Exhibit 1
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 24th day of
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September, 2001
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AMONG:
GAMA COMPUTER CORPORATION, a body corporate formed pursuant
to the laws of the State of Delaware and having an office
for business located at Xxxxx 000, 0000 Xxxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("Gama")
AND:
BLUEBOOK ACQUISITIONS CORP., a body corporate formed
pursuant to the laws of the State of Nevada and a wholly
owned subsidiary of Gama
(the "Acquirer")
AND:
THE BLUEBOOK INTERNATIONAL, INC., a body corporate formed
pursuant to the laws of the State of Nevada and having an
office for business located at 00000 Xxxxxxx Xxxx 000-X,
Xxxx Xxxxxx, XX 00000.
(the "Company")
AND:
XXXX X. XXXXXXXXXX, businessman, of The Bluebook
International, Inc., 00000 Xxxxxxx Xxxx 000-X, Xxxx Xxxxxx,
XX 00000.
AND:
XXXXXX X. XXXXXXXXXX, businessman, of The Bluebook
International, Inc., 00000 Xxxxxxx Xxxx 000-X, Xxxx Xxxxxx,
XX 00000.
AND:
XXXXXX X. XXXXXXXXXX, businessman, of The Bluebook
International, Inc., 00000 Xxxxxxx Xxxx 000-X, Xxxx Xxxxxx,
XX 00000.
AND:
XXXXXXX X. XXXXXXXXXX, businesswoman, of The Bluebook
International, Inc., 00000 Xxxxxxx Xxxx 000-X, Xxxx Xxxxxx,
XX 00000.
(Xxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxxxxx, Xx., Xxxxxx X.
Xxxxxxxxxx and Xxxxxxx X. Xxxxxxxxxx being hereinafter
referred to as the "Company Shareholders").
AND:
XXXXXX XXXXXX, businessman and majority shareholder, of Gama
Computer Corporation, (the "Gama Majority Shareholder").
WHEREAS:
A. The Company is engaged in the business of publishing information for the
insurance, cleaning, construction, reconstruction, repair and service
industries;
X. Xxxx is a reporting company whose common stock is quoted on the NASD
"Bulletin Board" and which is seeking merger or acquisition candidates in order
to create value for its shareholders;
C. The respective Boards of Directors of Gama, the Company and the Acquirer
deem it advisable and in the best interests of Gama, the Company and the
Acquirer that the Company merge with and into the Acquirer (the "Merger")
pursuant to this Agreement and the Certificate of Merger, and the applicable
provisions of the laws of the State of Nevada; and
D. It is intended that the Merger shall qualify for United States federal
income tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
E. Xxxxxx Xxxxxx owns the majority of the equity stock of Gama and is being
made a party to this Agreement for the purpose of jointly and severally
covenanting to indemnify the Company in the manner hereinafter provided.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement the following terms will have the following meanings:
(a) "ACQUISITION SHARES" means the 10,900,000 Gama Shares to be issued to
the Company Shareholders at Closing;
(b) "AGREEMENT" means this agreement and plan of merger among Gama, the
Acquirer, the Company, the Company Shareholders and the Gama Majority
Shareholder;
(c) "AUDITED COMPANY FINANCIAL STATEMENTS" means the audited financial
statements of the Sole Proprietor Business for the fiscal year ended
December 31, 2000, together with the unqualified auditors' report
thereon, true copies of which are to be delivered at Closing pursuant
to paragraph 10.2(h) hereof;
(d) "AUDITED GAMA FINANCIAL STATEMENTS" means the audited financial
statements of Gama for the fiscal year ended December 31, 2000,
together with the unqualified auditors' report thereon, a true copy of
which is attached as Schedule "J" hereto;
(e) "BUSINESS" means all aspects of the business conducted by the Company
or the Sole Proprietor Business, as the case may be, including,
without limitation, publishing information for the insurance,
clearing, construction, reconstruction, repair and service industries,
and all other related activities;
(f) "CLOSING" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 10 hereof;
(g) "CLOSING DATE" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been
satisfied or waived;
(h) "COMPANY ACCOUNTS PAYABLE AND LIABILITIES" means all accounts payable
and liabilities of the Company and the Sole Proprietor Business due
and owing or otherwise constituting a binding obligation of the
Company, the Sole Proprietor Business and/or its affiliates (other
than a Company Material Contract) as of June 30, 2001 as set forth in
Schedule "C" hereto;
(i) "COMPANY ACCOUNTS RECEIVABLE" means all accounts receivable and other
debts owing to the Company and/ or the Sole Proprietor Business as of
June 30, 2001 as set forth in Schedule "D" hereto;
(j) "COMPANY ASSETS" means the undertaking and all the property and assets
of the Business of the Company and the Sole Proprietor Business of
every kind and description wheresoever situated including, without
limitation, the Company Equipment, the Company Inventory, the Company
Material Contracts, the Company Accounts Receivable, the Company Cash,
the Company Intangible Assets and the Company Goodwill, and all credit
cards, charge cards and banking cards issued to the Company;
(k) "COMPANY BANK ACCOUNTS" means all of the bank accounts, lock boxes and
safety deposit boxes of the Company or relating to the Business of the
Company as set forth in Schedule "I" hereto;
(l) "COMPANY CASH" means all cash on hand or on deposit to the credit of
the Company on the Closing Date;
(m) "COMPANY EQUIPMENT" means all machinery, equipment, furniture, and
furnishings used in the Business of the Company, including, without
limitation, the items more particularly described in Schedule "E"
hereto;
(n) "COMPANY FINANCIAL STATEMENTS" means, collectively, the Audited
Company Financial Statements and the Quarterly Company Financial
Statements, true copies of which are to be delivered at Closing
pursuant to paragraph 10.2(h) hereof;
(o) "COMPANY GOODWILL" means the goodwill of the Business of the Company
together with the exclusive right of Gama to represent itself as
carrying on the Business of the Company in succession of the Company
subject to the terms hereof, and the right to use any words indicating
that the Business of the Company is so carried on including the right
to use the name "Bluebook International" or any variation thereof as
part of the name of or in connection with the Business of the Company
or any part thereof carried on or to be carried on by the Company, the
right to all corporate, operating and trade names associated with the
Business of the Company, or any variations of such names as part of or
in connection with the Business of the Company, all telephone listings
and telephone advertising contracts, all lists of customers, books and
records and other information relating to the Business of the Company,
all necessary licenses and authorizations and any other rights used in
connection with the Business of the Company;
(p) "COMPANY INSURANCE POLICIES" means the public liability insurance and
insurance against loss or damage to the Company Assets and the
Business of the Company as described in Schedule "F" hereto;
(q) "COMPANY INTANGIBLE ASSETS" means all of the intangible assets of the
Company, including, without limitation, the Company Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of the Company;
(r) "COMPANY INVENTORY" means all inventory and supplies of the Business
of the Company and the Sole Proprietor Business as of June 30, 2001 as
set forth in Schedule "G" hereto;
(s) "COMPANY MATERIAL CONTRACTS" means the burden and benefit of and the
right, title and interest of the Company in, to and under all trade
and non-trade contracts, engagements or commitments, whether written
or oral, to which the Company is entitled in connection with the
Business of the Company whereunder the Company is obligated to pay or
entitled to receive the sum of $10,000 or more including, without
limitation, any pension plans, profit sharing plans, bonus plans, loan
agreements, security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, directors, attorneys or
others which cannot be terminated without liability on not more than
one month's notice, and those contracts listed in Schedule "H" hereto;
(t) "COMPANY SHARES" means all of the issued and outstanding shares of the
Company's equity stock;
(u) "DRAFT COMPANY FINANCIAL STATEMENTS" means the draft audited financial
statements of the Sole Proprietor Business for the fiscal year ended
December 31, 2000 and the draft unaudited and consolidated financial
statements of the Company and the Sole Proprietor Business for the six
month period ended June 30, 2001, a true copy of which is attached as
Schedule "A" hereto;
(v) "EFFECTIVE TIME" means the date of the filing of an appropriate
Certificate of Merger in the form required by the State of Nevada,
which certificate shall provide that the Merger shall become effective
upon such filing;
(w) "EMPLOYMENT AGREEMENTS" means the employment agreements between the
Company and each of Xxxx X. Xxxxxxxxxx and Xxxxxx X. Xxxxxxxxxx to be
entered into pursuant to Article 7 hereof substantially in the form
attached hereto as Schedule "Q";
(x) "GAMA ACCOUNTS PAYABLE AND LIABILITIES" means all accounts payable and
liabilities of Gama and Acquirer due and owing or otherwise
constituting a binding obligation of Gama and/or its affiliates (other
than a Gama Material Contract) as of June 30, 2001 as set forth is
Schedule "L" hereto;
(y) "GAMA ACCOUNTS RECEIVABLE" means all accounts receivable and other
debts owing to Gama as of June 30, 2001 as set forth in Schedule "M"
hereto;
(z) "GAMA ASSETS" means the undertaking and all the property and assets of
the Business of Gama of every kind and description wheresoever
situated including, without limitation, Gama Equipment, Gama Material
Contracts, Gama Accounts Receivable, Gama Cash, Gama Intangible Assets
and Gama Goodwill, and all credit cards, charge cards and banking
cards issued to Gama;
(aa) "GAMA BANK ACCOUNTS" means all of the bank accounts, lock boxes and
safety deposit boxes of Gama or relating to the Business of Gama as
set forth in Schedule "N" hereto;
(bb) "GAMA CASH" means all cash on hand or on deposit to the credit of Gama
on the Closing Date;
(cc) "GAMA COMMON SHARES" means the shares of common stock in the capital
of Gama;
(dd) "GAMA CONTROL SHARES' means the 6,487,500 Gama Common Shares owned by
Xxxxxx Xxxxxx;
(ee) "GAMA EQUIPMENT" means all machinery, equipment, furniture, and
furnishings used in the Business of Gama, including, without
limitation, the items more particularly described in Schedule "O"
hereto;
(ff) "GAMA FINANCIAL STATEMENTS" means, collectively, the Audited Gama
Financial Statements and the Quarterly Gama Financial Statements;
(gg) "GAMA GOODWILL" means the goodwill of the Business of Gama including
the right to all corporate, operating and trade names associated with
the Business of Gama, or any variations of such names as part of or in
connection with the Business of Gama, all books and records and other
information relating to the Business of Gama, all necessary licenses
and authorizations and any other rights used in connection with the
Business of Gama;
(hh) "GAMA INTANGIBLE ASSETS" means all of the intangible assets of Gama,
including, without limitation, Gama Goodwill, all trademarks, logos,
copyrights, designs, and other intellectual and industrial property of
Gama (if any);
(ii) "GAMA MATERIAL CONTRACTS" means the burden and benefit of and the
right, title and interest of Gama and/ or Acquirer in, to and under
all trade and non-trade contracts, engagements or commitments, whether
written or oral, to which Gama or Acquirer is entitled whereunder Gama
and/ or Acquirer is obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension plans,
profit sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with employees,
lessees, licensees, managers, accountants, suppliers, agents,
distributors, officers, directors, attorneys or others which cannot be
terminated without liability on not more than one month's notice, and
those contracts listed in Schedule "P" hereto;
(jj) "MERGER CONSIDERATION" means the Acquisition Shares;
(kk) "PLACE OF CLOSING" means the offices of Xxx, Xxxxxxx & Xxxxx, LLP or
such other place as Gama and the Company may mutually agree upon;
(ll) "PREFERRED SHARES" means the shares of Series A Convertible Preferred
Stock in the capital of Gama to be issued in the Private Placement;
(mm) "PRIVATE PLACEMENT" means the private sale by Gama of 2,000 Preferred
Shares at a price of $1,000.00 per Preferred Share;
(nn) "PROMISSORY NOTE" means the Replacement Promissory Note dated
September 15, 2001 by the Company in favor of Xxxxxx X. Xxxxxxxxxx and
Xxxxxxx X. Xxxxxxxxxx in the face amount of $1,000,000 to be assigned
to Gama at Closing;
(oo) "QUARTERLY COMPANY FINANCIAL STATEMENTS" means the unaudited
consolidated financial statements of the Company and the Sole
Proprietor Business for the six month period ended June 30, 2001, true
copies of which are to be delivered at Closing pursuant to paragraph
10.2(h) hereof;
(pp) "QUARTERLY GAMA FINANCIAL STATEMENTS" means the unaudited financial
statements of Gama for the six month period ended June 30, 2001, a
true copy of which are attached as Schedule "K" hereto;
(qq) "SOLE PROPRIETOR BUSINESS" means the business conducted by Xxxxxx X.
Xxxxxxxxxx and Xxxxxxx X. Xxxxxxxxxx, husband and wife, as sole
proprietors under the trade name "The Bluebook" and similar names, the
assets of which were sold to the Company pursuant to that certain
Amended and Restated Asset Purchase and Sale Agreement, dated as of
September 15, 2001.
(rr) "STATE CORPORATION LAW" means the Business Corporation Law of the
State of Nevada;
(ss) "SUBSCRIPTION AGREEMENTS" means the form of subscription agreements to
be used in the Private Placement, having terms substantially as set
forth in Schedule "R" attached hereto; and
(tt) "SURVIVING COMPANY" means the Acquirer following the merger with the
Company.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
CAPTIONS AND SECTION NUMBERS
1.2 The headings and section references in this Agreement are for
convenience of reference only and do not form a part of this Agreement and are
not intended to interpret, define or limit the scope, extent or intent of this
Agreement or any provision thereof.
SECTION REFERENCES AND SCHEDULES
1.3 Any reference to a particular "Article", "section", "paragraph",
"clause" or other subdivision is to the particular Article, section, clause or
other subdivision of this Agreement and any reference to a Schedule by letter
will mean the appropriate Schedule attached to this Agreement and by such
reference the appropriate Schedule is incorporated into and made part of this
Agreement. The Schedules to this Agreement are as follows:
Information concerning the Company
Schedule "A" Draft Company Financial Statements
Schedule "B" Deleted
Schedule "C" Company Accounts Payable and Liabilities
Schedule "D" Company Accounts Receivable
Schedule "E" Company Equipment
Schedule "F" Company Insurance Policies
Schedule "G" Company Inventory
Schedule "H" Company Material Contracts
Schedule "I" Company Bank Accounts
Information concerning Gama
Schedule "J" Audited Gama Financial Statements
Schedule "K" Quarterly Gama Financial Statements
Schedule "L" Gama Accounts Payable and Liabilities
Schedule "M" Gama Accounts Receivable
Schedule "N" Gama Bank Accounts
Schedule "O" Gama Equipment
Schedule "P" Gama Material Contracts
Agreements
Schedule "Q" Employment Agreements
Schedule "R" Subscription Agreements
Other
Schedule "S" Share Ownership and Allocation of Merger Consideration
Schedule "T" Confidentiality Agreement
SEVERABILITY OF CLAUSES
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE MERGER
THE MERGER
2.1 At Closing, the Company shall be merged with and into the Acquirer
pursuant to this Agreement and the Plan of Merger and the separate corporate
existence of the Company shall cease and the Acquirer, as it exists from and
after the Closing, shall be the Surviving Company.
EFFECT OF THE MERGER
2.2 The Merger shall have the effect provided therefor by the State
Corporation Law. Without limiting the generality of the foregoing, and subject
thereto, at Closing (i) all the rights, privileges, immunities, powers and
franchises, of a public as well as of a private nature, and all property, real,
personal and mixed, and all debts due on whatever account, including without
limitation subscriptions to shares, and all other choses in action, and all and
every other interest of or belonging to or due to the Company or the Acquirer,
as a group, subject to the terms hereof, shall be taken and deemed to be
transferred to, and vested in, the Surviving Company without further act or
deed; and all property, rights and privileges, immunities, powers and franchises
and all and every other interest shall be thereafter as effectually the property
of the Surviving Company, as they were of the Company and the Acquirer, as a
group, and (ii) all debts, liabilities, duties and obligations of the Company
and the Acquirer, as a group, subject to the terms hereof, shall become the
debts, liabilities and duties of the Surviving Company and the Surviving Company
shall thenceforth be responsible and liable for all debts, liabilities, duties
and obligations of the Company and the Acquirer, as a group, and neither the
rights of creditors nor any liens upon the property of the Company or the
Acquirer, as a group, shall be impaired by the Merger, and may be enforced
against the Surviving Company.
ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
2.3 The Articles of Incorporation of the Surviving Company from and after
the Closing shall be the Articles of Incorporation of the Acquirer until
thereafter amended in accordance with the provisions therein and as provided by
the applicable provisions of the State Corporation Law. The Bylaws of the
Surviving Company from and after the Closing shall be the Bylaws of the Acquirer
as in effect immediately prior to the Closing, continuing until thereafter
amended in accordance with their terms, the Articles of Incorporation of the
Surviving Company and as provided by the State Corporation Law. The Directors
of the Company at the Effective Time shall continue to be the Officers of the
Surviving Company.
CONVERSION OF SECURITIES
2.4 At the Effective Time, by virtue of the Merger and without any action on
the part of the Acquirer, the Company or the Company Shareholders, the shares of
capital stock of each of the Company and the Acquirer shall be converted as
follows:
(a) Capital Stock of the Acquirer. Each issued and outstanding share of
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the Acquirer's capital stock shall continue to be issued and
outstanding and shall be converted into one share of validly issued,
fully paid, and non-assessable common stock of the Surviving Company.
Each stock certificate of the Acquirer evidencing ownership of any
such shares shall continue to evidence ownership of such shares of
capital stock of the Surviving Company.
(b) Conversion of Company Shares. Each Company Share that is issued and
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outstanding at the Effective Time shall automatically be cancelled and
extinguished and converted, without any action on the part of the
holder thereof, into the right to receive at the time and in the
amounts described in this Agreement an amount of Acquisition Shares
equal to the number of Acquisition Shares divided by the number of
Company Shares outstanding immediately prior to Closing. All such
Company Shares, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist,
and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive the Acquisition Shares and the Acquisition Price paid in
consideration therefor upon the surrender of such certificate in
accordance with this Agreement.
ASSIGNMENT OF DEBT
2.5 At the Closing, Xxxxxx X. Xxxxxxxxxx and Xxxxxxx X. Xxxxxxxxxx agree to
assign to Gama the Promissory Note in settlement of the subscription price for
1,000 Preferred Shares purchased by Xxxxxx X. Xxxxxxxxxx and Xxxxxxx X.
Xxxxxxxxxx pursuant to the Private Placement under the terms of the Subscription
Agreement.
ADHERENCE WITH APPLICABLE SECURITIES LAWS
2.6 The Company Shareholders agree that they are acquiring the Acquisition
Shares for investment purposes and will not offer, sell or otherwise transfer,
pledge or hypothecate any of the Acquisition Shares (other than pursuant to an
effective Registration Statement under the Securities Act of 1933 (United
States), as amended) directly or indirectly unless:
(a) the sale is to Gama;
(b) the sale is made pursuant to the exemption from registration under the
Securities Act of 1933 (United States) provided by Rule 144
thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not require
registration under the Securities Act of 1933 (United States) or any
applicable United States state laws and regulations governing the
offer and sale of securities, and the Vendor has furnished to Gama an
opinion of counsel to that effect or such other written opinion as may
be reasonably required by Gama.
The Company Shareholders acknowledge that the certificates representing the
Acquisition Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE SHALL BE MADE UNLESS A
REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF
1933, AS AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN
EFFECT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE COMPANY SHAREHOLDERS
REPRESENTATIONS AND WARRANTIES
3.1 The Company and the Company Shareholders jointly and severally represent
and warrant in all material respects to Gama and the Acquirer, with the intent
that they will rely thereon in entering into this Agreement and in completing
the transactions contemplated hereby, that:
THE COMPANY - CORPORATE STATUS AND CAPACITY
(a) Incorporation. The Company is a corporation duly incorporated and
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validly subsisting under the laws of the State of Nevada, and is in
good standing with the office of the Secretary of State for the State
of Nevada;
(b) Carrying on Business. The Company carries on business primarily in the
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State of California and does not carry on any material business
activity in any other jurisdiction. The Company has an office in
Irvine, California and in no other locations. The nature of the
Business of the Company does not require the Company to register or
otherwise be qualified to carry on business in any other jurisdiction;
(c) Corporate Capacity. The Company has the corporate power, capacity and
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authority to own the Company Assets, to carry on the Business of the
Company and to enter into and complete this Agreement;
THE COMPANY - CAPITALIZATION
(d) Authorized Capital. The authorized capital of the Company consists of
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45,000,000 shares of common stock par value $0.01, 1,250,000 shares of
Series A Convertible Preferred Stock par value $0.01 and 3,750,000
shares of Series B Convertible Preferred Stock par value $0.01;
(e) Ownership of Company Shares. The issued and outstanding share capital
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of the Company will on Closing consist of 7,083,332 shares (being the
Company Shares), which shares on Closing shall be validly issued and
outstanding as fully paid and non-assessable shares. The Company
Shareholders will be at Closing the registered and beneficial owners
of all of the Company Shares. The Company Shareholders own and will on
Closing own the Company Shares free and clear of any and all liens,
charges, pledges, encumbrances, restrictions on transfer and adverse
claims whatsoever;
(f) No Option. No person, firm or corporation has any agreement, option,
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warrant, preemptive right or any other right capable of becoming an
agreement or option for the acquisition of the Company Shares or for
the purchase, subscription or issuance of any of the unissued shares
in the capital of the Company;
(g) No Restrictions. There are no restrictions on the transfer, sale or
----------------
other disposition of the Company Shares contained in the charter
documents of the Company or under any agreement;
THE COMPANY - RECORDS AND COMPANY FINANCIAL STATEMENTS
(h) Charter Documents. The charter documents of the Company have not been
------------------
altered since the incorporation of the Company, except as filed in the
record book of the Company;
(i) Corporate Minute Books. The corporate minute books of the Company are
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complete and each of the minutes contained therein accurately reflect
the actions that were taken at a duly called and held meeting or by
consent without a meeting. All actions by the Company which required
director or shareholder approval are reflected on the corporate minute
books of the Company. The Company is not in violation or breach of, or
in default with respect to, any term of its Certificate of
Incorporation (or other charter documents) or by-laws.
(j) Company Financial Statements. The Draft Company Financial Statements
------------------------------
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company as
of the respective dates thereof, and the sales and earnings of the
Business of the Company and the Sole Proprietor Business during the
periods covered thereby, in all material respects, and have been
prepared in substantial accordance with generally accepted accounting
principles consistently applied, and the Company Financial Statements,
when delivered at or prior to Closing pursuant to paragraph 10.2(h)
hereof, will be substantially identical to the Draft Financial
Statements and will present fairly, in all material respects, the
assets and liabilities (whether accrued, absolute, contingent or
otherwise) of the Company and the Sole Proprietor Business as of the
respective dates thereof, and the sales and earnings of the Business
of the Company and the Sole Proprietor Business, as the case may be,
during the periods covered thereby, in all material respects, and will
have been prepared in substantial accordance with generally accepted
accounting principles consistently applied;
(k) Company Accounts Payable and Liabilities. There are no material
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liabilities, contingent or otherwise, of the Company which are not
disclosed in Schedule "C" hereto or reflected in the Draft Company
Financial Statements except those incurred in the ordinary course of
business since the date of the said schedule and the Draft Company
Financial Statements, and the Company has not guaranteed or agreed to
guarantee any debt, liability or other obligation of any person, firm
or corporation. Without limiting the generality of the foregoing, all
accounts payable and liabilities of the Company and the Sole
Proprietor Business as of June 30, 2001 are described in Schedule "C"
hereto;
(l) Company Accounts Receivable. All Company Accounts Receivable result
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from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Company, any claim by the
obligor for set-off or counterclaim;
(m) Company Bank Accounts. All of the Company Bank Accounts, their
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location, numbers and the authorized signatories thereto are as set
forth in Schedule "I" hereto;
(n) No Debt to Related Parties. Save and except for the Promissory Note,
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the Company is not, and on Closing will not be, materially indebted to
the Company Shareholders nor to any family member thereof, nor to any
affiliate, director or officer of the Company or the Company
Shareholders except accounts payable on account of bona fide business
transactions of the Company incurred in normal course of the Company
Business, including employment agreements with Company Shareholders,
none of which are more than 30 days in arrears;
(o) No Related Party Debt to the Company. The Company Shareholders are not
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now indebted to or under any financial obligation to the Company on
any account whatsoever, except for advances on account of travel and
other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
------------
capital of the Company have been made, declared or authorized since
the date of the Draft Company Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
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since the date of the Draft Company Financial Statements to or on
behalf of the Company Shareholders or to or on behalf of officers,
directors, shareholders or employees of the Company or under any
management agreements with the Company, except payments made in the
ordinary course of business and at the regular rates of salary or
other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
------------------
insurance or similar plans or other deferred compensation plans
affecting the Company;
(s) No Adverse Events. Since the date of the Draft Company Financial
-------------------
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of the Company
or the Sole Proprietor Business, its liabilities or the
Company Assets or any damage, loss or other change in
circumstances materially affecting the Company, the Business
of the Company or the Company Assets or the Company's right
to carry on the Business of the Company, other than changes
in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and
adversely affecting the Company, the Business of the Company
or the Company Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by the Company to the Company
Shareholders or to any of the Company's officers, employees
or agents or any bonus, payment or arrangement made to or
with any of them,
(iv) the Business of the Company has been and continues to be carried
on in the ordinary course,
(v) the Company has not waived or surrendered any right of material
value,
(vi) the Company has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
THE COMPANY - INCOME TAX MATTERS
(t) Tax Returns. All tax returns and reports of the Company required by
------------
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by the
Company or in accordance with any notice of assessment or reassessment
issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
--------------
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by the Company. The Company is not aware of any contingent
tax liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in filing
earlier tax returns;
THE COMPANY - APPLICABLE LAWS AND LEGAL MATTERS
(v) Licenses. The Company holds all licenses and permits as may be
--------
requisite for carrying on the Business of the Company in the manner in
which it has heretofore been carried on, which licenses and permits
have been maintained and continue to be in good standing except where
the failure to obtain or maintain such licenses or permits would not
have a material adverse effect on the Company Business;
(w) Applicable Laws. The Company has not been charged with or received
----------------
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to it
the violation of which would have a material adverse effect on the
Company, and, to its knowledge, the Company is not in breach of any
laws, ordinances, statutes, regulations, by-laws, orders or decrees
the contravention of which would result in a material adverse impact
on the Business of the Company;
(x) Pending or Threatened Litigation. There is no material litigation or
----------------------------------
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Company, the Business of the
Company, or any of the Company Assets, nor does the Company have any
knowledge of any deliberate act or omission of the Company that would
form any material basis for any such action, proceeding or enquiry;
(y) No Bankruptcy. The Company has not made any voluntary assignment or
--------------
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against the
Company and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of the Company;
(z) Labour Matters. The Company is not party to any collective agreement
---------------
relating to the Business of the Company with any labour union or other
association of employees and no part of the Business of the Company
has been certified as a unit appropriate for collective bargaining or,
to the knowledge of the Company, has made any attempt in that regard
and the Company has no reason to believe that any current employees
will leave the Company's employ as a result of this Merger.
(aa) Finder's Fees. The Company is not party to any agreement which
--------------
provides for the payment of finder's fees, brokerage fees, commissions
or other fees or amounts which are or may become payable to any third
party in connection with the execution and delivery of this Agreement
and the transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(bb) Authorization and Enforceability. The execution and delivery of this
----------------------------------
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of the Company;
(cc) No Violation or Breach. The execution and performance of this
-------------------------
Agreement will not
(i) violate the charter documents of the Company or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which the Company,
is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Company Material
Contracts, or any right or rights enjoyed by the Company,
(iii) result in any alteration of the Company's obligations under any
agreement to which the Company is party including, without
limitation, the Company Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third
party upon or against the Company Assets,
(v) result in the imposition of any tax liability to the Company
relating to the Company Assets or the Company Shares, or
(vi) violate any court order or decree to which the Company is
subject;
THE COMPANY ASSETS - OWNERSHIP AND CONDITION
(dd) Business Assets. The Company Assets comprise all of the property and
----------------
assets of the Business of the Company, and neither the Company
Shareholders nor any other person, firm or corporation owns any assets
used by the Company in operating the Business of the Company, whether
under a lease, rental agreement or other arrangement, other than as
disclosed in Schedules "E" or "H" hereto;
(ee) Title. The Company is the legal and beneficial owner of the Company
-----
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save and
except as disclosed in Schedules "E" or "H" hereto;
(ff) No Option. No person, firm or corporation has any agreement or option
----------
or a right capable of becoming an agreement for the purchase of any of
the Company Assets;
(gg) Company Insurance Policies. The Company maintains the public liability
--------------------------
insurance and insurance against loss or damage to the Company Assets
and the Business of the Company as described in Schedule "F" hereto;
(hh) Company Material Contracts. The Company Material Contracts listed in
----------------------------
Schedule "H" constitute all of the material contracts of the Company;
(ii) No Default. There has not been any default in any material obligation
-----------
of the Company or any other party to be performed under any of the
Company Material Contracts, each of which is in good standing and in
full force and effect and unamended (except as disclosed in Schedule
"H"), and the Company is not aware of any default in the obligations
of any other party to any of the Company Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
--------------------------------
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of the Company. The
Company is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
THE COMPANY ASSETS - COMPANY EQUIPMENT
(kk) Company Equipment. The Company Equipment has been maintained in a
------------------
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
THE COMPANY ASSETS - COMPANY GOODWILL AND OTHER ASSETS
(ll) Company Goodwill. The Company carries on the Business of the Company
-----------------
only under the name "Bluebook International" and variations thereof
(including B.E.S.T, X.X.X.X.Xxx, and The Bluebook) and under no other
business or trade names. The Company does not have any knowledge of
any infringement by the Company of any patent, trademark, copyright or
trade secret;
THE BUSINESS OF THE COMPANY
(mm) Maintenance of Business. Since the date of the Draft Company Financial
-----------------------
Statements, the Business of the Company and Sole Proprietor Business
has been carried on in the ordinary course and the Company has not
entered into any material agreement or commitment except in the
ordinary course; and
(nn) Subsidiaries. The Company does not own any subsidiary and does not
------------
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of the Company and the Company
Shareholders contained herein will be true at and as of Closing in all material
respects as though such representations and warranties were made as of such
time. Notwithstanding the completion of the transactions contemplated hereby,
the waiver of any condition contained herein (unless such waiver expressly
releases a party from any such representation or warranty) or any investigation
made by Gama, the representations and warranties of the Company and the Company
Shareholders shall survive the Closing.
INDEMNITY
3.3 The Company and the Company Shareholders jointly and severally agree to
indemnify and save harmless Gama from and against any and all claims, demands,
actions, suits, proceedings, assessments, judgments, damages, costs, losses and
expenses, including any payment made in good faith in settlement of any claim
(subject to the right of the Company and the Company Shareholders to defend any
such claim), resulting from the breach by any of them of any representation or
warranty of such party under this Agreement or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be furnished
by the Company or the Company Shareholders to Gama hereunder.
ARTICLE 4
COVENANTS OF THE COMPANY
AND THE COMPANY SHAREHOLDERS
COVENANTS
4.1 The Company and the Company Shareholders covenant and agree with Gama
that they will:
(a) Conduct of Business. Until the Closing, conduct the Business
---------------------
diligently and in the ordinary course consistent with the manner in
which the Business generally has been operated up to the date of
execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts to
------------------------
preserve the Business and the Company Assets and, without limitation,
preserve for Gama the Company's relationships with their suppliers,
customers and others having business relations with them;
(c) Access. Subject to the Confidentiality Agreement referenced in Section
------
8.8 below, and until the Closing, give Gama and its representatives
full access to all of the properties, books, contracts, commitments
and records of the Company relating to the Company, the Business and
the Company Assets, and furnish to Gama and its representatives all
such information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
-----------------
required to obtain, prior to Closing, any and all third party consents
required to permit the Merger and to preserve and maintain the Company
Assets, including the Company Material Contracts, notwithstanding the
change in control of the Company arising from the Merger;
(e) Reporting and Internal Controls. From and after the Effective Time,
----------------------------------
the Company shall forthwith take all required actions to implement
internal controls on the Business of the Surviving Company to ensure
that the Company complies with Section 13b(2) of the Securities and
Exchange Act of 1934;
(f) Forward Split and Name Change. Forthwith after the Closing, take such
------------------------------
steps are required to cause the Gama Common Shares to be forward split
on the basis of three new shares for each one old share and to change
the name of Gama to "Bluebook International" or such similar name as
may be acceptable to the board of directors of Gama
(g) Financial Statements. Take all such steps and actions necessary to
---------------------
have the Company Financial Statements delivered at Closing.
AUTHORIZATION
4.2 The Company agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting the Company to release any and all information in
their possession respecting the Company to Gama. The Company shall execute and
deliver to Gama any and all consents to the release of information and specific
authorizations which Gama reasonably require to gain access to any and all such
information.
SURVIVAL
4.3 The covenants set forth in this Article shall survive the Closing for
the benefit of Gama.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GAMA,
GAMA MAJORITY SHAREHOLDER AND ACQUIRER
REPRESENTATIONS AND WARRANTIES
5.1 Gama, the Gama Majority Shareholder, and Acquirer, jointly and
severally, represent and warrant in all material respects to the Company, with
the intent that the Company will rely thereon in entering into this Agreement
and in approving and completing the transactions contemplated hereby, that:
GAMA - CORPORATE STATUS AND CAPACITY
(a) Incorporation. Gama is a corporation duly incorporated and validly
-------------
subsisting under the laws of the State of Delaware, and is in good
standing with the office of the Secretary of State for the State of
Delaware;
(b) Carrying on Business. Gama and Acquirer carry on business in the
----------------------
Province of British Columbia only and do not carry on any material
business activity in any other jurisdiction. Gama and Acquirer have
offices in Vancouver, British Columbia and in no other locations. The
nature of the Business of Gama and Acquirer do not require either Gama
or Acquirer to register or otherwise be qualified to carry on business
in any other jurisdiction;
(c) Corporate Capacity. Gama and Acquirer have the corporate power,
-------------------
capacity and authority to own the Gama Assets and to enter into and
complete this Agreement;
(d) Reporting Status; Listing. Gama is required to file current reports
---------------------------
with the Securities and Exchange Commission pursuant to section 15(d)
of the Securities Exchange Act of 1934, the Gama Shares are quoted on
the NASD "Bulletin Board", and all reports required to be filed by
Gama with the SEC or NASD have been timely filed;
GAMA - CAPITALIZATION
(e) Authorized Capital. The authorized capital of Gama consists of
-------------------
30,000,000 Gama Common Shares, $0.0001 par value and 5,000,000 shares
of preferred stock. $0.0001 par value, of which 8,411,137 Gama Common
Shares and no shares of preferred stock are presently issued and
outstanding;
(f) No Option. No person, firm or corporation has any agreement or option
----------
or any right capable of becoming an agreement or option for the
acquisition of Gama Shares or for the purchase, subscription or
issuance of any of the unissued shares in the capital of Gama other
than pursuant to the Subscription Agreements;
(g) Capacity. Gama has the full right, power and authority to enter into
--------
this Agreement on the terms and conditions contained herein;
ACQUIRER CAPITALIZATION
(h) Authorized Capital. The authorized capital of Acquirer consists of 100
------------------
shares of common stock, $0.01 par value, and no shares of preferred
stock, of which one share of common stock is presently issued and
outstanding;
(i) No Option. No person, firm or corporation has any agreement or option
----------
or any right capable of becoming an agreement or option for the
acquisition of any common or preferred shares in Acquirer or for the
purchase, subscription or issuance of any of the unissued shares in
the capital of Acquirer;
(j) Capacity. Acquirer has the full right, power and authority to enter
--------
into this Agreement on the terms and conditions contained herein;
GAMA - RECORDS AND FINANCIAL STATEMENTS
(k) Charter Documents. The charter documents of Gama and Acquirer have not
-----------------
been altered since the incorporation of each, respectively, except as
filed in the record books of Gama or Acquirer, as the case may be;
(l) Gama Financial Statements. The Gama Financial Statements present
---------------------------
fairly, in all material respects, the assets and liabilities (whether
accrued, absolute, contingent or otherwise) of Gama and Acquirer as of
the respective dates thereof, and the sales and earnings of the
Business of Gama during the periods covered thereby, in all material
respects and have been prepared in substantial accordance with
generally accepted accounting principles consistently applied;
(m) Gama/Acquirer Accounts Payable and Liabilities. There are no material
-----------------------------------------------
liabilities, contingent or otherwise, of Gama or Acquirer which are
not disclosed in Schedule "L" hereto or reflected in the Gama
Financial Statements except those incurred in the ordinary course of
business since the date of the said schedule and the Quarterly Gama
Financial Statements, and neither Gama nor Acquirer has guaranteed or
agreed to guarantee any debt, liability or other obligation of any
person, firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of Gama and Acquirer
are described in Schedule "L" hereto;
(n) Gama Accounts Receivable. All the Gama Accounts Receivable result from
------------------------
bona fide business transactions and services actually rendered
without, to the knowledge and belief of Gama, any claim by the obligor
for set-off or counterclaim;
(o) Gama Bank Accounts. All of the Gama Bank Accounts, their location,
--------------------
numbers and the authorized signatories thereto are as set forth in
Schedule "N" hereto;
(p) No Debt to Related Parties. Neither Gama nor Acquirer is now or will
----------------------------
be at Closing, materially indebted to any director or officer or
affiliate of Gama or Acquirer, or any family member thereof, save and
except as disclosed in Schedule "L" hereto;
(q) No Related Party Debt to Gama. No director or officer or affiliate of
------------------------------
Gama is now indebted to or under any financial obligation to Gama on
any account whatsoever, except for advances on account of travel and
other expenses not exceeding $5,000 in total;
(r) No Dividends. No dividends or other distributions on any shares in the
------------
capital of Gama have been made, declared or authorized since the date
of Quarterly Gama Financial Statements;
(s) No Payments. No payments of any kind have been made or authorized
------------
since the date of Quarterly Gama Financial Statements to or on behalf
of officers, directors, shareholders or employees of Gama or under any
management agreements with Gama;
(t) No Pension Plans. There are no pension, profit sharing, group
------------------
insurance or similar plans or other deferred compensation plans
affecting Gama;
(u) No Adverse Events. Since the date of the Quarterly Gama Financial
-------------------
Statements
(i) there has not been any material adverse change in the financial
position or condition of Gama or Acquirer, their liabilities or
the Gama Assets or any damage, loss or other change in
circumstances materially affecting Gama or Acquirer, the Business
of Gama or the Gama Assets or Gama's right to carry on the
Business of Gama, other than changes in the ordinary course of
business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting Gama or Acquirer, the Business of Gama or the Gama
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Gama to any of Gama's officers,
employees or agents or any bonus, payment or arrangement made to
or with any of them,
(iv) the Business of Gama has been and continues to be carried on in
the ordinary course,
(v) Gama has not waived or surrendered any right of material value,
(vi) Gama has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
GAMA - INCOME TAX MATTERS
(v) Tax Returns. All tax returns and reports of Gama required by law to be
-----------
filed have been filed and are true, complete and correct, and any
taxes payable in accordance with any return filed by the Company or in
accordance with any notice of assessment or reassessment issued by any
taxing authority have been so paid;
(w) Current Taxes. Adequate provisions have been made for taxes payable
--------------
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Gama. Gama is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment including
aggressive treatment of income and expenses in filing earlier tax
returns;
GAMA - APPLICABLE LAWS AND LEGAL MATTERS
(x) Licenses. Gama holds all licenses and permits as may be requisite for
--------
carrying on the Business of Gama in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not have
a material adverse effect on the Company Business;
(y) Applicable Laws. Gama has not been charged with or received notice of
----------------
breach of any laws, ordinances, statutes, regulations, by-laws, orders
or decrees to which it is subject or which apply to it the violation
of which would have a material adverse effect on the Business of Gama,
and to their knowledge, neither Gama nor Acquirer is in breach of any
laws, ordinances, statutes, regulations, bylaws, orders or decrees the
contravention of which would result in a material adverse impact on
the Business of Gama;
(z) Pending or Threatened Litigation. There is no material litigation or
----------------------------------
administrative or governmental proceeding or enquiry pending or
threatened against or relating to Gama, the Business of Gama, or any
of the Gama Assets nor does Gama have any knowledge of any deliberate
act or omission of Gama that would form any material basis for any
such action, proceeding or enquiry;
(aa) No Bankruptcy. Gama has not made any voluntary assignment or proposal
--------------
under applicable laws relating to insolvency and bankruptcy and no
bankruptcy petition has been filed or presented against Gama and no
order has been made or a resolution passed for the winding-up,
dissolution or liquidation of Gama;
(bb) Labour Matters. Gama is not party to any collective agreement relating
--------------
to the Business of Gama with any labour union or other association of
employees and no part of the Business of Gama has been certified as a
unit appropriate for collective bargaining or, to the knowledge of
Gama, has made any attempt in that regard;
(cc) Finder's Fees. Gama is not party to any agreement which provides for
--------------
the payment of finder's fees, brokerage fees, commissions or other
fees or amounts which are or may become payable to any third party in
connection with the execution and delivery of this Agreement and the
transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(dd) Authorization and Enforceability. The execution and delivery of this
----------------------------------
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of Gama and Acquirer;
(ee) No Violation or Breach. The execution and performance of this
----------------------
Agreement will not
(i) violate the charter documents of Gama or Acquirer or result in
any breach of, or default under, any loan agreement,
mortgage, deed of trust, or any other agreement to which
Gama or Acquirer is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Gama Material Contracts,
or any right or rights enjoyed by Gama,
(iii) result in any alteration of Gama's obligations under any
agreement to which Gama is party including, without
limitation, the Gama Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third
party upon or against the Gama Assets,
(v) result in the imposition of any tax liability to Gama or Acquirer
relating to the Gama Assets, or
(vi) violate any court order or decree to which Gama or Acquirer is
subject;
THE GAMA ASSETS - OWNERSHIP AND CONDITION
(ff) Business Assets. The Gama Assets comprise all of the property and
----------------
assets of the Business of Gama, and no other person, firm or
corporation owns any assets used by Gama in operating the Business of
Gama, whether under a lease, rental agreement or other arrangement,
other than as disclosed in Schedules "O" or "P" hereto;
(gg) Title. Gama is the legal and beneficial owner of the Gama Assets, free
-----
and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except as
disclosed in Schedules "O" or "P" hereto;
(hh) No Option. No person, firm or corporation has any agreement or option
----------
or a right capable of becoming an agreement for the purchase of any of
the Gama Assets;
(ii) Gama Material Contracts. The Gama Material Contracts listed in
-------------------------
Schedule "P" constitute all of the material contracts of Gama;
(jj) No Default. There has not been any default in any material obligation
-----------
of Gama or any other party to be performed under any of the Gama
Material Contracts, each of which is in good standing and in full
force and effect and unamended, and Gama is not aware of any default
in the obligations of any other party to any of the Gama Material
Contracts;
(kk) No Compensation on Termination. There are no agreements, commitments
--------------------------------
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Gama. Gama is not
obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
GAMA ASSETS - GAMA EQUIPMENT
(ll) Gama Equipment. The Gama Equipment has been maintained in a manner
---------------
consistent with that of a reasonably prudent owner;
GAMA ASSETS - GAMA GOODWILL AND OTHER ASSETS
(mm) Gama Goodwill. Gama carries on the Business of Gama only under the
--------------
name "Gama" and variations thereof and under no other business or
trade names. Gama does not have any knowledge of infringement of any
patent, trademarks, copyright or trade secret;
THE BUSINESS OF GAMA
(nn) Maintenance of Business. Since the date of the Gama Financial
-------------------------
Statements, the Business of Gama has been carried on in the ordinary
course and Gama has not entered into any material agreement or
commitment except in the ordinary course and except as disclosed
herein;
(oo) Subsidiaries. Except for Acquirer, Gama does not own any subsidiaries
------------
and does not otherwise own, directly or indirectly, any shares or
interest in any other corporation, partnership, joint venture or firm;
and
GAMA - ACQUISITION SHARES
(pp) Acquisition Shares. The Acquisition Shares when delivered to the
-------------------
Company Shareholders shall be validly issued and outstanding as fully
paid and non-assessable shares and the Acquisition Shares shall be
transferable upon the books of Gama, in all cases subject to the
provisions and restrictions of all applicable securities laws.
NON-MERGER AND SURVIVAL
5.2 The representations and warranties of Gama, the Gama Majority
Shareholder, and Acquirer contained herein will be true at and as of Closing in
all material respects as though such representations and warranties were made as
of such time. Notwithstanding the completion of the transactions contemplated
hereby, the waiver of any condition contained herein (unless such waiver
expressly releases a party from any such representation or warranty) or any
investigation made by the Company or the Company Shareholders, the
representations and warranties of Gama, Acquirer, and the Gama Majority
Shareholder shall survive the Closing.
INDEMNITY
5.3 Gama, the Gama Majority Shareholder and Acquirer, jointly and severally,
agree to indemnify and save harmless the Company and the Company Shareholders
from and against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right of
Gama to defend any such claim), resulting from the breach by any of them of any
representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by Gama or Acquirer to the Company or the Company
Shareholders hereunder.
ARTICLE 6
COVENANTS OF GAMA AND ACQUIRER
COVENANTS
6.1 Gama covenants and agrees with the Company that it will:
(a) Conduct of Business. Until the Closing, conduct its business
---------------------
diligently and in the ordinary course consistent with the manner in
which it generally has been operated up to the date of execution of
this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
--------------------------
preserve its business and assets;
(c) Access. Until the Closing, give the Company, the Company Shareholders,
------
and their representatives full access to all of the properties, books,
contracts, commitments and records of Gama, and furnish to the
Company, the Company Shareholders, and their representatives all such
information as they may reasonably request; and
(d) Procure Consents. Until the Closing, take all reasonable steps
-----------------
required to obtain, prior to Closing, any and all third party consents
required to permit the Merger and to preserve and maintain the Gama
Assets notwithstanding the change in control of the Company arising
from the Merger.
AUTHORIZATION
6.2 Gama agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Gama to release any and all information in their
possession respecting Gama to the Company. Gama shall promptly execute and
deliver to the Company any and all consents to the release of information and
specific authorizations which the Company reasonably require to gain access to
any and all such information.
SURVIVAL
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of the Company and the Company Shareholders.
ARTICLE 7
EMPLOYMENT AGREEMENTS
At the Closing, the Company shall enter into the Employment Agreements with
Xxxx X. Xxxxxxxxxx and Xxxxxx X. Xxxxxxxxxx pursuant to which they will provide
services to the Company. The Employment Agreements shall be substantially in the
form attached hereto as Schedule "Q".
ARTICLE 8
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT IN FAVOUR OF GAMA
8.1 Gama's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(g) all documents or copies of documents required to be executed and
delivered to Gama hereunder will have been so executed and delivered;
(h) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Company at or prior to the Closing
will have been complied with or performed;
(i) title to the Company Shares and Company Assets will be free and clear
of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as disclosed
herein;
(j) the Certificate of Merger shall be executed by the Company;
(k) subject to Article 9 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of the Company, its liabilities or the Company
Assets or any damage, loss or other change in circumstances
materially and adversely affecting the Business of the
Company or the Company Assets or the Company's right to
carry on the Business of the Company, other than changes in
the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to the Company or the
Business of the Company (whether or not covered by
insurance) materially and adversely affecting the Company,
the Business of the Company or the Company Assets;
(l) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription Agreements
for subscriptions pursuant to the Private Placement, in the aggregate,
of not less than $2,000,000, shall have in its trust account not less
than $1,000,000 and an assignment of the Promissory Note to Gama;
(m) Gama's issued and outstanding common share capital shall be reduced to
2,011,137 Gama Shares by the return to treasury of 6,400,000 of the
Gama Control Shares and Gama shall have received a release in form
satisfactory to the Company from Xxxxxx Xxxxxx in that regard;
(n) the Company shall have delivered to Gama and the Gama Majority
Shareholder the Company Financial Statements and the Company Financial
Statements shall conform to the Draft Company Financial Statements in
all material respects; and
(o) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
WAIVER BY GAMA
8.2 The conditions precedent set out in the preceding section are inserted
for the exclusive benefit of Gama and any such condition may be waived in whole
or in part by Gama at or prior to Closing by delivering to the Company a written
waiver to that effect signed by Gama. In the event that the conditions precedent
set out in the preceding section are not satisfied on or before the Closing Gama
shall be released from all obligations under this Agreement.
CONDITIONS PRECEDENT IN FAVOUR OF THE COMPANY AND THE COMPANY SHAREHOLDERS
8.3 The obligation of the Company and the Company Shareholders to carry out
the transactions contemplated hereby is subject to the fulfillment of each of
the following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to the Company hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Gama at or prior to the Closing will
have been complied with or performed;
(c) Gama will have delivered the Acquisition Shares to the Company
Shareholders at the Closing in accordance with Schedule "S" attached
hereto and the Acquisition Shares will be registered on the books of
Gama in the name of the Company Shareholders at the Effective Time;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) the Certificate of Merger shall be executed by the Acquirer in form
acceptable for filing with the Nevada Secretary of State.;
(f) subject to Article 9 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of Gama, its liabilities or Gama Assets or any
damage, loss or other change in circumstances materially and
adversely affecting Gama, the Business of Gama or Gama
Assets or Gama's right to carry on the Business of Gama,
other than changes in the ordinary course of business, none
of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to Gama or the Business
of Gama (whether or not covered by insurance) materially and
adversely affecting Gama, the Business of Gama or Gama
Assets;
(g) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription Agreements
for subscriptions pursuant to the Private Placement, in the aggregate,
of not less than $2,000,000, shall have in its trust account not less
than $1,000,000 and an assignment of the Promissory Note to Gama;
(h) Gama's issued and outstanding common share capital shall be reduced to
2,011,137 Gama Shares by the return to treasury of 6,400,000 of the
Gama Control Shares and Gama shall have received a release in form
satisfactory to the Company from Xxxxxx Xxxxxx in that regard; and
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
WAIVER BY COMPANY AND THE COMPANY SHAREHOLDERS
8.4 The conditions precedent set out in the preceding section are inserted
for the exclusive benefit of the Company and the Company Shareholders and any
such condition may be waived in whole or in part by the Company or the Company
Shareholders at or prior to the Closing by delivering to Gama a written waiver
to that effect signed by the Company and the Company Shareholders. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing the Company and the Company Shareholders shall be
released from all obligations under this Agreement.
NATURE OF CONDITIONS PRECEDENT
8.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favour of the other party or parties set forth in
this Article.
TERMINATION
8.6 Notwithstanding any provision herein to the contrary, if the Closing
does not occur on or before October 5, 2001, this Agreement will be at an end
and will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
CONFIDENTIALITY
8.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from the Company and Gama
and the contents thereof confidential and not utilize nor reveal or release
same, provided, however, that Gama will be required to issue one or more news
releases and file a Current Report on Form 8-K with the Securities and Exchange
Commission respecting the proposed Merger contemplated hereby together with such
other documents as are required to maintain the currency of Gama's filings with
the Securities and Exchange Commission.
8.8 Gama and the Gama Majority Shareholder shall execute, contemporaneously
with this Agreement, the Confidentiality Agreement in substantially the same
form as attached hereto as Schedule "T", in connection with all financial,
technical and business information and documents of the Company.
ARTICLE 9
RISK
MATERIAL CHANGE IN THE BUSINESS OF THE COMPANY
9.1 If any material loss or damage to the Business of the Company occurs
prior to Closing and such loss or damage, in Gama's reasonable opinion, cannot
be substantially repaired or replaced within sixty (60) days, Gama shall, within
seven (7) days following any such loss or damage, by notice in writing to the
Company, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to Gama's obligations to carry out the
transactions contemplated hereby, be vested in the Company or
otherwise adequately secured to the satisfaction of Gama on or before
the Closing Date.
MATERIAL CHANGE IN THE BUSINESS OF GAMA
9.2 If any material loss or damage to the Business of Gama occurs prior to
Closing and such loss or damage, in the Company's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, the Company shall,
within seven (7) days following any such loss or damage, by notice in writing to
Gama, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to the Company's obligations to carry out the
transactions contemplated hereby, be vested in Gama or otherwise
adequately secured to the satisfaction of the Company on or before the
Closing Date.
ARTICLE 10
CLOSING
CLOSING
10.1 The Merger and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing procedure
set out in this Article.
DOCUMENTS TO BE DELIVERED BY THE COMPANY
10.2 On or before the Closing, the Company and the Company Shareholders will
deliver or cause to be delivered to Gama:
(a) the original or certified copies of the charter documents of the
Company and all corporate records documents and instruments of the
Company, the corporate seals of the Company and all books and accounts
of the Company;
(b) certificates representing the Company Shares, duly endorsed in blank
in accordance with Schedule "S" attached hereto;
(c) all reasonable consents or approvals required to be obtained by the
Company and the Company for the purposes of completing the Merger and
preserving and maintaining the interests of the Company under any and
all Company Material Contracts and in relation to the Company Assets;
(d) certified copies of such resolutions of the shareholder and director
of the Company as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(e) an acknowledgement from the Company and the Company Shareholders of
the satisfaction of the conditions precedent set forth in section 8.3
hereof;
(f) the Employment Agreements, duly executed by the Company, Xxxx X.
Xxxxxxxxxx and Xxxxxx X. Xxxxxxxxxx;
(g) the Certificate of Merger, duly executed by the Company;
(h) the Company Financial Statements; and
(i) such other documents as Gama may reasonably require to give effect to
the terms and intention of this Agreement.
DOCUMENTS TO BE DELIVERED BY GAMA
10.3 On or before the Closing, Gama shall deliver or cause to be delivered
to the Company and the Company Shareholders:
(a) share certificates representing the Acquisition Shares duly registered
in the names of the Company Shareholders required in accordance with
Schedule "S" hereto;
(b) certified copies of such resolutions of the directors of Gama as are
required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of Gama dated as of
the Closing Date appointing the nominees of the Company Shareholders
as officers of the Company;
(d) an undated resolution of the directors of Gama appointing the nominees
of the Company Shareholders listed below in Article 11 to the board of
directors of Gama;
(e) an undated resignation of Xxxxxx Xxxxxx as director of Gama;
(f) an acknowledgement from Gama of the satisfaction of the conditions
precedent set forth in section 8.1 hereof;
(g) copies of the Subscription Agreements duly executed by the subscribers
to the Private Placement together with evidence that the Escrow Agent
(as that term is defined in the Subscription Agreements) has received
into its trust account not less than $1,000,000 pursuant to the
Subscription Agreements and an assignment of the Promissory Note;
(h) the Certificate of Merger, duly executed by the Company; and
(i) such other documents as the Company may reasonably require to give
effect to the terms and intention of this Agreement.
ARTICLE 11
POST-CLOSING MATTERS
Forthwith after the Closing, Gama, the Company and the Company Shareholders
agree to use all their best efforts to:
(a) file the Certificate of Merger with Secretary of State of the State of
Nevada;
(b) Gama shall file with the Securities and Exchange Commission on Form
14f1 disclosing the change in control of Gama and shall, 10 days after
such filing, date the resolutions appointing Xxxx X. Xxxxxxxxxx,
Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X.
Sheriff and Xxxxx Xxxxxxxxxx to the board of directors of Gama, and
forthwith date and accept the resignation of Xxxxxx Xxxxxx as director
and officer of Gama;
(c) file a Form D with the Securities and Exchange Commission in respect
of the Private Placement (if required);
(d) file Form 8-K with the Securities and Exchange Commission disclosing
the terms of this Agreement;
(e) take such steps as are required to request the resignation of N.I.
Cameron, Chartered Accountants, as auditors of the Company and to file
a Form 8-K in respect thereof with the Securities and Exchange
Commission;
(f) file reports on Forms 13D and 3 with the Securities and Exchange
Commission disclosing the acquisition of the Acquisition Shares by the
Company Shareholders;
(g) take such steps as are necessary to forthwith cause the Gama Common
Shares to be forward split on the basis of three new shares for each
one old share and to change the name of Gama to "Bluebook
International" or such similar name as may be acceptable to the board
of directors of Gama.
ARTICLE 12
GENERAL PROVISIONS
ARBITRATION
12.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of Los Angeles, California.
NOTICE
12.2 Any notice required or permitted to be given by any party will be
deemed to be given when in writing and delivered to the address for notice of
the intended recipient by personal delivery, prepaid single certified or
registered mail, or telecopier. Any notice delivered by mail shall be deemed to
have been received on the fourth business day after and excluding the date of
mailing, except in the event of a disruption in regular postal service in which
event such notice shall be deemed to be delivered on the actual date of receipt.
Any notice delivered personally or by telecopier shall be deemed to have been
received on the actual date of delivery.
ADDRESSES FOR SERVICE
12.3 The address for service of notice of each of the parties hereto is as
follows:
(a) Gama or the Acquirer:
Gama Telecom Inc.
Xxxxx 000, 0000 Xxxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Telecopier: (000) 000-0000
(b) the Company or the Company Shareholders
The Bluebook International, Inc.
00000 Xxxxxxx Xxxx 000-X
Xxxx Xxxxxx, XX 00000
Telecopier: (000) 000-0000
CHANGE OF ADDRESS
12.4 Any party may, by notice to the other parties change its address for
notice to some other address in North America and will so change its address for
notice whenever the existing address or notice ceases to be adequate for
delivery by hand. A post office box may not be used as an address for service.
FURTHER ASSURANCES
12.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
TIME OF THE ESSENCE
12.6 Time is expressly declared to be the essence of this Agreement.
ENTIRE AGREEMENT
12.7 The provisions contained herein constitute the entire agreement among
the Company, the Company Shareholders and Gama respecting the subject matter
hereof and supersede all previous communications, representations and
agreements, whether verbal or written, among the Company, the Company
Shareholders and Gama with respect to the subject matter hereof.
ENUREMENT
12.8 This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
ASSIGNMENT
12.9 This Agreement is not assignable without the prior written consent of
the parties hereto.
COUNTERPARTS
12.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
APPLICABLE LAW
12.11 This Agreement is subject to the laws of the State of Delaware.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
GAMA COMPUTER CORPORATION
_________________________________ By: ________________________________
Witness Xxxxxx Xxxxxx, President
_________________________________
Name
_________________________________
Address
_________________________________
BLUEBOOK ACQUISITIONS CORP.
_________________________________ By: ________________________________
Witness Xxxxxx Xxxxxx, President
_________________________________
Name
_________________________________
Address
_________________________________
THE BLUEBOOK INTERNATIONAL, INC.
_________________________________ By: ________________________________
Witness Xxxx X. Xxxxxxxxxx, President
_________________________________
Name
_________________________________
Address
_________________________________
_________________________________ ___________________________________
Witness XXXX X. XXXXXXXXXX
_________________________________
Name
_________________________________
Address
_________________________________
_________________________________ ___________________________________
Witness XXXXXX X. XXXXXXXXXX
_________________________________
Name
_________________________________
Address
_________________________________
_________________________________ ___________________________________
Witness XXXXXX X. XXXXXXXXXX
_________________________________
Name
_________________________________
Address
_________________________________
_________________________________ ___________________________________
Witness XXXXXXX X. XXXXXXXXXX
_________________________________
Name
_________________________________
Address
_________________________________ ___________________________________
Witness XXXXXX XXXXXX
_________________________________
Name
_________________________________
Address
This is Page 32 to the Agreement and Plan of Merger dated September 24, 2001
among Gama Computer Corporation, Bluebook Acquisitions Corp., The Bluebook
International, Inc., Xxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxxx X.
Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxxxx and Xxxxxx Xxxxxx.
