.
4.15 Material Contract Defaults. CVI is not in default in any
material respect under the terms of any contract, agreement,
lease or other commitment which is material to the business,
operations, properties or assets, or condition of CVI, and there
is no event of default or event which, with notice of lapse of
time or both, would constitute a default in any material respect
under any such contract, agreement, lease, or other commitment in
respect of which CVI has not taken adequate steps to prevent such
default from occurring, or otherwise compromised, reached a
satisfaction of, or provided for extensions of time in which to
perform under any one or more contract obligations, among others.
4.16 Conflict with Other Instruments. The consummation of the
within transactions will not result in the breach of any term or
provision of, or constitute a default under any indenture,
mortgage, deed of trust, or material agreement or instrument to
which CVI was or is a party, or to which any of its assets or
operations are subject, and will not conflict with any provision
of the Articles of Incorporation of CVI.
4.17 Governmental Authorizations. CVI has all licenses,
franchises, permits and other government 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 laws, 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 CVI
of this Plan and the consummation by CVI of the transactions
contemplated hereby.
4.18 Compliance with Laws and Regulations. CVI has complied with
all applicable statutes and regulations of any federal, state, or
other applicable jurisdiction or agency thereof, except to the
extent that noncompliance would not materially and adversely
effect the business, operations, properties, assets, or condition
of CVI or except to the extent that noncompliance would not
result in the occurrence of any material liability, not otherwise
disclosed to Chaos.
4.19 Approval of Plan. The Board of Directors of CVI have
authorized the execution and delivery of this Plan by CVI and
have approved the Plan and the transactions contemplated hereby.
CVI has full power, authority, and legal right to enter into this
Plan and to consummate the transactions contemplated hereby.
4.20 Information. The information concerning CVI set forth in
this Plan, and the CVI Schedules attached hereto, are complete
and accurate in all material respects and do not contain, or will
not contain, when delivered, any untrue statement of a material
fact or omit to state a material fact the omission of which would
be misleading to Chaos in connection with this Plan.
4.21 CVI Schedules. CVI has delivered to Chaos the following
items listed below, hereafter referred to as the "CVI Schedules",
which is hereby incorporated by reference and made part hereof.
A certification executed by a duly authorized officer of CVI on
or about the date within the Plan is executed to certify that the
CVI Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements;
(c) Resolution of Board of Directors approving Plan;
(d) Consent of Shareholders approving Plan;
(e) A list of key employees, including current compensation,
with notation as to job description and whether or not such
employee is subject to written contract, and if subject to a
contract or employment agreement, a copy of the same;
(f) A schedule showing the name and location of each bank or
other institution with which CVI has an account and the names of
the authorized persons to draw thereon or having access thereto;
(g) A schedule setting forth the shareholders, together with the
number of shares owned beneficially or of record by each (also
attached as Exhibit A);
(h) Officer's Certificate as required by Section 7.2 of the
Plan;
(i) Certificate of Good Standing.
Section 5
Special Covenants
5.1 CVI Information Incorporated in Chaos' Reports. CVI
represents and warrants to Chaos that all of the information
furnished under this Plan shall be true and correct in all
material respects and that there is no omission of any material
fact required to make the information stated not misleading. CVI
agrees to indemnify and hold Chaos harmless, including each of
its Directors and Officers, and each person, if any, who controls
such party, under any applicable law from and against any and all
losses, claims, damages, expenses, or liabilities to which any of
them may become subject under applicable law, or reimburse them
for any legal or other expenses reasonable incurred by them in
connection with investigating or defending any such actions,
whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or
are based on any untrue statement, alleged untrue statement, or
omission of a material fact contained in such information
delivered hereunder.
5.2 Special Covenants and Representations Regarding the Exchange
of Chaos Stock . The consummation of this Plan and the
transactions herein contemplated, including the issuance of the
Chaos shares in exchange for all of the issued and outstanding
shares of CVI to the Shareholders constitutes the offer and sale
of securities under the Securities Act and the applicable state
statutes, which depend, inter alia, on the circumstances under
which the Shareholders acquire such securities. Chaos intends to
rely on the exemption of the registration provision of Section 5
of the Securities Act as provided for under Section 4.2 of the
Securities Act of 1933, which states "transactions not involving
a public offering", among others. Each Shareholder upon
submission of his CVI shares and the receipt of the Chaos shares
exchanged therefor, shall execute and deliver to Chaos a letter
of investment to indicate, among other representations, that the
Shareholder is exchanging the CVI shares for Chaos shares for
investment purposes and not with a view to the subsequent
distribution thereof. A proposed Investment Letter is attached
hereto as Exhibit B and incorporated herein by reference for the
general use by the Shareholders, as they may determine.
5.3 Action Prior to Closing. Upon the execution hereof
until the Closing date, and the completion of the consolidated
audited financials,
(a) CVI and Chaos will (i) perform all of its obligations under
material contracts, leases, insurance policies and/or documents
relating to its assets an business; (ii) use its best efforts to
maintain and preserve its business organization intact, to retain
its key employees, and to maintain its relationship with existing
potential customers and clients; and (iii) fully comply with and
perform in all material respects all duties and obligations
imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state
government authorities.
(b) Neither CVI nor Chaos will (i) make any change in its
Articles of Incorporation or Bylaws except and unless as
contemplated pursuant to Section 3 of this Plan; (ii) enter into
or amend any contract, agreement, or other instrument of the
types described in the parties' schedules, except that a party
may enter into or amend any contract or other instrument in the
ordinary course of business involving the sale of goods or
services, provided that such contract does not involve
obligations in excess of $10,000.
Section 6
Conditions Precedent to Obligations of
CVI and the Shareholders
All obligations of CVI and the Shareholders under this Plan are
subject to the satisfaction, on or before the Closing date,
except as otherwise provided for herein, or waived or extended in
writing by the parties hereto, of the following conditions:
6.1 Accuracy of Representations. The representations and
warranties made by Chaos in this Plan were true when made and
shall be true as of the Closing date (except for changes therein
permitted by this Plan) with the same force and effect as if such
representations and warranties were made at and as of the Closing
date; and Chaos shall have performed and complied with by Chaos
prior to the Closing, unless waived or extended in writing by the
parties hereto. CVI shall have been furnished with a
certificate, signed by a duly authorized executive officer of
Chaos and dated the Closing date, to the foregoing effect.
6.2 Officers' Certificate. CVI and the Shareholders shall
have been furnished with a certificate dated the Closing date and
signed by a duly authorized executive officer of Chaos, to the
effect that no litigation, proceeding, investigation, or inquiry
is pending, or to the best knowledge of Chaos, threatened, which
might result in an action to enjoin or prevent the consummation
of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties,
business, or operations of Chaos.
6.3 No Material Adverse Change. Prior to the Closing date,
there shall have not occurred any material adverse change in the
final condition, business or operations of Chaos, nor shall any
event have occurred which, with lapse of time or giving of notice
or both, may cause or create any material adverse change in the
financial condition, business or operations of Chaos, except as
otherwise disclosed to CVI.
6.4 Opinion of Counsel of Chaos. Chaos shall furnish to
CVI and the Shareholders an opinion dated as of the Closing date
and in form and substance satisfactory to CVI and the
Shareholders to the effect that:
(a) Chaos is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada, and with
all requisite corporate power to perform its obligations under
this Plan.
(b) The business of Chaos, as presently conducted, including,
upon the consummation hereof, the ownership of all of the issued
and outstanding shares of CVI, does not require it to register it
to do business as a foreign corporation on any jurisdiction other
than under the jurisdiction of its Articles of Incorporation or
Bylaws and Chaos has complied to the best of its knowledge in all
material respects with all laws, regulations, licensing
requirements and orders applicable to its business activities and
has filed with the proper authorities, including the Department
of Commerce, Division of Corporations, and Secretary of State for
the State of Nevada, all statements and reports required to be
filed.
(c) The authorized and outstanding capital stock of Chaos as set
forth in Section 3.2 above, and all issued and outstanding shares
have been duly and validly authorized and issued and are fully
paid and non-assessable.
(d) There are no material claims, suits or other legal
proceedings pending or threatened against Chaos of any court or
before or by any governmental body which might materially effect
the business of Chaos or the financial condition of Chaos as a
whole and no such claims, suits or legal proceedings are
contemplated by governmental authorities against Chaos.
(e) To the best knowledge of such counsel, the consummation of
the transactions contemplated by this Plan will not violate or
contravene the provisions of the Certificate of Incorporation or
Bylaws of Chaos, or any contract, agreement, indenture, mortgage,
or order by which Chaos is bound.
(f) This Plan constitutes a legal, valid and binding obligation
of Chaos enforceable in accordance with its terms, subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium,
or similar law effecting creditors' rights generally and general
principles of equity (regardless of whether such principles are
considered in a proceeding in equity or law).
(g) The execution and delivery of this Plan and the consummation
of the transactions contemplated hereby have been ratified by a
majority of the Shareholders of Chaos and have been duly
authorized by its Board of Directors.
6.5 Good Standing. CVI shall have received a Certificate
of Good Standing from the State of Nevada, dated within sixty
(60) days prior to Closing, but in no event later than ten (10)
days subsequent to the execution hereof certifying that Chaos is
in good standing as a corporation in the State of Nevada.
6.6 Other Items. CVI and the Shareholders shall have
received such further documents, certifications or instruments
relating to the transactions contemplated hereby as CVI and the
Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of Chaos
All obligations of Chaos under this Plan are subject, at its
option, to the fulfillment, before Closing, or each of the
following conditions:
7.1 Accuracy of Representations. The representations and
warranties made by CVI and the Shareholders under this Plan were
true when made and shall be true as of the Closing date (except
for changes therein permitted by this Plan) with the same force
and effect as if such representations and warranties were made at
and as of the Closing date; and, Chaos shall have performed and
complied with by CVI prior to the Closing, unless waived or
extended in writing by the parties hereto. Chaos shall have been
furnished with a certificate, signed by a duly authorized
executive officer of CVI and dated the Closing date, to the
foregoing effect.
7.2 Officers' Certificate. Chaos shall have been furnished
with a certificate dated the Closing date and signed by a duly
authorized executive officer of CVI, to the effect that no
litigation, proceeding, investigation, or inquiry is pending, or
to the best knowledge of CVI, threatened, which might result in
an action to enjoin or prevent the consummation of the
transactions contemplated by this Plan, or which might result in
any material adverse change in the assets, properties, business,
or operations of CVI.
7.3 No Material Adverse Change. Prior to the Closing date,
there shall have not occurred any material adverse change in the
final condition, business or operations of Chaos, nor shall any
event occurred which, with lapse of time the giving of notice or
both, may cause or create any material adverse change in the
financial condition, business or operations of CVI, except as
otherwise disclosed to Chaos.
7.4 Good Standing. Chaos shall have received a Certificate
of Good Standing from the State of Nevada, dated within sixty
(60) days prior to Closing, but in no event later than ten (10)
days subsequent to the execution hereof certifying that CVI is in
good standing as a corporation in the State of Nevada.
7.5 Dissenters' Rights Waived. The Shareholders of CVI,
and each of them, have agreed and hereby waive any dissenters'
rights, if any, under the laws of the State of Nevada in regards
to any objection to this Plan as outlined herein and otherwise
consent to and agree and authorize the execution and consummation
of the within Plan in accordance to the terms and conditions of
this Plan by the management of CVI.
7.6 Other Items. Chaos shall have received such further
documents, certifications or instruments relating to the
transactions contemplated hereby as Chaos may reasonably request.
7.7 Registration of CVI Shares. In connection with the
exchange of Chaos shares for CVI shares, Chaos agrees, if
practicable, and subject to the consent of an underwriter(s) in
the event Chaos undertakes to file a Registration Statement under
the Securities Act of 1933, as amended, for the purpose of
raising money from the public through the sale of its equity, to
ensure that the Chaos shares issued in connection with the within
Plan will be included as part of a general Registration Statement
and "piggy back" any such offering for the purpose of registering
the same for sale by the Shareholders, as they may determine.
Chaos shall execute and deliver to the Shareholders the
Registration Rights Agreement in form attached hereto as Exhibit
B.
7.8 Execution of Investment Letter. The Shareholders shall
have executed and delivered copies of Exhibit C to Chaos.
Section 8
Termination
8.1 Termination by CVI or the Shareholders. This Plan may
be terminated at any time prior to the Closing date by action of
CVI or the Shareholders, if Chaos shall fail to comply in any
material respect with any of the covenants or agreements
contained in this Plan, or if any of its representations or
warranties contained herein shall be inaccurate in any material
respect.
8.2 Termination by Chaos. This Plan may be terminated at
any time prior to the Closing date by action of Chaos if CVI
shall fail to comply in any material respect with any of the
covenants or agreements contained in this Plan, or if any of its
representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent.
(a) This Plan may be terminated at any time prior to the Closing
date by mutual consent of Chaos, expressed by action of its Board
of Directors, CVI or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this Plan
shall be of no further force and effect and no obligation, right
or liability shall arise hereunder. Each party shall bear its
own costs in connection herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint
Xxxxx Xxxxxxxx of Xxxxxx & Co., 0000 Xxxx 0000 Xxxxx, Xxxx Xxxx
Xxxx 00000 as their agent and attorney in fact (the
"Shareholders' Representative") with full power and authority
until the Closing to execute, deliver and receive on their behalf
all notices, requests and other communications hereunder; to fix
and alter on their behalf the date, time and place of the
Closing; to waive, amend or modify any provisions of this Plan
and to take such other action on their behalf in connection with
this Plan, the Closing and the transactions contemplated hereby
as such agent deems appropriate; provided, however, that no such
waiver, amendment or modification may be made if it would
decrease the number of shares to be issued to the Shareholders
under Section 1 hereof or increase the extent of their obligation
to Chaos hereunder, unless agreed in writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to
time, after the Closing date, each party will execute such
additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the
intent and purpose of the Plan.
10.2 Payments of Estimated Costs and Fees. Chaos and CVI
mutually determine and agree that CVI shall pay the estimated
costs and fees incurred in connection with the execution and
consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the
date of Closing, or as soon thereafter as practicable, CVI and
the Shareholders shall cause to have promptly prepared and
disseminated a news release concerning the execution and
consummation of the Plan, such press release and communication to
be released promptly and within the time required by the laws,
rules and regulations as promulgated by the United States
Securities and Exchange Commission, and concomitant therewith to
cause to be prepared a full and complete letter to Chaos'
shareholders which shall contain information required by
Regulation 240.14f-1 as promulgated under Section 14(f) as
mandated under the Securities and Exchange Act of 1934, as
amended.
10.4 Notices. All notices and other communications required
or permitted hereunder shall be sufficiently given if personally
delivered, sent by registered mail, or certified mail, return
receipt requested, postage prepaid, or by facsimile transmission
addressed to the following parties hereto or at such other
addresses as follows:
If to Chaos: Chaos Group, Inc.
Attention: Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
If to CVI: Clear Vision Inc.
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
If to the Shareholders: Xxxxx Xxxxxxxx
Xxxxxx & Co.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Or at 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
as of the date so delivered, mailed, sent by facsimile
transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire
agreement between the parties relating to the subject matter
hereof, including any previous letters of intent, understandings,
or agreements between Chaos, CVI and the Shareholders with
respect to the subject matter hereof, all of which are hereby
merged into this Plan, which alone fully and completely expresses
the agreement of the parties relating to the subject matter
hereof. Excepting the foregoing agreement, there are no other
courses of dealing, understandings, agreements, representations,
or warranties, written or oral, except as set forth herein.
10.6 Governing Law. This Plan shall be governed by and
construed and enforced in accordance with the laws of the State
of Utah, except to the extent preempted by federal law, in which
event (and to that extent only) federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this
Plan is intended to qualify as a "tax-free" reorganization under
the provisions of Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended. CVI and Chaos acknowledge, however,
that each are being represented by their own tax advisors in
connection with this transaction, and neither has made any
representations or warranties to the other with respect to
treatment of such transaction or any part or effect thereof under
applicable tax laws, regulations or interpretations; and no
attorney's opinion or tax revenue ruling has been obtained with
respect to the tax consequences of the transactions contemplated
by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in
any action or suit to enforce this Plan, or secure relief from
any default hereunder or breach hereof, the nonprevailing party
or parties shall reimburse the prevailing party or parties for
all costs, including reasonable attorney fees, incurred in
connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided
herein shall be cumulative and every other right and remedy,
whether conferred herein, at law or in equity, and may be
enforced concurrently or separately, 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,
therefore, or thereafter occurring or existing. Any time prior
to the expiration of thirty (30) days from the date hereof, this
Plan may be amended by a writing signed by the party or parties
for whose benefit the provision is intended.
10.10 Counterparts. This Plan may be executed in any
number of counterparts, each of which when executed and delivered
shall be deemed to be an original, and all of which together
shall constitute one and the same instruments.
10.11 Headings. The section and subsection headings in
this Plan are inserted for convenience only and shall not effect
in any way the meaning or interpretation of the Plan.
10.12 Parties in Interest. Except as may otherwise be
expressly provided herein, all terms and provisions of this Plan
shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, beneficiaries, personal and
legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and
Agreement of Reorganization effective the day and year first set
forth above.
CHOAS GROUP, INC.
By: /s/ Wm. Xxxxxxx Xxxxxxxx
Wm. Xxxxxxx Xxxxxxxx, President
CLEAR VISION INC.
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx, President
SHAREHOLDERS
CHINEX INTERNATIONAL
By: /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx, President
XXXXXXX HILLS 310, INC.
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx, President
ECOSPHERE
By: /s/ Wm. Xxxxxxx Xxxxxxxx
Wm. Xxxxxxx Xxxxxxxx
LABRANDA
By: /s/ Xxxxxx Case
Xxxxxx Case, Secretary
