EXHIBIT 3.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this 28th, day of
May, 1997, among Connection Sports International, Inc., a Colorado corporation
("Connection"); DCH Technology, Inc., a California corporation, any and all of
its subsidiaries (hereinafter collectively referred to as "DCH") and its
shareholders (hereinafter "Shareholders").
Connection wishes to acquire all the issued and outstanding stock of DCH for and
in exchange for stock of Connection, in a stock for stock transaction intending
to qualify as a tax-free exchange pursuant to (S)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 I
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the Shareholders of DCH agree
to assign, transfer, and deliver to Connection, free and clear of all liens,
pledges, encumbrances, charges, restrictions or known claims of any kind, nature
or description, all of their shares of DCH stock, which constitutes all of the
issued and outstanding shares of DCH aggregating 39,275 common shares, and
Connection 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 Connection stock, par value $0.01, in the aggregate of
6,000,000 post split shares, as subject to the provisions of this Plan, which
shall represent, as a result thereof, approximately 95% of the then issued and
outstanding shares of Connection. Subsequent to the date hereof, the
Shareholders shall, upon the surrender of the DCH certificates representing
their respective beneficial and record ownership of all of the issued and
outstanding shares of DCH to Connection. 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 share of
the exchanged Connection stock as provided for herein. Upon the consummation of
the transaction contemplated herein, Connection shall be the beneficial and
record owner of all of the issued and outstanding stock of DCH.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number of
Connection 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 Connection 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 Connection at
the closing provided for in Section 2 (the "Closing") the shares of common stock
of DCH listed opposite their respective names on Exhibit A hereto (the "DCH
shares") in exchange for the post-split shares of the common stock of Connection
as outlined above in Section 1.1 hereof (the "Connection Stock"). All of such
shares of Connection common stock shall be issued at the closing to the
Shareholders, in the number shown opposite their respective names in Exhibit A.
The transfer of DCH shares by the Shareholders shall be effected by the delivery
to Connection 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 are the Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution thereof, and from time to
time thereafter, the Shareholders shall execute such additional instruments and
take such other action as Connection may request in order to move more
effectively sell, transfer and assign clear title and ownership in the DCH
shares to Connection.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held at the
offices of Connection Sports International, Inc. on May 29, 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 mad or other courier
service, conference telephone communications or as otherwise agreed upon by the
respective parties or their duly authorized representatives. In any event, the
closing of the transactions contemplated on the 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 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
Representatives, Warranties and Covenants of Connection
Connection represents and warrants to, and covenants with, the Shareholders and
DCH as follows:
3.1 Corporate Status. Connection is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado
incorporated on February 23, 1996. Connection has full corporated power and is
duly authorize, 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 Connection schedules (defined
below) are complete and correct copies of its Article of Incorporation and
Bylaws 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 and provision of the Connection Articles of Incorporation or Bylaws.
Connection has taken all action required by law, its Articles of Incorporation,
its Bylaws, or otherwise, to authorize the execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of Connection as of the date
hereof consists of 9,000,000 common shares, par value $0.01. As of the date
hereof there are 1,873,233 common shares of Connection issued and outstanding.
The foregoing shares constitute 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 Connection
common stock or with regard to any options, warrants or other contractual rights
to acquire any of Connection authorized but unissued common shares.
3.3 Financial Statements.
(a) Connection hereby warrants and covenants to DCH that the audited financial
statements of the period ended October 31, 1996, fairly and accurately represent
the financial condition of Connection and that the same will be prepared along
with the period ended as of the date of accordance with generally accepted
accounting principles consistently applied, on or before the expiration of
forty-five days from the date of Closing.
(b) Connection 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 Connection as submitted
heretofore to DCH for examination and review.
3.4 Subsidiaries. Connection has no subsidiaries.
3.5 Conduct of Business. Connection has no ongoing business.
3.6 Litigation. There are no material actions, suits, or proceedings, pending,
or, to the best knowledge of Connection, threatened by or against or effecting
Connection at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Connection does not have any knowledge of any default on its part with respect
to any judgement, order, writ, injunction, decree, warrant, rule, or regulation
any court, arbitrator, or governmental agency or instrumentality.
3.7 Books and Records. From the date hereof and for any reasonable prior
subsequent thereto, Connection and its present management will (i) give to the
Shareholders and DCH, 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 DCH, or their
duly authorized representatives, may inspect them; and (ii) furnish such
information concerning the properties and affairs of Connection as the
Shareholders and DCH, or their duly authorized representatives, may reasonably
request. Any such request to inspect Connection books shall be directed to
Connection counsel, Xxxx Xxxxx, at the address set forth herein under section
9.4 Notices.
3.8 Confidentiality. Until the Closing (and thereafter if there is no Closing),
Connection and its representatives will keep confidential any information which
they obtain from the Shareholders or from DCH concerning its properties, assets
and the proposed business operations of DCH. 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 May 29, 1997 or otherwise waived or extended in writing to a date
mutually agreeable to the parties hereto, Connection will return to DCH all
written matter with regard to DCH obtained in connection with the negotiations
or consummation of this Plan.
3.9 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 Connection 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 Bylaws of Connection.
3.10 Corporate Authority. Connection 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 DCH 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.
3.11 Consent of Shareholders. Connection hereby warrants and represents that the
Shareholders of Connection, being 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 Connection and DCH
pursuant to a stock-for-stock transaction in which Connection would acquire all
of the issued and outstanding shares of DCH in exchange for the issuance of
6,000,000 post reverse common shares of Connection.
3.12 Resignation of Director. Upon the Closing, the current directors of
Connection shall submit their resignations.
3.13 Special Covenants and Representations Regarding the Exchanged Connection
Stock. The consummation of this Plan and the transactions herein contemplated
include the issuance of the exchanged Connection 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 statutes 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
Connection a Letter(s) of Investment Intent in the form attached hereto as
Exhibit B and incorporated herein by reference.
3.14 Undisclosed or Contingent Liabilities. Connection hereby represents and
warrants that it has no undisclosed or contingent liabilities which have not
been disclosed to DCH.
3.15 Information. The information concerning Connection set forth in this Plan,
and the Connection 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 DCH in connection with this Plan.
3.16 Title and Related Matters. Connection 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 Connection balance sheets, free and
clear of any and all liens and encumbrances.
3.17 Contracts or Agreements. Connection is not bound by any material contracts,
agreements or obligation which it has not already disclosed to DCH.
3.18 Governmental Authorizations. Connection has all licenses, franchises,
permits and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof Connection shall use its best efforts to obtain as quickly as
possible a listing in Xxxxx'x OTC Industrial Manual, or some other recognized
manual, recognized by the various states as an exemption from registration
provisions of any such state for the purposes of interstate trading of
Connections' post-split stock. 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 governmental body is
required in connection with the execution and delivery by Connection of this
Plan and the consummation by DCH of the transaction contemplated hereby.
3.19 Compliance with Laws and Regulations. Connection 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 Connection or except to the extent that noncompliance
would not result in the occurrence of any material liability, not otherwise
disclosed to DCH.
3.20 Approval of Plan. The Board of Directors of Connection has authorized the
execution and delivery of this Plan by Connection and have approved the Plan and
the transactions. contemplated hereby. Connection has full power, authority, and
legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
3.21 Ratification by Shareholders. This Plan will be submitted to the
Shareholders of Connection for approval and ratification of the plan; the
adoption and ratification of the Plan by a majority of the Shareholders of
Connection is a condition precedent to the consummation of the Plan.
3.22 Investment Intent. Connection is acquiring the DCH shares to be transferred
to it under this Plan for investment and no with a view to the sale or
distribution thereof, and Connection has no commitment or present intention to
liquidate DCH or to sell or otherwise dispose of the DCH shares.
3.23 Unregistered Shares and Access to Information. Connection understands that
the offer and sale of the DCH 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 DCH or the DCH shares. Connection has been provided
with and reviewed all information concerning DCH the DCH 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 DCH shares.
Connection has made an investigation as to the merits and risks of its
acquisition of the DCH Shares and has had the opportunity to ask questions of,
and has received satisfactory answers from, the officers and directors of DCH
concerning DCH the DCH 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 DCH shares.
3.24 Connection Schedules. Connection has delivered to DCH the following items
listed below, hereafter referred to as the "Connection Schedules", which is
hereby incorporated by reference and made a part hereof A certification executed
by a duly authorized officer of Connection on or about the date within the Plan
is executed to certify that the Connection Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and Bylaws;
(b) Connections' Prospectus;
(c) Financial statements;
(d) Shareholder list;
(e) Consent of Directors to Plan;
(f) Officer's Certificate as required under Section 6.2 of the Plan;
(g) Opinion of counsel as required under Section 6.4 of the Plan;
(h) Certificate of Good Standing;
(i) Resignations of current Board of Directors; and
(j) Consent of Shareholders approving the Plan.
Section 4
Representations, Warranties and Covenant of DCH
DCH represents and warrants to, and covenants with, the Shareholders and
Connection as follows:
4.1 Corporate Status. DCH is a corporation duly organized, validly existing and
in good standing under the laws of the State of California on January 11, 1995.
DCH 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, required qualification. Included in
the DCH schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof The
execution and delivery of its Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of DCH's
Articles of Incorporation or Bylaws. DCH has taken all action required by law,
its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of DCH as of the date hereof
consists of 50,000 common shares, par value $0.01. As of the date hereof there
are 39,275 common shares of DCH issued and outstanding. The foregoing shares
constitute 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 DCH's common stock or with regard to
any options, warrants or other contractual rights to acquire any of DCH's
authorized but unissued common shares.
4.3 Financial Statements.
(a) DCH hereby warrants and covenants to Connection that the financial
statements of the period from incorporation to April 30, 1997, fairly and
accurately represent the financial condition of DCH and that the same will be
prepared along with the period ended as of the date of Closing on or before the
expiration of forty-five days from the date of Closing.
(b) DCH hereby warrants and represents that the unaudited financial statements
for the periods set forth in subparagraph (a), supra, fairly and accurately
represent the financial condition of DCH as submitted heretofore to Connection
for examination and review.
4.4 Conduct of Business. DCH 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 Connection, enter into any material
commitments except in the ordinary course of business.
DCH agrees that DCH will conduct itself in the following manner pending the
Closing:
(a) Certificate of Incorporation Bylaws. No change will be made in the
Certificate of Incorporation or Bylaws of DCH.
(b) Capitalization, etc, DCH will not make any change in its authorized or
issued shares of class, declare or pay and dividend or other distribution, or
issue, encumber, purchase or otherwise acquire any of its shares of any class.
4.5 Options, Warrants and Rights. Although DCH intends to enact and put into
effect various management and employee benefit plans in the near future, as of
the date hereof, DCH has no options, warrants or stock appreciation rights
related to the authorized but unissued DCH common stock. There are no existing
options, warrants, calls, or commitments of any character relating to the
authorized and unissued DCH common 'stock, except options, warrants, calls or
commitments, if any, to which DCH is not a party and by which it is not bound.
4.6 Title to Property. DCH 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 DCH, and the properties and assets of DCH are
subject to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
4.7 Litigation. There are no material actions, suits, or proceedings, pending,
or, to the best knowledge of DCH threatened by or against or effecting DCH at
law or in equity, or before any governmental agency or instrumentality, domestic
or foreign, or before any arbitrator of any kind; DCH does not have any
knowledge of any default on its part with respect to any judgement, order, writ,
injunction, decree, warrant, rule, or regulation any court, arbitrator, or
governmental agency or instrumentality.
4.8 Books and Records, From the date hereof and for any reasonable prior
subsequent thereto, DCH and its present management will (i) give to the
Shareholders and DCH 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 DCIL or their
duly authorized representatives, may inspect them; and (ii) furnish such
information concerning the properties and affairs of DCH as the Shareholders and
DCH or their duly authorized representatives, may reasonably request. Any such
request to inspect DCH's books shall be directed to DCH's representative, T.
Xxxxxx Xxxxxxx, at the address set forth herein under section 9.4 Notices.
4.9 Confidentiality. Until the Closing (and thereafter if there is no Closing),
DCH and its representatives will keep confidential any information which they
obtain from the Shareholders or from DCH concerning its properties, assets and
the proposed business operations of DCH. 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 May 29, 1997 or otherwise waived or extended in writing to a date
mutually agreeable to the parties hereto, DCH will return to Connection all
written matter with regard to Connection obtained in connection with the
negotiations or consummation of this Plan.
4.10 Investment Intent. The Shareholders represent and covenant that they are
acquiring the unregistered and restricted common shares of Connection 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
Connection 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, an Investment Letter similar in form to that attached hereto as
Exhibit B.
4.11 Unregistered Shares and Access to Information. DCH and the Shareholders
understand that the offer and sale of Connection post-split shares to be
exchanged for the DCH 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 Connection or Connection post-split stock., DCH and
the Shareholders have been provided with and reviewed all information concerning
Connection and Connection post-split shares, to be exchanged for the DCH shares.
DCH and Shareholders have made an investigation as to the merits and risks of
their acquisition of the Connection post-split shares, to be exchanged for the
DCH shares and have had the opportunity to ask questions of, and have received
satisfactory answers from, the officers and directors of Connection concerning
Connection post-split shares to be exchanged for the DCH 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 Connection post-split shares to be exchanged
for the DCH shares.
4.12 Title to Shares. The Shareholders are the beneficial and record owners,
free and clear of any hens and encumbrances, of whatever kind or nature, of all
of the shares of DCH of whatever class or series, which the Shareholders have
contracted to exchange.
4.13 Contracts.
(a) Set forth in the DCH Schedules are copies or descriptions of all material
contracts which written or oral, all agreements, franchises, licenses, or other
commitments to which DCH is a party by which DCH or its properties are bound.
(b) Except as may be set forth in the DCH Schedules, DCH is not a party to any
contract, agreement, corporate restriction, or subject to any judgement, order,
writ, injunction, decree, or award, which materially adversely effect the
business, operations, properties, assets, or conditions of DCH.
(c) Except as set forth in the DCH Schedules, DCH 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 business
with a value of less that $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 DCIL except for adequate value and -pursuant to
contract. DCH has not entered into any material transaction which is not listed
in the DCH Schedules or reflected in the DCH financial statements.
4.14 Material Contract Defaults. DCH 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 DCH
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 DCH 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.
4.15 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 DCH 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 Bylaws of DCH.
4.16 Governmental Authorizations. DCH has all licenses, franchises, permits and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date hereof.
Except for compliance with federal and state securities laws, no authorization,
approval, consent or order of, or registration, declaration, or filing with, any
court or governmental body is required in connection with the execution and
delivery by DCH of this Plan and the consummation by DCH of the transaction
contemplated hereby.
4.17 Compliance with Laws and Regulations. DCH 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 DCH or except to the extent that noncompliance would not result in the
occurrence of any material liability, not otherwise disclosed to Connection.
4.18 Approval of Plan. The Board of Directors of DCH has authorized the
execution and delivery of this Plan by DCH and have approved the Plan and the
transactions. contemplated hereby. DCH has full power, authority, and legal
right to enter into this Plan and to consummate the transactions contemplated
hereby.
4.19 Information. The information concerning DCH set forth in this Plan, and the
DCH 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 Connection in connection with this Plan,
4.20 DCH's Schedules. DCH has delivered to Connection the following items listed
below, hereafter referred to as the "DCH Schedules", which is hereby
incorporated by reference and made a part hereof A certification executed by a
duly authorized officer of DCH on or about the date within the Plan is executed
to certify that the DCH Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Resolutions of Board of Directors Meeting approving the Plan;
(c) Consent of Shareholder approving the Plan;
(d) Waiver of Notice of Shareholder's Meeting;
(e) Copies of all licenses, permits and other governmental authorizations,
requests or applications therefore pursuant to which DCH carries on or proposes
to carry on its business except those which, in the aggregate, are immaterial to
the present or proposed opinion business of DCH.
(f) A list of all 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;
(g) A schedule showing the name and location of each bank or other institution
with which DCH has an account and names of the authorized persons to draw
thereon or having access thereto;
(h) Financial statements of DCH;
(i) A schedule setting forth the Shareholders, together with the number of
shares owned beneficially or of record by each (also attached as Exhibit A);
(j) Officer's Certificate as required by Section 7.2 of the Plan;
(k) Certificate of Good Standing;
(1) Acceptance of Nominations as Directors.
Section 5 -
Special Covenants
5.1 Resignation of Directors. At the Closing, all of Connections' current
management will resign their respective positions, seriatim, as Directors.
5.2 DCH Information Incorporated in Connections' Reports. DCH represents and
warrants to Connection that all the information furnished under this Plan shall
be true and correct in all material respects and that there is no omission or
any material fact required to make the information stated not misleading. DCH
agrees to indemnify and hold Connection hardness, 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 become subject under applicable
law, or reimburse them for any legal or other expenses reasonably incurred by
them in connection with investigating or defending 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.
5.3 Special Covenants and Representations Regarding the Exchanged Connection
Stock. The consummation of this Plan and the transactions herein contemplated,
including the issuance of Connection post-split shares in exchange for all of
the issued and outstanding shares of DCH 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. Connection 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 DCH shares and the receipt of the Connection post-split
shares exchanged therefor, shall execute and deliver to Connection a letter of
investment intent to indicate, among other representations, that the Shareholder
is exchanging the DCH shares for Connection post-split 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.
5.4 Action Prior to Closing. Upon the execution hereof until the Closing date,
and the completion of the financial statements,
(a) DCH and Connection will (i) perform all of its obligations under
material contract, leases, insurance policies and/or documents relating to its
assets and 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 governmental authorities.
(b) Neither DCH nor Connection will (i) make any change in its Articles of
Incorporation or Bylaws except 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 DCH and the Shareholders
All obligations of DCH 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
Connection in this Plan were true when made and shall be true as of the Closing
date (except for changes permitted by this Plan) with the same force and effect
as if such representations and warranties were made at and as the Closing date;
and, Connection shall have performed and complied with by Connection prior to
Closing, unless waived or extended in writing by the parties hereto. DCH shall
have been furnished with a certificate, signed by a duly authorized executive
officer of Connection and dated the Closing date, to the foregoing effect.
6.2 Officers' Certificate. DCH and the Shareholders shall have been furnished
with a certificate dated the Closing date and signed by a duly authorized
executive officer of Connection, to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of Connection,
threatened, which might result in an action or 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 Connection.
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, nor shall any event have occurred which, with lapse of time or
the giving of notice or both, may cause or create any material adverse change in
the financial condition, business or operations of Connection, except as
otherwise disclosed to DCH.
6.4 Opinion of Counsel of Connection. Connection shall furnish to DCH and the
Shareholders an opinion dated as of the Closing date and in form and substance
satisfactory to DCH and the Shareholders to the effect that:
(a) Connection is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Colorado, and with all requisite
corporate power to perform its obligations under this Plan.
(b) The business of Connection, as presently conducted, including, upon the
consummation hereof, the ownership of all of the issued and outstanding shares
of DCR 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 Connection has complied to the best of
its knowledge in all material respects with all the 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, State of Colorado and Secretary of State of California, all
statements and reports required to be filed.
(c) The authorized and outstanding capital stock of Connection 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 Connection of any court or before or by any governmental
body which might materially effect the business of Connection or the financial
condition of Connection as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities against Connection.
(e) Connections' initial public offering file declared effective by the
Colorado Securities Commission on November 27, 1996, and was offered and sold in
accordance with and in compliance the rules and regulations of the Securities
Act of 1933, as amended. Subsequent to the termination of Connection' public
offering, no stop orders suspending the effectiveness of the distribution is or
was in effect, and no proceedings since termination thereof for that purpose are
pending before or threatened by any state or federal agency or authority.
(f) 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 Connection, or any
contract, agreement, indenture, mortgage, or order by which Connection is bound.
(g) This Plan constitutes a legal, valid and binding obligation of
Connection enforceable in accordance with its terms, subject to the effect or
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).
6.5 Good Standing. DCH shall have received a Certificate of Good Standing from
the State of Colorado, dated within sixty (60) days prior to Closing, but in no
event later than ten (10) days subsequent to the execution hereof certifying
that Connection is in good standing as a corporation in the State of Colorado.
6.6 Other Items. DCH and the Shareholders shall have received such further
documents, certifications or instruments relating to the transactions
contemplated hereby as DCH and the Shareholders may reasonably request.
6.7 Resignations and Designation of New Directors. DCH and the Shareholders
shall have received duly executed resignations from all of the directors and
officers of Connection dated and effective as of the Closing, and appointing the
person or persons designated by DCH, and who are listed in Exhibit C hereto, to
serve on the Board of Directors of Connection until the next annual meeting of
the stockholders and until their successors shall be elected and qualified.
6.8 Changes in Capitalization and Cancellation of Shares. Change of Name of
Connection. All resolutions required to complete the matters outlined in Section
1.4 hereof shall have been adopted, ratified and approved, save only for the
filing of the required and necessary documentation.
Section 7
Conditions Precedent to Obligations of Connection
All obligations of Connection under this Plan are subject, at its option, to the
fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties made by DCH
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, Connection shall have performed and complied with
by DCH prior to the Closing, unless waived or extended in writing by the parties
hereto. Connection shall have been furnished with a certificate, signed by a
duly authorized executive officer of DCH and dated the Closing date, to the
forgoing effect.
7.2 Officers' Certificate. Connection shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of DCH to the effect that no litigation, proceeding, investigation, or
inquiry is pending, or to the best knowledge of DCH, 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 DCH.
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 Connection, nor shall any event have occurred which, with lapse of
time of the giving notice or both, may cause or create any material adverse
change in the financial condition, business or operations of DCH except as
otherwise disclosed to Connection.
7.4 Good Standing. Connection shall have received a Certificate of Good
Standing from the State of California, dated within sixty (60) days prior to
Closing, but in no event later than ten (10) days subsequent to the execution
hereof certifying that DCH is in good standing as a corporation in the State of
California.
7.5 Dissenter's Rights Waived. The Shareholders of DCH, and each of them, agree
and hereby waive any dissenters' rights, if any, under the laws of the State of
California 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 DCH.
7.6 Other Items. Connection shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as Connection may reasonably request.
7.7 Registration of DCH Shares. In connection with the exchange of Connection
shares for DCH shares, Connection agrees, if practicable, and subject to the
consent of an underwriter(s) in the event Connection 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 Connection 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.
7.8 Execution of Investment Letter. The Shareholders shall have executed and
delivered copies of Exhibit B to Connection.
Section 8
Termination
8.1 Termination by DCH or the Shareholders. This plan may be terminated at any
time prior to the Closing date by action of DCH or the Shareholders, if
Connection 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
and warranties contained herein shall be inaccurate in any material respect.
8.2 Termination by Connection. This Plan may be terminated at any time prior to
the Closing date by action of Connection if DCH 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 Connection, expressed by action of its Board of Directors, DCH
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 of liability shall arise
hereunder. Each party shall bear its own costs in connection herewith.
Section 9
Shareholder's Representative
The Shareholders hereby irrevocably designate and appoint Xxxxx X. Xxxxxx, who
will act as agent and attorney in fact ("the Shareholder's Representative") with
full power and authority until the Closing to execute, deliver and receive 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 I hereof or increase the extent
of their obligation to Connection hereunder, unless agreed in writing by Xxxxx
X. Xxxxxx.
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
purposes of the Plan.
10.2 Payments of Estimated Costs and Fees. Connection and DCH mutually determine
and agree that Connection 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, DCH 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
Connections' shareholders which shall contain information required by Regulation
240.14f- I 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 Connection Sports:
Connection Sports International, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xx 00000
With a copy to:
Xxxx Xxxxx, Esq.
0000 Xxxxx Xxxx # 000
Xxxxxxx, XX 00000
If to DCH Technology, Inc.:
DCH Technology, Inc.
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
If to the Shareholders Representative:
Xxxxx X. Xxxxxx
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 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 Connection, DCH 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 Colorado, 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. DCH and
Connection 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; an no attorney's opinion or tax revenue ruling has been
obtained with respect to the tax consequences or 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 with 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, of 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 all parties
hereto, with respect to any of the terms contained herein, and any ten-n or
condition of this Plan may be waived of the time for performance thereof may be
extended 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 be otherwise 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.
Attest: Connection Sports International, Inc.:
/s/ XXXXX XXXXXXX
By: Xxxxx Xxxxxxx, Secretary
Attest: DCH Technology, Inc.:
/s/ XXXXX XXXXXXXX
By: Xxxxx X. Xxxxxxxx, Secretary
Attest: Shareholders Representative:
/s/ XXXXX X XXXXXX
By: Xxxxx X. Xxxxxx
