1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), entered
into this 8th day of January 1999, is by, between, and among X.Xxxxx &
Company, Ltd. (formerly known as Interactive Telephone Network, Inc.), a
publicly held Delaware corporation (hereinafter the "Purchaser"), X.Xxxxx &
Company, a privately-held Delaware corporation (hereinafter the "Private
Company"), and the sole shareholder of the Private Company whose name and
signature are set forth upon the signature page of this Agreement (the
"Shareholder").
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Shareholder is
willing to sell, all of the outstanding stock of the Private Company in
exchange solely for a part of the voting stock of the Purchaser whereby the
Shareholder would acquire a controlling interest of the Purchaser; and
WHEREAS, the parties hereto intend to qualify such transaction as a
tax-free exchange pursuant to Section 368(a)(I)(B) of the Internal Revenue
Code of 1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants
and agreements set forth herein, the mutual benefits to the parties to be
derived herefrom, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Purchaser, the Private
Company, and the Shareholder approve and adopt this Agreement and Plan of
Reorganization and mutually covenant and agree with each other as follows:
1. Shares to be Transferred and Shares to be Issued.
1.1 On the Closing Date the Shareholder shall transfer to the
Purchaser certificates for the number of shares of the common stock of the
Private Company described in Schedule" A, " attached hereto and incorporated
herein, which in the aggregate shall represent all of the issued and
outstanding shares of the common stock of the Private Company.
1.2 In exchange for the transfer of the common stock of the
Private Company pursuant to subsection 1.1. hereof, the Purchaser shall on
the Closing Date and contemporaneously with such transfer of the common stock
of the Private Company to it by the Shareholder issue and deliver to the
Shareholder the number of shares of common stock of the Purchaser specified
on Schedule "A" hereof such that the Shareholder shall own approximately 90%
of the outstanding common stock of the Purchaser.
2. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to the Purchaser as set forth below. These
representations and warranties are made as an
2
inducement for the Purchaser to enter into this Agreement and, but for the
making of such representations and warranties and their accuracy, the
Purchaser would not be a party hereto.
2.1 Ownership of Stock.
a. The Shareholder is the record and beneficial owner and
holder of the number of fully paid and nonassessable shares of the common
stock of the Private Company listed in Schedule "A" hereto as of the date
hereof and will continue to own such shares of the common stock of the
Private Company until the delivery thereof to the Purchaser on the Closing
Date and all such shares of common stock are or will be on the Closing Date
owned free and clear of all liens, encumbrances, charges and assessments of
every nature and subject to no restrictions with respect to transferability.
The Shareholder currently has, and will have at Closing, full power and
authority to dispose, assign, and transfer his, her, or its shares of the
Private Company in accordance with the terms hereof. The Shareholder
currently has, and will have at Closing, full power and authority to vote
his, her, or its shares of the Private Company, without restriction of any
kind.
b. Except for this Agreement, there are no outstanding
options, contracts, calls, commitments, agreements or demands of any
character relating to the common stock of the Private Company listed in
Schedule "A" and owned by the Shareholder.
2.2 Accuracy of All Statements Made by the Shareholder. No
representation or warranty by the Shareholder in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Shareholder pursuant to this Agreement,
nor any document or certificate delivered to the Purchaser by the
Shareholder pursuant to this Agreement or in connection with actions
contemplated hereby, contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading.
3. Representations and Warranties of the Private Company. The Private
Company represents and warrants to the Purchaser as set forth below. These
representations and warranties are made as an inducement for the Purchaser to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Purchaser would not be a party hereto.
3.1 Organization and Authority. The Private Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
3.2 Capitalization. As of the date of the Closing, the Private
Company will have a total of no more than 42,000,000 shares of common stock
issued and outstanding. All of the shares will have been duly authorized and
validly issued and will be fully paid and nonassessable. There are no
options, warrants, conversion privileges, or other rights presently
outstanding for the purchase of any authorized but unissued stock of the
Private Company.
-2-
3
3.3 Performance of This Agreement. The execution and performance of
this Agreement and the transfer of stock contemplated hereby have been
authorized by the board of directors of the Private Company.
3.4 Financials. True copies of the financial statements of the
Private Company for the period ended June 30, 1998, (unaudited) have been
furnished to the Purchaser. Said financial statements are true and correct in
all material respects and present an accurate and complete disclosure of the
financial condition of the Private Company as of June 30, 1998, and the
earnings for the periods covered, in accordance with generally accepted
accounting principles applied on a consistent basis.
3.5 Liabilities. There are no material liabilities of the Private
Company, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of the Private Company, its agents or servants
occurring prior to June 30, 1998, which are not disclosed by or reflected in
said financial statements. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Private Company.
3.6 Absence of Certain Changes or Events. Except as set forth in
this Agreement, since June 30, 1998, there has not been (i) any material
adverse change in the business, operations, properties, level of inventory,
assets, or condition of the Private Company, or (ii) any damage, destruction,
or loss to the Private Company (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets, or conditions of the Private Company.
3.7 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Private Company or its subsidiaries, if
any, or their assets, properties, or business, nor does the Private Company
or its subsidiaries know, or have reasonable grounds to know, of any basis
for any such proceedings, investigations or inquiries, product liability
or other claims, judgments, injunctions or restrictions. In addition, there
are no material proceedings existing, pending or reasonably contemplated to
which any officer, director, or affiliate of the Private Company or as to
which the Shareholder is a party adverse to the Private Company or any of
its subsidiaries or has a material interest adverse to the Private Company
or any of its subsidiaries.
3.8 Taxes. All federal, state, foreign, county and local income,
profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid
and discharged as reported by the Private Company, and there are no unpaid
taxes which are, or could become a lien on the properties and assets of the
Private Company, except as provided for in the financial statements of the
Private Company, or have been incurred in the normal course of business of
the Private Company since that date. All tax returns of any kind required
to be filed have been filed and the taxes paid or accrued.
-3-
4
3.9 Hazardous Materials. No hazardous material has been released,
placed, stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or disposed of on or under any real property currently
or previously owned or leased by the Private Company or any of its
subsidiaries.
3.10 Accuracy of All Statements Made by the Private Company: .No
representation or warranty by the Private Company in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Private Company pursuant to this Agreement,
nor any document or certificate delivered to the Purchaser by the Private
Company pursuant to this Agreement or in connection with actions contemplated
hereby, contains or shall contain any untrue statement of material fact or
omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Private Company and to the Shareholder as set
forth below. These representations and warranties are made as an inducement
for the Private Company and the Shareholder to enter into this Agreement and,
but for the making of such representations and warranties and their accuracy,
the Private Company and the Shareholder would not be parties hereto.
4.1 Organization and Good Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to enter into and perform the
transactions contemplated by this Agreement.
4.2 Capitalization. As of the date of the Closing, the Purchaser
will have a total of no more than 435,200 shares of common stock issued and
outstanding (excluding the shares to be issued pursuant to this Agreement).
All of the shares will have been duly authorized and validly issued and will
be fully paid and nonassessable. Except for the Purchaser's obligations
hereunder with respect to the shares to be issued pursuant to subsection 1.2
hereof, there are no options, warrants, conversion privileges, or other
rights presently outstanding for the purchase of any authorized but unissued
stock of the Purchaser. As of the Closing, the Certificate of Incorporation,
as amended, of the Purchaser (the "Purchaser Certificate of Incorporation")
and as currently in effect shall remain unchanged, except as provided herein.
4.3 Performance of This Agreement. The execution and performance of
this Agreement and the issuance of stock contemplated hereby have been
authorized by the board of directors of the Purchaser.
4.4 Financials. True copies of the financial statements of the
Purchaser consisting of the balance sheets as of the fiscal years ended
December 31, 1998 and 1997 (unaudited), and statements of income, cash
flow and changes in stockholder's equity for each of the years then ended,
have been delivered by the Purchaser to the Private Company. Said financial
statements are true and correct in all material respects and present an
accurate and complete disclosure of the financial
-4-
5
condition of the Purchaser as of December 31, 1998, and the earnings for the
periods covered, in accordance with generally accepted accounting principles
applied on a consistent basis.
4.5 Liabilities. There are no material liabilities of the Purchaser,
whether accrued, absolute, contingent or otherwise, which arose or relate to
any transaction of the Purchaser, its agents or servants which are not
disclosed by or reflected in said financial statements. As of the date hereof,
there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of business of the Purchaser.
4.6 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Purchaser or its subsidiaries, if any,
or their assets, properties, or business, nor does the Purchaser or its
subsidiaries know, or have reasonable grounds to know, of any basis for any
such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which
any officer, director, or affiliate of the Purchaser is a party adverse to
the Purchaser or any of its subsidiaries or has a material interest adverse
to the Purchaser or any of its subsidiaries.
4.7 Taxes. All federal, state, foreign, county and local income,
profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Purchaser, and there are no unpaid taxes which
are, or could become a lien on the properties and assets of the Purchaser,
except as provided for in the financial statements of the Purchaser, or
have been incurred in the normal course of business of the Purchaser since
that date. All tax returns of any kind required to be filed have been filed
and the taxes paid or accrued.
4.8 Hazardous Materials. No hazardous material has been released,
placed, stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or disposed of on or under any real property currently
or previously owned or leased by the Purchaser or any of its subsidiaries.
4.9 Legality of Shares to be Issued. The shares of common stock of
the Purchaser to be issued by the Purchaser pursuant to this Agreement, when
so issued and delivered, will have been duly and validly authorized and issued
by the Purchaser and will be fully paid and nonassessable.
4.10 Accuracy of All Statements Made by the Purchaser. No
representation or warranty by the Purchaser in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by the Purchaser pursuant to this Agreement, nor any document or
certificate delivered to the Private Company or the Shareholder pursuant to
this Agreement or in connection with actions contemplated hereby, contains
or shall contain any untrue statement of
-5-
6
material factor omits to state or shall omit to state a material fact
necessary to make the statements contained therein not misleading.
5. Covenants of the Parties.
5.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by the
Private Company, if not previously furnished, such entity shall deliver to
the Purchaser copies of the articles of incorporation, as amended, and the
current bylaws of the Private Company, and copies of the resolutions duly
adopted by the board of directors of the Private Company approving this
Agreement and the transactions herein contemplated.
b. Simultaneous with the execution of this Agreement by the
Purchaser, if not previously furnished, such entity shall deliver to the
Private Company copies of the Purchaser Certificate of Incorporation, and the
current bylaws of the Purchaser, and copies of the resolutions duly adopted
by the board of directors of the Purchaser approving this Agreement and the
transactions herein contemplated.
5.2 Access to Information.
a. The Purchaser and its authorized representatives shall have
full access during normal business hours to all properties, books, records,
contracts, and documents of the Private Company, and the Private Company shall
furnish or cause to be furnished to the Purchaser and its authorized
representatives all information with respect to its affairs and business as
the Purchaser may reasonably request. The Purchaser shall hold, and shall
cause its representatives to hold confidential, all such information and
documents, other than information that (i) is in the public domain at the
time of its disclosure to the Purchaser; (ii) becomes part of the public
domain after disclosure through no fault of the Purchaser; (iii) is known to
the Purchaser or any of its officers or directors prior to disclosure; or (iv)
is disclosed in accordance with the written consent of the Private Company.
In the event this Agreement is terminated prior to Closing, the Purchaser
shall, upon the written request of the Private Company, promptly return all
copies of all documentation and information provided by the Private Company
hereunder.
b. The Private Company and its authorized representatives shall
have full access during normal business hours to all properties, books,
records, contracts, and documents of the Purchaser, and the Purchaser shall
furnish or cause to be furnished to the Private Company and its authorized
representatives all information with respect to its affairs and business the
Private Company may reasonably request. The Private Company shall hold, and
shall cause its representatives to hold confidential, all such information
and documents, other than information that (i) is in the public domain at
the time of its disclosure to the Private Company; (ii) becomes part of the
public domain after disclosure through no fault of the Private Company; (iii)
is known to the Private Company or any of its officers or directors prior to
disclosure; or (iv) is disclosed in
-6-
7
accordance with the written consent of the Purchaser. In the event this
Agreement is terminated prior to Closing, the Private Company shall, upon the
written request of the Purchaser, promptly return all copies of all
documentation and information provided by the Purchaser hereunder.
5.3 Actions Prior to Closing. From and after the date of this
Agreement and until the Closing Date:
a. The Purchaser and the Private Company shall each carry on
its business diligently and substantially in the same manner as heretofore,
and neither party shall make or institute any unusual or novel methods of
purchase, sale, management, accounting or operation.
b. Neither the Purchaser nor the Private Company shall enter
into any contract or commitment, or engage in any transaction not in the
usual and ordinary course of business and consistent with its business
practices.
c. Neither the Purchaser nor the Private Company shall amend
its articles of incorporation or bylaws or make any changes in authorized or
issued capital stock, except as provided in this Agreement.
d. The Purchaser and the Private Company shall each use its
best efforts (without making any commitments on behalf of the company) to
preserve its business organization intact.
e. Neither the Purchaser nor the Private Company shall do any
act or omit to do any act, or permit any act or omission to act, which will
cause a material breach of any material contract, commitment, or obligation
of such party.
f. The Purchaser and the Private Company shall each duly
comply with all applicable laws as may be required for the valid and
effective issuance or transfer of stock contemplated by this Agreement.
g. Neither the Purchaser nor the Private Company shall sell or
dispose of any property or assets, except products sold in the ordinary
course of business.
h. The Purchaser and the Private Company shall each promptly
notify the other of any lawsuits, claims, proceedings, or investigations that
may be threatened, brought, asserted, or commenced against it, its officers or
directors involving in any way the business, properties, or assets of such
party.
5.4 Shareholders' Approval. The Purchaser shall promptly submit this
Agreement and the transactions contemplated hereby for the approval of its
stockholders by majority written consent or at a meeting of stockholders and,
subject to the fiduciary duties of the Board of directors of the Purchaser
under applicable law, shall use its best efforts to obtain stockholder
approval and
-7-
8
adoption of this Agreement and the transactions contemplated hereby. In
connection with such written action by, or meeting of, stockholders, the
Purchaser shall prepare a proxy or information statement to be furnished to
the shareholders of the Purchaser setting forth information about this
Agreement and the transactions contemplated hereby. The Private Party shall
promptly furnish to the Purchaser all information, and take such other
actions, as may reasonably be requested in connection with any action to be
taken by the Purchaser in connection with the immediately preceding sentence.
The Private Company shall have the right to review and provide comments to
the proxy or information statement prior to mailing to the shareholders of
the Purchaser.
5.5 Covenant as to Tax or Accounting Consequences. It is expressly
understood and agreed that neither the Purchaser nor its officers or agents
has made any warranty or agreement, expressed or implied, as to the tax or
accounting consequences of the transactions contemplated by this Agreement or
the tax or accounting consequences of any action pursuant to or growing out
of this Agreement.
5.6 Indemnification. The Private Company and the Shareholder,
severally and not jointly, shall indemnify Purchaser for any loss, cost,
expense, or other damage {including, without limitation, attorneys' fees and
expenses) suffered by Purchaser resulting from, arising out of, or incurred
with respect to the falsity or the breach of any representation, warranty, or
covenant made by the Private Company or the Shareholder herein, and any
claims arising from the operations of the Private Company prior to the
Closing Date. Purchaser shall indemnify and hold the Private Company and the
Shareholder harmless from and against any loss, cost, expense, or other
damage {including, without limitation, attorneys' fees and expenses) resulting
from, arising out of, or incurred with respect to, or alleged to result from,
arise out of or have been incurred with respect to, the falsity or the breach
of any representation, covenant, warranty, or agreement made by Purchaser
herein, and any claims arising from the operations of Purchaser prior to the
Closing Date. The indemnity agreement contained herein shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any party and shall survive the consummation of the transactions
contemplated by this Agreement.
5.7 Publicity. The parties agree that no publicity, release, or
other public announcement concerning this Agreement or the transactions
contemplated by this Agreement shall be issued by any party hereto without
the advance approval of both the form and substance of the same by the other
parties and their counsel, which approval, in the case of any publicity,
release, or other public announcement required by applicable law, shall not
be unreasonably withheld or delayed.
5.8 Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall bear its own respective expenses incurred in
connection with the negotiation and preparation of this Agreement, in the
consummation of the transactions contemplated hereby, and in connection with
all duties and obligations required to be performed by each of them under
this Agreement.
-8-
9
5.9 Further Actions. Each of the parties hereto shall take all such
further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
5.10 Finder's Fee. The Private Company shall be responsible for the
payment of a finder's fee to Xxxxxxx Holdings, Inc., which fee shall be
payable in full on or before March 31, 1999. No other finder, broker, or
similar agent has been employed by or on behalf of the Purchaser, the Private
Company, or the Shareholder in connection with this Agreement or the
transaction contemplated hereby.
6. Conditions Precedent to the Purchaser's Obligations. Each and every
obligation of the Purchaser to be performed on the Closing Date shall be
subject to the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The representations
and warranties made by the Private Company and the Shareholder in this
Agreement or given on their behalf hereunder shall be substantially accurate
in all material respects on and as of the Closing Date with the same effect
as though such representations and warranties had been made or given on and
as of the Closing Date.
6.2 Performance of Obligations and Covenants. The Private Company
and the Shareholder shall have performed and complied with all obligations
and covenants required by this Agreement to be performed or complied with by
them prior to or at the Closing.
6.3 Officer's Certificate. The Purchaser shall have been furnished
with a certificate (dated as of the Closing Date and in form and substance
reasonably satisfactory to the Purchaser), executed by an executive officer
of the Private Company, certifying to the fulfillment of the conditions
specified in subsections 6.1 and 6.2 hereof.
6.4 No Litigation or Proceedings. There shall be no litigation or
any proceeding by or before any governmental agency or instrumentality pending
or threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
6.5 No Material Adverse Change. As of the Closing Date there shall
not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of the Private Company to conduct its
business or the earning power thereof on the same basis as in the past.
6.6 Shareholders' Approval. The holders of not less than a
majority of the outstanding common stock of the Purchaser shall have voted
for authorization and approval of this Agreement and the transactions
contemplated hereby.
-9-
10
6.7 Shareholders' Execution of Agreement. This Agreement shall have
been duly executed and delivered by each of the parties owning in the
aggregate all of the outstanding stock of the Private Company as of the
Closing Date.
7. Conditions Precedent to Obligations of the Private Company and the
Shareholder. Each and every obligation of the Private Company and the
Shareholder to be performed on the Closing Date shall be subject to the
satisfaction prior thereto of the following conditions:
7.1 Truth of Representations and Warranties. The representations and
warranties made by the Purchaser in this Agreement or given on its behalf
hereunder shall be substantially accurate in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date.
7.2 Performance of Obligations and Covenants. The Purchaser shall
have performed and complied with all obligations and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
7.3 Officer's Certificate. The Private Company shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to the Private Company), executed by an
executive officer of the Purchaser, certifying to the fulfillment of the
conditions specified in subsections 7.1 and 7.2 hereof.
7.4 No Litigation or Proceedings. There shall be no litigation or
any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
7.5 No Material Adverse Change. As of the Closing Date there shall
not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of the Purchaser to conduct its business.
7.6 No Liabilities. As of the Closing Date the Purchaser shall not
have aggregate liabilities in excess of $5,000.
8. Securities Law Provisions.
8.1 Restricted Securities. Each of the parties hereto, severally and
not jointly, represents that he, she, or it is aware that the shares issued or
transferred to him, her, or it will not have been registered pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
act, and thus will be restricted securities as defined in Rule 144 promulgated
by the Securities and Exchange Commission (the "SEC"). Therefore, under
current interpretations and applicable rules, he, she, or it will probably
have to retain such shares for a period of at least one year and at the
expiration of such one year period his, her, or its sales may be confined to
brokerage
-10-
11
transactions of limited amounts requiring certain notification filings with
the SEC and such disposition may be available only if the issuer is current
in its filings with the SEC under the Securities Exchange Act of 1934, as
amended, or other public disclosure requirements.
8.2 Non-distributive Intent. Each of the parties hereto, severally
and not jointly, covenants and warrants that the shares received are
acquired for his, her, or its own account and not with the present view
towards the distribution thereof and he, she, or it will not dispose of such
shares except (i) pursuant to an effective registration statement under the
1933 Act, or (ii) in any other transaction which, in the opinion of counsel
acceptable to the issuer, is exempt from registration under the 1933 Act, or
the rules and regulations of the SEC thereunder. In order to effectuate the
covenants of this subsection, an appropriate legend will be placed upon each
of the certificates of common stock issued or transferred pursuant to this
Agreement, and stop transfer instructions shall be placed with the transfer
agent for the securities.
8.3 Evidence of Compliance with Private Offering Exemption. Each of
the parties hereto, severally and not jointly, hereby represents and warrants
that he, she, or it, either individually or together with his, her, or its
representative, has such knowledge and experience in business and financial
matters that he, she, or it is capable of evaluating the risks of this
Agreement and the transactions contemplated hereby, and that the financial
capacity of such party is of such proportion that the total cost of such
person's commitment in the shares would not be material when compared with his,
her, or its total financial capacity. The Shareholder hereby acknowledges
receipt of the following documents pertaining to the Purchaser and this
transaction: The Purchaser Certificate of Incorporation; the current bylaws of
the Purchaser; the minute book of the Purchaser containing all existing
minutes and consents of actions by the board of directors and the
shareholders; the information statement dated December 21, 1998; the
financial statements of the Purchaser for the years ended December 31, 1998
and 1997; and a list of shareholders of the Purchaser prepared by the transfer
agent and dated December 23, 1998. Upon the written request of the issuer of
the securities issued or transferred pursuant to this Agreement, any party
hereto shall provide such issuer with evidence of compliance with the
requirements of any federal or state exemption from registration. The
Purchaser and the Private Company shall each file, with the assistance of the
other and its respective legal counsel, such notices, applications, reports,
or other instruments as may be deemed by each of them to be necessary or
appropriate in an effort to document reliance on such exemptions, unless an
exemption requiring no filing is available in the particular jurisdiction, all
to the extent and in the manner as may be deemed by such parties to be
appropriate.
9. Change of Management. Upon and as a condition of Closing this
Agreement.
9.1 Prior to Closing the Purchaser will present to its shareholders
for approval the election of Xxxxxxx Xxxxxxx as a director of the Purchaser
effective immediately following the Closing of this Agreement. Prior to
Closing the Private Company will furnish material information of Xxxxxxx
Xxxxxxx as nominee to be elected by the shareholders of the Purchaser.
Purchaser reserves the right to refuse to cause the nomination of such person
as director of Purchaser if, after review of the
-11-
12
foregoing information concerning said person, it is the opinion of Purchaser
that the election of such person would not be in the best interests of
Purchaser.
9.2 The Private Company reserves the right to terminate this
Agreement if nominee selected by it is not elected or appointed as set forth
above.
9.3 At Closing Xxxxxx X. Xxxxxx shall tender his resignation as an
officer and a director of the Purchaser concurrent with the appointment of Xx.
Xxxxxxx as a director.
10. Closing.
10.1 Time and Place. The Closing of this transaction ("Closing")
shall take place at 00 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx, at
10:00 am, on January 12th, 1999, or at such other time and place as the
parties hereto shall agree upon. Such date is referred to in this Agreement
as the "Closing Date."
10.2 Documents To Be Delivered b~ the Private Company and the
Shareholder. At the Closing the Private Company and the Shareholder shall
deliver to the Purchaser the following documents:
a. Certificates for the number of shares of common stock of
the Private Company in the manner and form required by subsection 1.1 hereof.
b. The certificate required pursuant to subsection 6.3 hereof.
c. Such other documents of transfer, certificates of authority,
and other documents as the Purchaser may reasonably request.
10.3 Documents To Be Delivered b~ the Purchaser. At the Closing the
Purchaser shall deliver to the Private Company and the Shareholder the
following documents:
a. Certificates for the number of shares of common stock of the
Purchaser as determined in sub-section 1.2 hereof.
b. The certificate required pursuant to subsection 7.3 hereof.
c. Such other documents of transfer, certificates of authority,
and other documents as the Private Company and the Shareholder may reasonably
request.
11. Termination. This Agreement may be terminated by the Purchaser or the
Private Company by notice to the other if, (i) at any time prior to the
Closing Date any event shall have occurred or any state of facts shall exist
that renders any of the conditions to its or their obligations to consummate
the transactions contemplated by this Agreement incapable of fulfillment, or
(ii) on
-12-
13
January 15, 1999, if the Closing shall not have occurred. Following
termination of this Agreement no party shall have liability to another party
relating to such termination, other than any liability resulting from the
breach of this Agreement by a party prior to the date of termination.
12. Rescission. Following Closing the Purchaser shall have the right to
rescind this Agreement, and the transactions set forth herein, if the Private
Company shall fail to make timely payments to Xxxxxxx Holdings, Inc.
("Xxxxxxx") of the finder's fee payable to such entity in connection with this
Agreement. The right to rescind this Agreement shall be exercisable by the
Company by written notice to the Private Company as set forth herein. This
right to rescind shall expire at the earlier of the full payment of such
finder's fee or April 5, 1999. In order to assure that implementation of such
rescission shall be possible, the parties hereto agree to the following
provisions:
12.1 Immediately following Closing the Private Company shall cause
Xx. Xxxxxxx to furnish to Xxxxxxx, to be held in escrow, an irrevocable
director resignation, which resignation shall be delivered to the Purchaser
if for any reason any finder's fee payment to Xxxxxxx is not made by the
required due date. Upon receipt of such resignation, the Purchaser shall
reappoint Xx. Xxxxxx as a director of the Purchaser. If all fees are paid on
or before the due dates, such resignation shall be destroyed.
12.2 After Closing if Xx. Xxxxxxx, or any other director
designated by the Private Company, shall resign, or if new directors are to
be appointed for any reason, Xxxxxxx shall designate the persons to fill any
vacancy or new appointment until all finder's fees have been paid to Xxxxxxx.
12.3 After Closing the Purchaser shall not issue any additional
shares of common stock (except for up to 500,000 shares) or amend the
certificate of incorporation, without the prior written approval of Xxxxxxx,
until all finder's fees have been paid to Xxxxxxx.
12.4 Immediately following Closing, the Shareholder shall place in
escrow with Xxxxxxx any stock certificates issued pursuant to this Agreement,
together with duly executed stock powers therefore, which certificates shall
be held by Xxxxxxx until the payment of all finder's fees to Xxxxxxx. In
addition, the Shareholder shall grant to Xxxxxxx an irrevocable proxy to vote
such shares so long as they are held in escrow by Xxxxxxx. If for any reason
the fees are not paid on or before the due dates, Xxxxxxx shall be permitted
to deliver the stock certificates and the stock powers therefore to the
transfer agent for cancellation. Upon payment of the fees, Xxxxxxx shall
forward the stock certificates to the Shareholder.
12.5 After Closing and until the payment of all finder's fees to
Xxxxxxx, the Private Company shall continue to conduct all operations of its
current or proposed business through such entity and no operations shall be
conducted through the Purchaser. In addition, during such period the
Purchaser shall not enter into any material agreement or obligation, or incur
any indebtedness, and the only permissible transaction by the Purchaser shall
be the issuance of up to 500,000 shares of common stock for cash.
-13-
14
13. Miscellaneous.
13.1 Notices. All communications provided for herein shall be in
writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant to
this subsection:
Purchaser: Xxxxxx X. Xxxxxx, President
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
With Copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Private Company
and Shareholder: Xxxxxxx Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx Xxxxxx, XX 00000
13.2 Default. Should any party to this Agreement default in any of
the covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee, which
may arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Utah.
13.3 Assignment. This Agreement may not be assigned in whole or in
part by the parties hereto without the prior written consent of the other
party or parties, which consent shall not be unreasonably withheld.
13.4 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
13.5 Partial Invalidity. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant, condition,
or provision of this Agreement shall be valid and shall be enforceable to the
fullest extent permitted by law.
13.6 Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations,
-14-
15
representations, prior discussions, letters of intent, and preliminary
agreements between the parties hereto relating to the subject matter of this
Agreement.
13.7 Interpretation of Agreement. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
13.8 Survival of Covenants. Etc. All covenants, representations,
and warranties made herein to any party, or in any statement or document
delivered to any party hereto, shall survive the making of this Agreement and
shall remain in full force and effect until the obligations of such party
hereunder have been fully satisfied.
13.9 Further Action. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action
as may be required to carry out fully the transactions contemplated herein.
13.1O Amendment. This Agreement or any provision hereof may not be
changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom
enforcement of the change, waiver, termination, or discharge is sought.
13.11 Full Knowledge. By their signatures, the parties acknowledge
that they have carefully read and fully understand the terms and conditions
of this Agreement, that each party has had the benefit of counsel, or has
been advised to obtain counsel, and that each party has freely agreed to be
bound by the terms and conditions of this Agreement.
13.12 Headings. The descriptive headings of the various sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
13.13 Counterparts. This Agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement
and Plan of Reorganization as of the day and year first above written.
PURCHASER: X.Xxxxx & Company, Ltd.
BY: /Signature/
----------------------------
Xxxxxx X. Xxxxxx, President
-15-
16
PRIVATE COMPANY: X.Xxxxx & Company
By: /Signature/
----------------------------
Xxxxxxx Xxxxxxx, President
SHAREHOLDER: Coslabs, Ltd.
By: /Signature/
----------------------------
Xxxxxxx Xxxxxxx, President
-16-
17
SCHEDULE "A"
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
NO. OF SHARES OF NO. OF SHARES OF
NAME OF THE PRIVATE COMPANY THE PURCHASER
SHAREHOLDER TO BE TRANSFERRED TO BE ISSUED
--------------- --------------- ---------------
Coslabs, Ltd. 42,000,000 3,740,000
-17-
