[DESCRIPTION] Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), made and entered into
as of the 31st day of August, 1999, by and between NYB FOODS, INC., a Colorado
corporation ("NYB"), WRAPSTERS, INC., a Colorado corporation ("Wrapsters")
and NYB ACQUISITIONS CORP., a Colorado corporation ("Acquisitions").
WITNESSETH:
WHEREAS Acquisitions will be a corporation duly organized and existing under
the laws of the State of Colorado, to be incorporated October 8, 1999, and
will be a wholly-owned subsidiary of Wrapsters, a corporation duly organized
under the laws of the State of Colorado, having been incorporated on February
23, 1996 under the name of HAI Enterprises, Inc., and having changed its name
to Wrapsters, Inc., on February 20, 1998, and NYB is a corporation organized
and existing under the law of the State of Colorado, having been incorporated
on April 21, 1995; and
WHEREAS, the respective Boards of Directors of NYB, Wrapsters and Acquisitions
deem it to be advisable and in the best interests of NYB, Wrapsters and
Acquisitions and their respective shareholders that NYB merge with and into
Acquisitions pursuant to this Agreement and the applicable provisions of the
law of the State of Colorado, such transaction being herein called the
Merger; and
WHEREAS, the Boards of Directors of NYB, Wrapsters and Acquisitions,
respectively, have or will have approved and adopted this Agreement as a plan
of reorganization within the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code, as amended;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements,
warranties, provisions, and covenants herein contained, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1. DELIVERY AND FILING OF ARTICLES OF MERGER; EFFECTIVE TIME OF MERGER.
Acquisitions and NYB will cause Articles of Merger to be signed and delivered
to the Secretary of State of the State of Colorado, as provided in Section
0-000-000, Colorado Revised Statutes on or before the third day following the
day on which the last of the shareholder approvals shall have been obtained,
or such earlier or later date as may be mutually agreed to by NYB and
Acquisitions. The time of the delivery to the Secretary of State referred to
in the preceding sentence is herein referred to as the Time of Filing. The
effective time of the Merger shall be the close of business on the day the
Articles of Merger shall have been filed by the Secretary of State of the
State of Colorado. At the effective time of the Merger, the separate
existence of NYB shall cease and NYB shall be merged with and into Acquisitions.
Acquisitions and NYB are hereinafter sometimes referred to as the Constituent
Corporations and Acquisitions, the party to the Merger surviving the Merger
is hereinafter sometimes referred to as the Surviving Corporation.
2. CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING
CORPORATION.
(A) At the effective time of the Merger, the Certificate of Incorporation
of Acquisitions shall become the Certificate of Incorporation of the Surviving
Corporation. Subsequent to the effective time of the Merger, such Certificate
of Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until changed as provided by law.
(B) At the effective time of the Merger, the Bylaws of Acquisitions shall
become the Bylaws of the Surviving Corporation. Subsequent to the effective
time of the Merger, such Bylaws shall be the Bylaws of the Surviving
Corporation until they shall thereafter be duly amended.
(C) The names and addresses of the persons who shall constitute the Board
of Directors of the Surviving Corporation at the effective time of the Merger
are as follows:
Xxxxxx Xxxxxx 000 X. Xxxxxxxx Xxx., #000
Xxxx, XX 00000
Xxxxxxx Xxxxxx 000 X. Xxxxxxxx Xxx., #000
Xxxx, XX 00000
unless, prior to the effective time of the Merger, any one or more of the
persons named above shall die or refuse or become unable to serve, in which
event the remaining persons named above shall be the directors of the
Surviving Corporation at the effective time of the Merger, and any vacancy
occurring by reason of death, refusal or inability to serve shall be filled
after the effective time of the Merger as provided in the Bylaws of the
Surviving Corporation. The Directors of the Surviving Corporation shall hold
office subject to the provisions of the law of the State of Colorado and of
the Articles of Incorporation and Bylaws of the Surviving Corporation.
3. CONVERSION AND EXCHANGE OF STOCK. The manner of converting the shares of
common stock, no par value per share, of Acquisitions ("Acquisitions Common
Stock") issued and outstanding immediately prior to the effective time of the
Merger into shares of common stock, no par value per share, of NYB ("NYB
Common Stock") and the manner of converting the shares of NYB Common Stock
issued and outstanding immediately prior to the effective time of the Merger
into the shares of common stock, no par value per share, of Wrapsters,
("Wrapsters Common Stock"), shall be as follows:
(A) At the effective time of the Merger:
(1) Each share of NYB Common Stock issued and outstanding immediately
prior to the effective time of the Merger (a total of 4,900,000 shares of NYB
Common Stock) shall, by virtue of the Merger and without any action on the part
of the holder thereof, automatically be converted into approximately 1.53 fully
paid and non-assessable shares of Wrapsters Common Stock (a total of 7,500,000
shares of Wrapsters Common Stock) and $500,000.00 as follows: (i) Xxxxxx Xxxxxx
shall receive 5,188,776 shares of Wrapsters Common Stock and $345,900.00; (ii)
X. Xxxxxxx Xxxx shall receive 1,244,490 shares of Wrapsters Common Stock and
$81,600.00; (iii) Xxxx X. Xxxxxx shall receive 765,306 shares of Wrapsters
Common Stock and $51,000.00; (iv) Xxxx Xx XxXxxx shall receive 306,122 shares
of Wrapsters Common Stock and $20,500.00; and (v) Xxxx Xxxxx shall receive
15,306 shares of Wrapsters Common Stock and $1,000.00. Each share of NYB
Common Stock held in the treasury of NYB immediately prior to the effective
time of the Merger shall not be converted into Wrapsters Common Stock but
shall automatically be canceled at the effective time of the Merger. The
exchange ratio of approximately 1.53 shares of Wrapsters Common Stock for each
share of NYB Common Stock outstanding immediately prior to the effective time
of the Merger, as set forth in the first sentence of this Section 3(a)(1),
shall be subject to adjustment as follows: In the event that, subsequent to
the date of this Agreement but prior to the effective time of the Merger, the
outstanding shares of Wrapsters Common Stock shall have been, without
consideration, increased, decreased, changed into, or exchanged for a
different number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other like changes in Wrapsters' capitalization, then an
appropriate and proportionate adjustment shall be made in the manner and kind
of shares or securities to be thereafter delivered to the holders of NYB
Common Stock pursuant to the Merger, it being understood that in no event
shall other than Wrapsters Common Stock, as then constituted, be issued in
exchange for NYB Common Stock pursuant to the Merger.
(2) Each share of Acquisitions Common Stock issued and outstanding
immediately prior to the effective time of the Merger shall, by virtue of the
Merger and without any action on the part of the holder thereof, automatically
be converted into one fully paid and non-assessable share of NYB Common Stock.
Each share of Acquisitions Common Stock held in the treasury of Acquisitions
immediately prior to the effective time of the Merger shall automatically be
canceled.
(B) After the effective time of the Merger:
(1) Each holder of an outstanding certificate or certificates
theretofore representing shares of NYB Common Stock (other than shares issued
pursuant to Section 3(a)(2) of this Article I) shall be entitled, upon
surrender of such certificate or certificates to Corporate Stock Transfer, or
such other agent or agents as may be appointed by the Surviving Corporation
(the "Transfer Agent"), to receive therefor a certificate or certificates
representing the number of full shares of Wrapsters Common Stock into which
the shares of NYB Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted as aforesaid. On or
before the fifth business day following the effective time of the Merger, the
Transfer Agent will send a notice and a transmittal form to each holder of an
outstanding certificate or certificates, which immediately prior to the
effective time of the Merger represented shares of NYB Common Stock, advising
such stockholders of the terms of the conversion effected by the Merger, and
the procedure for surrendering to the Transfer Agent (which may involve the
appointment of one or more forwarding agents for stockholders) such
certificate or certificates for exchange into one or more certificates
representing the number of full shares of Wrapsters Common Stock which such
stockholder is entitled to receive pursuant to the terms of this Agreement.
Until so surrendered, each such outstanding certificate which prior to the
effective time of the Merger represented shares of NYB Common Stock shall be
deemed for all corporate purposes (subject to the further provisions of this
Section 3(b)(1) to evidence ownership of the number of shares of Wrapsters
Common Stock into which such shares of NYB Common Stock shall have been so
converted. After the effective time of the Merger there shall be no further
registry of transfers on the records of NYB of shares of NYB Common Stock
outstanding immediately prior to the effective time of the Merger, and, if
certificates representing such shares are presented to the Surviving
Corporation they shall be canceled and exchanged for certificates
representing shares of Wrapsters Common Stock as herein provided. No dividends
or distributions will be paid to persons entitled to receive certificates for
shares of Wrapsters Common Stock pursuant to Section 3(a)(1) of this Article
I until such persons shall have surrendered their certificates which prior to
the effective time of the Merger represented NYB Common Stock, provided,
however, that when certificates which prior to the effective time of the
Merger represented NYB Common Stock shall have been so surrendered, there shall
be paid to the holders thereof; but without interest thereon, all dividends
and other distributions payable subsequent to the effective time of the Merger
on the shares of Wrapsters Common Stock into which such certificates shall have
been so converted.
(2) Each holder of an outstanding certificate or certificates
theretofore representing shares of Acquisitions Common Stock shall be entitled,
upon surrender of such certificate or certificates to NYB to receive therefor
a certificate or certificates representing the number of full shares of NYB
Common Stock into which the shares of Acquisitions Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted as aforesaid. Until so surrendered, each such outstanding certificate
which prior to the effective time of the Merger represented shares of
Acquisitions Common Stock shall be deemed for all corporate purposes to
evidence ownership of the number of shares of NYB Common Stock into which such
shares of Acquisitions Common Stock shall have been so converted.
(3) If any certificate for Wrapsters, Common Stock is to be issued in
a name other than that in which the certificate for NYB Common Stock
surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Transfer Agent any transfer or other taxes required
by reason of the issuance of such Wrapsters Common Stock in any name other than
that of the registered holder of the certificate surrendered, or establish to
the satisfaction of the Transfer Agent that such tax has been paid or is not
applicable.
(4) Neither certificates nor scrip for fractional shares of Wrapsters
Common Stock will be issued.
4. CERTAIN INFORMATION WITH RESPECT TO CAPITAL STOCK OF NYB AND ACQUISITIONS.
The respective designations and numbers of outstanding shares and voting rights
of each class of outstanding capital stock of NYB and Acquisitions are as
follows:
(A) As of the date of this Agreement, the authorized capital stock of NYB
consisted of 20,000,000 shares, no par value per share, of NYB Common Stock, of
which 4,900,000 were issued and outstanding. No shares of such capital stock
are held in the treasury of NYB. The number of outstanding shares of capital
stock of NYB may not be changed prior to the effective time of the Merger. The
holders of NYB Common Stock are entitled to vote as one class upon this
Agreement.
(B) As of the date of this Agreement, the authorized capital stock of
Acquisitions consisted of 10,000,000 shares, no par value per share, of
Acquisitions Common Stock, 100 shares of which were issued and outstanding.
The holder of Acquisitions Common Stock is entitled to vote upon this
Agreement.
5. EFFECT OF MERGER. Except as herein specifically set forth, the identity,
existence, purposes, powers, objects, franchises, privileges, rights and
immunities of Acquisitions shall continue unaffected and unimpaired by the
Merger and the corporate franchises, existence and rights of NYB shall be
merged into Acquisitions and Acquisitions shall, as the Surviving Corporation,
be fully vested therewith. At the effective time of the Merger, the separate
existence of NYB shall cease, and in accordance with the terms of this
Agreement the Surviving Corporation shall possess all the rights, privileges,
powers, and franchises, as well of a public as of a private nature, and be
subject to all the restrictions, disabilities, and duties, of each of the
Constituent Corporations, and all and singular, the rights, powers, and
franchises and all property, real, personal and mixed, and all debts due on
whatever account, including stock subscriptions, and all other things in action
and all and every other interest of or belonging to or due to each of the
Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and all
property, rights, privileges, powers, and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the respective Constituent Corporations; and the
title to any real estate, or interest therein, whether by deed or otherwise,
under the laws of Colorado vested in either of said corporations, shall not
revert or be in any way impaired by reason of the Merger. The Surviving
Corporation shall thenceforth beresponsible and liable for all the liabilities
and obligations of the Constituent Corporations, and any claim existing or
action or proceeding pending by or against either of said Constituent
Corporations may be prosecutedas if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger, and all debts, liabilities, and
duties of each of said Constituent Corporations shall attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said
debts, liabilities, and duties had been incurred or contracted by it.
ARTICLE II
REPRESENTATIONS OF NYB
1. AS TO NYB. NYB makes the following representations and warranties to
Wrapsters, which representations and warranties are true and correct, based on
all facts that NYB's officers' and directors' know or should know in the
exercise of reasonable diligence:
(A) GOOD STANDING. NYB Foods, Inc., is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado;
and NYB has the power and authority to carry on its business as the same is
presently conducted and to own and lease its properties where such properties
are now owned and leased.
(B) CAPITAL STRUCTURE. NYB has 20,000,000 shares of no par value voting
common stock authorized,-of which 4,900,000 shares are issued and outstanding.
(C) FINANCIAL STATEMENTS. Attached hereto as Exhibit "A" are the latest
financial statements of NYB Foods, Inc. Said financial statements are true and
accurate, to the best of NYB's knowledge and belief as of the date of said
financial statements.
(D) LITIGATION. To NYB's knowledge, there are no investigations, actions,
suits, or proceedings pending or threatened against or affecting NYB in any
court or before any governmental agency or instrumentality that would or could
affect the validity or enforceability of this Agreement; nor to iVYB's knowledge
is NYB now, and as of the date of closing, it will not be in default with
respect to any order, writ, injunction, judgment or decree of any court or
federal, state or municipal governmental department, commission, board, bureau
or instrumentality that would or could affect the validity or enforceability of
this Agreement.
(E) COMPLIANCE WITH OTHER DOCUMENTS AND INSTRUMENTS. NYB warrants that it
is in substantial compliance with the requirements and provisions of all
instruments and documents to which it is a party or to which it may be subject.
(F) TAXES. NYB warrants that it has filed or has made provisions for the
filing of all federal and state tax returns which are required to be filed; has
paid all taxes to be paid. As of the date hereof no tax liabilities have been
assessed or proposed which remain unpaid.
(G) CONTRACTS. All contracts or agreements, to which NYB is a party which
materially affect the Business and/or operations of NYB, and NYB has in all
respects substantially performed its obligations required of it to date under
all such contracts and agreements.
(H) COMPLIANCE WITH LAWS. NYB warrants that it has materially complied
with all laws, regulations and orders of governmental authorities in the
conduct of its business. NYB has not received any notice (which remains
outstanding) which asserts noncompliance in any respect with applicable laws,
rules and/or regulations of the United States of America or of any state,
county, municipality or other political subdivision having jurisdiction over it,
or any agency thereof. NYB warrants and represents that, to the best of its
knowledge and belief, there are no circumstances relative to legal compliance,
franchise compliance, lease compliance or other circumstances that would
prohibit the continued operations of NYB's restaurants.
(I) NO BREACH. The execution and delivery of this Agreement and the
performance by NYB of its obligations hereunder will not result in any material
breach or violation of or material default under any material agreement,
indenture, lease, license, mortgage, instrument, or understanding, nor result
in any violation of any law, rile, regulation, statute, order or decree of any
kind to which NYB or any of its affiliates is a party or by which any of them
or any of their property is or may be or become subject.
(J) FULL AND FAIR DISCLOSURE. NYB hereby represents and warrants that, in
connection with investigation and due diligence by Wrapsters, it has disclosed
all material facts pertaining to NYB to Wrapsters and its agents, it has made
no misstatements of material facts, and has not omitted to state any material
facts required to make any other statement not misleading.
2. NYB'S COVENANTS. NYB hereby covenants that, prior to closing, it will not
cause or permit any of the following without the written consent of Wrapsters:
(A) CHANGE OF BUSINESS. Make any substantial alteration in its business or
method of operation or take any action which will or may materially adversely
affect the value of any of its assets. NYB shall maintain the original
appearance of the Business until the date of closing.
(B) INDEBTEDNESS. Incur any indebtedness other than in its name and in the
ordinary course of business. Indebtedness for attorney fees and costs associated
with this transaction shall be allowed without the prior written consent of
Wrapsters and shall be paid at the time of closing.
(C) CONTRACTS. Enter into any material contract or substantially amend or
alter any existing contract.
(D) TRANSFER OF PROPERTIES. Except in the ordinary course of business, sell
or transfer any of the NYB's properties.
(E) PAYMENT OF EXPENSES. Fail to pay any employee, suppliers, creditors,
including its Lessor, and others doing business with NYB.
(F) OPERATION. Subject to the foregoing and to the provisions for
apportionment as herein provided, NYB shall operate the business in a normal
and prudent manner and take no actions that shall alter the character of NYBs'
Business.
ARTICLE III
REPRESENTATIONS OF WRAPSTERS
1. AS TO WRAPSTERS. Wrapsters makes the following representations and
warrantiesn to NYB, which representations and warranties are true and correct,
based on all facts that Wrapsters' officers' and directors' know or should know
in the exercise of reasonable diligence:
(A) GOOD STANDING. Wrapsters is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado; and
Wrapsters has the power and authority to carry on its business as the same is
presently conducted and to own and lease its properties where such properties
are now owned and leased.
(B) CAPITAL STRUCTURE. Wrapsters has 25,000,000 shares of no par value
voting common stock authorized, of which 8,875,680 shares were issued and
outstanding as of the date of this Agreement; and Wrapsters has 10,000,000
shares of no par value preferred stock authorized, of which 113,500 shares of
Series B Preferred are issued and outstanding. In addition, Wrapsters has
outstanding 45,750 warrants to purchase an equal number of shares of common
stock, exercisable at $.10 per warrant, and options to purchase shares of
Wrapsters' common stock at $1.00 share, issued to employees pursuant a 1996
compensation plan.
(C) PUBLIC TRADING. Wrapsters is a publicly-held and publicly-traded
corporation with approximately ten (10) securities broker-dealers currently
acting as market makers in Wrapsters' publicly-traded common stock.
(D) AUTHORIZATION. Wrapsters has full power and authority to enter into
this Agreement and to perform same. This Agreement, upon execution and delivery,
will constitute the binding and valid obligations of Wrapsters, enforceable
according to its terms, subject only to requirements of Colorado statute, if
any, for shareholder approval.
(E) NO CONSENTS. Wrapsters need not obtain any consent, approval,
authorization or any other action of any governmental authority, or of any third
party in order to execute and perform this Agreement. Wrapsters shall provide
the appropriate governmental entities with all required information to properly
apprise such governmental authorities of the proposed transfer and the names of
all proposed officers and directors of Wrapsters.
(F) FINANCIAL STATEMENTS. Attached hereto as Exhibit "B" are the latest
financial statements of Wrapsters. Said financial statements are true and
accurate, to the best of Wrapsters' knowledge and belief as of the date of said
financial statements. The financial statements, records and books of accounting
of Wrapsters are auditable for purposes of registration of common stock with the
Securities and Exchange Commission.
(G) LITIGATION. To Wrapsters' knowledge, there are no investigations,
actions, suits, or proceedings pending or threatened against or affecting
Wrapsters in any court or before any governmental agency or instrumentality
that would or could affect the validity or enforceability of this Agreement;
nor to Wrapsters' knowledge is Wrapsters now, and as of the date of closing,
it will not be in default with respect to any order, writ, injunction, judgment
or decree of any court or federal, state or municipal governmental department,
commission, board, bureau or instrumentality that would or could affect the
validity or enforceability of this Agreement, other than the following:
(1) An individual named Xxxx sued Wrapsters in Cincinnati, Ohio,
alleging breach of contract and fraud and requesting up to $100,000 in damages;
(2) Litigation concerning default of real estate leases at Xxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx, has been commenced seeking eviction of
Wrapsters and possibly monetary damages; and the two Wrapsters locations in the
Atlanta, Georgia, area will be closed in the near future, which may lead to
litigation.
(H) TAXES. Wrapsters warrants that it has filed or has made provisions for
the filing of all federal and state tax returns which are required to be filed;
has paid all taxes to be paid. As of the date hereof, no tax liabilities have
been assessed or proposed which remain unpaid.
(I) CONTRACTS. All contracts or agreements, to which Wrapsters is a party
which materially affect the Business and/or operations of Wrapsters, are legal,
valid and binding, and Wrapsters has in all respects substantially performed its
obligations required of it to date under all such contracts and agreements.
(J) COMPLIANCE WITH LAWS. Wrapsters warrants that it has materially
complied with all laws, regulations and orders of governmental authorities in
the conduct of its business. Wrapsters has not received any notice (which
remains outstanding) which asserts noncompliance in any respect with applicable
laws, rules and/or regulations of the United States of America or of any state,
county municipality or other political subdivision having jurisdiction over it,
or any agency thereof. W rapsters warrants and represents that, to the best of
its knowledge and belief; there are no circumstances relative to legal
compliance, franchise compliance, lease compliance or other circumstances that
would prohibit the continued operations of Wrapsters' restaurants.
(K) NO BREACH. The execution and delivery of this Agreement and the
performance by Wrapsters of its obligations hereunder will not result in any
material breach or violation of or material default under any material
agreement, indenture, lease, license, mortgage, instrument, or understanding,
nor result in any violation of any law, rule, regulation, statute, order or
decree of any kind to which Wrapsters or any of its affiliates is a party or by
which any of them or any of their property is or may be or become subject.
(L) FULL AND FAIR DISCLOSURE. Wrapsters hereby represents and warrants
that, in connection with investigation and due diligence by NYB, it has
disclosed all material facts pertaining to Wrapsters to NYB and its agents, it
has made no misstatements of material facts, and have not omitted to state any
material facts required to make any other statement not misleading.
2. REPRESENTATIONS AND WARRANTIES OF WRAPSTERS. Wrapsters represents and
warrants as follows:
(A) SHARES. The Wrapsters Shares to be issued pursuant to this Agreement
will be validly issued, fully paid for and nonassessable.
(B) LIENS. The Wrapsters Shares to be issued pursuant to this Agreement are
not and shall not be or become subject to any lien, encumbrance, security
interest or financing statement whatsoever.
(C) CHANGE BUSINESS. Other than the imminent closing of the two remaining
Wrapsters locations in the Atlanta, Georgia, area, Wrapsters will not make any
substantial alteration in its business or method of operation or take any action
which will or may materially adversely affect the value of any of its assets.
Wrapsters shall maintain the original appearance of its business until the date
of closing.
(D) INDEBTEDNESS. Incur any indebtedness other than in its name and in the
ordinary course of business. Indebtedness for attorney fees and costs associated
with this transaction shall be allowed without the prior written consent of NYB
and shall be paid at the time of closing.
(E) CONTRACTS. Enter into any material contract or substantially amend or
alter any existing contract.
(F) TRANSFER OF PROPERTIES. Except in the ordinary course of business, or
in connection with the settlement of its outstanding liabilities, Wrapsters will
not sell or transfer any of its properties.
(G) PAYMENT OF EXPENSES. Fail to pay any employee, suppliers, creditors,
including its Lessor, and others doing business with Wrapsters.
(H) OPERATION. Subject to the foregoing and to the provisions for
apportionment as herein provided, Wrapsters shall operate the business in a
normal and prudent manner and take no actions that shall adversely affect
Wrapsters' Business.
ARTICLE IV
REPRESENTATIONS OF ACQUISITIONS
1. AS TO ACQUISITIONS. Acquisitions makes the following representations and
warranties, which representations and warranties are true and correct, based
on all facts that Acquisitions' officers' and directors' know or should know in
the exercise of reasonable diligence:
(A) GOOD STANDING. Acquisitions is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado; and
Acquisitions has the power and authority to carry on its business as the same
is presently conducted and to own and lease its properties where such properties
are now owned and leased.
(B) CAPITAL STRUCTURE. Acquisitions has 10,000,000 shares of no par value
voting common stock authorized, 100 shares of which are issued and outstanding,
being owned by Wrapsters.
(C) AUTHORIZATION. Acquisitions has full power and authority to enter into
this Agreement and to perform same. This Agreement, upon execution and delivery,
will constitute the binding and valid obligations of Acquisitions, enforceable
according to its terms, subject only to requirements of Colorado statute, if
any, for shareholder approval.
(D) NO CONSENTS. Acquisitions need not obtain any consent, approval,
authorization or any other action of any governmental authority, or of any third
party in order to execute and perform this Agreement. Acquisitions shall
provide the appropriate governmental entities with all required information to
properly apprise such governmental authorities of the proposed transfer and the
names of all proposed officers and directors of Acquisitions.
(E) FINANCIAL STATEMENTS. Acquisitions has no assets and has not provided
financial statements herewith.
(F) LITIGATION. There are no investigations, actions, suits, or proceedings
pending or threatened against or affecting Acquisitions in any court or before
any governmental agency or instrumentality that would or could affect the
validity or enforceability of this Agreement; nor is Acquisitions now, and as
of the date of closing, it will not be in default with respect to any order,
writ, injunction, judgment or decree of any court or federal, state or
municipal governmental department, commission, board, bureau or instrumentality
that would or could affect the validity or enforceability of this Agreement.
(G) TAXES. Acquisitions warrants that it has filed or has made provisions
for the filing of all federal and state tax returns which are required to be
filed; has paid all taxes to be paid. As of the date hereof no tax liabilities
have been assessed or proposed which remain unpaid.
(H) CONTRACTS. All contracts or agreements, to which Acquisitions is a
party which materially affect the business and/or operations of Acquisitions,
are legal, valid and binding, and Acquisitions has in all respects substantially
performed its obligations required of it to date under all such contracts and
agreements.
(I) COMPLIANCE WITH LAWS. Acquisitions warrants that it has materially
complied with all laws, regulations and orders of governmental authorities in
the conduct of its business. Acquisitions has not received any notice (which
remains outstanding) which asserts noncompliance in any respect with applicable
laws, rules and/or regulations of the United States of America or of any state,
county, municipality or other political subdivision having jurisdiction over it,
or any agency thereof.
(J) NO BREACH. The execution and delivery of this Ageement and the
performance by Acquisitions of its obligations hereunder will not result in any
material breach or violation of or material default under any material
agreement, indenture, lease, license, mortgage, instrument, or understanding,
nor result in any violation of any law, rule, regulation, statute, order or
decree of any kind to which Acquisitions or any of its affiliates is a party or
by which any of them or any of their property is or may be or become subject.
ARTICLE IV
AGREEMENTS OF PARTIES
1. WRAPSTERS' LIABILITIES. Attached hereto as "Exhibit C" is a true, accurate
and complete list of Wrapsters' liabilities. Before the Merger described herein
can be closed, Wrapsters shall have obtained the binding agreement of its
creditors, including opposing parties in any pending or threatened litigation,
in form agreeable to NYB, to settle and forgive any and all debt owed by
Wrapsters, except for the following, which shall be retained as obligations of
Wrapsters: [Xxxxxx Xxxxxxx of Wrapsters hand wrote the following: "shall use its
best efforts too" to replace "shall have" in line 3, and "upon completion of the
merger Wrapsters Inc. will assume all remaining debt and pending settlements as
set forth herein."]
(A) Wrapsters shall retain shareholder debt in an amount not to exceed
$155,000.00;
(B) Shall retain the "Turbo Chef Oven" and its lease, in the approximate
amount of $11,000.00; and
(C) Wrapsters shall retain all trade debt which is more than ninety (90)
days old so long as an amount equal to one-half (1/2) the total of said trade
debt liabilities is provided with which to offset settlements. [Xxxxxx Xxxxxxx
of Wrapsters crossed-out subsection (A), (B) and (C).]
2. SHARES TO BE ISSUED TO NYB SHAREHOLDERS. The issued and outstanding shares
of NYB common stock shall be converted to 7,500,000 shares of Wrapsters' common
stock pro-rata to the current shareholders of NYB in proportion to the number of
NYB shares they currently own. Of these shares of Wrapsters common stock,
3,500,000 shall be newly-issued shares subject to the registration rights
contained in paragraph 5.4 below, and 4,000,000 shall be restricted "Rule 144"
stock Before Wrapsters issues these shares, Xxxx and Xxxxxxx agree to
surrender 1,000,000 shares of Wrapsters common stock each to Wrapsters' treasury
for re-issue to NYB's shareholders.
3. EMPLOYMENT OF XXXXXX XXXXXX. Xxxxxx Xxxxxx, currently acting as President
of NYB, shall be employed for a period of three (3) years as Chief Executive
Officer and Chairman of the Board of Directors of Wrapsters, as well as Chief
Executive Officer of Acquisitions. Xx. Xxxxxx shall receive a salary of
$125,000.00 per annum for his employment by Wrapsters. In addition, Xx. Xxxxxx
shall be entitled to participate in stock option plans, pension and retirement
plans, health and dental insurance, and any and all other benefits currently
offered, or to be offered in the future by Wrapsters to its employees.
4. REGISTRATION RIGHTS.
(A) Wrapsters agrees that, subject to the availability of audited financial
statements which would comply with the requirements of Regulation S-X of the
Securities Act of 1933, as amended (the "Act"), upon written request of the then
holder(s) of any of the 3,500,000 Wrapsters Shares issued to NYB shareholders,
or the 428,833 shares to be issued to Xxxx under section 4.9 below, which are
subject to registration rights hereunder, Wrapsters will file, no more than
once, a Registration Statement or an Offering Circular on Form SB under the Act,
registering or qualifying, as the case may be, the Shares. Wrapsters will use
its best efforts, through its officers, directors, auditors and counsel in all
matters necessary or advisable to cause such Registration Statement or Offering
Statement to become effective as promptly as practicable. Wrapsters agrees to
use its best efforts to cause the above filing to become effective.
(B) Any or all of the owner(s) of the Shares shall have the right to join
with Wrapsters in any Registration Statement, other than an S-14, Form S-15, or
Form S-8, or Regulation A filing, to the maximum extent permissible, filed by
Wrapsters with the Securities and Exchange Commission. This right to join with
Wrapsters in a Registration Statement or a Regulation A filing is applicable
regardless of whether some of the owner(s) of the Shares shall have theretofore
availed itself (themselves) of the rights provided above. At any time Wrapsters
proposes to file with the Commission a Registration Statement or an Offering
Circular for its securities, it, at least thirty (30) days prior to such filing,
shall give written notice of such proposed filing to the owner(s) of the Shares
at their address appearing on the records of Wrapsters and shall offer to
include in such filing any proposed disposition of the Shares. Upon receipt by
Wrapsters, not less than twenty (20) days prior to the proposed filing date, of
a requestsetting forth the facts with respect to such proposed disposition, such
Shares shall be included in the Registration Statement or the Regulation A
filing, to the maximum extent permissible. Wrapsters shall supply said owners
with copies of such Registration Statement or Offering Statement and of the
Prospectus or the Offering Circular included therein in such quantities as may
be reasonably necessary for the purpose of the proposed disposition.
(C) Wrapsters shall bear the expenses of any registration or qualification
under this section, including but not limited to legal, accounting and printing
fees.
(D) In addition to the rights above provided, Wrapsters will cooperate with
the then Holder(s) of the Shares in preparing and in signing any Registration
Statement or Offering Statement, in addition to the Registration Statement and
the Offering Statement discussed above, required in order to sell or to transfer
the Shares and will supply all information required therefor but such additional
Registration Statement or Offering Statement shall be at the then Holder(s) cost
and expense.
(E) Wrapsters and the Holder(s) of the Shares will cooperate with each
other in the preparation and the filing of any Registration Statement or
Offering Statement and in any efforts to establish that any proposed disposition
by such Holder(s) is exempt under the Act. The Holder(s) will indemnify and will
hold Wrapsters and its officers, directors, and controlling persons harmless
against all losses, damages, expenses and liabilities based upon or arising out
of or in connection with any untrue statement of a material fact contained in
any Registration Statement or Offering Statement of any applicable Prospectus,
Offering Circular, amendment or supplement thereto, or arising out of or based
upon or in connection with an omission to state a material fact required to be
stated or necessary to make any statement therein not misleading, to the
extent that such untrue statement or omission was made by Wrapsters or by its
officers and directors in reliance upon information furnished by such Holder(s).
Wrapsters will indemnify and will hold each such Holder and each such person,
if any, who controls such Holder, harmless against all losses, damages,
expenses or liabilities based upon or arising out of or in connection with any
untrue statement of a material fact contained, on the effective date thereof,
in any such Registration Statement or Offering Statement or any applicable
Prospectus, Offering Circular, amendment or supplement thereto, or based upon
or arising out of or in connection with the investigation of an omission to
state a material fact required to be stated or necessary to make any statement
therein not misleading, but only to the extent that such untrue statement or
omission was not made by Wrapsters or by its officers or directors upon
information furnished by the Holder. Prior to the effective date of any such
Registration Statement or Offering Statement, Wrapsters and each Holder of
Shares shall enter into reciprocal indemnification agreements as herein
contemplated substantially in the form customarily used by reputable investment
bankers.
(F) Wrapsters' obligation under this section shall be conditioned as to
each such public offering upon a timely receipt by Wrapsters in writing of:
(1) Information as to the terms of such public offering furnished by
or on behalf of each Holder intending to make a public distribution of his or
its Shares; and
(2) Such other information as Wrapsters may reasonably require from
such Holder(s), or any underwriter for any of them, for inclusion in such
Registration Statement or Offering Statement.
5. BOARD OF DIRECTORS. Wrapsters shall cause its articles of incorporation or
bylaws, as appropriate, to be amended to provide for a board of directors of
five (5) individuals. The board of directors immediately following the closing
of the share exchange provided for herein shall consist of Xxxxxx Xxxxxx, Xxxxx
Xxxx III, two (2) members designated by Xx. Xxxxxx, and one (1) member
designated by Xx. Xxxx.
6. VOTING AGREEMENTS. Xxxxxx Xxxxxx, Culp, Metzger, and Xxxxxxxxx, hereby agree
to enter into voting agreements, by the terms of which all voting common shares
of Wrapsters will be voted for the slate of directors described in section 5.5
above. All previous voting agreements shall be rescinded and canceled. In
addition, Xxxxxxx shall give Xxxxxx an irrevocable proxy to vote Xxxxxxx'x
shares.
7. WORKING CAPITAL. Upon completion of the Merger contemplated herein,
Wrapsters shall make a contribution to the working capital of Acquisitions in
the amount of $200,000.00 from the proceeds of the private placement to be
closed substantially simultaneously with the closing of this Agreement.
8. COMMITMENT FOR FURTHER CAPITALIZATION. Wrapsters shall obtain a commitment
letter to raise an additional minimum amount of $1,000,000.00 for Wrapsters'
working capital within six (6) months of completion of the Merger contemplated
herein.
9. CONVERSION OF DEBT. Presently, Xxxxx Xxxx, III, is the holder of a promissory
note in the principal amount of $428,883.00, and various other shareholders are
holders of Wrapsters' debt in the amount of $433,000.00. Xx. Xxxx will convert
his debt to 428,883 shares of common stock of Wrapsters with registration
rights. $109,000 of the remaining debt shall likewise be converted to common
stock at the rate of one (1) share of common stock for each dollar of debt.
10. CONVERSION OF SERIES B PREFERRED SHARES. Presently, 113,500 shares of
Wrapsters' Series B Preferred Shares of stock is held by thirty-one (31)
individuals. All Series B Preferred Shares shall be converted to common stock
at the rate of three (3) shares of common stock for each one (1) outstanding
share of Series B Preferred stock.
11. TERMINATION OF EMPLOYMENT AGREEMENTS. Heretofore, Messrs. Xxxxxxx, Xxxx and
Xxxxxxxxx have had employment agreements with Wrapsters. Said employment
agreements shall be terminated and rescinded, and no further amounts shall be
paid by Wrapsters thereon. In addition, Messrs. Xxxxxxx, Xxxx and Xxxxxxxxx
shall forgive any indebtedness from Wrapsters currently existing under such
employment agreements.
12. FURTHER FRANCHISE ACQUISITIONS. Wrapsters shall not acquire, by cash
payment, share exchange or merger, any franchise businesses, other than NYB,
until such time as the Merger contemplated herein is consummated, and Xxxxxx
Xxxxxx has assumed the position of President of Wrapsters and has been able to
review and approve the terms of the said acquisition. Specifically, Wrapsters
will not close on the acquisition of the "1 Potato 2" franchise business until
Xx. Xxxxxx has reviewed and approved same. In addition, Xxxxxxx will agree to
return 400,000 shares of Wrapsters common stock to Wrapsters for the purpose of
consummating a purchase of "1 Potato 2" franchise company by Wrapsters, should
this acquisition be consummated. [Xxxxxx Xxxxxxx crossed-out this last
sentence.]
13. USE OF PRIVATE PLACEMENT PROCEEDS. Wrapsters will disclose to NYB all terms
and conditions, and produce for inspection all documents relating to the private
placement to be closed substantially simultaneously with the closing of this
Merger. Wrapsters will not disburse any of the funds it anticipates receiving
from a private placement of common stock to be closed substantially
simultaneously with the closing of this Merger, other than disbursement
necessary to effect the Merger with NYB, and to contribute working capital to
Acquisitions, pay past due promissory notes totaling $190,000.00 and accrued
interest of $17,500.00, until such time as Xxxxxx Xxxxxx has been able to
review such disbursement, discuss same with the Board of Directors and
approve of same.
14. FINANCIAL AFFAIRS AND ACCOUNTING. Upon closing this Agreement, all books of
accounting and financial affairs shall be tendered to Xxxxxx Xxxxxx, and all
such accounting and financial operations of Wrapsters shall thereafter be
conducted from the Mesa, Arizona, business offices of New York Burrito.
ARTICLE V
INDEMNITY
NYB, Wrapsters and Acquisitions shall each indemnify, save, and hold the other
harmless from and against any and all damage, loss, cost or expense (including
reasonable attorney's fees) arising from any breach of this Agreement caused by
their own act or omission, including the breach of any representation, warranty
or covenant set forth herein or the untruth or inaccuracy thereof. NYB,
Wrapsters and Acquisitions each shall, at their own expense, defend the other
from and against any claims resulting hereunder from their own act or omission
with counsel reasonably satisfactory to the other; provided, however, that the
defending party shall allow the non-defending party to participate in any such
action to the extent such action such participation is reasonable and the
defending party deems it appropriate; and, provided further, that the defending
party shall not agree to settlement of any such action without the prior written
consent of the non-defending party, which consent shall not be unreasonably
withheld.
ARTICLE VI
ARBITRATION
1. ARBITRATION. Any dispute which arises between the parties with respect to
this Agreement or its enforcement or interpretation, or arising out of or
relating to any alleged breach, default or misrepresentation in connection with
any of the provisions under this Agreement, shall be resolved by submission to
binding arbitration at the offices of the Judicial Arbitration & Mediation
Services, Inc. ("JAMS/Endispute") or other similar arbitration offices located
in Phoenix, Arizona. Such arbitration shall be conducted in accordance with the
most recent version of the JAMS/Endispute Rules of Practice and Procedure for
the Arbitration of Commercial disputes (the "JAMS/Endispute Rules") as of the
date of this Agreement.
(A) INITIATION. The aggrieved party shall initiate arbitration by sending
written notice of its intention to arbitrate to the other party to this
Agreement at their respective business addresses and to JAMS/Endispute main
office or other similar arbitration offices in Phoenix, Arizona. Such notice
shall contain a description of the dispute, the amount in controversy and the
remedy sought. If and when any party to this Agreement shall make a demand for
arbitration, the parties shall execute any and all documents and statements
required by JAMS/Endispute or other similar arbitration offices for the
arbitration or settlement of the dispute in accordance with JAMS/Endispute
Rules. In no event shall any demand for arbitration be made after the date when
institution of a legal or equitable proceeding based on such claim, dispute or
other matter in question would be barred by the applicable statute of
limitations.
(B) ARBITRATORS. The parties may agree on an arbitrator from the
JAMS/Endispute panel or other similar arbitration offices for any arbitration
pursuant to this section 8. If the parties are unable to agree on an
arbitrator, JAMS/Endispute or other similar arbitration offices shall provide
a list of three prospective arbitrators and each party shall strike one in
accordance with JAMS\Endispute or other similar arbitration Rules. The
remaining arbitrator shall serve as the designated arbitrator during the
arbitration proceedings conducted pursuant to the JAMS\Endispute or other
similar arbitration rules. The final decision of the arbitrator shall be
binding on the parties and shall not be subject to appellate review. In the
event of any conflict between this section 8 and the JAMS\Endispute rules or
other similar arbitration rules, this section shall control.
(C) ARBITRATION RULES. With respect to the processing of controversies and
claims submitted to binding arbitration at the offices of JAMS\Endispute or
other similar arbitration offices, both parties hereto commit to proceed in
accordance with the JAMS\Endispute or other similar arbitration rules in a
good faith and expeditious manner so as to move towards resolution of such
controversies and claims in a speedy, fair, and thorough fashion.
(D) DECISIONS FINAL. The decision of the arbitrator or arbitrators shall be
deemed final and binding upon the parties hereto, and may be entered and
enforced in any court of competent jurisdiction. NYB and Wrapsters expressly
agree that each shall have and retain the right to apply under all the
applicable provisions of the Arizona Code of Civil Procedure or any other
similar code or procedure to a court for such provisional remedy or remedies as
may be necessary or appropriate under the circumstances.
ARTICLE VII
CLOSING
1. TIME AND PLACE. The closing shall take place at the offices of NYB, 000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx, Xxxxxxx 00000 at _____ m. o'clock, __________,
1999, or at such other time or such other place as the parties may mutually
agree, for the final payment of the purchase price and conveyance of stock
certificates.
2. CONDITIONS OF PARTIES' OBLIGATIONS. All obligations of NYB, Wrapsters, and
Acquisitions under this Agreement are subject to the fulfillment prior to or at
the closing of each of the following conditions, any one or more of which may be
waived by mutual consent of the parties:
(A) NYB, Wrapsters and Acquisitions shall have performed and complied with
all agreements, conditions and representations herein required to be performed
or complied with by them prior to or on the date of closing.
(B) All agreements pertaining to the operation of the Business, if any,
shall be approved for transfer.
3. EVENTS AT CLOSING. At the closing, the following events shall occur:
(A) Wrapsters shall present the signed settlement agreements for trade
debts, accounts payable and other operational liabilities, including any pending
or threatened litigation, except for those items listed in section 5.1 above,
and the funds to settle trade debts referred to in section 5.1(C).
(B) Xxxx will surrender 1,000,000 of his shares of Wrapsters common stock
to Wrapsters, and Xxxxxxx will surrender 1,400,000 [this number was crossed out
by Xx. Xxxxxxx and he hand-wrote "1,250,000"] of his shares of Wrapsters common
stock to Wrapsters, 400,000 of which shares are to be returned to Xxxxxxx should
the "1 Potato 2" acquisition not be consummated. [Xxxxxx Xxxxxxx crossed out the
last sentence from "400,000" to the end and hand-wrote the following: "the
250,000 shares will be designated to resolve liabilities as follows: Xxxx
125,000 shares, 75,000 shares to Xx Xxxxxxxx, 45,000 shares to d.k. Xxxx
XxXxxxxxx, 5,000 shares to Xxxxxx XxXxxx".]
(C) Xxxx, Xxxxxxx and Xxxxxxxxx will deliver rescission agreements
pertaining to their employment contracts with Wrapsters, and documents
sufficient to cancel any and all outstanding debt they may have been owed
pursuant to said employment agreements and any stock options granted them by
Wrapsters.
(D) Wrapsters shall present rescission agreements or surrender of any stock
options previously issued to any of Wrapsters' current or former employees;
(E) NYB shareholders shall present all outstanding share certificates;
(F) Wrapsters shall tender to the shareholders of NYB the funds and share
certificates representing the number of shares of Wrapsters' common stock listed
hereinabove, validly issued;
(G) Xxxx, Xxxxxxx and Xxxxxxxxx will deliver rescission agreements
pertaining to the Voting Agreements they previously signed, and the voting
agreements referred to in section 5.6 above will be signed by Culp, Metzger,
Xxxxxxxxx and Xxxxxx;
(H) Proof that the articles of incorporation and/or bylaws of Wrapsters
have been amended to provide for a five (5) member Board of Directors shall be
presented by Wrapsters;
(I) Proof that a new board of directors of Wrapsters has been elected or
appointed, in accordance with the terms of section 5.5 above shall be presented
by Wrapsters;
(J) Wrapsters shall provide signed binding agreements from all Series B
Preferred Stock shareholders including their agreement to surrender said Series
B Preferred shares in exchange for the number of shares of Wrapsters common
stock indicated in section 5.10 above;
(K) Xxxx and the holder(s) of the $109,000 in Wrapsters investor notes
identified in section 5.9 above, shall present said notes, or other evidence of
indebtedness, for cancellation and be issued the Wrapsters shares indicated in
said section 5.9;
(L) Wrapsters, NYB and Acquisitions shall each present proof of authority
to close this Agreement in the form of resolutions of the board of directors
and/or shareholders, whichever is appropriate;
(M) Wrapsters shall contribute $200,000.00 to the working capital of NYB;
(N) Holders of the $190,000 in Wrapsters shareholder notes identified in
section 5.1 above shall present said notes for cancellation and be paid
$190,000 along with $17,500 accrued interest thereon;
(O) Wrapsters will provide the letter of commitment for the financing
referred to in section 5.8 above;
(P) The books of accounting, corporate minute books and any other records
of Wrapsters shall be delivered to Xxxxxx Xxxxxx for the continuation of
business;
(Q) Wrapsters and NYB will deliver to the other a certificate, signed by
each member of the Board of Directors and Chief Executive Officer, certifying
that the representations and warranties made hereinabove are true and correct,
and that each covenant contained herein has been performed; and
(R) Each party shall deliver to the other such other documents,
certificates and the like as are reasonably required to perfect the transaction
contemplated hereby.
ARTICLE VIII
TERMINATION
1. DEFAULT AND TERMINATION. This Agreement may be terminated prior to or at
closing in the event of default by either party, the remedies upon default are
as set forth below, unless otherwise provided in this Agreement.
(A) IF WRAPSTERS IS IN DEFAULT. NYB may elect to treat this Agreement as
terminated, in which case all payments and things of value received hereunder
shall be returned to NYB.
(B) IF NYB IS IN DEFAULT. Wrapsters may elect to treat this Agreement as
terminated, in which case all payments and things of value received hereunder
shall be forfeited and retained on behalf of Wrapsters, and Wrapsters may
recover such damages as may be proper.
(C) Anything to the contrary herein notwithstanding, in the event of any
litigation arising out of this Agreement, the court may award to the prevailing
party all reasonable costs and expense, including attorney's fees.
ARTICLE IX
MISCELLANEOUS
1. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with the
Exhibits, if any, annexed hereto, sets forth and constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes any and all prior agreements, understandings, promises, and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto. This Agreement may not be released,
discharged, amended or modified in any manner except by an instrument in writing
signed by duly authorized representatives of the parties hereto.
2. SEVERABILITY. The invalidity or unenforceability of one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted.
3. GOVERNING LAW. This Agreement shall be deemed to have been entered and shall
be construed and enforced in accordance with the laws of the State of Colorado.
4. PARAGRAPH HEADINGS. The paragraph headings are inserted only for convenient
reference and do not define, limit or prescribe the scope of this Agreement or
any Exhibit attached hereto.
5. TIME. Time is of the essence herein, and all payments and other conditions
herein must be made at the time specified herein.
6. WAIVERS. The failure of either party to insist, in any one or more instances,
upon the performance of any of the terms, covenants or conditions of this
Agreement or to exercise any rights hereunder, shall not be construed as a
waiver or relinquishment of the fixture performance of any such term, covenant
or condition or the future exercise of such right, but the obligations of the
other party with respect to such future performance shall continue in full force
and effect.
7. NOTICE. Any notice or other communication required or permitted to be made or
given to either party hereto shall be sufficiently made or given on the date of
receipt if sent to such party by certified or registered first class mail,
postage prepaid, addressed to the address as set forth next to the parties names
below, or to such other address as either party shall designate by written
notice, similarly given, to the other party.
8. SUCCESSOR AND ASSIGNS. Subject to the restrictions set forth herein, this
Agreement, and each and every provision hereof, shall be binding upon and shall
inure to the benefit of the parties, their respective successors, successors-in-
title, heirs and assigns, and each and every successor-in-interest to any party,
whether such successor acquires such interest by way of gift, purchase,
foreclosure, or by any other method, who shall hold such interest subject to all
the terms and conditions of this Agreement.
9. FINDER'S FEES. Wrapsters, NYB, and Acquisitions represent that there is no
obligation to pay any commission, finder's fee, or similar charge in connection
with the transactions provided for in this Agreement. Wrapsters, NYB, and
Acquisitions shall indemnify and hold the other harmless from and against any
and all loss, liability and damage, including expenses arising out of any claim
for any such commission, fee, or charge, so far as any arises by reason of
services alleged to have been rendered to, or at the instance of such party.
10. SURVIVAL OF REPRESENTATIONS. The representations, warranties and agreements
of Wrapsters, NYB, and Acquisitions contained in this Agreement shall survive
the execution hereof and shall be unaffected by any investigation made by any
party at any time.
11. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
12. EXPENSES. Each party shall pay all of its own expenses in connection with
the preparation and performance of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
Xxxxxx X. Xxxxxxx
WRAPSTERS, INC.
By: Xxxxxx Xxxxxxx
Title: President
Xxxxxx X. Xxxxxx, Xx.
NYB FOODS, INC.
By: Xxxxxx Xxxxxx
Title: President
Xxxxxx X. Xxxxxx, Xx.
NYB ACQUISITIONS CORP.
By: Xxxxxx Xxxxxx
Title: President
Xxxxx X. Xxxxxxx, CPA, PC
000 X. Xxxxxxx Xxxxx, Xxxxx 000 (000) 000-0000
Xxxx, Xxxxxxx 00000 FAX(480) 000-0000
INDEPENDENT AUDITOR'S REPORT
To the Shareholders
NYB Foods, Inc.
I have audited the accompanying balance sheets of NYB Foods, Inc. as of March
31, 1999 and 1998, and the related statements of income and retained earnings
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express
an opinion on these fnancial statements based on my audit.
I conducted the audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform :he audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and of the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial positiion of NYB Foods, Inc. as of March 31,
1999 and 1998, and the results of its operations for the years then ended in
conformity with generally accepted accounting principles.
Xxxxx X. Xxxxxxx
Mesa, Arizona
July 10, 1999
Member, American Institute of Certified Public Accountants and Arizona Society
of Certified Public Accountants
NYB FOODS, INC.
1999 1998
ASSETS
Current Assets
Cash $68,808 $24,191
Accounts receivable, net of allowance
of $20,000 for 1999 64,054 35,630
Inventory (Note A) 1,857 -
Prepaid expenses 201,875 137,250
Advances to related parties (Note B) 229,459 122,963
Note receivable (Note C and K) 58,191 -
Deferred tax benefit (Note A and G) - 13,826
Total Current Assets 624,244 333,860
Property and Equipment (Note A and D) 105,986 8,549
Other Assets
Franchise documentation 40,000 40,000
Note receivable (Note C) 16 809 -
Refundable deposits 2,066 2,094
Organizational costs, net of
amortization 50 100
58,925 42,194
$789,155 $384,603
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable and accrued expenses 28,762 1,214
Commissions payable 15,580 21,365
Loan (Note B) 2,762 10,751
Note payable (Note F) 5,501 -
Deferred tax liability (Note A and G) 3,673 -
Deferred revenue (Note A) 633,500 324,500
Total Current Liabilities 689,778 357,830
Long Term Liabilities
Note Payable (Note F) 4,192 -
Total Liabilities 693,970 357,830
Equity
Common stock, 20,000,000 shares of
no par value authorized; 4,900,000
shares issued and outstanding
(Note H) 81,631 81,631
Retained earnings 13,554 (54.858)
95,185 26,773
$789,155 $384,603
The accompanying notes are an integral part of this financial statement.
NYB FOODS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Years Ended March 31,
1999 1998
Revenue $769,936 $420,571
Operating Expenses 760,621 458,417
Net Income from Operations 9,315 (37,846)
other Income and (Expense)
Miscellaneous Income (Note K) 100,599 11,219
Miscellaneous Expense (Note K) (35,031) -
Interest Income 12,606 7,475
Interest Expense (1,577) -
76,597 18,694
Net Income Before Taxes and
Discontinued Operations 85,912 (19,152)
Loss From Discontinued Operations
(Note J) - (7,645)
Net Income (Loss) Before Taxes 85,912 (26,797)
Provision for Taxes
Deferred tax benefit (expense)
(Note A and G) (17,500) 6,455
Net Income (Loss) 68,412 (20,342)
Accumulated Deficit, beginning of year (54,858) (34,516)
Retained Earnings, end of year $13,554 $(54,858)
The accompanying notes are an integral part this financial statement.
NYB FOODS, INC.
STATEMENT OF CASH FLOWS
Years Ended March 31,
1999 1998
Cash Flow From Operating Activities
Cash received from customers $741,508 $413,846
Cash paid to employees and suppliers (496,404) (341,106)
Miscellaneous income 25,599 11,219
Miscellaneous expense (35,031) -
Interest expense (1,577) -
Net Cash Provided (Used) By
Operating Activities 234,095 83,959
Cash Flow From Investing Activities
Investments (93,887) (34,367)
Acquisition of equipment (105,284) (7,762)
Net Cash Provided (Used) By
Investing Activities (199,171) (42,129)
Cash Flow From Financing Activities
Proceeds from notes payable 9,693 (19,000)
Net Increase (Decrease) in Cash 44,617 22,830
Beginning cash balance 24,191 1,361
Ending cash balance $68,808 $24,191
The accompanying notes are an integral part of this financial statement.
1999 1998
Reconciliation Of Net Income (loss) To Cash
Provided (used) by Operating Activities
Net (Loss) $68,412 $(20,342)
Adjustments to reconcile net income to
cash provided(used) by operating
activities
Depreciation 7, 845 1,252
Amortization 50 50
Loss from discontinued operations - 7,645
(Increase) decrease in operating
assets
Accounts receivable (28,424) (14,200)
Interest receivable (12,607) (7,475)
Inventory (1,857) -
Prepaid expenses (64,625) (60,750)
Note receivable (75,000) -
Deferred tax benefit - (6,455)
Refundable deposits 28 (478)
Increase (decrease) in operating
liabilities
Accounts payable 12,901 20,375
Deferred tax liability 17,499 -
Accrued expenses 8,862 -
Deferred revenue 309,000 164,500
Advance (7,989) (163)
Net Cash Provided (Used) by Operating
Activities $234,095 $83,959
The accompanying notes are an integral part of this financial statement.
NYB FOODS, INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of NYB Foods, Inc. (NYB) is
presented to assist in understanding the Corporation's financial statements.
The financial statements and notes are the representation of the Corporation's
management, who are responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial statements.
1. Nature of Business
NYB was incorporated in the state of Colorado on April 21, 1995 and maintains
its principal place of business in Mesa, Arizona. The Corporation's principal
business activity is that of a franchiser granting qualified persons franchises
for the operation of quick serve restaurants that operate under the name New
York Burrito Gourmet Wraps.
2. Deferred Revenue
Income from initial franchise fees is deferred and recognized when the
franchisee commences operations. At March 31, 1999, fifty-five stores were sold
but not opened, however six have begun operations in the subsequent fiscal year
at which time the initial franchise fee will be recognized as revenue.
3. Properry and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes over a estimated useful life of five, seven. and thirty nine years.
Depreciation expense for the years ended March 31, 1999 and 1998 was $7,845
and $1,252, respectively.
4. Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between basis of equipment for financial and
income tax reporting. The deferred tax assets and liabilities represent the
future tax return consequences of those differences, which will either be
taxable of deductible when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for capital losses that are not available
to offset future income taxes.
5. Cash and Cash Equivalents
For purposes of the statement of cash flows, the Corporation considers all short
term debt securities purchased with a maturity of three months or less to be
cash equivalents.
6. Reclassifications
Certain accounts in the prior-year financial statements have been reclassified
for comparative purposes to conform with the presentation in the current-year
financial statements.
NYB FOODS, INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999.
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT:
7. Use ofEstimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reporting amounts and disclosures. Accordingly, actual results
could differ from those estimates.
8. Inventories
Inventory consists of spices, sauces, and packaging supplies, valued at lower of
cost or market, on a first in, first out basis.
NOTE B - ADVANCES TO RELATED PARTIES
An unsecured note receivable, bearing interest at 8% per annum from a majority
shareholder:
1999 1998
Loan $206,854 $112,963
Accrued interest 22,605 10,000
$229,459 $122,963
Interest income related to this note for the years ended March 31, 1999 and 1998
was $12,606 and $7,475, respectively.
The Corporation uses a credit card that is issued to a shareholder. As of March
31, 1999 and 1998, the balance owing was $2,762 and $10,751, respectively.
NOTE C - NOTES RECEIVABLE
Note receivable (Note K), secured by all
contract rights, accounts receivable,
and title and interest in and to all New
York Burrito franchise restaurants within
the state of California. The note receivable
bears interest at 8% per annum and is payable
in fifteen equal installments of $5,678 $75,000
Less current portion 58,191
$16,809
NYB FOODS INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classification as follows:
1999 1998
Equipment $45,930 $9,273
Training Facility 68,268 -
Leasehold Improvement 1,157 800
115,355 10,073
Less: Accumulated Depreciation (9,369) (1,524)
$105,986 $8,549
NOTE E - LEASE OBLIGATIONS
The Corporation conducts its operations from facilities in both Colorado and
Arizona under operating leases. Future minimum rental payments required for the
operating leases are as follows:
1999 1998
Year Ended March 31.
1999 $- $14,026
2000 $63,204 $14,480
2001 $63,204 $2,426
2002 $33,612 $-
2003 $27,694 $-
2004 $20,771 $ -
Rental expense for the years ended March 31, 1999 and 1998 was $15,600 and
$16,099, respectively.
NOTE F- NOTE PAYABLE
Notes payable consisted of the following at March 31,:
1999 1998
Note payable in monthly installments of $470.08, $9,693 $-
including interest at a rate of 18.50% per annum,
secured by vehicle
Less current maturities 5,501 -
$4,192 $-
NYB FOODS, INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE G - INCOME TAXES
The Corporation has loss carryforwards totaling $68,482 which will be fully
absorbed in the current year. The provisions for income taxes consist of the
following components:
1999 1998
Deferred tax (benefit) expense $17,500 $(6,455)
The deferred tax liability is associated with the use of accelerated
depreciation methods for income tax purposes.
NOTE H - STOCKHOLDER'S EQUITY
On April 16, 1997, the number of authorized shares of common stock was increased
from 5,000,000 to 20,000,000.
On May 17, 1997, 2,500,000 shares of outstanding common stock split at a rate of
1.356. In addition, 1,510,000 shares of common stock were issued.
NOTE I - CONTINGENCIES
Subsequent to March 31, 1998, the Corporation filed an arbitration action of
$50,000 against Gourmet Wraps, LLC and Xxxx Xxxxxxxxxxx for breach of a
Development Agreement and damages resulting therefrom.: The arbitrator found
in favor of NYB Foods, Inc., and awarded the Corporation $19,500.
NOTE J - DISCONTINUED OPERATIONS
In May 1997, the Corporation sold its investment in the franchise store located
in Mesa, Arizona. The franchise was sold for $25,000. The Corporation recognized
a loss of $7,645 and $65,225 at March 31, 1998.
NOTE K- MISCELLANEOUS ITEMS
Miscellaneous expense includes a settlement in October 1998 with a landlord in
the amount of $30,000 for unsettled rent payments.
Miscellaneous income includes the sale of California royalty rights to a
corporation for $100,000; $25,000 cash and a note for $75,000 (Note C).
Wrapsters, Inc.
Balance Sheet
January 3,1999
Assets
Current assets:
Cash $26,046
Accounts receivable 1,154
Inventory 9,919
Total current assets 37,119
Property and equipment, net 271,920
Other assets 33,390
$342,429
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses $286,475
Deferred franchise fees 50,000
Note payable 20,000
Notes payable to affiliates 521,876
Total current liabilities 878,351
Commitments and contingencies (see notes - and -)
Stockholders' equity (deficit):
Series B redeemable convertible preferred stock;
no par value, 113,500 shares authorized, issued
and outstanding (liquidation preference of
$1,135,000) 990,594
Common stock; no par value, 25,000,000 shares
authorized, 7,990,480 shares issued and
outstanding 19,741
Accumulated deficit (1,546,257)
Total stockholders' equity (deficit) (535,922)
$342,429
See accompanying notes to financial statements.
Wrapsters, Inc.
Statement of Operations
For the Year Ended January 3,1999
Revenue:
Restaurant sales revenue $315,026
Other income 27,472
Total revenue 342,498
Operating expenses:
Food, beverages and paper 124,944
Payroll and benefits 521,595
Occupancy 161,979
Other operating 571,406
Total operating expenses 1,379,924
Other expenses:
Interest expense 37,783
Loss on store closings 207,473
Total other expenses 245,256
Net loss $(1,282,682)
Basic and diluted loss per common share
See accompanying notes to financial statements.
Wrapsters, Inc.
Statement of Changes in Stockholders' Equity Deficit
For the Year Ended January 3, 1999
Members' Preferred Stock Common Stock Accumulated
Equity Shares Amount Shares Amount Deficit Total
WRAPSTERS, L.C:
Balance, 12/31/97 $418,624 - - - - (263,575) 155,049
Capital
contributions 30,000 - - - - - 30,000
Net loss - - - - - (80,528) (80,528)
Balance immediately
before merger 448,624 - - - - (344,103) 104,521
Wrapsters, Inc:
Convert members'
equity to note
payable (428,883) - - - - - (428,883)
Issue common
stock (19,741) - - 7,600,000 19,741 - -
Existing HAI
shareholders - - - 390,480 - - -
Issue Series B
preferred stock - 113,500 990,594 - - - 990,594
Net loss post
merger - - - - - (1,202,154) (1,202,154)
Balance, January
3, 1999 $0 113,500 990,594 7,990,480 19,741 (1,546,257) (535,922)
See accompanying notes to financial statements.
Wrapsters, Inc.
Statement of Cash Flows
For the Year Ended January 3, 1999
Cash flows from operating activities:
Net loss $(1,282,682)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 40,459
Loss on store closings 207,472
Change in operating assets and liabilities:
Accounts receivable (1,154)
Other assets (20,300)
Inventory (4,961)
Accounts payable and accrued expenses 206,892
Deferred franchise fees 50,000
Other, net 2
Net cash used by operating activities (804,272)
Cash flows from investing activities:
Proceeds from disposal of property and equipment 16,500
Purchases of property and equipment (353,386)
Net cash used by investing activities (336,886)
Cash flows from financing activities:
Proceeds from notes payable to affiliates 92,993
Proceeds from note payable 10,000
Capital contribution 30,000
Issuance of Series B preferred stock 990,594
Net cash provided by financing activities 1,123,587
Net change in cash (17,571)
Cash, beginning of year 43,617
Cash, end of year $26,046
See accompanying notes to financial statements.
Wrapsters, Inc.
Statement of Cash Flows
For the Year Ended December 31, 1998
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $588
Noncash investing and financing activities:
Equity converted to debt $428,883
Conversion of limited liability corporation
interest into common stock $19,741
See accompanying notes to financial statement.
Wrapsters, Inc.
Summary of Open Liabilities
Estimated
Cash
Estimated Requirements
Payee: Description Liability For Closing Status
Trade Accts Per Attached
Payable. Est Detail 28,056.18 20,987.48 100% Trade less
than < 90 days +
50% > 90 days
Wrapsters has closed all Its operations.
During its history, Wrapsters entered Into 8
Real Estate Leases.
1 Boca, FL 0.00 Subleased
0 Xxxxxxx Xxxxxxx, XX 0.00 Xxxxxxx/Xxxxxxxx
0 Xxxxxxxxx, XX 10,000.00 Settlement Offer
Accepted
4 Arlington, VA (GreenBriar) 10,000.00 (Estimated) Verbal
Agreement to release
upon sublease
5 Atlanta, GA (Powers Fairy) 10,000.00 (Estimated Verbal
Agreement to release
upon sublease
6 Fairfax, VA (Ballston Mall) 10,000.00 Settlement Offer
Accepted
7 Xxxxxxx, GA (Xxxxxxxxx) 0.00 Verbal
Agreement to
release upon
sublease
8. Pro Players Stadium (2 sites) 0.00 Lease Term
Expired
Subtotal RE Leases 0.00 40,000.00
Equipment Leases (Payoff Amount):
American Credit Card
General Machines 2,600.00 0.00 settled with return
Finance of equipment
Copelco
Capital,
Inc. Micros Cash
Registers 34,395.74 34,395.74 Paydown/Sell Equip
Less: est. cash sale value
of the registers (20,000.00)
Textron Financial Group
Turbo Chef Oven 11,973.00 11,973.00 Assumed by NYB
Less: est. cash sale value
of the Turbo Chef (7,500.00)
Subtotal Equip
Leases 48,968.74 18,868.74
Contractors
Design
Kontractors,
Inc. Contractor
for L/H 41,600.00 12,000.00 Offer Accepted
Improvements
Bank Loan
1st of
America
Bank Revolving Bank
Loan 18,000.00 18,000.00 Pay-off at
closing
Pending Lawsuit
Xxxx
Suit Open Lawsuit 7,500.00 Settlement Offer
Accepted
Promissory Notes
1/31/99
Notes
Payable
Xxxxxx Xxxxxxxxxx 25,000 25,000 Payoff at closing
Xxxxxx Xxxxxxxxxxx 20,000 20,000 Payoff at closing
Xxxxxx Xxxxxxx 10,000 10,000 Payoff at closing
Xxxxxxx Xxxxxx 100,000 100,000 Payoff at closing
Xxxxxxx Xxxxxx 25,000 25,000 Payoff at closing
Xxxxxxx Xxxxxxx 10,000 10,000 Payoff at closing
Total 1/31/99 Notes 190,000 190,000
Plus: accrued-
interest to 9/15/99 11,875 11,875 past due interest
2/28/99 Notes Payable
Xxxxxx Rynarzewki 25,000 Due 2/28/01, interest semi-annual
Xxxxxx Xxxxxxx 15,000 Due 2/28/01, interest semi-annual
Xxxxxxx Xxxxxx 50,000 Due 2/28/01, interest semi-annual
Xxxxxxx Xxxxxx 25,000 Due 2/28/01, interest semi-annual
Total 2/28/99 Notes 115,000
Plus: accrued interest
to 6/30/99 3,833.33 3,833.33 June Interest
payment in arrears
6/30/99 Notes Payable
Xxxxxxx Xxxxxx 40,000 Due 6/30/01, interest semi-annual
Xxxxx Xxxx Squeeze Corp 109,000 0 Converted to 109,000 shs
common stock
Xxxxx Clup, IIII 428,883 0 Converted to 428,883 shs
common stock
Total Estimated Cash Requirements
for Closing 323,064.53
Wrapsters, Inc.
Open Payables Detall
As of September 14, 1999
Total Open Payables Per Detail 172,986.26
Less Non-Trade Items Separately Listed in Attached Summary:
Real Estate Payables:
Forest City Management (16,394.64)
IRT Property Co. (2,221.01)
National City (9,365.32)
Regency Realty Corp Deerfield, FL (8,672.01)
Equipmant Leases:
Copelco Capital. Inc. (registers) (35,234.10)
Textron Financial Corp. (Turbo Chef) (11,443.00)
Note Payable to Southtrust Bank (20,000.00)
Payable to Design Kontractor (41,600.00)
Net Vendor Trade Payables per Detail 28,056.18
Aging of Trade Debt:
Vendor Trade payables aged less
than 90 days 11,470.73
Vendor Trade payables aged greater
than 90 days 16,585.45
28,056.18
Plus Additional Trade Liabilities not in Detail:
Xxx Xxxxxxx - Reimbursable Travel Expenses 474.00
Law Office of Xxxxxxx Xxxxxx 750.00
ARTICLES OF MERGER
WHEREAS, Wrapsters, Inc., a Colorado corporation (hereinafter "Wrapsters") NYB
Foods, Inc., a Colorado corporation (hereinafter "NYB"), and NYB Acquisitions
Corp., a Colorado corporation (hereinafter "Acquisitions"), have entered into an
Agreement and Plan of Reorganization; and
WHEREAS, the boards of directors of Wrapsters, NYB and Acquisitions have
approved said Agreement and Plan of Reorganization, and NYB and Acquisitions
have submitted same to their respective shareholders for approval; and
WHEREAS, the shareholders of both NYB and Acquisitions have approved the said
Agreement and Plan of Reorganization by at least a majority of each class of the
outstanding voting shares of stock authorized to vote thereon;
NOW, THEREFORE, these Articles of Merger are hereby presented to and filed with
the Secretary of State for the State of Colorado, as follows:
ARTICLE I
PLAN OF MERGER
A. The Agreement and Plan of Reorganization between Wrapsters, NYB and
Acquisitions was signed August 31, 1999, and contemplated a tax-free merger of
NYB with and into Acquisitions in a reorganization pursuant to Internal Revenue
Code Section 368(a)(1)(A).
B. THE MERGER. On October 8, 1999, NYB was merged with and into Acquisitions
(the "Merger") in accordance with the applicable provisions of the Colorado
Revised Statutes,and the separate corporate existence of NYB thereupon ceased.
Acquisitions is the surviving corporation in the Merger (as such, the "Surviving
Corporation").
C. CERTIFICATE OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION.
(1) The certificate of incorporation of Acquisitions will be the
certificate of incorporation of the Surviving Company from and after October
8, 1999, until amended in accordance with its terms and Colorado Revised
Statutes.
(2) The By-Laws of Acquisitions will be the By-Laws of the Surviving
Corporation from and after the Effective Time until amended in accordance with
the terms of Colorado Revised Statutes. There were no changes or amendments made
to said by-laws.
D. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(1) The members of the Board of Directors of the Surviving Corporation
shall be Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx. All of the members of the Board or
Directors of the Surviving Corporation will serve until their successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the bylaws of the Surviving Corporation.
(2) The officers of the Surviving Corporation shall be Xxxxxx Xxxxxx,
President, and Xxxxxxx Xxxxxx, Secretary. Such persons will continue as officers
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation.
E. CONVERSION OF SECURITIES.
(1) On October 8, 1999, the 8,875,680 shares of Common Stock, no par value,
of Wrapsters issued and outstanding immediately prior thereto, by virtue of the
Merger and without any action on the part of Wrapsters or the holders thereof;
remained an issued and outstanding share of Common Stock of Wrapsters
thereafter, except for 2,000,000 shares of common stock which were surrendered
and tendered back to Wrapsters, to become treasury stock. In addition, 428,883
shares of common stock were issued to a shareholder in exchange for cancellation
of a promissory note in the principal amount of $428,883; 109,000 shares of
common stock were issued to another shareholder in exchange for cancellation of
a promissory note in the principal amount of $109,000; and 340,500 shares of
common stock were issued to shareholders in a conversion of all 113,500
outstanding shares of Series B Preferred Stock of Wrapsters.
(2) On October 8, 1999, the 4,900,000 shares of Common Stock, no par value,
of NYB issued and outstanding immediately prior thereto, by virtue of the Merger
and without any action on the part of NYB or the holder thereof, was converted
into 7,500,000 shares of common stock, no par value per share, of the Surviving
Corporation, and the sum of $500,000.
(3) On October 8, 1999, the 100 shares of Common Stock, no par value, of
Acquisitions issued and outstanding immediately prior thereto, by virtue of the
Merger and without any action on the part of Acquisitions of the holder thereof,
remained an issued and outstanding share of Common Stock of the Surviving
Corporation.
ARTICLE II
SHAREHOLDER APPROVAL
A. The Board of Directors of Acquisitions approved the Merger and submitted it
to a vote of the holders of Acquisitions' voting common stock on October 8,
1999. On that date, 100 shares of Acquisitions' no par value common stock were
issued and outstanding, and the holders of Acquisitions' common stock approved
the Merger by a vote of 100 shares for, 0 against. No other shares were issued
or authorized to vote thereon.
B. The Board of Directors of NYB approved the Merger and submitted it to a vote
of the holders of NYB's voting common stock on October 8, 1999. On that date,
4,900,000 shares of NYB's no par value common stock were issued and outstanding,
and the holders of NYB's common stock approved the Merger by a vote of 4,900,000
shares for, 0 against. No other shares were issued or authorized to vote
thereon.
ARTICLE III
MISCELLANEOUS
A. COPY OF PLAN. An executed Agreement and Plan of Reorganization is on file at
the principal place of business of Acquisitions, the Surviving Corporation,
which is located at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx, Xxxxxxx 00000. A
copy of this Agreement and Plan of Reorganization will be furnished by
Acquisitions free of charge on written request to any shareholder of
Acquisitions or NYB.
B. AUTHORITY. The Agreement and Plan of Reorganization described herein, and the
performance of its terms were duly authorized by all actions required by the
laws of the states under which each constituent corporation was incorporated
or organized and by their respective constituent documents.
WHEREAS, the undersigned, being the officers and directors of Wrapsters, Inc.,
hereby certify to the foregoing.
Xxxxxx X. Xxxxxx, Xx. Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, President Xxxxxxx Xxxxxx, Secretary
WHEREAS, the undersigned, being the officers and directors of NYB Foods, Inc.,
hereby certify to the foregoing.
Xxxxxx X. Xxxxxx, Xx. Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, President Xxxxxxx Xxxxxx, Secretary
WHEREAS, the undersigned, being the officers and directors of NYB Acquisitions,
Inc., hereby certify to the foregoing.
Xxxxxx X. Xxxxxx, Xx. Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, President Xxxxxxx Xxxxxx, Secretary
