EXHIBIT 7.6
Plan of Reorganization and Asset Purchase Agreement
This Plan of Reorganization and Asset Purchase Agreement (the
"Agreement") is made and entered into as of the 1st day of July 1999 by and
between Zeros & Ones, Inc., a Delaware corporation ("ZOI"), Commercial Labor
Management, Inc., a Nevada corporation ("CLMI"), Xxxxxx Xxxxx, an individual
("Xxxxx"), Xxxx X. Xxxxxxxxxx, an individual ("Xxxxxxxxxx"), and Xxxxxx X.
Xxxxxx ("Xxxxxx"), an individual ("Xxxxxx"), with respect to the following
facts:
RECITALS
A. This Agreement hereby supercedes and replaces the Plan of
Reorganization and Exchange Agreement (the "Prior Agreement")
made and entered into as of April 30, 1999 by and between ZOI,
CLMI, the ZOI Shareholders (as defined in the Prior
Agreement), Xxxxxxxxxx and
Xxxxxx.
X. Xxxxx owns 100% of the total issued and outstanding capital
stock of ZOI.
C. ZOI is engaged in the business of selling products on the
Internet, conducting the auction of products on the Internet,
providing Internet and media consulting services, designing
and operating Internet websites, building and licensing
Internet core technology, and providing software consulting
services.
D. CLMI is a public reporting company trading on the OTC Bulletin
Board.
E. ZOI desires to sell and CLMI desires to purchase the business
and substantially all of the assets of ZOI on the terms and
subject to the conditions set forth in this Agreement.
F. The plan of reorganization evidenced by this Agreement is
intended to be a tax free reorganization under Section 368 of
the Internal Revenue Code of 1986, as amended. It is part of
an overall tax free plan of reorganization pursuant to which
CLMI is also acquiring 100% of the total issued and
outstanding stock of Quantum Arts, Inc., Polyganol Research
Corporation, Wood Ranch Technology Group, Inc., Kidvision,
Inc. and Pillar West Entertainment, Inc.
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NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency to which are hereby acknowledged by the parties to this Agreement,
and in light of the above recitals to this Agreement, the parties to this
Agreement hereby agree as follows:
1. Purchase and Sale of Assets.
---------------------------
On the terms and subject to the conditions set forth in this Agreement,
ZOI agrees to sell, convey, assign, transfer and deliver to CLMI and CLMI agrees
to purchase from ZOI, at the closing on July 1, 1999 ("Closing Date"), all of
the assets, properties and business of ZOI of every kind, whether tangible,
intangible, real, personal or mixed, and wherever located (collectively referred
to as the "Acquired Assets"), including without limitation, the following: its
business as a going concern; its leaseholds, furniture, fixtures, equipment and
supplies; its rights under leases, licenses, franchise agreements and other
contracts; its copyrights, trademarks and tradenames; its customers; stocks,
bonds, securities and other investments; certificates of deposit; all cash on
hand and money on deposit with banks and others; notes and accounts receivable;
insurance policies; causes of action, judgments, claims and demands; and all
other property and rights owned or held by ZOI on the Closing Date or then used
by it in its business, whether or not specifically referred to in this Agreement
unless specifically excluded in this Agreement.
2. Obligations and Liabilities.
---------------------------
On the Closing Date, Xxxxx shall assume any liabilities, obligations,
or payables of ZOI. CLMI will not assume or be obligated to satisfy or perform
any liabilities, obligations or payables of ZOI.
3. Purchase Price.
--------------
As consideration for the sale, conveyance, assignment, transfer and
delivery of the Acquired Assets to CLMI, CLMI agrees to issue and deliver to ZOI
on the Closing Date a total of two hundred and twenty thousand (220,000) shares
of its Common Stock, $.001 par value, to ZOI (collectively referred to as the
"Shares"). Immediately after the Closing, ZOI will distribute all of the Shares
to Xxxxx.
4. Closing and Further Acts.
------------------------
The closing of the exchange (the "Closing") will occur upon the
satisfaction or waiver of the conditions set forth in Section 9 of this
Agreement, but no later than July 1, 1999. At the Closing ZOI shall deliver to
CLMI such bills of sale, deeds, assignments and other instruments of sale,
conveyance, assignment and transfer as are sufficient in the opinion of CLMI and
its counsel to vest in CLMI and its successors or assigns the absolute, legal
and equitable title to all of the Acquired Assets. CLMI shall deliver to ZOI
stock certificates representing a total of two hundred and twenty thousand
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(220,000) shares of CLMI Common Stock (which, when issued, will equal
approximately 3.14% of the total number of shares of CLMI's Common Stock issued
and outstanding on the date of such issuance), which will then be distributed by
ZOI to Xxxxx. Upon the Closing, or as soon as permissible in accordance with
Section 14f of the Securities Exchange Act of 1934, as amended, whichever occurs
later, Xxxxxx X. Xxxxxx will resign as an officer and director of CLMI, and will
appoint new directors as designated by Xxxxx to fill the vacancies on CLMI's
Board of Directors. Upon the Closing, Xxxxxxxxxx and Xxxxxx will each tender to
CLMI for redemption and cancellation 1,850,000 shares of CLMI Common Stock which
they currently own. All parties to this Agreement hereby agree to execute all
other documents and take all other action which are reasonably necessary or
appropriate in order to effect all of the transactions contemplated by this
Agreement.
5. Covenants of CLMI.
-----------------
5.1 Covenants of CLMI.
-----------------
A portion of the intangible assets and claims presently owned by CLMI,
equal to 50% of any award or proceeds, if any, received in its lawsuit against
CNG Communications, Inc. and Xxxx Xxxxxx (the "Lawsuit") shall be retained by
CLMI after the Closing. Xxxxxxxxxx and Xxxxxx will each be entitled to 25% of
any award or proceeds received in the Lawsuit, if any, in part in consideration
for their work in facilitating the Lawsuit on CLMI's behalf, regardless of who
the plaintiffs are in the Lawsuit or which claims are remaining. After the
Closing, CLMI will be responsible for any costs incurred in connection with the
Lawsuit. On the Closing, CLMI will have no more than 7,000,000 shares of its
Common Stock, par value $.001 per share, outstanding, and will not have
outstanding any preferred stock, warrants, options, or other securities
convertible into the common or preferred stock of CLMI, except as disclosed in
Exhibit C to this Agreement. Upon Closing, CLMI will have no accounts payable or
outstanding debt. On, or as soon as practicable after, the Closing, CLMI will
change its name to Zeros & Ones, Inc.
5.2 Covenants of Xxxxxxxxxx and Xxxxxx.
----------------------------------
On the Closing, Xxxxxxxxxx and Xxxxxx each covenant to tender for
cancellation 1,850,000 shares of the Common Stock of CLMI owned by them. Xxxxxx
agrees to resign as an officer and director of CLMI, effective on the Closing,
or as soon as permissible in accordance with Section 14f of the Securities
Exchange Act of 1934, as amended, whichever occurs later.
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6. Covenants of ZOI and Xxxxx.
--------------------------
6.1 ZOI Financial Condition.
-----------------------
ZOI and Xxxxx hereby covenant that (i) within 90 days after the
Closing, ZOI will have positive net stockholders' equity of at least $5,000,000,
and (ii) upon the Closing, ZOI will deliver to CLMI audited financial statements
for the Acquired Assets.
6.2 Cash Payment.
------------
ZOI has already tendered $120,000 in cash to CLMI, from which CLMI will
pay all accounts payable set forth on the CLMI Financial Statements (as
hereinafter defined), or which are incurred after December 31, 1998 until the
Closing Date, with the balance allocable as determined by CLMI in its sole and
absolute discretion. On or before July 31, 1999, CLMI will tender to Xxxxxxxxxx
and Xxxxxx a payment in cash of $87,500 plus accrued simple interest thereon
from July 1, 1999 at the rate of 10% per annum to be allocated in the sole and
absolute discretion of Xxxxxxxxxx and Xxxxxx. ZOI will make said check payable
as designated by Xxxxxxxxxx and Xxxxxx. This debt of CLMI to Xxxxxxxxxx and
Xxxxxx will be evidenced by a promissory note in the principal amount of
$87,500, bearing simple interest at the rate of 10% per annum, payable by CLMI
to Xxxxxxxxxx and Xxxxxx.
7. Representations and Warranties of ZOI and Xxxxx.
-----------------------------------------------
ZOI and Xxxxx represent and warrant to CLMI as follows:
7.1 Power and Authority; Binding Nature of Agreement.
------------------------------------------------
ZOI and Xxxxx have full power and authority to enter into this
Agreement and to perform their obligations hereunder. The execution, delivery
and performance of this Agreement by them has been duly authorized by all
necessary action on their part. Assuming that this Agreement is a valid and
binding obligation of each of the other parties hereto, this Agreement is a
valid and binding obligation of ZOI and Xxxxx.
7.2 Subsidiaries.
------------
There is no corporation, general partnership, limited partnership,
joint venture, association, trust or other entity or organization which ZOI
directly or indirectly controls or in which ZOI directly or indirectly owns any
equity or other interest, other than those listed on Exhibit B to this
Agreement.
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7.3 Good Standing.
-------------
ZOI and its subsidiaries (i) are duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated,
(ii) have all necessary power and authority to own their assets and to conduct
their business as it is currently being conducted, and (iii) are duly qualified
or licensed to do business and are in good standing in every jurisdiction (both
domestic and foreign) where such qualification or licensing is required.
7.4 Charter Documents and Corporate Records.
---------------------------------------
ZOI and its subsidiaries have delivered to CLMI complete and correct
copies of (i) the articles of incorporation, bylaws and other charter or
organizational documents of ZOI and its subsidiaries, including all amendments
thereto, (ii) the stock records of ZOI and its subsidiaries, and (iii) the
minutes and other records of the meetings and other proceedings of the
shareholders and directors of ZOI and its subsidiaries. ZOI and its subsidiaries
are not in violation or breach of (i) any of the provisions of their articles of
incorporation, bylaws or other charter or organizational documents, or (ii) any
resolution adopted by their shareholders or directors. There have been no
meetings or other proceedings of the shareholders or directors of ZOI or its
subsidiaries that are not fully reflected in the appropriate minute books or
other written records of ZOI and its subsidiaries.
7.5 Capitalization.
--------------
The authorized capital stock of ZOI consists of 50,000,000 shares of
common stock, par value $.001 per share, of which 1,500 shares are issued and
outstanding. All of the outstanding shares of the capital stock of ZOI are
validly issued, fully paid and nonassessable, and have been issued in full
compliance with all applicable federal, state, local and foreign securities laws
and other laws. There are no (i) outstanding options, warrants or rights to
acquire any shares of the capital stock or other securities of ZOI, (ii)
outstanding securities or obligations which are convertible into or exchangeable
for any shares of the capital stock or other securities of ZOI, or (iii)
contracts or arrangements under which ZOI is or may become bound to sell or
otherwise issue any shares of its capital stock or any other securities.
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7.6 Financial Statements.
ZOI has delivered to CLMI the following financial statements relating
to ZOI on the Closing (the "ZOI Financial Statements"): (i) the audited assets
of ZOI as of June 25, 1999; and (ii) the unaudited balance sheets and statements
of income and retained earnings, stockholders' equity and changes in financial
position of ZOI for the years ended December 31, 1998, 1997 and 1996. Except as
stated therein or in the notes thereto, the ZOI Financial Statements:(a) present
fairly the financial position of ZOI as of the respective dates thereof and the
results of operations and changes in financial position of ZOI for the
respective periods covered thereby; and (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods covered.
7.7 Absence of Changes.
------------------
Except as otherwise disclosed to CLMI in writing in Exhibit D to this
Agreement, since December 31, 1998:
(a) There has not been any material adverse change in the
business, condition, assets, operations or prospects of ZOI or its
subsidiaries and no event has occurred that might have an adverse
effect on the business, condition, assets, operations or prospects of
ZOI or its subsidiaries.
(b) ZOI or its subsidiaries have not (i) declared, set aside
or paid any dividend or made any other contribution in respect of any
shares of capital stock, nor (ii) repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities.
(c) ZOI or its subsidiaries have not sold or otherwise issued
any shares of capital stock or any other securities.
(d) ZOI or its subsidiaries have not amended their articles of
incorporation, bylaws or other charter or organizational documents, nor
have they effected or been a party to any merger, recapitalization,
reclassification of shares, stock split, reverse stock split,
reorganization or similar transaction.
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(e) ZOI has not formed any subsidiary or contributed any funds
or other assets to any subsidiary, other than as disclosed in Exhibit B
of this Agreement.
(f) ZOI has not purchased or otherwise acquired any assets,
nor has it leased any assets from any other person, except in the
ordinary course of business consistent with past practice.
(g) ZOI or its subsidiaries have not made any capital
expenditure outside the ordinary course of business or inconsistent
with past practice, or in an amount exceeding ten thousand dollars
($10,000), and the total amount of the capital expenditures made by ZOI
or its subsidiaries have not exceeded twenty thousand dollars
($20,000), without CLMI's consent.
(h) ZOI or its subsidiaries has not sold or otherwise
transferred any assets to any other person, except in the ordinary
course of business consistent with past practice and at a price equal
to the fair market value of the assets transferred.
(i) There has not been any loss, damage or destruction to any
of the properties or assets of ZOI or its subsidiaries (whether or not
covered by insurance).
(j) ZOI or its subsidiaries have not written off as
uncollectible any indebtedness or accounts receivable, except for
write-offs that were made in the ordinary course of business consistent
with past practice and that involved less than one hundred dollars
($100) singly and less than one thousand dollars ($1,000) in the
aggregate.
(k) ZOI or its subsidiaries have not leased any assets to any
other person except in the ordinary course of business consistent with
past practice and at a rental rate equal to the fair rental value of
the leased assets.
(l) ZOI or its subsidiaries have not mortgaged, pledged,
hypothecated or otherwise encumbered any assets, except in the ordinary
course of business consistent with past practice.
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(m) ZOI or its subsidiaries have not entered into any contract
or incurred any debt, liability or other obligation (whether absolute,
accrued, contingent or otherwise), except for (i) contracts that were
entered into in the ordinary course of business consistent with past
practice and that have terms of less than six months and do not
contemplate payments by or to ZOI or its subsidiaries which will
exceed, over the term of the contract, three thousand dollars ($3,000)
in the aggregate, and (ii) current liabilities incurred in the ordinary
course of business consistent with the past practice.
(n) ZOI or its subsidiaries have not made any loan or advance
to any other person, except for advances that have been made to
customers in the ordinary course of business consistent with past
practice and that have been properly reflected as "accounts
receivables."
(o) ZOI or its subsidiaries have not paid any bonus to, or
increased the amount of the salary, fringe benefits or other
compensation or remuneration payable to, any of the directors, officers
or employees of ZOI or its subsidiaries.
(p) No contract or other instrument to which ZOI or any of its
subsidiaries are or were a party or by which ZOI or any of its
subsidiaries or any of their assets are or were bound has been amended
or terminated, except in the ordinary course of business consistent
with past practice.
(q) ZOI or its subsidiaries have not discharged any lien or
discharged or paid any indebtedness, liability or other obligation,
except for current liabilities that (i) are reflected in the ZOI
Financial Statements as of December 31, 1998 or have been incurred
since December 31, 1998 in the ordinary course of business consistent
with past practice, and (ii) have been discharged or paid in the
ordinary course of business consistent with past practice.
(r) ZOI or its subsidiaries have not forgiven any debt or
otherwise released or waived any right or claim, except in the ordinary
course of business consistent with past practice.
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(s) ZOI or its subsidiaries have not changed its methods of
accounting or its accounting practices in any respect.
(t) ZOI or its subsidiaries have not entered into any
transaction outside the ordinary course of business or inconsistent
with past practice.
(u) ZOI or its subsidiaries have not agreed or committed
(orally or in writing) to do any of the things described in clauses (b)
through (t) of this Section 5.7.
7.8 Absence of Undisclosed Liabilities.
----------------------------------
ZOI and its subsidiaries have no debt, liability or other obligation of
any nature (whether due or to become due and whether absolute, accrued,
contingent or otherwise) that is not reflected or reserved against in the ZOI
Financial Statements as of December 31, 1998, except for obligations incurred
since December 31, 1998 in the ordinary course of business consistent with past
practice.
7.9 Contracts.
---------
ZOI and its subsidiaries have delivered to CLMI complete and correct
copies of all of the contracts and other instruments including all amendment
hereto. All of such contracts and other instruments are valid and in full force
and effect, and are enforceable in accordance with their terms. There is no
existing default by any person under any of said contracts or other instruments,
and there exists no condition or set of circumstance which, with notice or lapse
of time or both, would constitute such a default.
7.10 Acquired Assets.
---------------
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not to ZOI's
knowledge result in a breach of the terms and conditions of, or result
in a loss of rights under, or result in the creation of any lien,
charge or encumbrance upon, any of the Acquired Assets pursuant to (i)
ZOI's articles of incorporation, bylaws, or agreements of limited
partnership, as the case may be, (ii) any franchise, mortgage, deed of
trust, lease, license, permit, agreement, contract, instrument or
undertaking to which ZOI is a party or by which it or any of its
properties are bound, or (iii) any statute, rule, regulation, order,
judgment, award or decree.
(b) ZOI has good and marketable title to all of the Acquired
Assets, free and clear of all mortgages, liens, leases, pledges,
charges, encumbrances, equities or claims, except as expressly
disclosed in Exhibit A to this Agreement.
(c) To ZOI's knowledge the Acquired Assets are not subject to
any material liability, absolute or contingent, which is not listed as
a liability in Exhibit A to this Agreement, nor is ZOI subject to any
liability, absolute or contingent, which has not been disclosed to and
acknowledged by CLMI in writing prior to the Closing Date.
(d) The list of Acquired Assets set forth in Exhibit A of this
Agreement is an accurate description of all of the assets of ZOI.
(e) The list of Acquired Assets set forth in Exhibit A to this
Agreement contains a list of all contracts, agreements, licenses,
leases, arrangements, commitments and other undertakings to which ZOI
is a party or by which it or its property is bound. Except as specified
in Exhibit A, all of such contracts, agreements, leases, licenses and
commitments are valid, binding and in full force and effect, and are
assignable to CLMI without the consent of any other party.
(f) To ZOI's knowledge no consent is necessary to effect the
transfer to CLMI of any of the Acquired Assets and, upon the
consummation of the transactions contemplated hereby, CLMI will be
entitled to use the Acquired Assets to the full extent that CLMI used
the same immediately prior to the transfer of the Acquired Assets.
(g) All of the machinery, equipment, furniture and fixtures as
of the Closing Date will be in the same condition as on the date of
this Agreement, normal wear and tear excepted. ZOI hereby conveys to
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conveys to CLMI (to the extent it is able under the applicable warranty
documents) any and all product warranty or similar rights that ZOI may
have against third parties in respect of the condition of any Acquired
Assets.
7.11 Compliance With Laws; Licenses and Permits.
------------------------------------------
ZOI and its subsidiaries, to their knowledge, are not in violation of,
nor have they failed to conduct their business in full compliance with, any
applicable federal, state, local or foreign laws, regulations, rules, treaties,
rulings, orders, directives or decrees. ZOI and its subsidiaries have delivered
to CLMI complete and correct copies of all of the licenses, permits,
authorizations and franchises to which ZOI or its subsidiaries are subject and
all said licenses, permits, authorizations and franchises are valid and in full
force and effect. Said licenses, permits, authorizations and franchises
constitute all of the licenses, permits, authorizations and franchises necessary
to permit ZOI and its subsidiaries to conduct their business in the manner in
which it is now being conducted, and ZOI and their subsidiaries are not in
violation or breach of any of the terms, requirements or conditions of any of
said licenses, permits, authorizations or franchises.
7.12 Litigation.
----------
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to ZOI's knowledge, threatened
against or with respect to ZOI or its subsidiaries which (i) if adversely
determined would have an adverse effect on the business, condition, assets,
operations or prospects of ZOI or its subsidiaries, or (ii) challenges or would
challenge any of the actions required to be taken by the ZOI under this
Agreement. There exists no basis for any such action, suit, proceeding, dispute,
litigation, claim, complaint or investigation.
7.13 Non-Contravention.
-----------------
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
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or organizational documents of ZOI or its subsidiaries; (ii) contravene or
result in a violation of any resolution adopted by the shareholders or directors
of ZOI or its subsidiaries; (iii) result in a violation or breach of, or give
any person the right to declare (whether with or without notice or lapse of
time) a default under or to terminate, any agreement or other instrument to
which ZOI or Xxxxx is a party or by which ZOI or its subsidiaries or any of
their assets or Xxxxx is bound; (iv) give any person the right to accelerate the
maturity of any indebtedness or other obligation of ZOI or its subsidiaries; (v)
result in the loss of any license or other contractual right of ZOI or its
subsidiaries; (vi) result in the loss of, or in a violation of any of the terms,
provisions or conditions of, any governmental license, permit, authorization or
franchise of ZOI or its subsidiaries; (vii) result in the creation or imposition
of any lien, charge, encumbrance or restriction on any of the assets of ZOI or
its subsidiaries or on Xxxxx' stock in ZOI; (viii) result in the reassessment or
revaluation of any property of ZOI or its subsidiaries; by any taxing authority
or other governmental authority; (ix) result in the imposition of, or subject
ZOI or its subsidiaries; to any liability for, any conveyance or transfer tax or
any similar tax; or (x) result in a violation of any law, rule, regulation,
treaty, ruling, directive, order, arbitration award, judgment or decree to which
ZOI or its subsidiaries or any of their assets or any of Xxxxx' stock in ZOI is
subject.
7.14 Approvals.
---------
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by ZOI or its subsidiaries or Xxxxx in connection with the execution,
delivery or performance of this Agreement, including the conveyance to CLMI of
the Acquired Assets.
7.15 Brokers.
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ZOI has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to ZOI's knowledge, no person is entitled, or intends to claim
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that it is entitled, to receive any such fees or commissions in connection with
such transaction.
7.16 Full Disclosure.
---------------
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to CLMI by or on behalf of
ZOI or Xxxxx contains any untrue statement of a material fact or omits to state
a material fact necessary to make the representations and other statements
contained herein and therein not misleading.
7.17 Representations True on Closing Date.
------------------------------------
The representations and warranties of ZOI and Xxxxx set forth in this
Agreement are true and correct on the date hereof, and will be true and correct
on the Closing Date as though such representations and warranties were made as
of the Closing Date.
7.18 Non-Distributive Intent.
-----------------------
The shares of CLMI stock being acquired by Xxxxx pursuant to this
Agreement are not being acquired by Xxxxx with a view to the public distribution
of them. Xxxxx acknowledges and agrees that the CLMI stock acquired by him
pursuant to this Agreement has not been registered or qualified under federal or
state securities laws, and may not be sold, conveyed, transferred, assigned or
hypothecated without being registered under the Securities Act of 1933, as
amended, and applicable state law, or in the alternative submission of evidence
reasonably satisfactory to CLMI that an exemption from registration is
available.
8. Representations and Warranties of CLMI.
--------------------------------------
CLMI represents and warrants to ZOI and Xxxxx as follows:
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8.1 Power and Authority; Binding Nature of Agreement.
------------------------------------------------
CLMI has full power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by CLMI has been duly authorized by all necessary action on its
part. Assuming that this Agreement is a valid and binding obligation of each of
the other parties hereto, this Agreement is a valid and binding obligation of
CLMI.
8.2 Good Standing.
-------------
CLMI (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated, (ii) has all necessary
power and authority to own its assets and to conduct its business as it is
currently being conducted, and (iii) is duly qualified or licensed to do
business and is in good standing in every jurisdiction (both domestic and
foreign) where such qualification or licensing is required.
8.3 Charter Documents and Corporate Records.
---------------------------------------
CLMI has delivered to Xxxxx and ZOI complete and correct copies of (i)
the articles of incorporation, bylaws and other charter or organizational
documents of CLMI, including all amendments thereto, (ii) the stock records of
CLMI, and (iii) the minutes and other records of the meetings and other
proceedings of the shareholders and directors of CLMI. CLMI is not in violation
or breach of (i) any of the provisions of its articles of incorporation, bylaws
or other charter or organizational documents, or (ii) any resolution adopted by
its shareholders or directors. There have been no meetings or other proceedings
of the shareholders or directors of CLMI that are not fully reflected in the
appropriate minute books or other written records of CLMI.
8.4 Capitalization.
--------------
The authorized capital stock of CLMI consists of 50,000,000 shares of
common stock, par value $.001 per share, of which 4,587,941shares are issued and
outstanding, and 2,000,000 share of preferred stock, none of which is issued or
outstanding. All of the outstanding shares of the capital stock of CLMI are
validly issued, fully paid and nonassessable, and have been issued in full
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compliance with all applicable federal, state, local and foreign securities laws
and other laws. Except as disclosed in Exhibit C of this Agreement, there are no
(i) outstanding options, warrants or rights to acquire any shares of the capital
stock or other securities of CLMI, (ii) outstanding securities or obligations
which are convertible into or exchangeable for any shares of the capital stock
or other securities of CLMI, or (iii) contracts or arrangements under which CLMI
is or may become bound to sell or otherwise issue any shares of its capital
stock or any other securities.
8.5 Financial Statements.
--------------------
CLMI has delivered to ZOI and the ZOI Shareholders the following
financial statements (the "CLMI Financial Statements"): (i) the audited balance
sheet of CLMI as of December 31, 1998 and December 31, 1997; and (ii) the
audited statements of income and retained earnings, stockholders' equity and
changes in financial position of CLMI for the years ended December 31, 1998 and
December 31, 1997; and (iii) supporting supplemental schedules. Except as stated
therein or in the notes thereto, the CLMI Financial Statements: (a) present
fairly the financial position of CLMI as of the respective dates thereof and the
results of operations and changes in financial position of CLMI for the
respective periods covered thereby; and (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods covered.
8.6 Absence of Changes.
------------------
Except as otherwise disclosed to ZOI in writing in Exhibit D to this
Agreement, since December 31, 1998, there has not been any material adverse
change in the business, condition, assets, operations or prospects of CLMI and
no event has occurred that might have an adverse effect on the business,
condition, assets, operations or prospects of CLMI.
8.7 Absence of Undisclosed Liabilities.
----------------------------------
CLMI has no debt, liability or other obligation of any nature (whether
due or to become due and whether absolute, accrued, contingent or otherwise)
that is not reflected or reserved against in the CLMI Financial Statements as of
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December 31, 1998, except for obligations incurred since December 31, 1998 in
the ordinary course of business consistent with past practice.
8.8 Litigation.
----------
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to CLMI's knowledge, threatened
against or with respect to CLMI which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
CLMI, or (ii) challenges or would challenge any of the actions required to be
taken by CLMI under this Agreement. There exists no basis for any such action,
suit, proceeding, dispute, litigation, claim, complaint or investigation.
8.9 Non-Contravention.
-----------------
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of CLMI; (ii) contravene or result in a violation of
any resolution adopted by the shareholders or directors of CLMI; (iii) result in
a violation or breach of, or give any person the right to declare (whether with
or without notice or lapse of time) a default under or to terminate, any
agreement or other instrument to which CLMI is a party or by which CLMI or any
of its assets are bound; (iv) give any person the right to accelerate the
maturity of any indebtedness or other obligation of CLMI; (v) result in the loss
of any license or other contractual right of CLMI; (vi) result in the loss of,
or in a violation of any of the terms, provisions or conditions of, any
governmental license, permit, authorization or franchise of CLMI; (vii) result
in the creation or imposition of any lien, charge, encumbrance or restriction on
any of the assets of CLMI; (viii) result in the reassessment or revaluation of
any property of CLMI by any taxing authority or other governmental authority;
(ix) result in the imposition of, or subject CLMI to any liability for, any
conveyance or transfer tax or any similar tax; or (x) result in a violation of
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8.10 Approvals.
---------
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by CLMI in connection with the execution, delivery or performance of
this Agreement.
8.11 Brokers.
-------
CLMI has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to CLMI's knowledge, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection with
such transactions.
8.12 Full Disclosure.
---------------
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to ZOI by or on behalf of
CLMI contains any untrue statement of a material fact or omits to state a
material fact necessary to make the representations and other statements
contained herein and therein not misleading.
8.13 Representations True on Closing Date.
------------------------------------
The representations and warranties of CLMI set forth in this Agreement
are true and correct on the date hereof, and will be true and correct on the
Closing Date as though such representations and warranties were made as of the
Closing Date.
9. Conditions to Closing.
---------------------
9.1 Conditions Precedent to CLMI's Obligation To Close.
--------------------------------------------------
CLMI's obligation to close the plan of reorganization and exchange as
contemplated in this Agreement is conditioned upon the occurrence or waiver by
CLMI of the following:
(a) All representations and warranties of ZOI and Xxxxx made
in this Agreement or in any exhibit hereto delivered by ZOI and Xxxxx
shall be true and correct as of the Closing Date with the same force
and effect as if made on and as of that date.
(b) ZOI and Xxxxx shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be
performed or complied with by ZOI and Xxxxx prior to or at the Closing
Date.
9.2 Conditions Precedent to ZOI's and Xxxxx' Obligation To Close.
------------------------------------------------------------
ZOI's and Xxxxx' obligation to close the plan of reorganization and
exchange as contemplated in this Agreement is conditioned upon the occurrence or
waiver by ZOI or Xxxxx of the following:
(a) All representations and warranties of CLMI made in this
Agreement or in any exhibit hereto delivered by CLMI shall be true and
correct on and as of the Closing date with the same force and effect as
if made on and as of that date.
(b) CLMI shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied
with by CLMI prior to or at the Closing Date.
10. Further Assurances.
------------------
Following the Closing, ZOI and Xxxxx agree to take such actions and
execute, acknowledge and deliver to CLMI such further instruments of assignment,
assumptions, conveyance and transfer and take any other action as CLMI may
reasonably request in order to more effectively convey, sell, transfer and
assign to CLMI all of the Acquired Assets, to confirm the title of CLMI thereto,
to have Xxxxx assume all of the liabilities of ZOI and to indemnify CLMI
therefrom, and to assist CLMI in exercising its rights with respect to the
Acquired Assets.
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11. Survival of Representations and Warranties.
------------------------------------------
All representations and warranties made by each of the parties hereto
shall survive the closing for a period of one year after the Closing Date.
12. Indemnification.
---------------
12.1 Indemnification by Xxxxx.
------------------------
Xxxxx agrees to indemnify, defend and hold harmless CLMI against any
and all claims, demands, losses, costs, expenses, obligations, liabilities and
damages, including interest, penalties and attorney's fees and costs, incurred
by CLMI arising, resulting from, or relating to any and all liabilities of ZOI,
any misrepresentation of a material fact or omission to disclose a material fact
made by ZOI or Xxxxx in this Agreement, any exhibits to this Agreement or in any
other document furnished or to be furnished by ZOI or Xxxxx under this
Agreement, or any breach of, or failure by ZOI or Xxxxx to perform, any of their
representations, warranties, covenants or agreements in this Agreement or in any
exhibit or other document furnished or to be furnished by ZOI or Xxxxx under
this Agreement.
12.2 Indemnification by CLMI.
-----------------------
CLMI agrees to indemnify, defend and hold harmless ZOI and Xxxxx
against any and all claims, demands, losses, costs, expenses, obligations,
liabilities and damages, including interest, penalties and attorneys' fees and
costs incurred by ZOI or Xxxxx arising, resulting from or relating to any breach
of, or failure by CLMI to perform, any of its representations, warranties,
covenants or agreements in this Agreement or in any exhibit or other document
furnished or to be furnished by CLMI under this Agreement.
13. Injunctive Relief.
-----------------
13.1 Damages Inadequate.
------------------
Each party acknowledges that it would be impossible to measure in money
the damages to the other party if there is a failure to comply with any
covenants and provisions of this Agreement, and agrees that in the event of any
breach of any covenant or provision, the other party to this Agreement will not
have an adequate remedy at law.
13.2 Injunctive Relief.
-----------------
It is therefore agreed that the other party to this Agreement who is
entitled to the benefit of the covenants and provisions of this Agreement which
have been breached, in addition to any other rights or remedies which they may
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have, shall be entitled to immediate injunctive relief to enforce such covenants
and provisions, and that in the event that any such action or proceeding is
brought in equity to enforce them, the defaulting or breaching party will not
urge a defense that there is an adequate remedy at law.
14. Waivers.
-------
If any party shall at any time waive any rights hereunder resulting
from any breach by the other party of any of the provisions of this Agreement,
such waiver is not to be construed as a continuing waiver of other breaches of
the same or other provisions of this Agreement. Resort to any remedies referred
to herein shall not be construed as a waiver of any other rights and remedies to
which such party is entitled under this Agreement or otherwise.
15. Successors and Assigns.
----------------------
This Agreement supercedes and replaces the Plan of Reorganization and
Exchange Agreement made and entered into on April 30, 1999 by and between ZOI,
CLMI, the ZOI Shareholders (as defined in the Prior Agreement), Xxxxxxxxxx, and
Xxxxxx. Each covenant and representation of this Agreement shall inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
16. Entire and Sole Agreement.
-------------------------
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written agreement signed by the parties against whom the amendment is sought to
be enforced.
17. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, and the venue for any action hereunder
shall be in the appropriate forum in the County of Los Angeles, State of
California.
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18. Counterparts.
------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
19. Attorneys' Fees and Costs.
-------------------------
In the event that either party must resort to legal action in order to
enforce the provisions of this Agreement or to defend such action, the
prevailing party shall be entitled to receive reimbursement from the
nonprevailing party for all reasonable attorneys' fees and all other costs
incurred in commencing or defending such action, or in enforcing this Agreement,
including but not limited to post judgment costs.
20. Assignment.
----------
This Agreement shall not be assignable by any party without prior
written consent of the other parties.
21. Remedies.
--------
Except as otherwise expressly provided herein, none of the remedies set
forth in this Agreement are intended to be exclusive, and each party shall have
all other remedies now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
22. Section Headings.
----------------
The section headings in this Agreement are included for convenience
only, are not a part of this Agreement and shall not be used in construing it.
23. Severability.
------------
In the event that any provision or any part of this Agreement is held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision or part of this Agreement.
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24. Notices.
-------
Each notice or other communication hereunder shall be in writing and
shall be deemed to have been duly given on the earlier of (i) the date on which
such notice or other communication is actually received by the intended
recipient thereof, or (ii) the date five (5) days after the date such notice or
other communication is mailed by registered or certified mail (postage prepaid)
to the intended recipient at the following address (or at such other address as
the intended recipient shall have specified in a written notice given to the
other parties hereto):
If to ZOI or Xxxxx:
------------------
Zeros & Ones, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to CLMI:
----------
Commercial Labor Management, Inc.
c/o Richardson & Associates
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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25. Publicity.
---------
No press release, notice to any third party or other publicity
concerning the transactions contemplated by this Agreement shall be issued,
given or otherwise disseminated without the prior approval of each of the
parties hereto; provided, however, that such approval shall not be unreasonably
withheld.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
ZOI: ZEROS & ONES, INC.
By: --------------------------------
Xxxxxx Xxxxx, President
XXXXX: ------------------------------------
Xxxxxx Xxxxx
CLMI: COMMERCIAL LABOR MANAGEMENT, INC.
By: --------------------------------
Xxxxxx X. Xxxxxx, President
XXXXXXXXXX: -----------------------------------
Xxxx X. Xxxxxxxxxx
XXXXXX: -----------------------------------
Xxxxxx X. Xxxxxx
-23-
EXHIBIT A
LIST OF ACQUIRED ASSETS
EXHIBIT A
LIST OF ACQUIRED ASSETS
-----------------------
1. Fifty percent (50%) of the outstanding stock of EKO Corporation.
2. Cash
3. Loan Receivable
4. Equipment
a. Office PCs
b. Desks and Furnishings
c. Silicon Graphics Crimson Elan
d. Silicon Graphics R4000 3D Workstation
e. Computer Graphics Workstation
f. Alias/Wavefront Maya
g. IBM Network File Server
h. Apache Internet/Web Server
i. Tektronix Large Media File Server
j. Apple Power Macintosh Systems
k. UMAX High-Resolution Image Scanner
l. High-Speed Fiber Optic Network
m. AT&T Office Telephone Systems
n. Xerox Document Center
o. BMW 3281 Automobile
5. Accounts Receivable
6. Contracts with Licensees of Websuites Technology
7. Charter Merchant relationship with Xxxxxx.xxx
8. Direct Access Development Partnership with Microsoft
9. Website Hosting Auto-xxxx Commitments on over 30 commerce websites
10. Consultancy Retainer Agreements/Hourly and Per-Project.
11. Permanent Software Licenses for Alias/Wavefront Software.
12. Link Relationships with xXxxx.xxx, Xxxxxx.xxx, Xxxxxx.xxx, CBS
Sportsline, Xxxxxxxxx.xxx, Omaha Steaks, Candy Direct, many others.
13. Strategic Relationship with Website Results Corporation.
14. Ownership of several valuable domain names
a. XxxxxXxXxxx.xxx
b. XxxxxXxxxxxxx.xxx
c. XxxXxxxxXxxxx.xxx
d. XxxxxxxXxxxxx.xxx
e. XxxXxxxxxxxx.xxx
f. XxxxXxxxxxxxx.xxx
g. XX.XX
h. XXxxxxxxx.xxx
i. Xxxxxx.xxx
j. XxxxxXxxxxx.xxx
k. XxxxxxxXxxxxx.xxx
l. XXX.xxx
m. XxxxXxxxx.XXX
n. XXXX.xxx
15. Ownership of "Creative Energy" and "RGB", proprietary development tools
created by and utilized exclusively by Zeros & Ones to build websites.
EXHIBIT B
LIST OF ZOI SUBSIDIARIES
EXHIBIT B
LIST OF ZOI SUBSIDIARIES
EKO Corporation, a 50% owned subsidiary.
EXHIBIT C
OUTSTANDING WARRANTS
EXHIBIT C
A. It is expected that on the Closing, 320,000 warrants in CLMI
will be outstanding pursuant to which the holder of each
warrant will be entitled to purchase one share of CLMI Common
Stock for a price of $3.00 per share for a period of three
years from the date of issue.
EXHIBIT D
MATERIAL CHANGES SINCE DECEMBER 31, 1998
None.
XXXX OF SALE OF ASSETS
Zeros & Ones, Inc., a Delaware corporation ("ZOI") hereby sells and
conveys to Commercial Labor Management, Inc., a Nevada corporation ("CLMI"), all
of the tangible and intangible assets (the "Assets") to be transferred to CLMI
pursuant to the terms of that certain Plan of Reorganization and Asset Purchase
Agreement ("Agreement"), made and entered into as of July 1, 1999, by and
between ZOI, Xxxxxx Xxxxx, Xxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxx and CLMI, and
assigns the Assets to CLMI forever, free and clear of all liens and
encumbrances. All such Assets are listed on Exhibit A to the Agreement, which is
made a part hereof.
ZOI warrants and agrees to defend the title to all of the Assets for
the benefit of CLMI and assigns against all persons.
In Witness Whereof, ZOI has signed and delivered this Xxxx of Sale to
CLMI on July 1, 1999 at Los Angeles, California.
ZEROS & ONES, INC.
A Delaware corporation
By: ---------------------------
Xxxxxx Xxxxx, President
