AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), dated as
of the 3rd day of January 2003, by and between Shaft, Inc., a Nevada corporation
("Shaft"), and Elegant Concrete Technologies, Inc., a New York corporation
("Elegant"), and the shareholders of Elegant ("Shareholders"), with reference to
the following:
A. Shaft is a Nevada corporation organized on March 9, 1990.
Shaft has authorized capital stock of 100,000,000 shares of common
stock, $.001 par value ("Shaft Common Stock"), of which 702,755 shares
are issued and outstanding.
B. Elegant is a privately held corporation organized under the
laws of the State of New York on April 3, 2002. Elegant has authorized
capital stock of 20,000 shares of common stock, $1.00 par value
("Elegant Common Stock"), of which 167 2/3 shares are issued and
outstanding.
C. The respective Boards of Directors of Shaft and Elegant have
deemed it advisable and in the best interests of Shaft and Elegant
that Elegant be acquired by Shaft, pursuant to the terms and
conditions set forth in this Agreement.
D. Shaft and Elegant propose to enter into this Agreement which
provides among other things that all of the outstanding shares of
Elegant Common Stock be acquired by Shaft, in exchange for 500,000
shares of Shaft Common Stock and such additional items as more fully
described in the Agreement.
E. The parties desire the transaction to qualify as a tax-free
reorganization under Section 368 (a)(1)(B) of the Internal Revenue
Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 167 2/3 shares of Elegant Common Stock,
which represents all of the outstanding shares of Elegant, shall be acquired by
Shaft in exchange for 500,000 restricted shares of Shaft Common Stock (the
"Shaft Shares"). The Shaft Shares shall be issued as set forth in Exhibit A to
this Agreement.
1.02 At the Closing, the Elegant shareholders will deliver certificates
for the outstanding shares of Elegant Common Stock, duly endorsed so as to make
Shaft the sole holder thereof, free and clear of all claims, and encumbrances
and Shaft shall deliver a transmittal letter directed to the transfer agent of
Shaft directing the issuance of the Shaft Shares to the shareholders of Elegant
as set forth on Exhibit A of this Agreement.
1.03 Following the reorganization the cancellation of shares detailed
in Article 2.02(d) below, there will be a total of 994,000 shares of Shaft
Common Stock issued and outstanding.
1.04 Following the reorganization, Elegant will be a wholly owned
subsidiary of Shaft.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at on or before January 6, 2003, (the
"Closing Date") or at such other place or date and time as may be agreed to in
writing by the parties hereto.
2.02 The following conditions are a part of this Agreement and must be
completed on the Closing Date, or such other date specified by the parties:
(a) Xxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxx will be appointed to, and shall
be the sole members of, the Board of Directors of Shaft. Xxxxxxxx Xxxxxx shall
resign as a director of Shaft.
(b) Xxxxxxxx Xxxxxx, who is currently the sole officer of Shaft, will
resign as an officer of Shaft and Xxxx Xxxxxxxx will be appointed President of
Shaft., and Xxxxxxx Xxxxxxxx will be appointed Chief Financial Officer,
Secretary and Treasurer of Shaft.
(c) Shaft shall obtain the necessary approval to amend its Articles of
Incorporation to change the name of the Company to Elegant Concrete
Technologies, Inc., or such similar name as is available in the State of Nevada.
(d) Shaft shall acquire and cancel 208,755 shares of Shaft Common Stock
leaving 494,000 shares of Shaft Common Stock outstanding.
(e) Shaft will obtain the necessary approval to forward split its
issued and outstanding Shaft Common Stock on a ten for one basis following the
Closing of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SHAFT
Shaft hereby represents and warrants to Elegant as follows:
3.01 Attached hereto is each of the following:
(a) Financial Statements. Audited financial statements of
Shaft including, but not limited to, balance sheets and profit and loss
statements from the fiscal years end 2000, 2001 and unaudited financial
statements through 9/30/2002, prepared in accordance with generally
accepted accounting principles and which fairly present the financial
condition of Shaft at the dates thereof. (Schedule A)
(b) Property. An accurate list and description of all
property, real or personal, owned by Shaft of a value equal to or
greater than $1,000.00. (Schedule B.)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule A. (Schedule
C.) A complete and accurate list of all debts, liabilities and
obligations of Shaft incurred or owing as of the date of this
Agreement. (Schedule C.1.)
(d) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether of real or
personal property) and each contract, promissory note, mortgage,
license, franchise, or other written agreement to which Shaft is a
party which involves or can reasonably be expected to involve aggregate
future payments or receipts by Shaft (whether by the terms of such
lease, contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or indemnity
against the failure to pay same) of $1,000.00 or more annually during
the twelve-month period ended December 31, 2002, or any consecutive
twelve-month period thereafter, except any of said instruments which
terminate or are cancelable without penalty during such twelve-month
period. (Schedule D.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of Shaft for
the repayment of borrowed money. (Schedule E.)
(f) Consents Required. A complete list of all agreements
wherein consent to the transaction herein contemplated is required to
avoid a default thereunder; or where notice of such transaction is
required at or subsequent to closing, or where consent to an
acquisition, consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule F.)
(g) Articles and Bylaws. Complete and accurate copies of the
Certificate and Articles of Incorporation and Bylaws of Shaft together
with all amendments thereto to the date hereof. (Schedule G.)
(h) Shareholders. A complete list of all persons or entities
holding capital stock of Shaft (as certified by Shaft's transfer agent)
or any rights to subscribe for, acquire, or receive shares of the
capital stock of Shaft (whether warrants, calls, options, or conversion
rights), including copies of all stock option plans whether qualified
or nonqualified, and other similar agreements. (Schedule H.)
(i) Officers and Directors. A complete and current list of all
Officers and Directors of Shaft, each of whom shall resign effective as
of the Closing Date. (Schedule I.)
(j) Salary Schedule. A complete and accurate list (in all
material respects) of the names and the current salary rate for each
present employee of Shaft who received $1,000.00 or more in aggregate
compensation from Shaft whether in salary, bonus or otherwise, during
the year 2001, or who is presently scheduled to receive compensation
from Shaft whether in a salary, bonus or otherwise in excess of
$1,000.00 during the year ending December 2002, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employees listed according to
departments. All such employees are "at will" employees of Shaft.
(Schedule J.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration
or other such proceedings or investigations (including without
limitations unfair labor practice matters, labor organization
activities, environmental matters and civil rights violations) pending
or, to the knowledge of Shaft threatened, which may materially and
adversely affect Shaft. (Schedule K.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for Shaft for the last fiscal year. (Schedule L.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular
basis) made by Shaft under ERISA, EEOC, FDA and all other governmental
agencies (federal, state or local) during the last fiscal year.
(Schedule M.)
(n) Banks. A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the name of
each bank in which Shaft has an account or safe deposit box, and (2)
the names and addresses of all signatories. (Schedule N.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein Shaft is qualified to do business and is in good standing.
(Schedule O.)
(p) Subsidiaries. A complete list of all subsidiaries of
Shaft. (Schedule P.) The term "Subsidiary" or "Subsidiaries" shall
include corporations, unincorporated associations, partnerships, joint
ventures, or similar entities in which SHAFT has an interest, direct or
indirect.
(q) Union Matters. An accurate list and description (in all
material respects) of all union contracts and collective bargaining
agreements of Shaft, if any. (Schedule Q.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which Shaft may have,
other than those listed in the schedule on Union Matters. (Schedule R.)
(s) Employee Benefit Plans. Complete and accurate copies of
all salary, stock options, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of Shaft in effect on the date hereof or to become
effective after the date thereof, together with copies of any
determination letters issued by the Internal Revenue Service with
respect thereto. (Schedule S.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and a description of all material insurance policies
naming Shaft as an insured or beneficiary or as a loss payable payee or
for which Shaft has paid all or part of the premium in force on the
date hereof, specifying any notice or other information possessed by
Shaft regarding possible claims thereunder, cancellation thereof or
premium increases thereon, including any policies now in effect naming
Shaft as beneficiary covering the business activities of Shaft.
(Schedule T.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of Shaft, including presently effective
contracts of Shaft or(?) to be assigned to Shaft, accounting for the
principle revenues of Shaft, indicating the dollar amounts of gross
income of each such customer for the period ended December 31, 2000.
(Schedule U.)
(v) Licenses and Permits. A complete list of all licenses,
permits and other authorizations of Shaft. (Schedule V.)
3.02 Organization, Standing and Power. Shaft is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
all requisite corporate power to own or lease its properties and carry on its
businesses as are now being conducted.
3.03 Qualification. Shaft is duly qualified and is licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
its business operations. Such jurisdictions, which are the only jurisdictions in
which Shaft is duly qualified and licensed as a foreign corporation, are shown
in Schedule O.
3.04 Capitalization of Shaft. The authorized capital stock of Shaft consists of
100,000,000 shares of Common Stock, $.001 par value, of which the only shares
issued and outstanding are 702,755 issued to shareholders listed on Schedule H,
which shares were duly authorized, validly issued and fully paid and
nonassessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the "Act")
and any relevant state securities laws or pursuant to valid exemptions
therefrom. There are no preemptive rights with respect to the Shaft Common
Stock. There is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of Shaft.
3.05 Authority. The execution and delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate actions, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of Shaft. This
Agreement constitutes the valid and binding obligation of Shaft enforceable
against it in accordance with its terms, subject to the principles of equity
applicable to the availability of the remedy of specific performance. This
Agreement has been duly executed by Shaft and the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement shall not result in any breach of any terms or provisions of Shaft's
Certificate and Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which Shaft is a party or bound by.
3.06 Absence of Undisclosed Liabilities. Shaft has no material liabilities of
any nature, whether fixed, absolute, contingent or accrued, which were not
reflected on the financial statements set forth in Schedule A or otherwise
disclosed in this Agreement or any of the Schedules or Exhibits attached hereto.
As of the Closing, Shaft shall have no assets or liabilities other than those
resulting from the acquisition of Elegant.
3.07 Absence of Changes. Since December 31, 2001 there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of Shaft, except for changes resulting from completion of
those transactions described in Section 2.02(e) and Section 5.01
3.08 Tax Matters. All taxes and other assessments and levies which Shaft is
required by law to withhold or to collect have been duly withheld and collected,
and have been paid over to the proper government authorities or are held by
Shaft in separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections and all other
payments due in connection therewith (including, without limitation, employment
taxes, both the employee's and employer's share) have been paid over to the
government or placed in a separate and segregated bank account for such purpose.
There are no known deficiencies in income taxes for any periods and further, the
representations and warranties as to absence of undisclosed liabilities
contained in Section 3.06 includes any and all tax liabilities of whatsoever
kind or nature (including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by Shaft income or business prior
to the Closing Date.
3.09 Options, Warrants, etc. Except as otherwise described in Schedule H, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which Shaft or its shareholders are a party or by which Shaft or
its shareholders are bound, or are a party, calling for the issuance of shares
of capital stock of Shaft or any securities representing the right to purchase
or otherwise receive any such capital stock of Shaft.
3.10 Title to Assets. Except for liens set forth in Schedule C, Shaft is the
sole unconditional owner of, with good and marketable title to, all assets
listed in the schedules as owned by it and all other property and assets are
free and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever.
3.11 Agreements in Force and Effect. Except as set forth in Schedules D and E,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which Shaft is a party
are valid and in full force and effect on the date hereof, and Shaft has not
breached any material provision of, and is not in default in any material
respect under the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which breach
or default would have a material adverse effect upon the business, operations or
financial condition of Shaft.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either Shaft or the shareholders
thereof, threatened, in which, individually or in the aggregate, an adverse
determination would materially and adversely affect the assets, properties,
business or income of Shaft. Shaft has substantially complied with, and is not
in default in any material respect under, any laws, ordinances, requirements,
regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of Shaft and except as set forth
in Schedule K, Shaft is not in violation of or in default with respect to any
applicable law or any applicable rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or instrumentality,
or delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of Shaft.
3.14 Brokers and Finders. Shaft shall be solely responsible for payment to any
broker or finder retained by Shaft for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated herein. Shaft has
not agreed to pay any fees or commissions to any party.
3.15 Accuracy of Information. No representation or warranty by Shaft contained
in this Agreement and no statement contained in any certificate or other
instrument delivered or to be delivered to Elegant pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and exhibits hereto) contains or will contain any
untrue statement of material fact or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
3.16 Subsidiaries. Except as listed in Schedule P, Shaft does not have any other
subsidiaries or own capital stock representing ten percent (10%) or more of the
issued and outstanding stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or approval of, or
registration, qualification or filing with, any governmental authority or other
person is required to be obtained or accomplished by Shaft or any shareholder
thereof in connection with the consummation of the transactions contemplated
hereby.
3.18 Improper Payments. Neither Shaft, nor any person acting on behalf of Shaft
has made any payment or otherwise transmitted anything of value, directly or
indirectly, to (a) any official or any government or agency or political
subdivision thereof for the purpose of influencing any decision affecting the
business of Shaft (b) any customer, supplier or competitor of Shaft or employee
of such customer, supplier or competitor, for the purpose of obtaining,
retaining or directing business for Shaft or (c) any political party or any
candidate for elective political office nor has any fund or other asset of Shaft
been maintained that was not fully and accurately recorded on the books of
account of Shaft.
3.19 Copies of Documents. Shaft has made available for inspection and copying by
Elegant and its duly authorized representatives, and will continue to do so at
all times, true and correct copies of all documents which it has filed with the
Securities and Exchange Commission and all other governmental agencies which are
material to the terms and conditions contained in this Agreement. Furthermore,
all filings by Shaft with the Securities and Exchange Commission, and all other
governmental agencies, including but not limited to the Internal Revenue
Service, have contained information which is true and correct, to the best
knowledge of the Board of Directors of Shaft, in all material respects and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not misleading or
which could have any material adverse effect upon the financial condition or
operations of Shaft or adversely affect the objectives of this Agreement with
respect to Elegant including, but not limited to, the issuance and subsequent
trading of the shares of Shaft Common Stock to be received hereby, subject to
compliance by the shareholders of Elegant with applicable law.
3.20 Valid Issuance of Securities. The Shares, when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and non-assessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.
3.21 Related Party Transactions. No employee, officer or director of the Company
or member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them. No member of the immediate family of any officer or director of the
Company is directly or indirectly interested in any material contract with the
Company.
3.22 No Operations. Shaft has not conducted any substantial business operations
for the sale and/or delivery of products and/or services since September 2000.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
ELEGANT CONCRETE TECHNOLOGIES, INC.
Elegant hereby represents and warrants to Shaft as follows:
4.01 Elegant shall deliver to Shaft, on or before Closing, the following:
(a) Financial Statements. Unaudited balance sheets as of a
recent date and audited financial statements delivered within 60 days
of closing. Elegant has no material liabilities other than ordinary
expenses of organization and regular contracts for the delivery of
concrete. (Schedule AA)
(b) Property. An accurate list and description of all
property, real or personal owned by Elegant of a value equal to or
greater than $1,000.00. (Schedule BB)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule AA. (Schedule
CC.) A complete and accurate list of all debts, liabilities and
obligations of Elegant incurred or owing as of the date of this
Agreement. (Schedule CC.1.)
(d) Leases and Contracts. A complete and accurate list
describing all material terms of material leases (whether of real or
personal property) and each contract, promissory note, mortgage,
license, franchise, or other written agreement to which Elegant is a
party which involves or can reasonably be expected to involve aggregate
future payments or receipts by Elegant (whether by the terms of such
lease, contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or indemnity
against the failure to pay same) of $1,000.00 or more annually during
the twelve-month period ended December 31, 2002 or any consecutive
twelve-month period thereafter, except any of said instruments which
terminate or are cancelable without penalty during such twelve-month
period. (Schedule DD.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of Elegant
for the repayment of borrowed money. (Schedule EE.)
(f) Consents Required. A complete list of all agreements
wherein consent to the transaction herein contemplated is required to
avoid a default thereunder; or where notice of such transaction is
required at or subsequent to closing, or where consent to an
acquisition, consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule FF.)
(g) Articles and Bylaws. Complete and accurate copies of the
Articles of Incorporation and Bylaws of Elegant, together with all
amendments thereto to the date hereof. (Schedule GG.)
(h) Shareholders. A complete list of all persons or entities
holding capital stock of Elegant or any rights to subscribe for,
acquire, or receive shares of the capital stock of Elegant (whether
warrants, calls, options, or conversion rights), including copies of
all stock option plans whether qualified or nonqualified, and other
similar agreements. (Schedule HH.)
(i) Officers and Directors. A complete and current list of all
officers and Directors of Elegant. (Schedule II.)
(j) Salary Schedule. A complete and accurate list (in all
material respects) of the names and the current salary rate or each
present employee of Elegant who received $1,000 or more in aggregate
compensation from Elegant whether in salary, bonus or otherwise, during
the year 2001, or who is presently scheduled to receive from Elegant a
salary in excess of $1,000.00 during the year ending December 31, 2002,
including in each case the amount of compensation received or scheduled
to be received, and a schedule of the hourly rates of all other
employees listed according to departments. (Schedule JJ.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration
or other such proceedings or investigations (including without
limitations unfair labor practice matters, labor organization
activities, environmental matters and civil rights violations) pending
or, to the knowledge of Elegant threatened, which may materially and
adversely affect Elegant. (Schedule KK.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for Elegant, if any. (Schedule LL.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular
basis) made by Elegant under ERISA, EEOC, FDA and all other
governmental agencies (federal, state or local). (Schedule MM.)
(n) Banks. A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the name of
each bank in which Elegant has an account or safe deposit box, and (2)
the names and addresses of all signatories. (Schedule NN.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein Elegant is qualified to do business and is in good standing.
(Schedule OO.)
(p) Subsidiaries. A complete list of all subsidiaries of
Elegant. (Schedule PP.) The term "Subsidiary" or "Subsidiaries" shall
include corporations, unincorporated associations, partnerships, joint
ventures, or similar entities in which Elegant has an interest, direct
or indirect.
(q) Union Matters. An accurate list and description (in all
material respects of union contracts and collective bargaining
agreements of Elegant, if any. (Schedule QQ.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which Elegant may have,
other than those listed in the schedule on Union Matters. (Schedule
RR.)
(s) Employee Benefit Plans. Complete and accurate copies of
all salary, stock option, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of Elegant in effect on the date hereof or to become
effective after the date thereof, together with copies of any
determination letters issued by the Internal Revenue Service with
respect thereto. (Schedule SS.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and description of all material insurance policies
naming Elegant as an insured or beneficiary or as a loss payable payee
or for which Elegant has paid all or part of the premium in force on
the date hereof, specifying any notice or other information possessed
by Elegant regarding possible claims thereunder, cancellation thereof
or premium increases thereon, including any policies now in effect
naming Elegant as beneficiary covering the business activities of
Elegant. (Schedule TT.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of Elegant, including all presently
effective contracts of Elegant to be assigned to Elegant, accounting
for the principle revenues of Elegant, indicating the dollar amounts of
gross revenues of each such customer for the period ended as of a
recent date. (Schedule UU.)
(v) Licenses and Permits. A complete list of all licenses,
permits and other authorizations of Elegant. (Schedule VV.)
4.02 Organization, Standing and Power. Elegant is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
with all requisite corporate power to own or lease its properties and carry on
its business as is now being conducted.
4.03 Qualification. Elegant is duly qualified and licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
business operations. Such jurisdictions, which are the only jurisdictions in
which Elegant is duly qualified and licensed as a foreign corporation, is shown
in Schedule OO.
4.04 Capitalization of Elegant. The authorized capital stock of Elegant consists
of 20,000 shares of Common Stock, par value $1.00 per share, of which the only
shares issued and outstanding are 167 2/3 shares issued to the shareholders
listed on Schedule HH, which shares were duly authorized, validly issued and
fully paid and nonassessable. There are no preemptive rights with respect to the
Elegant stock.
4.05 Authority. The execution and delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate action, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of Elegant. This
Agreement constitutes the valid and binding obligation of Elegant , enforceable
against it in accordance with its terms, subject to the principles of equity
applicable to the availability of the remedy of specific performance. This
Agreement has been duly executed by Elegant and the execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement shall not result in any breach of any terms or provisions of Elegant's
Articles of Incorporation or Bylaws or of any other agreement, court order or
instrument to which Elegant is a party or bound.
4.06 Absence of Undisclosed Liabilities. Elegant has no material liabilities of
any nature, whether fixed, absolute, contingent or accrued, which were not
reflected on the financial statements set forth in Schedule AA or otherwise
disclosed in this Agreement or any of the Schedules or Exhibits attached hereto.
4.07 Absence of Changes. Since inception, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of Elegant , except for changes resulting from completion
of those transactions described in Section 5.02.
4.08 Tax Matters. All taxes and other assessments and levies which Elegant is
required by law to withhold or to collect have been duly withheld and collected,
and have been paid over to the proper government authorities or are held by
Elegant in separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections and all other
payments due in connection therewith (including, without limitation, employment
taxes, both the employee's and employer's share) have been paid over to the
government or placed in a separate and segregated bank account for such purpose.
There are no known deficiencies in income taxes for any periods and further, the
representations and warranties as to absence of undisclosed liabilities
contained in Section 4.06 includes any and all tax liabilities of whatsoever
kind or nature (including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by Elegant income or business
prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in Schedule HH, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which Elegant or its shareholders are a party or by which Elegant
or its shareholders are bound, or are a party, calling for the issuance of
shares of capital stock of Elegant or any securities representing the right to
purchase or otherwise receive any such capital stock of Elegant .
4.10 Title to Assets. Except for liens set forth in Schedule CC, Elegant is the
sole and unconditional owner of, with good and marketable title to, all the
assets and patents listed in the schedules as owned by them and all other
property and assets are free and clear of all mortgages, liens, pledges, charges
or encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in Schedules DD and EE,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which Elegant is a
party are valid and in full force and effect on the date hereof, and Elegant has
not breached any material provision of, and is not in default in any material
respect under the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which breach
or default would have a material adverse effect upon the business, operations or
financial condition of Elegant.
4.12 Legal Proceedings, Etc. Except as set forth in Schedule KK, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of Elegant , threatened, in which,
individually or in the aggregate, an adverse determination would materially and
adversely affect the assets, properties, business or income of Elegant . Elegant
has substantially complied with, and is not in default in any material respect
under, any laws, ordinances, requirements, regulations or orders applicable to
its businesses.
4.13 Governmental Regulation. To the knowledge of Elegant and except as set
forth in Schedule KK, Elegant is not in violation of or in default with respect
to any applicable law or any applicable rule, regulation, order, writ or decree
of any court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report required to be filed
with any governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of Elegant. .
4.14 Broker and Finders. Elegant shall be solely responsible for payment to any
broker or finder retained by Elegant for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by Elegant contained
in this Agreement and no statement contained in any certificate or other
instrument delivered or to be delivered to Shaft pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
4.16 Subsidiaries. Except as listed in Schedule PP, Elegant does not have any
other subsidiaries or own capital stock representing ten percent (10%) or more
of the issued and outstanding stock of any other corporation.
4.17 Consents. Except as listed in Schedule FF, no consent or approval of, or
registration, qualification or filing with, any other governmental authority or
other person is required to be obtained or accomplished by Elegant or any
shareholder thereof, in connection with the consummation of the transactions
contemplated hereby.
4.18 Improper Payments. No person acting on behalf of Elegant has made any
payment or otherwise transmitted anything of value, directly or indirectly, to
(a) any official or any government or agency or political subdivision thereof
for the purpose of influencing any decision affecting the business of Elegant ,
or (b) any political party or any candidate for elective political office, nor
has any fund or other asset of Elegant been maintained that was not fully and
accurately recorded on the books of account of Elegant.
4.19 Copies of Documents. Elegant has made available for inspection and copying
by SHAFT and its duly authorized representatives, and will continue to do so at
all times, true and correct copies of all documents which it has filed with any
governmental agencies which are material to the terms and conditions contained
in this Agreement. Furthermore, all filings by Elegant with governmental
agencies, including but not limited to the Internal Revenue Service, have
contained information which is true and correct in all material respects and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not misleading or
which could have any material adverse effect upon the financial condition or
operations of Elegant or adversely affect the objectives of this Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of Elegant represents
and warrants to Shaft that the shares of Shaft being acquired pursuant to this
Agreement are being acquired for his own account and for investment and not with
a view to the public resale or distribution of such shares and further
acknowledges that the shares being issued have not been registered under the
Securities Act and are "restricted securities" as that term is defined in Rule
144 promulgated under the Securities Act and must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of Shaft. During the period from the date hereof
to the date of Closing, Shaft shall:
(a) Conduct its operations in the ordinary course of business,
including but not limited to, paying all obligations as they mature,
complying with all applicable tax laws, filing all tax returns required
to be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner that
fairly and correctly reflects its income, expenses, assets and
liabilities.
Shaft shall not during such period, except in the ordinary course of
business, without the prior written consent of Elegant :
(c) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of its properties or
assets;
(d) Except as set forth in paragraph 5.01(c) above, declare or
pay any dividends on shares of its capital stock or make any other
distribution of assets to the holders thereof;
(e) Except as set forth in paragraph 5.01(d) above, issue,
reissue or sell, or issue options or rights to subscribe to, or enter
into any contract or commitment to issue, reissue or sell, any shares
of its capital stock or acquire or agree to acquire any shares of its
capital stock;
(f) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all of
its assets or change in any manner the rights of its capital stock or
other securities;
(g) Except as contemplated or required by this Agreement, pay
or incur any obligation or liability, direct or contingent, of more
than $1,000;
(h) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for obligations of
any other party, or make loans or advances to any other party;
(i) Make any material change in its insurance coverage;
(j) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees; except in
accordance with existing employment contracts;
(k) Enter into any agreement or make any commitment to any
labor union or organization;
(l) Make any capital expenditures.
5.02 Conduct and Transactions of Elegant . During the period from the date
hereof to the date of Closing, Elegant shall:
(a) Obtain an investment letter from each shareholder of
Elegant in a form substantially like that attached hereto as Exhibit B.
(b) Conduct the operations of Elegant in the ordinary course
of business.
Elegant shall not during such period, except in the ordinary course of
business, without the prior written consent of Shaft:
(c) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of the properties or assets
of Elegant;
(d) Declare or pay any dividends on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(e) Issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to issue,
reissue or sell, any shares of its capital stock or acquire or agree to
acquire any shares of its capital stock;
(f) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all of
its assets or change in any manner the rights of its capital stock or
other securities;
(g) Except as otherwise contemplated and required by this
Agreement, pay or incur any obligation or liability, direct or
contingent, of more than $1,000;
(h) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for obligations of
any other party, or make loans or advances to any other party;
(i) Make any material change in its insurance coverage;
(j) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees; except in
accordance with existing employment contracts;
(k) Enter into any agreement or make any commitment to any
labor union or organization;
(l) Make any material capital expenditures in excess of
$1,000.00.
(m) Allow any of the foregoing actions to be taken by any
subsidiary of Elegant.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the date of Closing of
the acquisition, Shaft and Elegant agree to use their best efforts to give the
other party, including its representatives and agents, full access to the
premises, books and records of each of the entities, and to furnish the other
with such financial and operating data and other information including, but not
limited to, copies of all legal documents and instruments referred to on any
schedule or exhibit hereto, with respect to the business and properties of Shaft
or Elegant, as the case may be, as the other shall from time to time request;
provided, however, if there are any such investigations: (1) they shall be
conducted in such manner as not to unreasonably interfere with the operation of
the business of the other parties and (2) such right of inspection shall not
affect in any way whatsoever any of the representations or warranties given by
the respective parties hereunder. In the event of termination of this Agreement,
Shaft and Elegant will each return to the other all documents, work papers and
other materials obtained from the other party in connection with the
transactions contemplated hereby, and will take such other steps necessary to
protect the confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Elegant. The obligation of Elegant to perform
this Agreement is subject to the satisfaction of the following conditions on or
before the Closing unless waived in writing by Elegant .
(a) Representations and Warranties. The representations and
warranties of Shaft set forth in Article 3 hereof shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing as though made on and as of the Closing, except as
otherwise permitted by this Agreement.
(b) Performance of Obligations. Shaft shall have in all
material respects performed all agreements required to be performed by
it under this Agreement and shall have performed in all material
respects any actions contemplated by this Agreement prior to or on the
Closing and Shaft shall have complied in all material respects with the
course of conduct required by this Agreement.
(c) Corporate Action. Shaft shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to counsel for Elegant that Shaft has submitted
with this Agreement and any other documents required hereby to such
parties for approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the shareholders
of Elegant and any consents necessary for or approval of any party
listed on any Schedule delivered by Shaft whose consent or approval is
required pursuant thereto shall have been obtained.
(e) Statutory Requirements. All statutory requirements for the
valid consummation by Shaft of the transactions contemplated by this
Agreement shall have been fulfilled.
(f) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by Shaft for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(g) Changes in Financial Condition of Shaft. There shall not
have occurred any material adverse change in the financial condition or
in the operations of the business of Shaft, except expenditures in
furtherance of this Agreement.
(h) Absence of Pending Litigation. Shaft is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement
or the consummation of the transactions contemplated hereunder.
(i) Authorization for Issuance of Stock. Elegant shall have
received in form and substance satisfactory to counsel for Elegant a
letter instructing and authorizing the Registrar and Transfer Agent for
the shares of common stock of Shaft to issue stock certificates
representing ownership of Shaft common stock to Elegant shareholders in
accordance with the terms of this Agreement and a letter from said
Registrar and Transfer Agent acknowledging receipt of the letter of
instruction and stating to the effect that the Registrar and Transfer
Agent holds adequate supplies of stock certificates necessary to comply
with the letter of instruction and the terms and conditions of this
Agreement.
(j) Books and records. Shaft shall delivery to Xxxxxxx
Xxxxxxxx all books and records of Shaft.
7.02 Conditions to Obligations of Shaft. The obligation of Shaft to perform this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing unless waived in writing by Shaft.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by Elegant, which in
the opinion of Shaft, would materially adversely affect the proposed
transaction and intent of the parties as set forth in this Agreement.
The representations and warranties of Elegant set forth in Article 4
hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing as though made on and as
of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. Elegant shall have in all
material respects performed all agreements required to be performed by
it under this Agreement and shall have performed in all material
respects any actions contemplated by this Agreement prior to or on the
Closing and Elegant shall have complied in all respects with the course
of conduct required by this Agreement.
(c) Corporate Action. Elegant shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to Counsel for Shaft that Elegant has submitted
with this Agreement and any other documents required hereby to such
parties for approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval of any
party listed on any Schedule delivered by Elegant, whose consent or
approval is required pursuant thereto, shall have been obtained.
(e) Financial Statements. Shaft shall have been furnished with
an unaudited balance sheet of Elegant as of a recent date and audited
financial statements within 60 days from date of closing.
(f) Statutory Requirements. All statutory requirements for the
valid consummation by Elegant of the transactions contemplated by this
Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by Elegant for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(h) Employment Agreements. Existing Elegant employment
agreements will have been delivered to counsel for Shaft.
(i) Changes in Financial Condition of Elegant . There shall
not have occurred any material adverse change in the financial
condition or in the operations of the business of Elegant, except
expenditures in furtherance of this Agreement.
(j) Absence of Pending Litigation. Elegant is not engaged in
or threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement
or the consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Elegant shareholders shall have
approved this Agreement and Plan of Reorganization.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and agree that they
shall, from time to time, execute and deliver or cause to be executed and
delivered all such further instruments of conveyance, transfer, assignments,
receipts and other instruments, and shall take or cause to be taken such further
or other actions as the other party or parties to this Agreement may reasonably
deem necessary in order to carry out the purposes and intent of this Agreement.
8.02 Review of Securities and Exchange Commission Filings. The parties covenant
and agree that Shaft, Inc. shall provide copies of drafts of all documents to be
filed with the Securities and Exchange Commission during the [6] months
following the date hereof to the former officers and directors of Shaft, Inc. by
sending a copy of such drafts to Xxxxxx X. Xxxxxxxxx, Esq., 0 Xxxx Xxxxxxxx,
Xxxxx 000, Xxxx Xxxx Xxxx, XX, 00000_xxx review at least three (3) business days
prior to any actual filing with the Securities and Exchange Commission.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate, schedule, exhibit or
other written instrument delivered by Shaft or Elegant pursuant hereto, or
otherwise adopted by Shaft, by its written approval, or by Elegant by its
written approval, or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by Shaft or Elegant as the case
may be. All representations, warranties and agreements made by either party
shall survive for the period of the applicable statute of limitations and until
the discovery of any claim, loss, liability or other matter based on fraud, if
longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary notwithstanding, this
Agreement and any agreement executed as required hereunder and the acquisition
contemplated hereby may be terminated at any time before the Closing as follows:
(a) By mutual written consent of the Boards of Directors of
Shaft and Elegant .
(b) By the Board of Directors of Shaft if any of the
conditions set forth in Section 7.02 shall not have been satisfied by
the Closing Date.
(c) By the Board of Directors of Elegant if any of the
conditions set forth in Section 7.01 shall not have been satisfied by
the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions; Payment of Expenses.
In the event this Agreement and the acquisition are terminated and abandoned
pursuant to this Article 10 hereof, this Agreement shall become void and of no
force and effect and there shall be no liability on the part of any of the
parties hereto, or their respective directors, officers, shareholders or
controlling persons to each other. For the costs and expenses incident to its
negotiation and preparation of this Agreement and any of the documents
evidencing the transactions contemplated hereby, including fees, expenses and
disbursements of counsel, Shaft shareholders shall bear the expenses incurred by
Shaft, and Elegant shareholders shall bear the expenses incurred by Elegant.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.01 Exchange of Shares. At the Closing, Shaft shall issue a letter to the
transfer agent of Shaft with a copy of the resolution of the Board of Directors
of Shaft authorizing and directing the issuance of Shaft shares as set forth on
Exhibit A to this Agreement.
11.02 Restrictions on Shares Issued to Elegant . Due to the fact that Elegant
will receive shares of Shaft Common Stock in connection with the acquisition
which have not been registered under the 1933 Act by virtue of the exemption
provided in Section 4(2) of such Act, those shares of Shaft will contain the
following legend:
The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares
have been acquired for investment and may not be sold or
offered for sale in the absence of an effective Registration
Statement for the shares under the Securities Act of 1933 or
an opinion of counsel to the Corporation that such
registration is not required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced in accordance
with the laws of the State of Nevada excluding the conflicts of laws.
12.02 Notices. All notices necessary or appropriate under this Agreement shall
be effective when personally delivered or deposited in the United States mail,
postage prepaid, certified or registered, return receipt requested, and
addressed to the parties last known address which addresses are currently as
follows:
If to "Shaft shareholders" If to "Elegant shareholders"
Shaft, Inc. Elegant Concrete Technologies, Inc.
0000 Xxxx Xxxxxx Xxxxxxx Xxxx 00 Xxx Xxxxxxxx Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxxxx, XX 00000
With copies to: With copies to:
Xxxxxx X. Xxxxxxxxx, Esq.
Lehman Walstrand & Associates, LLC
0 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
12.03 Amendment and Waiver. The parties hereby may, by mutual agreement in
writing signed by or on behalf of each party, amend this Agreement in any
respect. Any term or provision of this Agreement may be waived in writing signed
by an authorized officer at any time by the party against which such waiver is
to be charged, such waiver right shall include, but not be limited to, the right
of either party to:
(a) Extend the time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies in representations by the other
contained in this Agreement or in any document delivered pursuant
hereto;
(c) Waive compliance by the other with any of the covenants
contained in this Agreement, and performance of any obligations by the
other; and
(d) Waive the fulfillment of any condition that is precedent
to the performance by the party so waiving of any of its obligations
under this Agreement.
Any writing on the part of a party relating to such amendment,
extension or waiver as provided in this Section 12.03 shall be valid if
authorized or ratified by the Board of Directors of such party.
12.04 Remedies not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies by Shaft or
Elegant shall not constitute a waiver of the right to pursue other available
remedies.
12.05 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.06 Benefit. This Agreement shall be binding upon, and inure to the benefit
of, the respective successors and assigns of Shaft and Elegant and its
shareholders.
12.07 Entire Agreement. This Agreement and the Schedules and Exhibits attached
hereto, represent the entire agreement of the undersigned regarding the subject
matter hereof, and supersedes all prior written or oral understandings or
agreements between the parties.
12.08 Captions and Section Headings. Captions and section headings used herein
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
Executed as of the date first written above.
Shaft, Inc. Elegant Concrete Technologies, Inc.
By: /S/ Xxxxxxxx Xxxxxx By: /S/ Xxxx Xxxxxxxxx
--------------------------------- -------------------------------
Xxxxxxxx Xxxxxx, President Xxxx Xxxxxxxxx, President
The following shareholders, directors and officers of Elegant hereby confirms,
to the best of their knowledge, the representations and warranties set forth
herein in Article 4, acknowledge that Shaft and the Shaft shareholders are
relying upon such confirmation, and hereby agree to indemnify Shaft and the
Shaft shareholders for and defend them against all claims, judgments, damages,
direct losses, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees, both in defending any third party claim and in
enforcing this indemnity) (collectively, "Losses") arising out of or resulting
from any confirmed breach of any such representation or warranty, to the extent,
but only to the extent, such Losses in the aggregate exceed $10,000. Such
indemnification shall be for a period of twelve months from date of closing of
this Agreement.
The undersigned hereby approves the Agreement and Plan of Reorganization with
Shaft, Inc. The undersigned hereby represents and warrants that the undersigned
has read the Agreement and Plan of Reorganization with Shaft, Inc. and
understands its terms and conditions.
Shareholders of Elegant Concrete Technologies, Inc.
/S/ Xxxx Xxxxxxxxx Date: 1/6/03
------------------- ------
Xxxx Xxxxxxxxx
/S/ Xxxxxxx Xxxxxxxx Date: 1/6/03
-------------------- ------
Xxxxxxx Xxxxxxxx
Xxxxxx One Enterprises
/S/ Xxxx Xxxxxxxxx Date: 1/6/03
------------------- ------
By: Xxxx Xxxxxxxxx
Its: President
The following officer of Shaft hereby confirms, to the best of her knowledge,
the representations and warranties set forth herein in Article 3, and
acknowledges that Elegant and the Elegant shareholders are relying upon such
confirmation, and hereby agree to indemnify Elegant and the Elegant shareholders
for and defend them against all claims, judgments, damages, direct losses,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees, both in defending any third party claim and in enforcing this
indemnity) (collectively, "Losses") arising out of or resulting from any breach
of any such confirmed representation or warranty, to the extent, but only to the
extent, such Losses in the aggregate exceed $10,000 and such Losses occurred
during the period of September 1, 2000 through closing of this Agreement and
further provided that any indemnification shall be limited to no more than
$100,000. Such indemnification shall be for a period of twelve months from date
of closing of this Agreement.
/S/ Xxxxxxxx Xxxxxx Date: 1/6/03
---------------------- --------
Xxxxxxxx Xxxxxx
EXHIBIT A
Name of Number of
Shareholder Shares
----------- ------
Xxxx Xxxxxxxxx 300,000
Xxxxxxx Xxxxxxxx 25,000
Xxxxxx One Enterprises 175,000
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
ISSUER: Shaft, Inc.
SECURITY: Common Stock, par value $.001
QUANTITY: Shares (the "Securities")
In connection with the purchase of the above-listed Securities of the
Company, I, the purchaser represent to the Company the following:
(1) Investment. I am aware of the Company's business affairs and
financial condition. I am purchasing the Securities for investment for my own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933 (as
Amended). These securities have not been registered under the Securities Act by
reason of a specific exemption therefrom, which exemption depends on, among
other things, the bona fide nature of the investment intent as expressed herein.
In this connection I understand that, in view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
my representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for the period of one year or any other fixed period in the
future.
(2) Restrictions on Transfer Under Securities Act. I further
acknowledge and understand that the Securities must be held indefinitely unless
they are subsequently registered under the Securities Act or unless an exemption
from such registration is available. Moreover, I understand that the Company is
under no obligation to register the Securities. In addition, I understand that
the certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or unless
the Company receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required.
(3) Sales Under Rule 144. I am aware of the adoption of Rule 144 by the
SEC promulgated under the Securities Act, which in substance permits limited
public resale of securities acquired in a non- public offering subject to the
satisfaction of certain conditions, including: (i) the availability of certain
current public information about the Company, (ii) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a " market maker," and (iv) the amount of securities sold during any
three-month period not exceeding specified limitations (generally 1% of the
total shares outstanding).
(4) Limitations on Rule 144. I further acknowledge and understand that
the Company is not now, and at any time I wish to sell the Securities may not
be, satisfying the public information requirement of Rule 144, and, in such
case, I would be precluded from selling the Securities under Rule 144 even if
the minimum holding period had been satisfied.
(5) Sales Not Under Rule 144. I further acknowledge that, if all the
requirements of Rule 144 are not met, then Regulation A, or some other
registration exemption will be required; and that, although Rule 144 is not
exclusive, the staff of the Commission has expressed its opinion (i) that
persons proposing to sell private placement securities other than in a
registered offering or exemption from registration is available for such offers
or sales, and (ii) that such persons and the brokers who participate in the
transactions do so their own risk.
(6) Stop Transfer Instructions. I further understand that stop transfer
instructions will be in effect with respect to the transfer of the Securities
consistent with the above.
(7) Additional Representations and Warranties. In addition, I represent
and warrant:
(i) That I have had the opportunity to ask questions of, and
receive answers from, the Company ( or any person acting on
its behalf) concerning the Company and my proposed investment
in the Securities;
(ii) That I have concluded that I have sufficient information
upon which to base my decision to acquire the Securities;
(iii) That I have made my own determination of the value of
the Securities and have not relied upon any statements,
representations or warranties of the Company regarding the
value of the Securities or the business prospects of the
Company;
(iv) That I understand that in acquiring the Securities, I am
making a highly speculative investment with the knowledge that
the Company is in the initial stages of development;
(v) That I am capable of bearing the economic risk and burdens
of the investment, the possibility of complete loss of all of
the investment, and the possible inability to readily
liquidate the investment due to the lack of public market; and
(vi) That I understand that, in selling and transferring the
Securities, the Company had relied upon an exemption from the
registration requirements of the Securities Act and that, in
an attempt to effect compliance with all the conditions of
such exemption, the Company is relying in good faith upon all
of my foregoing representations and warranties.
SIGNATURE OF PURCHASER
Date: 1/6/03
------
/S/ Xxxx Xxxxxxxxx
---------------------
/S/ Xxxxxxx Xxxxxxxx
---------------------
XXXXXX ONE ENTERPRISES
By: /S/ Xxxx Xxxxxxxxx
-------------------
Its: President
