EXHIBIT 2.3
STOCK EXCHANGE AGREEMENT
STOCK EXCHANGE AGREEMENT made as of the 25th day of July, 2000 by and
among Pacific CMA, Inc., a Colorado corporation having its principal place of
business at 0000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Pacific"), Xxxxxx
Services Corporation, a British Virgin Islands International Business Company,
as the sole stockholder (the "Stockholder") of AGI Logistics (H.K.) Ltd., a
corporation organized under the laws of Hong Kong (the "Company") and the
Company.
WITNESSETH:
WHEREAS, based upon the representations, agreements and warranties
herein made by the Company, and subject to the terms and conditions contained in
this Agreement, Pacific wishes to acquire the Company as a wholly-owned
subsidiary by means of the exchange of 8,000,000 newly-issued shares of
Pacific's Common Stock for all of the issued and outstanding capital stock of
the Company; and
WHEREAS, based upon the representations, agreements and warranties
herein made by Pacific and subject to the terms and conditions contained in this
Agreement, the Stockholder wishes to exchange all of its right, title and
interest in and to the capital stock of the Company; and
WHEREAS, the transactions contemplated by this Agreement are intended
to be a tax-free reorganization of the corporate parties under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound, do hereby agree as
follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 EXCHANGE. Pacific and the Stockholder agree that, on the Closing Date
(as defined in Article 9), Stockholder will deliver to Pacific certificates
representing all of the issued and outstanding shares of capital stock of the
Company, being 15,000,000 shares of common stock (the "Company Shares") solely
in exchange for an aggregate of 8,000,000 shares of Pacific's Common Stock
without par value (the "Pacific Shares").
1.2 DELIVERY OF SHARES. On the Closing Date, Stockholder will deliver to
Pacific the certificates representing all of the outstanding Company
Shares, duly endorsed.
1.3 FURTHER ASSURANCES. The parties hereto each agree that at any time,
or from time
1
to time, as and when requested by any other party, or by its successors or
assigns, it will execute and deliver, or cause to be executed and
delivered, in its name by its last acting officers, all such conveyances,
assignments, transfers, deeds and other instruments, and will take or cause
to be taken such further or other action as the requesting party, or its
successors or assigns, may reasonably deem necessary or desirable in order
to carry out the vesting, perfecting, confirming, assignment, devolution or
other transfer of the interests, property, privileges, powers, immunities,
franchises and other rights referred to in this Article I, or otherwise to
carry out the intent and purposes of any of the transactions contemplated
by this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Stockholder represents and warrants that:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Hong Kong,
and has full corporate power to carry on its business as it is now being
conducted and to own or hold under lease the properties and assets it now owns
or holds under lease. The Company is duly qualified to do business as a foreign
corporation in every state, province or country where the failure to be so
qualified could reasonably be expected to have a material adverse effect on the
business of the Company. Schedule 2.1 hereto sets forth a complete listing of
all of the Company's (i) corporate and divisional officers and (ii) members of
its Board of Directors. Copies of the charter documents, bylaws and minutes of
each meeting of the Board of Directors of the Company have been delivered to
Pacific, and such copies are complete, correct and in full force and effect. The
Company is in compliance with, and is not in default under, any material terms
of such documents, bylaws or minutes.
2.2 CAPITALIZATION OF THE COMPANY. The Company's authorized capital stock
consists of 15,000,000 shares of Common Stock, HK$1.00 par value per share, all
of which are issued and outstanding, and no other class of capital stock. All
such issued and outstanding shares of the Company's Common Stock have been duly
and validly issued, are fully paid and non-assessable, and are free of any
preemptive rights. There are no voting trust agreements or other contracts,
agreements or arrangements affecting voting or dividend rights or
transferability with respect to the Company's capital stock. There are no
outstanding warrants, options, conversion privileges, preemptive rights, or
other rights or agreements to purchase or otherwise acquire or issue any
securities of the Company. The Company's shares of Common Stock are owned by the
Stockholder and by no other persons or entities.
2.3 SUBSIDIARIES AND INVESTMENTS. The Company has no other equity
interest or other interest in any corporation, partnership, joint venture or
other entity except as set forth on Schedule 2.3 hereto. The Company is not
subject to any obligation or requirement to provide funds, or make any
investment (in the form of a loan, capital contribution or otherwise) in any
2
entity.
2.4 FINANCIAL STATEMENTS. Attached as Schedule 2.4 hereto are the
Company's consolidated balance sheets as of December 31, 1999 (the "December
1999 Balance Sheet"), and its related consolidated statements of income, changes
in stockholders' equity, and changes in financial position for the year then
ended, audited by Xxxxxx Xxxxxxx. Such financial statements, together with the
notes thereto, are complete and correct in all material respects, are in
accordance with the books and records of the Company, and present fairly the
consolidated financial condition of the Company and the results of its
operations and changes in its financial position as of the dates and for the
periods indicated, and have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods covered by such statements, except as set forth in such
financial statements or in the opinion of the Company's certified public
accountants which accompanies such financial statements.
2.5 NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except liabilities and obligations (a) fully reflected or
reserved against in the December 1999 Balance Sheet or disclosed in the notes
thereto or (b) incurred since the date of the December 1999 Balance Sheet, in
the ordinary course of business.
2.6 CONDUCT OF BUSINESS. Since March 31, 2000, the Company has not:
(1) issued or reissued any capital stock, bonds, notes, warrants,
options or other securities or become subject to any obligation to
issue or pledge any such securities;
(2) incurred any contractual liability or obligation (absolute or
contingent), including, without limitation, purchases on a credit, lease or
installment basis, other than current liabilities incurred in the ordinary
course of business:
(3) failed to pay or discharge any current liability when it became
due and payable;
(4) sold, transferred or otherwise disposed of, mortgaged, pledged,
or subjected to lien or any other encumbrance, any of its assets, whether
real or personal (tangible or intangible) property, except inventory items
and other similar items of personal property in the ordinary course of
business;
(5) declared or made any dividend payment or any other payment or
distribution to its stockholders for any purpose; or redeemed or
purchased or otherwise acquired (i) any of its capital stock or (ii)
obligations of any Affiliate (as defined in SEC Rule 405) to the
Company;
(6) incurred any additional indebtedness for money borrowed or
amended the
3
terms of, or extended the time for payment of, any existing
indebtedness or guaranty, or mortgaged, pledged or subjected to lien,
charge, security interest or any other encumbrance any of its assets, real
or personal, tangible or intangible, or made any loans, advances or
guarantees to any person or entity, including, without limitation, salary
advances to any employee or officer;
(7) sold, assigned, transferred or licensed to others any patents,
trademarks, trade names, copyrights, franchises, licenses or other
intangible assets or its interest in any such asset;
(8) had any material adverse changes in the assets, properties,
operations, personnel, equipment, supply arrangements, financial condition
or, to the knowledge of the Stockholder or the Company, the prospects of
the Company;
(9) compromised any accounts receivable;
(10) increased by more than 5% the annual compensation, rate of
commissions and/or other benefits of any officer or employee or granted any
bonuses or made any loans or advances to any officer or employee;
(11) amended charter documents;
(12) made any changes in any method of accounting or accounting
practice of the Company;
(13) made, or committed to make, any capital expenditures for
additions to property, plant or equipment in excess of $100,000;
(14) made any claims under any insurance policy for any loss; or
(15) agreed, orally or in writing, or granted any other person or
entity an option, to do any of the things specified in subsections (a)
through (n), above.
2.7 NO LITIGATION. The Company is not engaged in or threatened with or
aware of any situation which could subject the Company to any litigation,
arbitration, claim, challenge or other legal proceedings or governmental or
other investigations relating to the affairs of the Company anywhere in the
world, including, without limiting the generality of the foregoing, any such
action or proceeding by or before arbitrators, administrative or regulatory
agencies.
2.8 EXISTENCE OF NECESSARY ASSETS. There are no significant assets which
the Company uses in its business (as heretofore conducted or as proposed to be
conducted) which are not either owned by the Company or the use of which are
otherwise authorized under one of the agreements, licenses or leases listed in
one of the Schedules delivered pursuant to this
4
Agreement.
2.9 CERTAIN EMPLOYEE MATTERS. To its knowledge after diligent inquiry,
the Company is in material compliance with all applicable laws, rules and
regulations relating to employment practices which could have an adverse effect
on its business, assets or condition, financial or otherwise, including without
limitation those relating to wages, hours, collective bargaining, age,
disability, race and sex discrimination and the payment and withholding of
taxes, and the Company does not have any unaccrued liability for any arrears of
wages or any taxes or penalties for failure to comply with any of the foregoing.
The Company does not have (i) any employment, consultant or similar contracts
with any person currently in force or in which the Company retains any
liability, or (ii) any controversies pending, threatened or reasonably
anticipated between the Company and any employee, or any labor union or other
collective bargaining unit representing any of its employees. No union or other
collective bargaining unit has been certified or recognized by the Company as
representing any employee.
2.10 NO CONFLICT WITH OTHER DOCUMENTS. Neither the execution and delivery
of this Agreement nor the carrying out of the transactions contemplated hereby
or by any of the Exhibits hereto will result in any violation, termination or
modification of, be in conflict with, or constitute a default under (or an event
which, with notice or lapse of time or both, would constitute a default), the
charter documents or bylaws of the Company, or the minutes of any Board of
Directors meeting of the Company, or any terms of any contract or instrument to
which the Company is a party, or any judgment, decree or order applicable to the
Company or any of its property, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Company.
2.11 AUTHORIZATION, POWER. The Stockholder has the full right, power and
authority to execute, deliver and perform this Agreement. This Agreement has
been duly executed and delivered by the Stockholder and constitutes and, upon
delivery and payment of the consideration set forth in Article I will constitute
the valid and legally binding obligation of the Stockholder, enforceable in
accordance with its terms. The Stockholder warrants to Pacific that it is
domiciled in the British Virgin Islands.
2.12 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No permit,
consent, approval or authorization of, or declaration, filing or registration
with, any public body or authority is necessary in connection with the execution
and delivery by the Stockholder or the Company of this Agreement or the
consummation of the transactions contemplated hereby.
2.13 CORPORATE RECORDS. The books of account and other financial records
of the Company are true, correct and complete, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis, in
accordance with applicable contractual requirements and government regulations
regarding accounting methods and practices, and accurately reflect the
operations of the Company and the value of its properties. All other significant
corporate records of the Company, including without limitation, the corporate
minute book and those relating to employees of the Company are true, correct and
complete in all
5
material respects.
2.14 POWERS OF ATTORNEY. No person holds any tax or other power of
attorney from the Company with respect to any matter.
2.15 INFORMATION. The Company has provided and shall provide Pacific
and its respective officers, accountants, counsel and other representatives
full access, during working hours on business days, to the properties,
books, contracts, commitments, records and accounts of every kind relating
to the Company, and has furnished them with such financial and operating
data, documents and other information with respect to the business,
operations, personnel, licenses, contracts and properties of the Company as
may be required herein or as Pacific or its representatives have requested
or shall from time to time request. No investigations made by Pacific and
its representatives shall affect the representations, warranties and/or
agreements made by the Company herein, and each such representation,
warranty and/or agreement shall survive any such investigation.
2.16 TAXES. The Company has timely filed in accordance with applicable
law all tax returns and tax reports required to be filed by it under any
applicable law on or before the Closing with respect to all fiscal periods ended
before the Closing. Such returns and reports are true, correct and complete in
all material respects. The Company has timely paid all income, profits,
franchise, sales, use occupation, property, excise, withholding and all other
taxes, fees and governmental charges (including interest and penalties, if any)
with respect to present and prior periods to the extent they have become due,
except such as are being contested in good faith by appropriate proceedings and
for which adequate reserves to fully cover such liability have been provided on
the December 1999 Balance Sheet. There are no tax liens upon any properties or
assets of the Company. All deficiencies and assessments resulting from
examination of state, local and foreign tax returns and reports of the Company
have been paid, except such as are being contested in good faith by appropriate
proceedings. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Federal, provincial, state,
local or foreign tax return or report for any period. The Company is not a party
to any tax-sharing or tax allocation agreement.
2.17 TITLE TO PROPERTIES; CONDITION. The Company, as of the
date hereof has good, valid and marketable title to all of its properties and
assets, real and personal (tangible and intangible), free and clear of any
liens, claims, charges, pledges, security interests, options to purchase,
encumbrances or equitable interests of any nature whatsoever. All of the
improvements on land owned by the Company are in overall good condition and
repair for buildings and improvements of their type and age and, to the best
knowledge of the Stockholder, comply with all applicable ordinances and
regulations including without limitation, building, zoning and other laws. All
of the items of tangible personal property of the Company are, as of the date
hereof, in overall good operating condition for items of equipment of their type
and age. Each of the leases pursuant to which the Company leases real or
personal property is in good standing, valid and effective and enforceable by
the Company in accordance with its terms, and there is not, under any of such
leases, any known existing default, waiver, indulgence or
6
postponement of any of the Company's obligations thereunder.
2.18 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor any
director, officer, agent, employee, consultant, or any other person associated
with or acting on behalf of the Company, has engaged or is engaged in any course
of conduct, or is a party to any agreements or involved in any transactions,
which has or would give rise to a violation of any statute or regulation
regarding improper payments to government officials (foreign or domestic) or
others.
2.19 INSURANCE. In the reasonable opinion of management, the Company is
insured by insurers of recognized responsibility under valid, outstanding, and
enforceable policies with respect to its property and the conduct of its
business in such amounts and against such risks as are usually insured against
by persons operating similar properties and businesses in the localities where
such properties and businesses are located.
2.20 NO PENDING TRANSACTIONS. Except for the transactions contemplated
by this Agreement, neither the Company nor any officer or director of the
Company is a party to or bound by or the subject of any agreement, undertaking
or commitment (i) which provides for the Company to merge or consolidate with,
or acquire all or substantially all of the property and assets of, any other
corporation or person, or (ii) which provides for the Company to sell, lease or
exchange all or substantially all of its property and assets to any other
corporation or person, or (iii) for the sale of any of the capital stock of the
Company by any officer or director.
2.21 DISCLOSURE. No representation or warranty made by the
Stockholder in this Agreement and no statement contained in any certificate,
schedule, list or other document whether heretofore furnished to Pacific or
hereafter required to be furnished to Pacific, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make the statements contained herein or therein not
misleading. There are no material facts relating to the business, operations,
properties, assets, liabilities (contingent or otherwise) or financial condition
of the Company which have not been disclosed to Pacific prior to the date hereof
or in or pursuant to this Agreement, which facts are or should be known with
reasonable diligence by the Company and would be adverse to the Company. Any
information disclosed on any Schedule hereto shall be deemed to have been
disclosed to Pacific even if such information is called for to be disclosed on
any other Schedule hereto, and need not be duplicated.
2.22 BROKERS. Except as disclosed in the Consulting Agreement between
the Company and PCMA, Inc., Nevada corporation, dated June 1, 2000, no broker or
finder, or other party or agent performing similar functions, has been retained
by the Company or the Shareholders or is entitled to be paid based upon any
agreements, arrangements, or understandings make by the Company on account of
the transactions contemplated hereby.
2.23 THE STOCKHOLDER. The Stockholder owns the issued and outstanding
shares of the Company's capital stock, free and clear of all agreements,
charges, options, liens, security
7
interests, pledges, claims, restrictions and encumbrances of any nature
whatsoever. There are no rights outstanding to purchase of any kind affecting
any shares of the capital stock of the Company, whether or not outstanding. The
Stockholder warrants and acknowledges that in connection with its receipt of
Pacific Shares upon Closing of the exchange, it understands that such stock has
not been registered with the Securities and Exchange Commission, and that it may
not be resold for at least one year, and then only pursuant to the restrictions
of, and in compliance with, Rule 144 under the Securities Act of 1933, if
available. The Stockholder is acquiring the Pacific Shares for investment
purposes only, and he has no present intention to sell or otherwise dispose of
any of such shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PACIFIC
Pacific represents and warrants to the Stockholder and the Company as
follows:
3.1 ORGANIZATION AND STANDING. Pacific is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado
and has full corporate power to conduct its business as it is now being
conducted and to own or hold under lease the properties and assets it now owns
or holds under lease. Pacific has conducted no business since its organization
other than the completion of its initial public offering.
3.2 CAPITALIZATION. The authorized capital stock of Pacific consists of
100,000,000 shares of Common Stock without par value and 10,000,000 shares of
Preferred Stock without par value. Immediately prior to Closing, there will be
issued and outstanding 12,000,000 shares of Common Stock and no shares of
Preferred Stock. All of such outstanding shares of Pacific Common Stock are
validly issued, fully paid and non-assessable and are free of any preemptive
rights. There are no outstanding options, warrants, rights, privileges or other
arrangements, preemptive or contractual, to acquire any shares of capital stock
of Pacific from Pacific.
3.3 STOCKHOLDERS' LIST. The Shareholder list dated April 24, 2000, which
is attached hereto as Exhibit E, was prepared by Corporate Stock Transfer, Inc.,
the Transfer Agent of the Company, and is a true and correct copy of the current
list of shareholders of the Company as of the date of execution of this
Agreement.
3.4 AUTHORITY; NO VIOLATION. The execution, delivery, and
performance of this Agreement by Pacific, and the consummation by it of the
transactions contemplated hereby have been duly authorized. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default under
any term or provision of the Certificate of Incorporation or bylaws of Pacific,
or of any contract, commitment, indenture, other agreement or restriction of any
kind or character to which Pacific is a party or by which Pacific is bound.
3.5 SUBSIDIARIES AND INVESTMENTS. Pacific has no equity interest or
other interest in
8
any corporation, partnership,joint venture or other entity.
3.6 FINANCIAL STATEMENTS. Pacific has provided the Stockholder
with a copy of its Form 10K-SB for the period ended December 31, 1999 and with a
copy of its Form 10Q-SB for the period ended March 31, 2000, both of which have
been filed with the Securities and Exchange Commission. The financial statements
contained therein, together with the notes thereto, are complete and correct in
all material respects, are in accordance with the books and records of Pacific,
and present fairly the financial condition of Pacific and the results of its
operations and changes in its financial position as of the dates and for the
periods indicated, and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered by such statements. There has not been and there will not be any
material change to the March 31, 2000 balance sheet contained in the Form 10Q-SB
up to and including the Closing.
3.7 NO UNDISCLOSED LIABILITIES. Pacific has no liabilities or
obligations (whether or as contemplated by this agreement, absolute, accrued,
contingent or otherwise and whether due or to become due), except liabilities
and obligations (a) fully reflected or reserved against in the December 31, 1999
balance sheet or disclosed in the notes thereto or (b) incurred since the date
of the March 31, 2000 balance sheet. Further, Pacific does not know and does not
have any reasonable ground to know of any basis for the assertion against itself
of any liability or obligation of any nature or in any amount not fully
reflected or reserved against in the March 31, 2000, balance sheet or Schedule
3.7 attached hereto.
3.8 TAXES. Pacific has timely filed in accordance with
applicable law all tax returns and tax reports required to be filed by it under
any applicable law on or before the Closing with respect to all fiscal periods
ended before the Closing. Such returns and reports are true, correct, and
complete in all material respects. Pacific has timely paid all income, profits,
franchise, sales, use, occupation, property, excise, withholding and all other
taxes, fees and governmental charges (including interest and penalties, if any)
with respect to present and prior periods to the extent they have become due,
except such as are being contested in good faith by appropriate proceedings and
for which adequate reserves to fully cover such liability have been provided on
the March 31, 2000 balance sheet. There are no tax liens upon any properties or
assets of Pacific. All deficiencies and assessments resulting from examination
of state, local and foreign tax returns and reports of Pacific have been paid,
except such as are being contested in good faith by appropriate proceedings.
There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Federal, state, local or foreign tax return or
report for any period. Pacific is not a party to any tax-sharing or tax
allocation agreement.
3.9 ABSENCE OF CERTAIN CHANGES. Pacific has not since March 31, 2000,
and as of the Closing will not have:
(a) Suffered any material adverse change in financial condition,
assets, liabilities, business, or prospects;
9
(b) Incurred any additional obligations or liabilities
(whether absolute, accrued, contingent, or otherwise) which it either has not
previously satisfied or will not satisfy at or before Closing;
(c) Paid any claim or discharged or satisfied any lien
or encumbrance or paid or satisfied any liability (whether absolute, accrued,
contingent, or otherwise) other than liabilities shown or reflected in Pacific's
March 31, 2000 balance sheet or liabilities incurred since March 31, 2000 and
listed on Schedule 3.9 hereto;
(d) Declared, paid, or set aside for payment to its
stockholders any dividend or other distribution in respect of its capital stock
or redeemed or purchased or otherwise acquired any of its capital stock or any
options relating thereto or agreed to take any such action; or
(e) Made any material change in any method of accounting or
accounting practice.
3.10 LITIGATION. There are no actions, proceedings, or
investigations pending or, to the knowledge of Pacific threatened against
Pacific, and Pacific does not know or have any reason to know of any basis for
any such action, proceedings, or investigation. There is no event or condition
of any kind or character pertaining to the business, assets, or prospects of
Pacific that may materially and adversely affect such business, assets or
prospects.
3.11 DISCLOSURE. Pacific has disclosed to the Stockholder all facts
material to the assets, prospects, and business of Pacific. No representation or
warranty by Pacific contained in this Agreement, and no statement contained in
any instrument, list, certificate, or writing furnished to the Stockholder
pursuant to the provisions hereof or in connection with the transaction
contemplated hereby, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading or necessary in order to provide a prospective
purchaser of Pacific with proper information as to Pacific and its affairs.
3.12 SEC FILINGS. Pacific filed a registration statement on Form
10-SB under the Securities Exchange Act of 1934 on October 14, 1999, which, in
accordance with Section 12(g) under such Act became effective on or about
December 14,1999. On or about December 21, 1999, Pacific filed an amended
registration statement on Form 10-SB/A in response to a comment letter from the
Securities and Exchange Commission dated November 30, 1999. The filing on Form
10-SB/A fully responded to all SEC comments, and following such filing, the SEC
verbally advised Pacific that it had no further comments. Thereafter, Pacific
has filed all periodic reports required to be filed with the Securities and
Exchange Commission on a timely basis and as of the date hereof, is current in
its filing obligations.
3.13 FULL DISCLOSURE. Pacific has provided the Stockholder and
the Company with full disclosure of all material information known to them
regarding Pacific and the Shares. None of the representations and warranties
made herein, or in any other certificate or memorandum
10
furnished or to be furnished to the Stockholder by Pacific contains or will
contain any untrue statement of material fact, or omit any material fact the
omission of which would be misleading.
3.14 BROKERS. Except as disclosed in the Consulting Agreement
between AGI Logistics (H.K.), Ltd., a Hong Kong corporation ("AGI"), and PCMA,
Inc., dated as of June 1, 2000, no broker or finder, or other party or agent
performing similar functions, has been retained by Pacific or is entitled to be
paid based upon any agreements, arrangements, or understandings made by Pacific
in connection with the transactions contemplated by this Agreement, and no
brokerage fee or other commission has been agreed to be paid by Pacific on
account of the transactions contemplated hereby.
ARTICLE 4
COVENANTS OF THE STOCKHOLDER
The Stockholder covenants with Pacific that, except as otherwise
consented to in writing by Pacific after the date of this Agreement:
4.1 CONDUCT OF BUSINESS. On or prior to the Closing Date, with respect to
the Company (a) its business will be conducted only in the ordinary course in
the manner carried on prior to the date of execution of this Agreement; (b) it
will use its best efforts to preserve its business organization intact, to keep
available the services of its officers and employees and to preserve the
goodwill of suppliers, clients, customers and others doing business with it, nor
shall it dispose of any material asset except in the ordinary course of
business; (c) it will not acquire or agree to acquire by merging or
consolidating with, purchasing substantially all of the assets of, or otherwise,
any business or any corporation, partnership, association or other business
organization or division thereof; (d) it will not make any change in its charter
documents or Bylaws; (e) it will not make any change in the number of shares or
in the terms of its authorized, issued or outstanding capital stock, nor shall
it enter into or grant any options, calls, contracts or commitment of any
character relating to any issued or unused capital stock; (f) it will not
declare or pay any dividend or other distribution in respect of its capital
stock; (g) it will not do any act or omit to do any act, which will cause a
breach of any material contract, commitment or obligation to which the Company
is a party or by which any of its properties or assets may be bound; and (h) it
will maintain all authorizations and make all filings and registrations which
are necessary in order to enable it to conduct its business, to remain in
compliance with all applicable laws, regulations and ordinances relating to its
business and will take all steps necessary to obtain all further authorizations
as may be required in the conduct of its future business as currently
contemplated.
4.2 INFORMATION. The Company will provide to Pacific, and to its
respective officers, accountants, counsel and other representatives full access,
during normal business hours throughout the period prior to the Closing Date, to
all the properties, books contracts, commitments, records and accounts of the
Company. The Company will furnish to Pacific during such period all such
information concerning the Company and its business and properties
11
as Pacific may reasonably request. If required by Pacific, the Company will, to
the extent that it has the power to do so, cause to be made available to Pacific
and Pacific's accountants the work papers and other information in respect of
the Company utilized by the Company's accountants in the preparation of the
Company's financial statements.
4.3 CONSENTS. The Company will take all necessary corporate or other
action and will use its best efforts to complete all filings and obtain all
governmental and other consents and approvals required for consummation of the
transactions contemplated by this Agreement, including, without limitation, the
obtaining of any requisite consents or approvals required or which may be
required of third parties pursuant to the agreements, leases and contracts
disclosed to Pacific pursuant to Section 2.17 or any others requiring the same,
and will promptly notify Pacific in writing of any information relating to the
status of the possible denial of such requested consents or approvals.
4.4 NOTICE OF LITIGATION. The Company will provide written notice to
Pacific of any litigation, judicial or administrative proceeding or governmental
investigation which arises, or to the knowledge of the Company, is overtly
threatened, after the date of this Agreement and prior to the Closing Date,
against or specifically relating to the Company or its properties or businesses,
or the transactions contemplated by this Agreement, setting forth in such notice
the facts and circumstances currently available to the Company with respect to
such litigation, proceeding or investigation.
4.5 CORPORATE TRANSACTIONS. On or prior to the Closing Date neither the
Company nor any Affiliate will seek to sell the Company or merge the Company
with any entity other than Pacific, and neither the Company nor any Affiliate
will negotiate or entertain any offer with respect to the sale of part or all of
the capital stock or the Company or any material portion of the Company's
assets, nor will the Company authorize or permit any officer, director or
employee of, or any investment banker, attorney, accountant or other
representative retained by the Company to solicit or encourage (including by way
of furnishing information) the making of any proposals that are reasonably
expected to lead to the acquisition of part or all of the Company's capital
stock or other than Pacific. The Company promptly will advise Pacific orally,
followed by written confirmation, of any such proposals.
4.6 CAUSE CONDITIONS TO BE SATISFIED. The Company will use best efforts to
cause all of the conditions described in Article 7 of this Agreement to be
satisfied.
4.7 COMPLIANCE WITH LAWS. The Company will duly comply with all
applicable laws as may be required for the valid and effective performance of
this Agreement.
4.8 NOTICE OF BREACH. The Company, in the event of, and promptly after,
the impending or threatened occurrence of any action (whether by the Company or
otherwise) or event of which the Company has knowledge, the taking or occurrence
of which will constitute or result in a breach, or would, if it had occurred
prior to the date hereof, have caused or constituted a breach, of any of its
representations, warranties, covenants or agreements set forth herein, will
12
promptly give written notice thereof to Pacific. The Company will use its best
efforts to prevent or promptly remedy its breach.
4.9 ANNOUNCEMENTS. Any public announcement of the proposed transaction
shall be only in a form and content which has been approved by Pacific and the
Company in writing, and shall be made only after a Form 8-K has been filed with
the SEC disclosing the transaction.
4.10 NO CHANGE IN OWNERSHIP. The Stockholder will continue to be the only
stockholder of the Company through and including the Closing Date.
ARTICLE 5
COVENANTS OF PACIFIC
Pacific covenants with the Company and the Stockholder that, except as
otherwise consented to in writing by the Company after the date of this
Agreement:
5.1 CONDUCT OF BUSINESS. On or prior to the Closing Date, Pacific shall
not make any alteration of its business as it has been heretofore conducted
except as contemplated by this Agreement.
5.2 INFORMATION. Pacific will provide to the Company such information
concerning Pacific and its business and properties as the Company may
reasonably request.
5.3 CONSENTS. Pacific will take all necessary corporate or other action
and will complete all filings and obtain all governmental and other consents and
approvals required for consummation of the transactions contemplated by this
Agreement, including, without limitation, the obtaining of any requisite
consents or approvals required or which may be required of third parties
pursuant to any agreements, leases and contracts requiring the same, and will
promptly notify the Company in writing of any information relating to the status
of the possible denial of such requested consents or approvals.
5.4 NOTICE OF LITIGATION. Pacific will provide written notice to the
Company of any material litigation, judicial or administrative proceeding or
governmental investigation which arises, or to the knowledge of Pacific, is
threatened or in prospect, after the date of this Agreement and prior to the
Closing Date, against or specifically relating to Pacific, its properties or
businesses, or the transactions contemplated by this Agreement, setting forth in
such notice the facts and circumstances currently available to Pacific with
respect to such litigation, proceeding or investigation.
5.5 CAUSE CONDITIONS TO BE SATISFIED. Pacific will use best efforts to
cause all of the conditions described in Article 8 of this Agreement to be
satisfied.
5.6 COMPLIANCE WITH LAWS. Pacific will duly comply with all applicable
laws as may
13
be required for the valid and effective performance of this Agreement.
5.7 NOTICE OF BREACH. Pacific, in the event of, and promptly after, the
impending or threatened occurrence of any action (whether by Pacific or
otherwise) or event of which Pacific has knowledge, the taking or occurrence of
which will constitute or result in a breach, or would, if it had occurred prior
to the date hereof, have caused or constituted a breach, of any of its
representations, warranties, covenants or agreements set forth herein, will
promptly give detailed written notice thereof to the Company. Pacific will use
its best efforts to prevent or promptly remedy its breach.
5.8 ANNOUNCEMENTS. Any public announcement of the proposed transaction
shall be only in a form and content which has been approved by Pacific and the
Company.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 REGISTRATION UNDER 1934 ACT; COMPLIANCE WITH REPORTING OBLIGATIONS.
On or about October 14, 1999 Pacific filed a registration statement on Form
10-SB under the Securities Exchange Act of 1934, which registration statement
became effective on or about December 14, 1999. On or about December 21, 1999,
Pacific filed an amended registration statement on Form 10-SB/A in response to a
comment letter from the Securities and Exchange Commission dated November 30,
1999. The filing on Form 10-SB/A fully responded to all SEC comments, and
following such filing, the SEC verbally advised Pacific that it had no further
comments. As of the date of execution of this Agreement, Pacific is current in
its filing obligations under the 1934 Act. Prior to completion of the
transactions contemplated hereby, Pacific will file a Notice pursuant to Rule
14f-1 to advise its shareholders of the contemplated change in its directors.
Following completion of the transactions contemplated hereby, Pacific shall
timely file a report on Form 8-K with respect to the completion of such
transactions.
6.2 QUOTATION ON OTC BULLETIN BOARD. As soon as reasonably possible
following completion of the transactions contemplated hereby and the filing of
Pacific's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2000, Pacific shall cooperate with at least one registered broker
dealer to cause such broker-dealer to file a Form 2-11 Information Statement
with the NASD Regulation, Inc., for the purpose of requesting clearance to
publish quotations for purchase and sale of Pacific's Common Stock on the OTC
Bulletin Board. Pacific shall cooperate with such broker and take such steps as
may be necessary or appropriate in order to obtain clearance from NASD
Regulation, Inc., for such broker to publish quotations for Pacific's Common
Stock on the OTC Bulletin Board, including assisting such broker in responding
in a timely manner to any open comments from NASD Regulation, Inc., regarding
the Form 2-11 filing.
6.3 CERTAIN BUSINESS LIMITATIONS. Until the first anniversary of this
Agreement, Pacific shall not issue any additional securities in a manner which
would have the effect of
14
causing disproportionate dilution to the persons who are the shareholders of
Pacific immediately prior to the Closing. Any issuance of additional securities
of Pacific for the purpose of acquiring securities or assets from one of the
officers, directors or affiliates of the Stockholder or the Company, or from an
entity which is directly or indirectly controlled by one of the officers,
directors or affiliates of the Stockholder or the Company shall be deemed to
have the effect of causing disproportionate dilution to the current
shareholders; PROVIDED, HOWEVER, that such prohibition shall not apply to the
acquisition (whether of securities or assets) of one or more enterprises in the
same or related industries as the Company (in respect of which enterprise an
officer, director, or affiliate of the Stockholder or the Company, or an entity
directly or indirectly controlled by such a person, shall be a recipient of
consideration paid by the Stockholder or the Company therefor), so long as such
consideration shall have been approved by the then-current directors of the
Company in the exercise of their business judgment, cognizant of their fiduciary
responsibilities to all of Pacific's shareholders. Until the first anniversary
of this Agreement, no reverse stock split or other form of reorganization shall
be authorized or completed, which would have the effect of causing any of the
issued and outstanding shares of Pacific (as of the Closing Date) to be reduced
to a smaller number.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF PACIFIC
Unless waived by Pacific in writing in its sole discretion, all
obligations of Pacific under this Agreement are subject to the fulfillment,
prior to or at the Closing of each of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Stockholder contained in Article II of this Agreement shall be
true at and as of the date of the Closing, and shall be deemed made again at and
as of such date and be true as so made again, the Stockholder shall have
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing.
In addition, there shall have been no material adverse change respecting the
Company since the "as of" date of the Schedules attached hereto except as set
forth on updated Schedules delivered by the Company at Closing; and Pacific
shall have received from an executive officer of the Stockholder a certificate
in such reasonable detail as Pacific may reasonably request, and dated the date
of the Closing, to the foregoing effect.
7.2 CORPORATE AUTHORITY. All corporate and other proceedings, including
director and stockholder approval, required to be taken by, or on the part of
the Stockholder to authorize it to execute, deliver and carry out this Agreement
shall have been duly and properly taken.
7.3 APPROVALS OF GOVERNMENTAL AUTHORITIES. All governmental approvals
necessary in the opinion of Pacific's counsel to consummate the transactions
contemplated by this Agreement shall have been received.
7.4 FILINGS, PERMITS OR ORDERS. All filings, permits or orders required
to carry out the
15
transactions contemplated by this Agreement, shall have been made or received
and there shall have been imposed no term or condition in respect thereof
materially adverse to Pacific.
7.5 CONSENTS: CONTRACTS. All requisite consents of any third parties, the
absence of any of which consents would materially and adversely impact Pacific
or the Company or the transactions contemplated by this Agreement, shall have
been obtained. All contracts and agreements of the Company including, without
limitation, all contracts and agreements listed on the Schedules attached
hereto, shall be in full force and effect and shall not be affected by the
consummation of the transactions contemplated hereby.
7.6 OFFICERS CERTIFICATE. Pacific shall have received at Closing a
certificate signed by an appropriate officer of the Stockholder, dated the date
of Closing, in form and substance satisfactory to Pacific and its counsel, to
the effect that: (a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of Hong Kong and is duly qualified
or registered to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business makes such
qualification necessary; (b) the Stockholder has all requisite power and
authority to enter into and perform this Agreement; (c) this Agreement has been
duly authorized, executed and delivered by the Stockholder, and is a valid and
binding obligation of the Stockholder; (d) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not as of the Closing Date (i) violate any judicial or administrative
order, judgment or decree entered against the Stockholder, (ii) conflict with
any of the terms, conditions or provisions of the charter or bylaws the
Stockholder, or (iii) conflict with, result in a breach of, constitute a default
under or accelerate or permit the acceleration of the performance required by
any material mortgage, indenture, loan agreement, other debt instrument or any
other material instrument or agreement to which the Company is a party or to
which any of their respective assets is subject which could adversely affect the
business of the Company; (e) no approval of any public domestic regulatory body
is required for the valid execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder, other than such
approvals as have been obtained and which shall be specified by such counsel;
and (f)there are no pending legal proceedings to which the Company is a party or
of which property of the Company is subject and, insofar as is known to such
officer, no such proceeding is threatened which could materially and adversely
affect the business of the Company.
7.7 ADVERSE DEVELOPMENTS. As of Closing, there shall not have been any
material adverse changes in the assets, properties, or operations of the
Company, and no event shall have occurred which could be reasonably expected to
have a materially adverse effect upon the business of the Company.
7.8 DUE DILIGENCE REVIEW. Pacific shall be satisfied with the results of
its due diligence review of the Company including its review of the Company's
Schedules hereto, which the parties acknowledge have not been provided as of the
date of execution hereof.
7.9 OTHER EVIDENCE. Pacific shall have received from the Company such
further
16
certificates and documents evidencing due action in accordance with this
Agreement, including certified copies of proceedings of the Board of Directors
and the Stockholder of the Company, as Pacific reasonably shall request.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDER
Unless waived by the Stockholder in writing in its sole discretion, all
obligations of the Stockholder under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representation and
warranties of Pacific contained in Article III of this Agreement shall be true
at and as of the date of the Closing, and shall be deemed made again at and as
of such date and be true as so made again; Pacific shall have performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing and there shall have
been no material adverse change respecting Pacific since the "as of" date of the
Schedules attached hereto except as set forth on updated Schedules delivered by
Pacific at Closing; and the Company shall have received from Pacific a
certificate or certificates in such reasonable detail as the Company may
reasonably request, signed by the Chief Executive Officer of Pacific and dated
the date of the Closing to the foregoing effect.
1.1
8.2 CORPORATE AUTHORITY. All corporate and other proceedings, including
director and stockholder approval, required to be taken by, or on the part of,
Pacific to authorize them to execute, deliver and carry out this Agreement shall
have been duly and properly taken.
8.3 APPROVALS OF GOVERNMENTAL AUTHORITIES. All governmental approvals
necessary in the opinion of the Company's counsel to consummate the transactions
contemplated by this Agreement shall have been received and shall not contain
any provision which, in the reasonable judgment of the Company, is unduly
burdensome.
8.4 FILINGS, PERMITS OR ORDERS. All filings, permits or orders required
to carry out the transactions contemplated by this Agreement shall have been
made or received and there shall have been imposed no term or condition in
respect thereof materially adverse to the Company.
8.5 RESIGNATION OF DIRECTORS OF PACIFIC. All directors of Pacific shall
have resigned effective of the Closing, and shall have appointed the persons
designated in writing by the Company to replace them.
8.6 CONSENTS; CONTRACTS. All requisite consents of any third parties the
absence of any of which consents would adversely impact the Company or the
transactions contemplated by this Agreement, shall have been obtained. All
contracts and agreements of Pacific including, without limitation, all contracts
and agreements listed on Pacific's Schedules attached hereto, shall be in
17
full force and effect and shall not be affected by the consummation of the
transactions contemplated hereby.
8.7 OFFICER'S CERTIFICATE AND OPINION OF COUNSEL TO PACIFIC. Pacific
shall have delivered to Stockholder a certificate signed by an appropriate
officer, dated the date of Closing, in form and substance satisfactory to the
Company and its counsel, to the effect that (a) Pacific is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business makes such qualification necessary; (b) Pacific has the corporate power
to enter into and perform this Agreement; (c) the execution, delivery and
performance of this Agreement by Pacific has been duly authorized and approved
by all requisite corporate action and this Agreement has been duly executed and
delivered by Pacific and constitutes valid and legally binding obligation of
Pacific; and (d) to the best knowledge and belief of such officer, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate any judicial or
administrative order, judgment or decree entered against Pacific, (ii) conflict
with any of the terms, conditions or provisions of the charter or bylaws of
Pacific, or (iii) conflict with, result in a breach of, constitute a default
under or accelerate or permit the acceleration of the performance required by
any material mortgage, indenture, loan agreement, other debt instrument or any
other material instrument or agreement known to such counsel to which Pacific is
a party or to which any of its assets is subject. In addition, Pacific shall
have delivered to the Company and the Stockholder an opinion of counsel, dated
the date of Closing, in form and substance satisfactory to the Company and its
counsel, to the effect that, the 8,000,000 shares of Pacific Common Stock to be
issued to the Stockholder at Closing have been duly authorized, validly issued
and are fully paid and non-assessable. In rendering such opinion, counsel may
reasonably rely on certificates of officers of Pacific, opinions of other
counsel and such other evidence as they may deem necessary or desirable.
ARTICLE 9
CLOSING
The "Closing" and payment of the consideration under this Agreement
shall be held on August 28, 2000, or promptly following satisfaction or waiver
of the last Condition to Closing, whichever is later, but in no event later than
September 30, 2000. The Closing shall be held at such place as Pacific and the
Company may agree.
ARTICLE 10
EXPENSES
Regardless of whether this Agreement is terminated, each party hereto
shall pay all of the costs and expenses incurred by it in connection with this
Agreement and the other transactions
18
contemplated hereby (including, without limitation, disbursements and expenses
of its attorneys, accountants and advisors). Each party shall be responsible for
and shall pay for broker's or finder's fees due and payable to any third party
claiming a right to such fees from or through such party in connection with the
transactions contemplated hereby.
ARTICLE XI
NOTICES
All notices, requests, demands and other communications under or in
connection with this Agreement shall be in writing, and (a) if to Pacific,
shall be addressed to: Pacific CMA, Inc., c/o Xxxx X. Xxxxxx, Esq., Frascona,
Joiner, Xxxxxxx & Xxxxxxxxxx, P.C., 0000 Xxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000; and (b) if to the Company, shall be addressed to: AGI Logistics (H.K.)
Ltd, c/o Xxxxxxx X. Xxxx, Esq., Xxxxx Xxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000.
All such notices, requests, demands or communications shall be
delivered by a recognized overnight courier service, or personally, or by fax to
the numbers specified above and shall be sufficient and effective when delivered
to or received at the address so specified. Any party may change the address at
which it is to receive notice by written notice to the other.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(1) by mutual written consent of Pacific and the Company; or
(2) by Pacific or the Company, if the Closing shall not have
occurred on or prior to September 30, 2000, unless the failure of such
occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants,
agreements and conditions hereof to be performed or observed by such
party at or before the Closing.
12.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Pacific or the Stockholder as provided above, this Agreement
shall forthwith become void and there shall be no further liability on the part
of Pacific or the Stockholder or their respective officers or directors (except
if such termination arises out of a material breach by the non-terminating party
of any of its representations, warranties, covenants or other agreements herein,
or based upon obligations set forth in Article XI and Section 12.3 hereof).
12.3 RETURN OF INFORMATION. Upon termination of this Agreement,
each party shall return to the other all written materials furnished by such
party to the other, without retaining any copies, except that counsel for each
party may retain one copy for evidentiary purposes until the
19
expiration of all applicable statutes of limitation with respect thereto. Prior
to Closing, each party agrees not to divulge any information obtained regarding
the other (unless ascertainable from public or published information or trade
sources) to third parties.
12.4 AMENDMENT, EXTENSION AND WAIVER. At any time prior to the
Closing, the Stockholder and Pacific may (i) amend this Agreement, (ii) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (iii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(iv) waive compliance with any of the agreements or conditions contained herein.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE XIII
ENTIRE AGREEMENT
This Agreement (including schedules and documents delivered pursuant
hereto, which are a part hereof) is intended by the parties to and does
constitute the entire agreement of the parties with respect to the transactions
contemplated by this Agreement and supersedes any and all prior understandings,
written or oral, between the parties, and this Agreement may be amended,
modified, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the amendment, modification,
waiver, discharge or termination is sought.
ARTICLE XIV
GENERAL
The paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns. The
shareholders of Pacific shall be third-party beneficiaries hereof. This
Agreement may not be assigned by any party hereto without the consent of all
other parties hereto. This Agreement may not be assigned by any party hereto
without the consent of all other parties hereto. This Agreement shall be
construed in accordance with and governed by, the laws of the State of
California. In the event of a dispute or controversy under this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees. Jurisdiction
and venue for any disputes hereunder shall be in any federal or state court
having jurisdiction and located in the State of California.
IN WITNESS WHEREOF, Pacific and the Stockholder have caused this
Agreement to be duly executed as of the date first above written.
20
PACIFIC CMA, INC.
By: /s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx, President
XXXXXX SERVICES CORPORATION
By: /s/ Xxxxxx Xxx Xxxx Ko
-----------------------------
Xxx Xxxx Xx, Xxxxxx, President
21
