EXHIBIT 7.1
Plan of Reorganization and Exchange Agreement
This Plan of Reorganization and Exchange Agreement (the "Agreement") is
made and entered into as of the 30th day of April 1999 by and between Zeros &
Ones, Inc., a Delaware corporation ("ZOI"), Commercial Labor Management, Inc., a
Nevada corporation ("CLMI"), the individuals listed in Exhibit A to this
Agreement (the "ZOI Shareholders"), Xxxx Xxxxxxxxxx, an individual
("Xxxxxxxxxx"), and Xxxxxx X. Xxxxxx ("Xxxxxx"), an individual ("Xxxxxx"), with
respect to the following facts:
RECITALS
A. The ZOI Shareholders own 100% of the total issued and
outstanding capital stock of ZOI.
B. ZOI is engaged in the business of selling products on the
Internet, conducting the auction of products on the Internet,
providing Internet and media consulting services, designing
and operating Internet websites, building and licensing
Internet core technology, providing software consulting
services, producing CD-ROM titles, providing other multimedia
consulting services, and conducting research of digital
compression technology and three dimensional high definition
television.
C. CLMI is a public reporting company trading on the OTC
Bulletin Board.
D. CLMI desires to acquire 100% of the total issued and
outstanding capital stock of ZOI in exchange for 6,000,000
shares of the common stock of CLMI, to be issued to the ZOI
Shareholders in accordance with Exhibit A of this Agreement.
E. The plan of reorganization evidenced by this Agreement is
intended to be a tax free reorganization under Section 368 of
the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency to which are hereby acknowledged by the parities to this Agreement,
and in light of the above recitals to this Agreement, the parties to this
Agreement hereby agree as follows:
1. Exchange of Equity Interests
In consideration for the issuance of a total of 6,000,000 shares of the
Common Stock, par value $.001 per share, of CLMI to the ZOI Shareholders, the
ZOI Shareholders hereby agree to convey to CLMI all of the ZOI Shareholders'
capital stock and right, title and interest in and to ZOI, effective as of the
Closing (as hereinafter defined) of this Agreement.
2. Closing and Further Acts
The closing of the exchange (the "Closing") will occur upon the
satisfaction or waiver of the conditions set forth in Section 7 of this
Agreement, but no later than June 30, 1999. At the Closing, the ZOI Shareholders
will tender to CLMI certificates and any other documents evidencing 100% of the
ZOI Shareholders' ownership in ZOI, and CLMI will deliver to the ZOI
Shareholders stock certificates evidencing 6,000,000 shares of the Common Stock,
par value $.001 per share, of CLMI being issued to the ZOI Shareholders pursuant
to this Agreement, allocated among them as indicated in Exhibit A to this
Agreement. Upon the closing, Xxxxxx X. Xxxxxx will resign as an officer and
director of CLMI and ZOI will appoint the new officers and directors of CLMI.
Upon the Closing, Xxxxxxxxxx and Xxxxxx will each tender to CLMI for redemption
and cancellation 1,900,000 shares of CLMI Common Stock which they currently own.
CLMI will deliver to ZOI all of its books, records and bank accounts at the
Closing. All parties to this Agreement hereby agree to execute all other
documents and take all other action which are reasonably necessary or
appropriate in order to effect all of the transactions contemplated by this
Agreement.
3. Covenants of CLMI
3.1 Covenants of CLMI
The intangible assets and claims presently owned by CLMI, including its
lawsuit against CNG Communications, Inc. and Xxxx Xxxxxx, shall remain in CLMI
after the Closing. CLMI hereby agrees that if, after the execution of this
Agreement and prior to the Closing date, ZOI issues up to 5,000,000 additional
shares of its Common Stock for a price agreed to by CLMI and up to 320,000
warrants (the "ZOI Warrants") with an exercise price agreed to by CLMI, CLMI
will offer the new shareholders of ZOI who purchase said shares and warrants an
exchange pursuant to which one share of CLMI Common Stock would be offered in
consideration for each new share of ZOI Common Stock outstanding, and one
warrant to purchase one share of CLMI Common Stock at the agreed exercise price
would be offered for each outstanding ZOI Warrant.
Upon Closing, CLMI will have no accounts payable.
3.2 Covenants of Xxxxxxxxxx and Xxxxxx
On the Closing, Xxxxxxxxxx and Xxxxxx each covenant to tender for
cancellation 1,900,000 shares of the Common Stock of CLMI owned by them. Xxxxxx
agrees to resign as an officer and director of CLMI, effective on the Closing.
4. Covenants of ZOI and ZOI Shareholders
4.1 ZOI Financial Condition
ZOI and the ZOI Shareholders hereby covenant that prior to Closing, (i)
ZOI will have positive net stockholders' equity of at least $5,000,000, and (ii)
ZOI and each of its subsidiaries which will be in existence more than 60 days
after the Closing will deliver audited financial statements for the years ending
and as of December 31, 1997 and 1998, or from inception through December 31,
1998.
4.2 Cash Payment
Upon execution of this Agreement, ZOI will tender $75,000 in cash to
CLMI or its designee, from which CLMI will pay all accounts payable set forth on
the CLMI Financial Statements (as hereinafter defined), or which are incurred
after December 31, 1998, with the balance allocable as determined by CLMI in its
sole and absolute discretion. On or before May 1, 1999, ZOI will tender an
additional $15,000 to CLMI to be allocated (i) first, to pay any CLMI accounts
payable, and then (ii) as determined by CLMI in its sole and absolute
discretion. On May 15, 1999, ZOI will tender to CLMI an additional $15,000, on
June 15, 1999, ZOI will tender to CLMI an additional $15,000, and on the sooner
to occur of June 30, 1999 or the Closing, ZOI will tender to CLMI a payment of
$87,500 in cash, all to be allocated in the same manner as described above in
Section 4.2 of this Agreement. ZOI will make said checks payable as designated
by CLMI.
5. Representations and Warranties of ZOI.
ZOI represents and warrants to CLMI (representations with respect to
ZOI subsidiaries are as of the Closing) as follows:
5.1 Power and Authority; Binding Nature of Agreement.
ZOI and the ZOI Shareholders have full power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance of this Agreement by them has been duly authorized by
all necessary action on their part. Assuming that this Agreement is a valid and
binding obligation of each of the other parties hereto, this Agreement is a
valid and binding obligation of ZOI and the ZOI Shareholders.
5.2 Subsidiaries.
There is no corporation, general partnership, limited partnership,
joint venture, association, trust or other entity or organization which ZOI
directly or indirectly controls or in which ZOI directly or indirectly owns any
equity or other interest, other than those listed on Exhibit B to this
Agreement.
5.3 Good Standing.
ZOI and its subsidiaries (i) are duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated,
(ii) have all necessary power and authority to own their assets and to conduct
their business as it is currently being conducted, and (iii) are duly qualified
or licensed to do business and are in good standing in every jurisdiction (both
domestic and foreign) where such qualification or licensing is required.
5.4 Charter Documents and Corporate Records.
ZOI and its subsidiaries have delivered to CLMI complete and correct
copies of (i) the articles of incorporation, bylaws and other charter or
organizational documents of ZOI and its subsidiaries, including all amendments
thereto, (ii) the stock records of ZOI and its subsidiaries, and (iii) the
minutes and other records of the meetings and other proceedings of the
shareholders and directors of ZOI and its subsidiaries. ZOI and its subsidiaries
are not in violation or breach of (i) any of the provisions of their articles of
incorporation, bylaws or other charter or organizational documents, or (ii) any
resolution adopted by their shareholders or directors. There have been no
meetings or other proceedings of the shareholders or directors of ZOI or its
subsidiaries that are not fully reflected in the appropriate minute books or
other written records of ZOI and its subsidiaries.
5.5 Capitalization.
The authorized capital stock of ZOI consists of 50,000,000 shares of
common stock, par value $.001 per share, of which 6,000,000 shares are issued
and outstanding. All of the outstanding shares of the capital stock of ZOI are
validly issued, fully paid and nonassessable, and have been issued in full
compliance with all applicable federal, state, local and foreign securities laws
and other laws. Except as disclosed in Exhibit C to this Agreement, there are no
(i) outstanding options, warrants or rights to acquire any shares of the capital
stock or other securities of ZOI, (ii) outstanding securities or obligations
which are convertible into or exchangeable for any shares of the capital stock
or other securities of ZOI, or (iii) contracts or arrangements under which ZOI
is or may become bound to sell or otherwise issue any shares of its capital
stock or any other securities.
5.6 Financial Statements.
ZOI has or will deliver to CLMI the following financial statements
relating to ZOI and any subsidiaries which are expected to be in existence more
than 60 days after the Closing and which have had material operations (the "ZOI
Financial Statements"): (i) the audited balance sheet of ZOI and its
subsidiaries as of December 31, 1998 and December 31, 1997; and (ii) the
unaudited statements of income and retained earnings, stockholders' equity and
changes in financial position of ZOI and its subsidiaries for the years ended
December 31, 1998 and December 31, 1997; and (iii) supporting supplemental
schedules. Except as stated therein or in the notes thereto, the ZOI Financial
Statements: (a) present fairly the financial position of ZOI and its
subsidiaries as of the respective dates thereof and the results of operations
and changes in financial position of ZOI and its subsidiaries for the respective
periods covered thereby; and (b) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered.
5.7 Absence of Changes.
Except as otherwise disclosed to CLMI in writing in Exhibit D to this
Agreement, since December 31, 1998:
(a) There has not been any material adverse change in the
business, condition, assets, operations or prospects of ZOI or its
subsidiaries and no event has occurred that might have an adverse
effect on the business, condition, assets, operations or prospects of
ZOI or its subsidiaries.
(b) ZOI or its subsidiaries have not (i) declared, set aside
or paid any dividend or made any other contribution in respect of any
shares of capital stock, nor (ii) repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities.
(c) ZOI or its subsidiaries have not sold or otherwise issued
any shares of capital stock or any other securities.
(d) ZOI or its subsidiaries have not amended their articles of
incorporation, bylaws or other charter or organizational documents, nor
have they effected or been a party to any merger, recapitalization,
reclassification of shares, stock split, reverse stock split,
reorganization or similar transaction.
(e) ZOI has not formed any subsidiary or contributed any funds
or other assets to any subsidiary, other than as disclosed in Exhibit B
of this Agreement.
(f) ZOI has not purchased or otherwise acquired any assets,
nor has it leased any assets from any other person, except in the
ordinary course of business consistent with past practice.
(g) ZOI or its subsidiaries have not made any capital
expenditure outside the ordinary course of business or inconsistent
with past practice, or in an amount exceeding ten thousand dollars
($10,000), and the total amount of the capital expenditures made by ZOI
or its subsidiaries have not exceeded twenty thousand dollars
($20,000), without CLMI's concent.
(h) ZOI or its subsidiaries has not sold or otherwise
transferred any assets to any other person, except in the ordinary
course of business consistent with past practice and at a price equal
to the fair market value of the assets transferred.
(i) There has not been any loss, damage or destruction to any
of the properties or assets of ZOI or its subsidiaries (whether or not
covered by insurance).
(j) ZOI or its subsidiaries have not written off as
uncollectible any indebtedness or accounts receivable, except for
write-offs that were made in the ordinary course of business consistent
with past practice and that involved less than one hundred dollars
($100) singly and less than one thousand dollars ($1,000) in the
aggregate.
(k) ZOI or its subsidiaries have not leased any assets to any
other person except in the ordinary course of business consistent with
past practice and at a rental rate equal to the fair rental value of
the leased assets.
(l) ZOI or its subsidiaries have not mortgaged, pledged,
hypothecated or otherwise encumbered any assets, except in the ordinary
course of business consistent with past practice.
(m) ZOI or its subsidiaries have not entered into any contract
or incurred any debt, liability or other obligation (whether absolute,
accrued, contingent or otherwise), except for (i) contracts that were
entered into in the ordinary course of business consistent with past
practice and that have terms of less than six months and do not
contemplate payments by or to ZOI or its subsidiaries which will
exceed, over the term of the contract, three thousand dollars ($3,000)
in the aggregate, and (ii) current liabilities incurred in the ordinary
course of business consistent with the past practice.
(n) ZOI or its subsidiaries have not made any loan or advance
to any other person, except for advances that have been made to
customers in the ordinary course of business consistent with past
practice and that have been properly reflected as "accounts
receivables."
(o) ZOI or its subsidiaries have not paid any bonus to, or
increased the amount of the salary, fringe benefits or other
compensation or remuneration payable to, any of the directors, officers
or employees of ZOI or its subsidiaries.
(p) No contract or other instrument to which ZOI or any of its
subsidiaries are or were a party or by which ZOI or any of its
subsidiaries or any of their assets are or were bound has been amended
or terminated, except in the ordinary course of business consistent
with past practice.
(q) ZOI or its subsidiaries have not discharged any lien or
discharged or paid any indebtedness, liability or other obligation,
except for current liabilities that (i) are reflected in the ZOI
Financial Statements as of December 31, 1998 or have been incurred
since December 31, 1998 in the ordinary course of business consistent
with past practice, and (ii) have been discharged or paid in the
ordinary course of business consistent with past practice.
(r) ZOI or its subsidiaries have not forgiven any debt or
otherwise released or waived any right or claim, except in the ordinary
course of business consistent with past practice.
(s) ZOI or its subsidiaries have not changed its methods of
accounting or its accounting practices in any respect.
(t) ZOI or its subsidiaries have not entered into any
transaction outside the ordinary course of business or inconsistent
with past practice.
(u) ZOI or its subsidiaries have not agreed or committed
(orally or in writing) to do any of the things described in clauses (b) through
(t) of this Section 5.7.
5.8 Absence of Undisclosed Liabilities.
ZOI and its subsidiaries have no debt, liability or other obligation of
any nature (whether due or to become due and whether absolute, accrued,
contingent or otherwise) that is not reflected or reserved against in the ZOI
Financial Statements as of December 31, 1998, except for obligations incurred
since December 31, 1998 in the ordinary course of business consistent with past
practice.
5.9 Contracts.
ZOI and its subsidiaries have delivered to CLMI complete and correct
copies of all of the contracts and other instruments including all amendment
hereto. All of such contracts and other instruments are valid and in full force
and effect, and are enforceable in accordance with their terms. There is no
existing default by any person under any of said contracts or other instruments,
and there exists no condition or set of circumstance which, with notice or lapse
of time or both, would constitute such a default.
5.10 Title to Personal Property.
ZOI and its subsidiaries have good, valid and marketable title to all
of their personal property (both tangible and intangible) and interests therein,
including without limitation all of the personal property reflected in the ZOI
Financial Statement as of December 31, 1998. All of such personal property and
interests therein are owned free and clear of any liens, pledges, security
interests, claims, equities, options, charges, encumbrances or restrictions.
5.11 Tax Matters.
All federal, state, local and foreign tax returns required to be filed
by ZOI and its subsidiaries have been properly prepared and duly filed, and all
taxes required to be paid by, or claimed by any federal, state, local or foreign
taxing authority to be payable by, ZOI and its subsidiaries have been paid in
full. The provisions for taxes reflected in the ZOI Financial Statement as of
December 31, 1998 are adequate for all taxes payable with respect to the period
prior to December 31, 1998. There is no (i) pending audit or examination of ZOI
or its subsidiaries (or of any of the tax returns thereof) being conducted by
any federal, state, local or foreign taxing authority, (ii) pending or
threatened claim or dispute relating to the payment of any taxes by ZOI or its
subsidiaries, (iii) basis upon which any federal, state, local or foreign taxing
authority may make any claim for the payment of additional taxes by ZOI or its
subsidiaries, or (iv) outstanding agreement or waiver extending the statutory
limitations period applicable to the payment of any taxes by ZOI or its
subsidiaries.
5.12. Compliance With Laws; Licenses and Permits.
ZOI and its subsidiaries, to their knowledge, are not in violation of,
nor have they failed to conduct their business in full compliance with, any
applicable federal, state, local or foreign laws, regulations, rules, treaties,
rulings, orders, directives or decrees. ZOI and its subsidiaries have delivered
to CLMI complete and correct copies of all of the licenses, permits,
authorizations and franchises to which ZOI or its subsidiaries are subject and
all said licenses, permits, authorizations and franchises are valid and in full
force and effect. Said licenses, permits, authorizations and franchises
constitute all of the licenses, permits, authorizations and franchises necessary
to permit ZOI and its subsidiaries to conduct their business in the manner in
which it is now being conducted, and ZOI and their subsidiaries are not in
violation or breach of any of the terms, requirements or conditions of any of
said licenses, permits, authorizations or franchises.
5.13. Title to ZOI Stock.
The ZOI Shareholders have good, valid and marketable title to all of
their stock in ZOI, and can convey good title to said stock to CLMI free and
clear of any liens, claims, encumbrances or security interests.
5.14. Litigation.
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to ZOI's knowledge, threatened
against or with respect to ZOI or its subsidiaries which (i) if adversely
determined would have an adverse effect on the business, condition, assets,
operations or prospects of ZOI or its subsidiaries, or (ii) challenges or would
challenge any of the actions required to be taken by the ZOI under this
Agreement. There exists no basis for any such action, suit, proceeding, dispute,
litigation, claim, complaint or investigation.
5.15 Non-Contravention.
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of ZOI or its subsidiaries; (ii) contravene or
result in a violation of any resolution adopted by the shareholders or directors
of ZOI or its subsidiaries; (iii) result in a violation or breach of, or give
any person the right to declare (whether with or without notice or lapse of
time) a default under or to terminate, any agreement or other instrument to
which ZOI or the ZOI Shareholders are a party or by which ZOI or its
subsidiaries or any of their assets or any ZOI Shareholders are bound; (iv) give
any person the right to accelerate the maturity of any indebtedness or other
obligation of ZOI or its subsidiaries; (v) result in the loss of any license or
other contractual right of ZOI or its subsidiaries; (vi) result in the loss of,
or in a violation of any of the terms, provisions or conditions of, any
governmental license, permit, authorization or franchise of ZOI or its
subsidiaries; (vii) result in the creation or imposition of any lien, charge,
encumbrance or restriction on any of the assets of ZOI or its subsidiaries or on
the ZOI Shareholders' stock in ZOI; (viii) result in the reassessment or
revaluation of any property of ZOI or its subsidiaries; by any taxing authority
or other governmental authority; (ix) result in the imposition of, or subject
ZOI or its subsidiaries; to any liability for, any conveyance or transfer tax or
any similar tax; or (x) result in a violation of any law, rule, regulation,
treaty, ruling, directive, order, arbitration award, judgment or decree to which
ZOI or its subsidiaries or any of their assets or any of the ZOI Shareholders'
stock in ZOI is subject.
5.16. Approvals.
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by ZOI or its subsidiaries or the ZOI Shareholders in connection with
the execution, delivery or performance of this Agreement, including the
conveyance to CLMI of the shares of the ZOI Shareholders' stock in ZOI being
acquired by CLMI hereunder.
5.17. Brokers.
ZOI has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to ZOI's knowledge, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transaction.
5.18. Full Disclosure.
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to CLMI by or on behalf of
ZOI or the ZOI Shareholders contains any untrue statement of a material fact or
omits to state a material fact necessary to make the representations and other
statements contained herein and therein not misleading.
5.19. Representations True on Closing Date.
The representations and warranties of ZOI and the ZOI Shareholders set
forth in this Agreement are true and correct on the date hereof, and will be
true and correct on the Closing Date as though such representations and
warranties were made as of the Closing Date.
5.20 Non-Distributive Intent.
The shares of CLMI stock being acquired by the ZOI Shareholders
pursuant to this Agreement are not being acquired by the ZOI Shareholders with a
view to the public distribution of them. The ZOI Shareholders acknowledge and
agree that the CLMI stock acquired by them pursuant to this Agreement has not
been registered or qualified under federal or state securities laws, and may not
be sold, conveyed, transferred, assigned or hypothecated without being
registered under the Securities Act of 1933, as amended, and applicable state
law, or in the alternative submission of evidence reasonably satisfactory to
CLMI that an exemption from registration is available.
6. Representations and Warranties of CLMI.
CLMI represents and warrants to ZOI and the ZOI Shareholders as
follows:
6.1 Power and Authority; Binding Nature of Agreement.
CLMI has full power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by CLMI has been duly authorized by all necessary action on its
part. Assuming that this Agreement is a valid and binding obligation of each of
the other parties hereto, this Agreement is a valid and binding obligation of
CLMI.
6.2 Good Standing.
CLMI (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated, (ii) has all necessary
power and authority to own its assets and to conduct its business as it is
currently being conducted, and (iii) is duly qualified or licensed to do
business and is in good standing in every jurisdiction (both domestic and
foreign) where such qualification or licensing is required.
6.3 Charter Documents and Corporate Records.
CLMI has delivered to the ZOI Shareholders and ZOI complete and correct
copies of (i) the articles of incorporation, bylaws and other charter or
organizational documents of CLMI, including all amendments thereto, (ii) the
stock records of CLMI, and (iii) the minutes and other records of the meetings
and other proceedings of the shareholders and directors of CLMI. CLMI is not in
violation or breach of (i) any of the provisions of its articles of
incorporation, bylaws or other charter or organizational documents, or (ii) any
resolution adopted by its shareholders or directors. There have been no meetings
or other proceedings of the shareholders or directors of CLMI that are not fully
reflected in the appropriate minute books or other written records of CLMI.
6.4 Capitalization.
The authorized capital stock of CLMI consists of 50,000,000 shares of
common stock, par value $.001 per share, of which 4,587,941shares are issued and
outstanding, and 2,000,000 share of preferred stock, none of which are issued or
outstanding. All of the outstanding shares of the capital stock of CLMI are
validly issued, fully paid and nonassessable, and have been issued in full
compliance with all applicable federal, state, local and foreign securities laws
and other laws. Except as disclosed in Section 3 of this Agreement, there are no
(i) outstanding options, warrants or rights to acquire any shares of the capital
stock or other securities of CLMI, (ii) outstanding securities or obligations
which are convertible into or exchangeable for any shares of the capital stock
or other securities of CLMI, or (iii) contracts or arrangements under which CLMI
is or may become bound to sell or otherwise issue any shares of its capital
stock or any other securities.
6.5 Financial Statements.
CLMI has delivered to ZOI and the ZOI Shareholders the following
financial statements (the "CLMI Financial Statements"): (i) the audited balance
sheet of CLMI as of December 31, 1998 and December 31, 1997; and (ii) the
audited statements of income and retained earnings, stockholders' equity and
changes in financial position of CLMI for the years ended December 31, 1998 and
December 31, 1997; and (iii) supporting supplemental schedules. Except as stated
therein or in the notes thereto, the CLMI Financial Statements: (a) present
fairly the financial position of CLMI as of the respective dates thereof and the
results of operations and changes in financial position of CLMI for the
respective periods covered thereby; and (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods covered.
6.6 Absence of Changes.
Except as otherwise disclosed to ZOI in writing in Exhibit D to this
Agreement, since December 31, 1998, there has not been any material adverse
change in the business, condition, assets, operations or prospects of CLMI and
no event has occurred that might have an adverse effect on the business,
condition, assets, operations or prospects of CLMI.
6.7 Absence of Undisclosed Liabilities.
CLMI has no debt, liability or other obligation of any nature (whether
due or to become due and whether absolute, accrued, contingent or otherwise)
that is not reflected or reserved against in the CLMI Financial Statements as of
December 31, 1998, except for obligations incurred since December 31, 1998 in
the ordinary course of business consistent with past practice.
6.8 Litigation.
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to CLMI's knowledge, threatened
against or with respect to CLMI which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
CLMI, or (ii) challenges or would challenge any of the actions required to be
taken by CLMI under this Agreement. There exists no basis for any such action,
suit, proceeding, dispute, litigation, claim, complaint or investigation.
6.9 Non-Contravention.
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of CLMI; (ii) contravene or result in a violation of
any resolution adopted by the shareholders or directors of CLMI; (iii) result in
a violation or breach of, or give any person the right to declare (whether with
or without notice or lapse of time) a default under or to terminate, any
agreement or other instrument to which CLMI is a party or by which CLMI or any
of its assets are bound; (iv) give any person the right to accelerate the
maturity of any indebtedness or other obligation of CLMI; (v) result in the loss
of any license or other contractual right of CLMI; (vi) result in the loss of,
or in a violation of any of the terms, provisions or conditions of, any
governmental license, permit, authorization or franchise of CLMI; (vii) result
in the creation or imposition of any lien, charge, encumbrance or restriction on
any of the assets of CLMI; (viii) result in the reassessment or revaluation of
any property of CLMI by any taxing authority or other governmental authority;
(ix) result in the imposition of, or subject CLMI to any liability for, any
conveyance or transfer tax or any similar tax; or (x) result in a violation of
any law, rule, regulation, treaty, ruling, directive, order, arbitration award,
judgment or decree to which CLMI or any of its assets is subject.
6.10 Approvals.
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by CLMI in connection with the execution, delivery or performance of
this Agreement.
6.11 Brokers.
CLMI has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to CLMI's knowledge, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection with
such transactions.
6.12 Full Disclosure.
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to ZOI by or on behalf of
CLMI contains any untrue statement of a material fact or omits to state a
material fact necessary to make the representations and other statements
contained herein and therein not misleading.
6.13 Representations True on Closing Date.
The representations and warranties of CLMI set forth in this Agreement
are true and correct on the date hereof, and will be true and correct on the
Closing Date as though such representations and warranties were made as of the
Closing Date.
7. Conditions to Closing
7.1 Conditions Precedent to CLMI's Obligation To Close
CLMI's obligation to close the plan of reorganization and exchange as
contemplated in this Agreement is conditioned upon the occurrence or waiver by
CLMI of the following:
(a) All representations and warranties of ZOI made in
this Agreement or in any exhibit hereto delivered by
ZOI shall be true and correct as of the Closing date
with the same force and effect as if made on and as
of that date.
(b) ZOI and the ZOI Shareholders shall have performed
and complied with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by ZOI and the ZOI
Shareholders prior to or at the Closing date.
7.2 Conditions Precedent to ZOI's and ZOI Shareholders'
Obligation To Close
ZOI's and ZOI Shareholders' obligation to close the plan of
reorganization and exchange as contemplated in this Agreement is conditioned
upon the occurrence or waiver by ZOI or the ZOI Shareholders of the following:
(a) All representations and warranties of CLMI
made in this Agreement or in any exhibit hereto delivered by CLMI shall
be true and correct on and as of the Closing date with the same force
and effect as if made on and as of that date.
(b) CLMI shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or
complied with by CLMI prior to or at the Closing Date.
8. Injunctive Relief
8.1. Damages Inadequate.
Each party acknowledges that it would be impossible to measure in money
the damages to the other party if there is a failure to comply with any
covenants and provisions of this Agreement, and agrees that in the event of any
breach of any covenant or provision, the other party to this Agreement will not
have an adequate remedy at law.
8.2. Injunctive Relief.
It is therefore agreed that the other party to this Agreement who is
entitled to the benefit of the covenants and provisions of this Agreement which
have been breached, in addition to any other rights or remedies which they may
have, shall be entitled to immediate injunctive relief to enforce such covenants
and provisions, and that in the event that any such action or proceeding is
brought in equity to enforce them, the defaulting or breaching party will not
urge a defense that there is an adequate remedy at law.
9. Waivers.
If any party shall at any time waive any rights hereunder resulting
from any breach by the other party of any of the provisions of this Agreement,
such waiver is not to be construed as a continuing waiver of other breaches of
the same or other provisions of this Agreement. Resort to any remedies referred
to herein shall not be construed as a waiver of any other rights and remedies
to which such party is entitled under this Agreement or otherwise.
10. Successors and Assigns.
Each covenant and representation of this Agreement shall inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
11. Entire and Sole Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written agreement signed by the parties against whom the amendment is sought to
be enforced.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, and the venue for any action hereunder
shall be in the appropriate forum in the County of Los Angeles, State of
California.
13. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
14. Attorneys' Fees and Costs.
In the event that either party must resort to legal action in order to
enforce the provisions of this Agreement or to defend such action, the
prevailing party shall be entitled to receive reimbursement from the
nonprevailing party for all reasonable attorneys' fees and all other costs
incurred in commencing or defending such action, or in enforcing this Agreement,
including but not limited to post judgment costs.
15. Assignment.
This Agreement shall not be assignable by any party without prior
written consent of the other parties.
16. Remedies.
Except as otherwise expressly provided herein, none of the remedies set
forth in this Agreement are intended to be exclusive, and each party shall have
all other remedies now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
17. Section Headings.
The section headings in this Agreement are included for convenience
only, are not a part of this Agreement and shall not be used in construing it.
18. Severability.
In the event that any provision or any part of this Agreement is held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision or part of this Agreement.
19. Notices.
Each notice or other communication hereunder shall be in writing and
shall be deemed to have been duly given on the earlier of (i) the date on which
such notice or other communication is actually received by the intended
recipient thereof, or (ii) the date five (5) days after the date such notice or
other communication is mailed by registered or certified mail (postage prepaid)
to the intended recipient at the following address (or at such other address as
the intended recipient shall have specified in a written notice given to the
other parties hereto):
If to ZOI or the ZOI Shareholders:
Zeros & Ones, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to CLMI:
Commercial Labor Management, Inc.
c/o Richardson & Associates
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
20. Publicity.
No press release, notice to any third party or other publicity
concerning the transactions contemplated by this Agreement shall be issued,
given or otherwise disseminated without the prior approval of each of the
parties hereto; provided, however, that such approval shall not be unreasonably
withheld.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
ZOI: ZEROS & ONES, INC.
By:
---------------------------------
Xxxxxx Xxxxx, President
ZOI SHAREHOLDERS:
Xxxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
CLMI: COMMERCIAL LABOR MANAGEMENT, INC.
By: _________________________________
Xxxxxx X. Xxxxxx, President
XXXXXXXXXX: __________________________________
Xxxx X. Xxxxxxxxxx
XXXXXX: __________________________________
Xxxxxx X. Xxxxxx
WP80\2251KID\Docs\Reorg&Exch.Agt.4.8
EXHIBIT A
ZOI SHAREHOLDERS AND ALLOCATION OF SHARES
EXHIBIT B
LIST OF ZOI SUBSIDIARIES
EXHIBIT C
OUTSTANDING WARRANTS
EXHIBIT D
MATERIAL CHANGES SINCE DECEMBER 31, 1998
EXHIBIT A
ZOI SHAREHOLDERS AND ALLOCATION OF SHARES
Name of ZOI Shareholders Number of Shares of ZOI Conveyed to CLMI Number of Shares of CLMI
Issued to ZOI Shareholders
Xxxxxx Xxxxx 1,000,000 1,000,000
Xxxxx Xxxxxxxx 850,000 850,000
Xxxxxxx Xxxxxxx 500,000 500,000
Xxxxxx Xxxxxx Xxxxx 500,000 500,000
Xxxxxxx Xxxxxxx 500,000 500,000
Other Shareholders of ZOI* 2,650,000 2,650,000
*The allocation of shares among these shareholders will be determined by ZOI.
ZOI will notify CLMI of the allocation prior to the Closing.
EXHIBIT B
LIST OF ZOI SUBSIDIARIES*
Quantum Arts, Inc.
EKO Corporation
Polyganol Research Corporation
Wood Ranch Technology Group, Inc.
Kidvision, Inc.
*All subsidiaries will be 100% owned by ZOI on the Closing.
EXHIBIT C
A. It is expected that prior to the Closing, 320,000 warrants in
ZOI will be outstanding pursuant to which the holder of each
warrant will be entitled to purchase one share of ZOI Common
Stock for a price of $3.00 per share for a period of three
years from the date of issue.
