AGREEMENT AND PLAN
OF
REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made this 5th day of November,
1994, by and between Stardust, Inc. Production-Recording-Promotion, a Utah
corporation having its principal place of business at 0000 Xxxxx 0000 Xxxx,
Xxxxxxxxx, Xxxx, 00000, ("Stardust"); Harcourt Investments (USA), Inc., a Nevada
corporation having its principal place of business at 00000 Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx ("Harcourt"); and the undersigned shareholders of Harcourt
("Shareholders").
WHEREAS, Shareholders own one hundred percent (100%) of the Share ownership
interest of Harcourt, and;
WHEREAS, Shareholders wish to sell and Stardust wishes to acquire
Shareholders' one hundred percent (100%) capital stock ownership of Harcourt,
and;
WHEREAS, the parties to this Agreement herein agree that this transaction
is by means of private sale, and waive any and all reference and/or rights as
the respective consideration paid or shares received by purchaser as being a
securities transaction, as promulgated by any state, territorial, provincial or
federal agency or law.
WHEREAS, the parties to this Agreement have as herein represented and
warranted, entered into this binding Agreement, which terms are herein
incorporated and agreed to by the parties hereto; that as such they are an
integral part hereof, and shall remain and survive as to their construction
intent and content pursuant and subject to all conditions of this Agreement, as
contained herein.
WHEREAS, Stardust wishes to acquire and Shareholders wish to transfer all
of the issued and outstanding capital stock of Harcourt in a transaction
intended to qualify as a reorganization within the meaning of Section
368(a)(b)(B) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, Stardust and Shareholders adopt this Plan or Reorganization
and agrees as follows:
ARTICLE 1. EXCHANGE OF STOCK
1.1 NUMBER OF SHARES. Shareholders represent and warrant that they are
selling one hundred percent (100%) (25,000 shares of no par value common stock)
issued and outstanding interest ownership of Harcourt (a Nevada corporation), to
Stardust for and in exchange for Shareholders receipt of the terms and
conditions of the full consideration of payment by Stardust to Shareholders of
fourteen million five hundred seventy five thousand (14,575,000) shares of
Stardust common stock at closing.
Exhibit 2.01
56
1.2 DELIVERY OF CERTIFICATES BY SHAREHOLDERS. The transfer of the
Harcourt shares by each of the Shareholders shall be effected by the delivery to
Stardust at the Closing of the total issued shares of capital stock represented
by certificates representing 25,000 shares of common stock accompanied by stock
powers executed in blank by each of the Shareholders.
1.3 DELIVERY OF CERTIFICATES BY STARDUST. On the date of the closing of
this Agreement, Stardust shall cause to be transferred and delivered to the
Shareholders the total purchase consideration herein defined, as full payment of
the purchase of one hundred percent (100%) of Shareholders' interest in
Harcourt.
1.4 RESTRICTIONS ON STARDUST COMMON STOCK. The Stardust shares issuable
pursuant to this Plan of Reorganization will be restricted securities within the
meaning of the Securities Act of 1933, as amended (the "Act").
ARTICLE II. THE CLOSING
The Closing contemplated by Articles I shall be held at such place and time
as shall be agreed upon by the parties, but in no event shall the Closing occur
later than December 31, 1994.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
HARCOURT, INC., AND SHAREHOLDERS
Shareholders and Harcourt, jointly and severally, represent and warrant to
Stardust as follows:
3.1 CORPORATE STATUS. Harcourt is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
3.2 CORPORATE POWER. Harcourt has the corporate power to own, lease, or
operate all properties and assets owned, leased or operated by it, to carry on
its business as now conducted and as proposed to be conducted, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement.
3.3 ARTICLE OF INCORPORATION. Harcourt's Articles of Incorporation, and
any amendments or restatement thereof through the date hereof, as filed with the
Nevada Secretary of State, are attached as Exhibit 3.3.
3.4 BYLAWS. Harcourt has not adopted bylaws.
3.5 CAPITALIZATION. The authorized capital stock of Harcourt consists of
twenty five thousand (25,000) shares of common stock, with no par value per
share, of which twenty five thousand (25,000) shares are issued and outstanding.
Harcourt has no outstanding subscription, options, warrants, call, or other
agreement or commitments entitling any person to purchase
Exhibit 2.01
57
or otherwise acquire any shares of common stock of Harcourt or other capital
stock or securities of Harcourt, including any right of conversation or exchange
under any outstanding security or other instrument. Harcourt is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock of any security convertible or
exchangeable for any of its capital stock. There are no voting trusts or other
agreements or understandings with respect to the voting of the capital stock of
Harcourt. The common stock of Harcourt is vested with all the voting rights in
Harcourt.
3.6 SUBSIDIARIES. Harcourt has no subsidiaries or affiliated corporations
within the meaning of Section 1563 (a) or Section 1564 of the Code.
3.7 SOLE SHAREHOLDERS. Shareholders are the only shareholders of Harcourt.
3.8 STOCK PAID AND NONASSESSABLE. The Harcourt Shares have been duly and
validly authorized and issued, and are fully paid and nonassessable and free
from preemptive and cumulative voting rights.
3.9 TITLE TO SHARES. Shareholders are the sole owners, free and clear of
any liens and encumbrances, of the number of the Harcourt shares specified in
Section 1.1. Such Shares represent all of the issued and outstanding capital
stock of Harcourt.
3.10 AUTHORIZATION. This Agreement has been duly authorized, executed, and
delivered by Harcourt, and has been approved by Harcourt's shareholders, and
constitutes a valid and binding agreement of Harcourt enforceable in accordance
with its terms.
3.11 FINANCIAL STATEMENTS. Are complete and correct and have been prepared
in accordance with generally accepted accounting principals on a basis
consistent with prior periods and fairly present the financial condition of
Harcourt at the date of such statements, and the results of operations for the
period ended on such date and reflect all adjustments which are necessary for a
fair presentation of the results reported.
3.12 COMPLIANCE. Harcourt is not in breach of, or in conflict with, any of
the terms, conditions, or provisions of its articles of Incorporation.
3.13 DIRECTORS AND OFFICERS. As of the date hereof, the following are
officers and directors of Harcourt: Xxxx X. Xxxx, Xxxxxxx Xxxxxxx, and Xxxxxxxx
Xxxx. Xxxx X. Xxxx is Chief Executive Officer, Xxxxxxx Xxxxxxx is Vice-
President of Harcourt.
3.14 TITLE TO PROPERTY. Harcourt has good and marketable title to all of
the property and assets reflected in the balance sheet delivered pursuant to
3.11 and such property and assets are not subject to any mortgage, pledge,
lien or encumbrance.
Exhibit 2.01
58
3.15 PATENTS, TRADEMARKS, ETC. Harcourt has received no notice of
infringement of, or conflict with, asserted rights of others with respect to any
patents, trademarks, service marks, trade names or copyright, nor is Harcourt
aware of any infringement by other upon its name. There are not patents, patent
rights, trademarks, service marks, conducted or as contemplated by Harcourt
which Harcourt does not own or possess adequate rights to use. All of Harcourt's
employees, including without limitation Shareholders, have transferred to
Harcourt all of their right , title and interest in and to any intellectual
property owned by them or in which they share an ownership interest (if any)
related in any way to Harcourt business.
3.16 NO REGULATORY VIOLATION. To the best of Harcourt's and the
Shareholders' knowledge, Harcourt is not in violation of any law, statue, order,
rule, regulation, writ, injunction, or decree of any governmental authority or
court, domestic or foreign, with respect to the conduct of its business, the
operation of Harcourt's facility or the ownership of its properties, nor will
the execution of this Agreement or consummation of any of the transactions
contemplated by this Agreement result in any such violation.
3.17 NO CONTRACTUAL VIOLATION. Neither the execution of this Agreement,
nor the performance of Harcourt's and Shareholders' obligations pursuant to this
Agreement or the consummation of the transactions contemplated hereby, will
conflict with, or result in a breach or violation of any of the terms or
provisions of, or constitute, or with the passage of time or the giving of
notice constitute, a default under any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond debenture, note agreement, or other
evidence of indentureness, lease, contract or other agreement or instrument to
which Harcourt is a party, or by which Harcourt or any of its properties is
bound, or Harcourt's Articles of Incorporation; and no consent, approval,
authorization, or order of any court or governmental agency or body is required
for the consummation by Harcourt or Shareholders of the transactions
contemplated hereby .
3.18 MATERIAL CONTRACTS. Harcourt warrants that there are not material
agreements, written or oral, related to Harcourt, except those specifically
disclosed in Exhibit 3.11.
3.19 UNDISCLOSED LIABILITIES. Harcourt has no liabilities of any nature
except as specifically disclosed on Exhibit 3.11 or to Stardust in writing.
3.20 LITIGATION. There are no actions, suits or proceedings to which
Harcourt is a party, or of which any of its property is the subject, pending
before or brought by any court or governmental agency or body, nor, to the
knowledge or Harcourt or Shareholders, is any such action, suit, or proceeding
threatened, which would, singly, or in the aggregate, result in any material
adverse change in the condition (financial or otherwise), business, key
personnel, properties, assets, results of operations (present or prospective) or
net worth of Harcourt.
3.21 PROFIT SHARING PLANS, ETC. Harcourt is not a party to and has no
obligation, contingent or otherwise, under any materials, oral or written,
expressed or implied: (i) commitment or agreement, with officers, directors,
Exhibit 2.01
59
employees, or any other persons providing similar services; (ii) agreement or
arrangement providing for the payment of any incentive, bonus, commission, or
deferred compensation or severance or termination pay; (iii) pension, profit
sharing, stock purchase, stock option, group life insurance, hospitalization
insurance, disability, retirement, or any other employee benefit plan, fringe
benefit plan, agreement, or arrangement, whether formal or informal and whether
legally binding or not; or (iv) collective bargaining or union contract or
agreement.
3.22 TAX RETURNS. Harcourt has timely filed all tax returns and reports
required to be filed by it, and has paid in a timely manner all taxes that are
shown on such returns as being due and payable other than such taxes as are
being contested in good faith and for which adequate reserves have been
established. Harcourt is not a Subchapter S Corporation.
3.23 NO MATERIAL CHANGES. There have been no material adverse changes in
the condition (financial or otherwise), results of operations, or shareholders'
equity of Harcourt since the date of the latest balance sheet contained in
Exhibit 3. 11, except for changes (material or otherwise) resulting from its
operations conducted in the ordinary course of business.
3.24 NO BROKERS. No finders' fees or brokerage commissions of any kind
will be payable by Harcourt in connection with the transactions described in
this Agreement.
3.25 DISCLOSURE OF MATERIAL FACTS. Neither Harcourt nor Shareholders have
knowingly failed to disclose to Stardust any facts material to the assets,
liabilities, earnings, prospects, and business of Harcourt. No representation or
warranty by Harcourt and Shareholders contained in this Agreement, and, to the
best of their knowledge, no statement contained in any document (including,
without limitation, the financial statements and Exhibits hereto), list,
certificate, or other writing furnished or to be furnished by or on behalf of
Harcourt or Shareholders or any of their representations in connection with the
transactions contemplated hereby, contains or will contain any untrue statements
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements contained herein or there not misleading or necessary in
order to provide fully and fairly the information required to be provided in any
such document, list, certificate, or other writing.
3.26 INTERPRETATION. As used in this Agreement, the term "best knowledge"
or "Harcourt's best knowledge" refers to the best knowledge of the officers and
directors of Harcourt.
3.27 INVESTMENT REPRESENTATIONS. Shareholders acknowledge that the
restricted Stardust Shares which they are receiving in exchange for their
Harcourt Shares have not been registered under the Securities Act of 1933 or
state blue sky laws, and that the restricted Stardust Shares may not be
transferred without such registration or an opinion of counsel that registration
is unnecessary ; Shareholders have the financial ability to bear the economic
risk of an investment in the Stardust Shares and have no need for liquidity in
Exhibit 2.01
60
such investment. Shareholders have had an opportunity to inspect Stardust's
corporate records and ask questions of officers of Stardust and are capable of
evaluating the merits and risks of consummating this transaction.
3.28 AUTHORITY. Shareholders have he power and legal capacity to enter
into this Agreement, the execution, delivery and performance of this Agreement
has been duly authorized by all required shareholders action on the part of
Harcourt and this agreement constitutes a valid, binding and legal obligation of
Shareholders,
ARTICLE IV. REPRESENTATIONS AND WARRANTS
OF STARDUST, INC.
STARDUST represents and warrants to Shareholders, as follows:
4.1 CORPORATE AUTHORITY: Authorization, Stardust has the full corporate
power and authority to enter into this Agreement, the execution of which has
been duly authorized by all requisite corporate action on the part of Stardust.
4.2 ISSUANCE OF SHARES. The Stardust Shares will be fully paid, validly
issued and nonassessable when issued in exchange for the Harcourt Shares.
4.3 FINANCIAL STATEMENTS. Exhibit 4.3 is a true and correct copy of
Stardust's financial statements as of May 31, 1994. Such financial statements
are complete and correct and have been prepared in accordance with generally
accepted accounting principals on a basis consistent with prior periods and
fairly present the financial condition of Stardust at the date of such
statements, and the results of operations for the period ended on such date and
reflect all adjustments which are necessary for a fair presentation of the
results reported.
ARTICLE V. CONDUCT OF SHAREHOLDERS AND
HARCOURT PENDING THE CLOSING
Shareholders and Harcourt agree that Harcourt will conduct itself in the
following manner pending the Closing:
5.1 CAPITALIZATION, ETC. Harcourt will not, without the prior written
consent of Stardust: (i) issue or commit to issue any capital stock or other
ownership interest; (ii) grant or commit to grant any options, warrants, or
other rights to subscribe for, purchase or otherwise acquire any shares of its
capital stock or other ownership interest, or issue or commit to issue any
securities convertible into or exchangeable for shares of its capital stock or
other ownership interest: (iii) declare, set aside, or pay any dividends or
distributions; (iv) directly or indirectly terminate or reduce or commit to
terminate or reduce or commit to acquire any of its capital stock or other
ownership interest, or directly or indirectly terminate or reduce or commit to
terminate or reduce any bank line of credit or the availability of any funds
under any other loan or financing agreement; (v) effect a stock split,
reclassification or recapitalization; (vi) change its Articles of Incorporation
or other governing instruments; (vii) borrow or agree to borrow any funds,
guarantee or agree to guarantee the obligations of others, or indemnify or agree
to indemnify others; (viii) waive or commit to waive any rights of substantial
Exhibit 2.01
61
value; or (ix) other than in the ordinary course of business. enter into any
agreement, contract, or commitment; except, in each case, contemplated by this
Agreement.
5.2 PROMPT ACTION. Harcourt and Shareholders will promptly take all
action contemplated by this Agreement or necessary to complete the transactions
contemplated by this Agreement.
5.3 CONFIDENTIALITY. Shareholders and Harcourt will treat this Agreement,
and the transactions contemplated by this Agreement as confidential, and will
not issue any press release or otherwise provide any information regarding such
transactions contemplated by this Agreement.
5.4 BUSINESS IN ORDINARY COURSE. Except as otherwise specifically
provided in this Agreement, Harcourt shall conduct its business only in its
ordinary course.
ARTICLE VI. ACCESS
From the date hereof to the Closing, Harcourt and Stardust shall provide
each other full access to their premises and books and records, and shall cause
each of their officers to furnish the other such financial and operating date
and other information with respect to each of their business and properties as
the other shall, from time to time, reasonably request, provided, however that
any such investigation shall not affect any of the representations and
warranties hereunder. In the event of termination of this Agreement, each parry
will return to the other all documents and other materials obtained in
connection with the transactions contemplated hereby, and not disclose or
utilize any information obtained from the other.
ARTICLE VII. CONDITIONS PRECEDENT TO SHAREHOLDERS'
AND HARCOURT'S OBLIGATIONS
The obligations of Shareholders and/or Harcourt under this Agreement, are
subject to fulfillment, before or on the date of Closing, of each of the
following conditions, any of which may be waived in writing at the discretion of
Stardust.
7.1 REPRESENTATIONS AND WARRANTIES OF HARCOURT AND SHAREHOLDERS. The
representations and warranties of Harcourt and Shareholders contained herein
shall be true and correct, in all material respects, as of the date hereof, and
shall continue to be true and correct, in all material respects, as of the
Closing.
7.2 COVENANTS AND AGREEMENTS OF HARCOURT AND SHAREHOLDERS. Harcourt and
Shareholders shall have performed all obligations and complied with all
covenants an conditions required by this Agreement to be performed or complied
with by them at or prior to the Closing.
7.3 NO ADVERSE CHANGES. No information shall have come to the attention
of Stardust pursuant to its investigation of Harcourt and Shareholders which is
not consistent, in all material respects, with information previously furnished
by Harcourt and Shareholders to Stardust.
Exhibit 2.01
62
ARTICLE VIII. CONDITIONS PRECEDENT TO
STARDUST'S OBLIGATIONS
The obligations of Stardust under Agreement are subject to the fulfillment,
before or on the date of Closing, of each of the following conditions, any of
which may be waived in writing at the discretion of Harcourt:
8.1 REPRESENTATIONS AND WARRANTIES OF STARDUST. The representations and
warranties of Stardust contained herein shall be true and correct, in all
material respect, as of the date hereof, and shall continue to be true and
correct, in all material respects, as of the Closing.
8.2 COVENANTS AND AGREEMENTS OF STARDUST. Stardust shall have performed
all obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to the Closing.
8.3 APPROVAL OF THE BOARD OF DIRECTORS OF STARDUST. The Board of
Directors of Stardust shall have approved the execution, delivery and
performance of this Agreement.
ARTICLE IX. INDEMNIFICATION
9.1 INDEMNIFICATION OF STARDUST. Shareholders agree to indemnify
Shareholders against any loss, damage, or expense (including reasonable
attorneys' fees) suffered by Stardust from (l) any breach by Shareholders or
Harcourt of this Agreement; or (2) any inaccuracy in or breach of any of the
representations, warranties, or covenants by Shareholders or Harcourt.
9.2 INDEMNIFICATION OF SHAREHOLDERS. Stardust agrees to indemnify
Shareholders against any loss, damage, or expense (including reasonable
attorneys' fees) suffered by the Shareholders from any inaccuracy in or breach
of any of Stardust's representations, warranties or covenants herein.
9.3 DEFENSE OF CLAIMS. Upon obtaining knowledge thereof, the indemnified
parties shall promptly notify the indemnifying party of any claim which has
given or could give rise to a right of indemnification under this Agreement. If
the right of indemnification relates to a claim asserted by a third party
against the indemnified party, the indemnifying party shall have the right to
employ counsel acceptable to the indemnified party to cooperate in the defense
of any such claim. So long as the indemnified party will not settle such claim,
if the indemnifying party does not elect to defend any such claim, the
indemnified party shall have no obligation to do so.
Exhibit 2.01
63
ARTICLE X. TERMINATION
10.1 CIRCUMSTANCES OF TERMINATION. This Agreement may be terminated (l) by
mutual consent in writing; (2) by either Harcourt or Stardust if there has been
a material misrepresentation or material breach of any warranty or covenant by
the other party, which determination on behalf of Stardust shall be made by its
Board of Directors in its sole discretion; or (3) by either Shareholders of
Stardust if the Closing shall not have taken place, unless adjourned to a later
date by mutual consent in writing, by the date set forth in Article II.
10.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to Section 10. 1, each party shall pay the cost and expenses
incurred by it in connection with this Agreement and no party (or any of its
officers, directors, and shareholders) shall be liable to any other party for
any costs, expenses, damage or loss of anticipated profits hereunder.
ARTICLE XI. MISCELLANEOUS
11.1 WAIVERS. No action pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party shall be deemed to
constitute a waiver by the party taking such action of any representation,
warranty, covenant or agreement contained herein, except that a breach of any
representation or warranty set forth herein that is known to a party hereto at
the time the transactions contemplated hereby are consummated shall not be
subsequently enforceable or actionable by such party. A waiver by any party, or
repeated waiver by any party hereto, of a breach or repeated series of breaches
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach.
11.2 GOVERNING LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Utah applicable to agreements executed in Utah.
11.3 ENTIRE AGREEMENT. This Agreement, together with the Exhibits hereto
and the financial statements referred to herein (which are incorporated hereby
by reference and made a part hereof) sets forth the entire agreement and
understandings of the parties with respect to the transactions contemplated
hereby and supersedes all prior agreement, arrangements, and understanding
relating to the subject matter hereof.
11.4 CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Article III and IV of this Agreement shall survive the closing
of the transactions contemplated by this Agreement.
11.5 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given, if sent by registered mail or certified
mail, postage prepaid, and addressed to the address set forth above with the
name of each party hereto.
Exhibit 2.01
64
11.6 ASSIGNMENT. This Agreement may not be assigned by operation of law or
otherwise.
11.7 HEADINGS. Headings in this Agreement are descriptive only, are
inserted for convenience, and do not constitute part of this Agreement.
11.8 COUNTERPARTS. This Agreement may be signed in any number of
counterparts and all such counterparts taken together shall constitute a single
agreement of the parties.
IN WITNESS WHEREOF, each of the parties has executed or caused its duly
authorized representative to execute this Agreement and Plan or Reorganization
in the manner appropriate to each, all as of the date first above written.
HARCOURT INVESTMENTS (USA), INC.
/s/ Xxxx X. Xxxx
----------------
Xx. Xxxx X. Xxxx, President
STARDUST, INC. PRODUCTION-RECORDING-PROMOTION
/s/ Xxxxxxx Xxxxxxx
-------------------
Xxxxxxx Xxxxxxx, Vice-President
AGREED TO AND ATTESTED BY 100% OF THE SHAREHOLDERS OF HARCOURT INVESTMENTS
(USA), INC.
PRINTED NAME: # OF SHARES: SIGNATURE:
EASTERN ROCESTER
LIMITED 20,000 /s/ Tan Geok Ser
-----------------------
Tan Geok Ser, President
XXXX XXXX 500 /s/ Xxxx Xxxx
-----------------------
Xxxx Xxxx
FIRST CAPITAL 4,500 /s/ Xxxxx Xxxxxxx
NETWORK, INC. ------------------------
Xxxxx Xxxxxxx, President
Exhibit 2.01
65
AGREEMENT AND PLAN
OF
REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made this lst day of December,
1994, by and between Harcourt Investments (USA), Inc. , Utah corporation having
its principal place of business at 00000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx
("Harcourt"); The Harcourt Pen Factory, Inc., a Nevada corporation having its
principal place of business at 00000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx ("Pen");
and the undersigned shareholder of Pen ("Shareholder").
WHEREAS, Shareholder owns one hundred percent (100%) of the share ownership
interest of Pen, and;
WHEREAS, Shareholder wishes to sell and Harcourt wishes to acquire
Shareholder's one hundred percent (100%) capital stock ownership of Pen, and;
WHEREAS, the parties to this Agreement herein agree that this transaction
is by means of private sale, and waive any and all reference and/or rights as
the respective consideration paid or shares received by purchaser as being a
securities transaction, as promulgated by any state, territorial, provincial or
federal agency or law.
WHEREAS, the parties to this Agreement have as herein represented and
warranted, entered into this binding Agreement, which terms are herein
incorporated and agreed to by the parties hereto; that as such they are an
integral part hereof, and shall remain and survive as to their construction
intent and content pursuant and subject to all conditions of this Agreement, as
contained herein.
WHEREAS, Harcourt wishes to acquire and Shareholder wishes to transfer all
of the issued and outstanding capital stock of Pen in a transaction intended to
qualify as a reorganization within the meaning of Section 368(a)(b)(B) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, Harcourt, Pen and Shareholder adopt this Agreement and Plan
of Reorganization and agrees as follows:
ARTICLE 1. EXCHANGE OF STOCK
1.1 NUMBER OF SHARES. Shareholder represents and warrants that he is
selling one hundred percent (100%) (25,000 shares of no par value common stock)
issued and outstanding interest ownership of Pen, to Harcourt for and in
exchange for the issuance by Harcourt to Shareholder of fifty two thousand five
hundred (52,500) shares of Harcourt common stock.
Exhibit 2.02
Page 1
66
1.2 DELIVERY OF CERTIFICATES BY SHAREHOLDER. The transfer of the Pen
shares by Shareholder shall be effected by the delivery to Harcourt at the
Closing of the total issued shares of capital stock represented by certificates
for 25,000 shares of common stock accompanied by stock powers executed in blank
by Shareholder.
1.3 DELIVERY OF CERTIFICATES BY HARCOURT. On the date of the closing of
this Agreement, Stardust shall cause to be transferred and delivered to the
Shareholder the total purchase consideration herein defined, as full payment of
the purchase of one hundred percent (100%) of Shareholder's interest in Pen.
1.4 RESTRICTIONS ON HARCOURT COMMON STOCK. The Harcourt shares issuable
pursuant to this Plan of Reorganization will be restricted securities within the
meaning of the Securities Act of 1933, as amended (the "Act").
ARTICLE II. THE CLOSING
The Closing contemplated by Articles I shall be held at such place and time
as shall be agreed upon by the parties, but in no event shall the Closing occur
later than December 31, 1994.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
PEN AND SHAREHOLDER
Shareholder and Pen, jointly and severally, represent and warrant to
Harcourt as follows:
3.1 CORPORATE STATUS. Pen is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
3.2 CORPORATE POWER. Pen has the corporate power to own, lease, or
operate all properties and assets owned, leased or operated by it, to carry on
its business as now conducted and as proposed to be conducted, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement.
3.3 ARTICLE OF INCORPORATION. Pen's Articles of Incorporation, and any
amendments or restatement thereof through the date hereof, as filed with the
Nevada Secretary of State, are attached as Exhibit 3.3.
3.4 BYLAWS. Pen has not adopted bylaws.
3.5 CAPITALIZATION. The authorized capital stock of Pen consists of
twenty five thousand (25,000) shares of common stock, with no par value per
share, of which twenty five thousand (25,000) shares are issued and outstanding
("Pen Shares"). Pen has no outstanding subscription, options, warrants, call, or
other agreements or commitments entitling any person to purchase or otherwise
acquire any shares of common stock of Pen or other capital stock or
Exhibit 2.02
Page 2
67
securities of Pen, including any right of conversion or exchange under any
outstanding security or other instrument. Pen is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock of any security convertible or exchangeable for any
of its capital stock. There are no voting trusts or other agreements or
understandings with respect to the voting of the capital stock of Pen. The
common stock of Pen is vested with all the voting rights in Pen.
3.6 SUBSIDIARIES. Pen has no subsidiaries or affiliated corporations
within the meaning of Section 1563 (a) or Section 1564 of the Code.
3.7 SOLE SHAREHOLDER. Shareholder is the only shareholder of Pen.
3.8 STOCK PAID AND NONASSESSABLE. The Pen Shares have been duly and
validly authorized and issued, and are fully paid and nonassessable and free
from preemptive and cumulative voting rights.
3.9 TITLE TO SHARES. Shareholder is the sole owner, free and clear of any
liens and encumbrances, of the number of the Pen Shares specified in Section
1.1. Such Shares represent all of the issued and outstanding capital stock of
Pen.
3.10 AUTHORIZATION. This Agreement has been duly authorized, executed, and
delivered by Pen and has been approved by Pen's shareholder, and constitutes a
valid and binding agreement of Pen enforceable in accordance with its terms.
3.11 FINANCIAL STATEMENTS. The Pen financial statements attached hereto as
Exhibit A are complete and correct and have been prepared in accordance with
generally accepted accounting principals on a basis consistent with prior
periods and fairly present the financial condition of Pen at the date of such
statements, and the results of operations for the period ended on such date and
reflect all adjustments which are necessary for a fair presentation of the
results reported.
3.12 COMPLIANCE. Pen is not in breach of, or in conflict with, any of the
terms, conditions, or provisions of its Articles of Incorporation.
3.13 DIRECTORS AND OFFICERS. As of the date hereof, the following are
officers and directors of Pen: Xxxx X. Xxxx, and Xxxxxxxx Xxxxx. Xxxx X. Xxxx is
Chief Executive Officer, and Xxxxxxxx Xxxxx is Secretary.
3.14 TITLE TO PROPERTY. Pen has good and marketable title to all of the
property and assets reflected in the balance sheet delivered pursuant to 3.11
and such property and assets are not subject to any mortgage, pledge, lien or
encumbrance.
3.15 PATENTS, TRADEMARKS, ETC. Pen has received no notice of infringement
of or conflict with, asserted rights of others with respect to any patents,
trademarks, service marks,
Exhibit 2.02
Page 3
68
trade names or copyright, nor is Pen aware of any infringement by other upon its
name. There are not patents, patent rights, trademarks, service marks, conducted
or as contemplated by Pen which Pen does not own or possess adequate rights to
use. All of Pen's employees, including without limitation Shareholder, have
transferred to Pen all of their right, title and interest in and to any
intellectual property owned by them or in which they share an ownership interest
(if any) related in any way to Pen's business.
3.16 NO REGULATORY VIOLATION. To the best of Pen and the Shareholder's
knowledge, Pen is not in violation of any law, statue, order, rule, regulation,
writ, injunction, or decree of any governmental authority or court, domestic or
foreign, with respect to the conduct of its business, the operation of Pen's
facility or the ownership of its properties, nor will the execution of this
Agreement or consummation of any of the transactions contemplated by this
Agreement result in any such violation.
3.17 NO CONTRACTUAL VIOLATION. Neither the execution of this Agreement,
nor the performance of Pen and Shareholder's obligations pursuant to this
Agreement or the consummation of the transactions contemplated hereby, will
conflict with, or result in a breach or violation of any of the terms or
provisions of, or constitute, or with the passage of time or the giving of
notice constitute, a default under any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond debenture, note agreement, or other
evidence of indentureness, lease, contract or other agreement or instrument to
which Pen is a party, or by which Pen or any of its properties is bound, or
Pen's Articles of Incorporation; and no consent, approval, authorization, or
order of any court or governmental agency or body is required for the
consummation by Pen or Shareholder of the transactions contemplated hereby.
3.18 MATERIAL CONTRACTS. Harcourt warrants that there are not material
agreements, written or oral, related to Pen, except those specifically disclosed
in Exhibit A.
3.19 UNDISCLOSED LIABILITIES. Pen has no liabilities of any nature except
as specifically disclosed on Exhibit A or to Harcourt in writing.
3.20 LITIGATION. There are no actions, suits or proceedings to which Pen
is a party, or of which any of its property is the subject, pending before or
brought by any court or governmental agency or body, nor, to the knowledge of
Pen or Shareholder, is any such action, suit, or proceeding threatened, which
would, singly, or in the aggregate, result in any material adverse change in the
condition (financial or otherwise), business, key personnel, properties, asset,
results of operations (present or prospective) or net worth of Pen.
3.21 PROFIT SHARING PLANS, ETC. Pen is not a party to and has no
obligation, contingent or otherwise, under any materials, oral or written,
expressed or implied: (i) commitment or agreement, with officers, directors,
employees, or any other persons providing similar services; (ii) agreement or
arrangement providing for the payment of any incentive, bonus, commission, or
deferred compensation or severance or termination pay; (iii) pension, profit
sharing, stock purchase, stock option, group life insurance, hospitalization
insurance, disability, retirement, or any other employee benefit plan, fringe
benefit plan, agreement, or arrangement, whether formal or informal and whether
Exhibit 2.02
Page 4
69
legally binding or not; or (iv) collective bargaining or union contract or
agreement.
3.22 TAX RETURNS. Pen has timely filed all tax returns and reports
required to be filed by it, and has paid in a timely manner all taxes that are
shown on such returns as being due and payable other than such taxes as are
being contested in good faith and for which adequate reserves have been
established. Pen is not a Subchapter S Corporation.
3.23 NO MATERIAL CHANCES. There have been no material adverse changes in
the condition (financial or otherwise), results of operations, or shareholder'
equity of Pen since the date of the latest balance sheet contained in Exhibit A,
except for changes (material or otherwise) resulting from its operations
conducted in the ordinary course of business.
3.24 NO BROKERS. No finders' fees or brokerage commissions of any kind
will be payable by Harcourt in connection with the transactions described in
this Agreement.
3.25 DISCLOSURE OF MATERIAL FACTS. Neither Pen nor Shareholder have
knowingly failed to disclose to Harcourt any facts material to the assets,
liabilities, earnings, prospects, and business of Pen. No representation or
warranty by Pen and Shareholder contained in this Agreement, and, to the best of
their knowledge, no statement contained in any document (including, without
limitation, the financial statements and Exhibits hereto), list, certificate, or
other writing furnished or to be furnished by or on behalf of Pen or Shareholder
or any of their representations in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements contained herein or there not misleading or necessary in order to
provide fully and fairly the information required to be provided in any such
document, list, certificate, or other writing.
3.26 INTERPRETATION. As used in this Agreement, the term "best knowledge"
or "Pen's best knowledge" refers to the best knowledge of the officers and
directors of Pen.
3.27 INVESTMENT REPRESENTATIONS. Shareholder acknowledges that the
restricted Harcourt Shares which they are receiving in exchange for his Pen
Shares have not been registered under the Securities Act of 1933 or state blue
sky laws, and that the restricted Harcourt Shares may not be transferred without
such registration or an opinion of counsel that registration is unnecessary;
Shareholder has the financial ability to bear the economic risk of an investment
in the Harcourt Shares and have no need for liquidity in such investment.
Shareholder has had an opportunity to inspect Harcourt's corporate records and
ask questions of officers of Harcourt and are capable of evaluating the merits
and risks of consummating this transaction.
3.28 AUTHORITY. Shareholder has the power and legal capacity to enter into
this Agreement, the execution, delivery and performance of this Agreement has
been duly authorized by all required shareholder action on the part of Pen and
this Agreement constitutes a valid, binding and legal obligation of Shareholder.
Exhibit 2.02
Page 5
70
ARTICLE IV. REPRESENTATIONS AND WARRANTS
OF HARCOURT
Harcourt represents and warrants to Shareholder, as follows:
4.1 CORPORATE AUTHORITY; AUTHORIZATION. Harcourt has the full corporate
power and authority to enter into this Agreement, the execution of which has
been duly authorized by all requisite corporate action on the part of Harcourt.
4.2 ISSUANCE OF SHARES. The Harcourt Shares will be fully paid, validly
issued and nonassessable when issued in exchange for the Pen Shares.
4.3 FINANCIAL STATEMENTS. Exhibit B is a true and correct copy of
Harcourt's financial statements as of December 31, 1994. Such financial
statements are complete and correct and have been prepared in accordance with
generally accepted accounting principals on a basis consistent with prior
periods and fairly present the financial condition of Harcourt at the date of
such statements, and the results of operations for the period ended on such date
and reflect all adjustments which are necessary for a fair presentation of the
results reported.
ARTICLE V. CONDUCT OF SHAREHOLDER AND
PEN PENDING THE CLOSING
Shareholder and Pen agree that Pen will conduct itself in the following
manner pending the Closing:
5.1 CAPITALIZATION, ETC. Pen will not, without the prior written consent
of Harcourt: (i) issue or commit to issue any capital stock or other ownership
interest; (ii) grant or commit to grant any options, warrant, or other rights to
subscribe for, purchase or otherwise acquire any shares of its capital stock or
other ownership interest, or issue or commit to issue any securities convertible
into or exchangeable for shares of its capital stock or other ownership
interest; (iii) declare, set aside, or pay any dividends or distributions; (iv)
directly or indirectly terminate or reduce or commit to terminate or reduce or
commit to acquire any of its capital stock or other ownership interest, or
directly or indirectly terminate or reduce or commit to terminate or reduce any
bank line of credit or the availability of any funds under any other loan or
financing agreement; (v) effect a stock split, reclassification or
recapitalization; (vi) change its Articles of Incorporation or other governing
instruments; (vii) borrow or agree to borrow any funds, guarantee or agree to
guarantee the obligations of others, or indemnify or agree to indemnify others;
(viii) waive or commit to waive any rights of substantial value; or (ix) other
than in the ordinary course of business, enter into any agreement, contract, or
commitment; except, in each case, contemplated by this Agreement.
Exhibit 2.02
Page 6
71
5.2 PROMPT ACTION. Pen and Shareholder will promptly take all action
contemplated by this Agreement or necessary to complete the transactions
contemplated by this Agreement.
5.3 CONFIDENTIALITY. Shareholder and Pen will treat this Agreement, and
the transactions contemplated by this Agreement as confidential, and will not
issue any press release or otherwise provide any information regarding such
transactions contemplated by this Agreement.
5.4 BUSINESS IN ORDINARY COURSE. Except as otherwise specifically
provided in this Agreement, Pen shall conduct its business only in its ordinary
course.
ARTICLE VI. ACCESS
From the date hereof to the Closing, Pen and Harcourt shall provide each other
full access to their premises and books and records, and shall cause each of
their officers to furnish the other such financial and operating data and other
information with respect to each of their business and properties as the other
shall, from time to time, reasonably request, provided, however that any such
investigation shall not affect any of the representations and warranties
hereunder. In the event of termination of this Agreement, each party will return
to the other all documents and other materials obtained in connection with the
transactions contemplated hereby, and not disclose or utilize any information
obtained from the other.
ARTICLE VII. CONDITIONS PRECEDENT TO SHAREHOLDER'
AND PEN'S OBLIGATIONS
The obligations of Shareholder and/or Pen under this Agreement, are subject to
fulfillment, before or on the date of Closing, of each of the following
conditions, any of which may be waived in writing at the discretion of Pen and
Shareholder.
7.1 REPRESENTATIONS AND WARRANTIES OF HARCOURT. The representations and
warranties of Harcourt contained herein shall be true and correct, in all
material respects, as of the date hereof, and shall continue to be true and
correct, in all material respects, as of the Closing.
7.2 COVENANT AND AGREEMENTS OF HARCOURT. Harcourt shall have performed
all obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by them at or prior to the Closing.
7.3 NO ADVERSE CHANCES. No information shall have come to the attention
of Pen and Shareholder pursuant to its investigation of Harcourt which is not
consistent, in all material respects, with information previously furnished to
Harcourt by Pen and Shareholder.
Exhibit 2.02
Page 7
72
ARTICLE VIII. CONDITIONS PRECEDENT TO
HARCOURT'S OBLIGATIONS
The obligations of Harcourt under Agreement are subject to the fulfillment,
before or on the date of Closing, of each of the following conditions, any of
which may be waived in writing at the discretion of Harcourt:
8.1 REPRESENTATIONS AND WARRANTIES OF PEN AND SHAREHOLDER. The
representations and warranties of Harcourt contained herein shall be true and
correct, in all material respects, as of the date hereof, and shall continue to
be true and correct, in all material respects, as of the Closing.
8.2 COVENANT AND AGREEMENTS OF PEN AND SHAREHOLDER. Pen and Shareholder
shall have performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing.
8.3 APPROVAL OF THE BOARD OF DIRECTORS OF PEN. The Board of Directors of
Pen shall have approved the execution, delivery and performance of this
Agreement.
ARTICLE IX. INDEMNIFICATION
9.1 INDEMNIFICATION OF HARCOURT. Shareholder agree to indemnify Harcourt
against any loss, damage, or expense (including reasonable attorneys' fees)
suffered by Harcourt from (1) any breach by Shareholder or Pen of this
Agreement; or (2) any inaccuracy in or breach of any of the representations,
warranties, or covenants by Shareholder or Pen.
9.2 INDEMNIFICATION OF PEN AND SHAREHOLDER. Harcourt agrees to indemnify
Pen and Shareholder against any loss, damage, or expense (including reasonable
attorneys' fees) suffered by Pen and/or the Shareholder from any inaccuracy in
or breach of any of Harcourt's representations, warranties or covenants herein.
9.3 DEFENSE OF CLAIMS. Upon obtaining knowledge thereof, the indemnified
parties shall promptly notify the indemnifying party of any claim which has
given or could give rise to a right of indemnification under this Agreement. If
the right of indemnification relates to a claim asserted by a third party
against the indemnified party, the indemnifying party shall have the right to
employ counsel acceptable to the indemnified party to cooperate in the defense
of any such claim. So long as the indemnified party will not settle such claim,
if the indemnifying party does not elect to defend any such claim, the
indemnified party shall have no obligation to do so.
Exhibit 2.02
Page 8
73
ARTICLE X. TERMINATION
l0.1 CIRCUMSTANCES OF TERMINATION. This Agreement may be terminated (l) by
mutual consent in writing; (2) by either Pen or Harcourt if there has been a
material misrepresentation or material breach of any warranty or covenant by the
other party, which determination on behalf of Harcourt shall be made by its
Board of Directors in its sole discretion; or (3) by either Shareholder or
Harcourt if the Closing shall not have taken place, unless adjourned to a later
date by mutual consent in writing, by the date set forth in Article II.
10.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to Section 10.1, each party shall pay the cost and expenses
incurred by it in connection with this Agreement and no party (or any of its
officers, directors, and shareholder) shall be liable to any other party for any
costs, expenses, damage or loss of anticipated profits hereunder.
ARTICLE XI. MISCELLANEOUS
11.1 WAIVERS. No action pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party shall be deemed to
constitute a waiver by the party taking such action of any representation,
warranty, covenant or agreement contained herein, except that a breach of any
representation or warranty set forth herein that is known to a party hereto at
the time the transactions contemplated hereby are consummated shall not be
subsequently enforceable or actionable by such party. A waiver by any party, or
repeated waiver by any party hereto, of a breach or repeated series of breaches
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach.
11.2 GOVERNING LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Utah applicable to agreement executed in Utah.
11.3 ENTIRE AGREEMENT. This Agreement, together with the Exhibits hereto
and the financial statements referred to herein (which are incorporated hereby
by reference and made a part hereof) sets forth the entire agreement and
understandings of the parties with respect to the transactions contemplated
hereby and supersedes all prior agreements, arrangements, and understanding
relating to the subject matter hereof.
11.4 CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Articles III and IV of this Agreement shall survive the
closing of the transactions contemplated by this Agreement.
11.5 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given, if sent by registered mail or certified
mail, postage prepaid, and addressed to the address set forth above with the
name of each party hereto.
Exhibit 2.02
Page 9
74
11.6 ASSIGNMENT. This Agreement may not be assigned by operation of law or
otherwise.
11.7 HEADINGS. Headings in this Agreement are descriptive only, are
inserted for convenience, and do not constitute part of this Agreement.
11.8 COUNTERPARTS. This Agreement may be signed in any number of
counterparts and all such counterparts taken together shall constitute a single
agreement of the parties.
IN WITNESS WHEREOF, each of the parties has executed or caused its duly
authorized representative to execute this Agreement and Plan or Reorganization
in the manner appropriate to each, all as of the date first above written.
HARCOURT INVESTMENTS (USA), INC.
/s/ Xxxx X. Xxxx
---------------------------
Xx. Xxxx X. Xxxx, President
AGREED TO AND ATTESTED BY THE SHAREHOLDER OF THE HARTCOURT PEN
FACTORY, INC.
PRINTED NAME: # OF SHARES: SIGNATURE:
XXXX XXXX 25,000 /s/ Xxxx Xxxx
-----------------------
Xxxx Xxxx
Exhibit 2.02
Page 10
75
