AGREEMENT AND PLAN OF REORGANIZATION
This Agreement dated July 1, 2000 by and among Deal Xxxxxx.xxx and its
wholly owned subsidiary e-River Marketing, Inc., ("Acquired"), and Regency Group
Limited, a Nevada corporation ("Acquirer").
RECITALS
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Acquirer desires to acquire Acquired through an exchange of all of the
outstanding coirunon stock of Acquired solely for voting stock of the Acquirer
(the "Transaction").
Acquired and Acquirer intend that this transaction qualify as a tax free
reorganization under Section 368 of the Internal Revenue Code of 1986.
NOW THEREFORE, in consideration of their respective covenants contained
hereinafter, Acquired and Acquirer enter into this Agreement as follows:
1. Transaction
1.1 Exchange of Stock. In consideration of the transfer, assignment and
delivery of all of Acquired's outstanding capital stock to Acquirer,
and in reliance upon the representations and warranties made herein by
Acquired, Acquirer will, in full payment thereof, issue to the
shareholders of Acquired at the Closing, the number of shares of the
voting common and preferred stock of Acquirer (the "Stock") that
equals an exchange ratio of .608 shares of Acquirer for each
outstanding share of Acquired. The number of shares of Acquirer to be
issued shall equal 5,000,000 shares of common stock which represents
twentyfive percent (25%) of the issued and outstanding common stock of
Acquirer and 2,500,000 shares of voting convertible preferred stock of
Acquirer which represents twenty-five percent (25 %) of the issued and
outstanding preferred stock of the Acquirer.
1.2 Closing. The Closing shall take place not later than October 30, 2000,
at the offices of Acquirer, or such other time and place as the
parties may agree upon. The day on which the Closing actually takes
place is herein sometimes referred to as the Closing Date. At the time
of the Closing, the parties shall file the Plan of Exchange in the
form attached hereto as Exhibit A with the Nevada Secretary of State
and the Transaction shall become effective at the time of filing (the
"Effective Date")
1.3 Acquired's Obligation at Closing
(a) At the Closing, Acquired will deliver to Acquirer:
(i) Stock certificates representing all of the outstanding
capital stock of Acquired duly endorsed in blank, or
accompanied by stock powers duly endorsed in blank, to be
held in escrow until the Effective Date of the Transaction.
(ii) All contracts, files, financial statements, books of
account, tax returns and other data and documents, minute
and stock books pertaining to Acquired as is further
specified by Acquirer.
(b) At any time and from time to time after the Closing, at
Acquirer's request and without further consideration, Acquired
will execute such other instruments of sale, transfer,
conveyance, assignment and confirmation and as Acquirer may
reasonably deem necessary or desirable.
1.5 Acquirer's Obligations
(a) Acquirer shall deliver at the Closing stock certificates)
representing 5,000,000 shares of voting common stock and 2,500,00
shares of voting convertible preferred stock of Acquirer
registered in such names and for the number of shares of stock as
set forth on Exhibit B attached hereto and by this reference
incorporated herein to be held in escrow until the Effective Date
of the Transaction.
2. Representations and Warranties by Acquired. Acquired represents and
warrants to Acquirer to the best of its knowledge as follows:
2.1 Organization, Standing and Qualification. Acquired is (i) a
corporation duly organized, validly existing and in good standing
under the laws of Arizona (ii) it has all requisite corporate power
and authority and is entitled to carry on its business as now being
conducted and to own, lease or operate its properties as and in the
places where such business is now conducted and such properties are
now owned, leased or operated.
2.2 Execution, Delivery and Performance of Agreement - Authority. Neither
the execution, delivery nor performance of this Agreement by Acquired,
with or without the giving of notice or the passage of time, or both,
conflict with, result in a default, right to accelerate or loss of
rights under any agreement to which Acquired is a party or by which
either of them may be bound. Acquired has the full power and authority
to enter into this Agreement and to carry out the transactions
contemplated hereby. All proceedings required to be taken by them to
authorize the execution, delivery and performance of this Agreement
and the agreements relating hereto have been properly taken. This
Agreement constitutes a valid and binding obligation of Acquired.
2.3 Financial Statements. Acquired has delivered to Acquirer copies
(initialed by Acquired's Secretary and identified with a reference to
this Section of this Agreement) of the latest unaudited balance sheet
of Acquired ("Balance Sheet") (attached as Exhibit 2.3), and
statements of revenues, expenses and retained earnings for the same
period then ended, (hereinafter collectively called the "Financial
Statements"), all of which, to the best of Acquired's knowledge, are
complete and correct, having been prepared from the books and records
of Acquired in accordance with generally accepted accounting
principles
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consistently applied and maintained throughout the periods indicated
and fairly present the financial condition of Acquired as of t their
respective dates and the results of its operations for the periods
covered thereby. Acquired shall deliver audited financials to Acquirer
as soon as reasonably possible.
Such Financial Statements do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein, and include all adjustments,
necessary for such fair presentation.
2.4 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against on the face of the Balance Sheet
(excluding the notes thereto), as of the Balance Sheet Date, Acquired
has no known debts, liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature whatsoever, including,
without limitation, any foreign or domestic tax liabilities or
deferred tax liabilities incurred in respect of or measured by
Acquired's income.
2.5 Taxes. All taxes, including without limitation, income, property,
sales, use, franchise, added value, employees' income withholding and
social security taxes, imposed by the United States or by any foreign
country or by any state, municipality, subdivision or instrumentality
of the United States or of any foreign country, or by other taxing
authority, which are due or payable by Acquired, and all interest and
penalties thereon, whether disputed or not, have been paid in full,
all tax returns required to be filed in connection therewith have been
accurately prepared and duly and timely filed and all deposits
required by law to be made by Acquired with respect to employees'
withholding taxes have been duly made as of 6/30/00
2.6 Absence of Changes or Events. Except as set forth in Schedule 1
annexed hereto, since the Balance Sheet Date, Acquired has conducted
its business only in the ordinary course and has not suffered any
change, event or condition which, in any case or in the aggregate, has
had or may have a materially adverse effect on Acquired's condition
(financial or otherwise), properties, stock, liabilities, operations
or prospects, including, without costs, backlog or relations with its
employees, agents, customers or suppliers of which Acquirer has not
been made aware.
2.7 Litigation. Except as set forth in Schedule 2 annexed hereto, there is
no claim, legal action, suit, administrative arbitration, governmental
investigation or other legal or administrative proceeding, nor any
order, decree or judgement in process, pending or in effect, or to the
knowledge of Acquired after due inquiry, is threatened, against or
relating to Acquired, its officers, directors, or employees, its
properties, stock or business or the transactions contemplated by this
Agreement, and Acquired does not know or have reason to be aware of
any basis for the same.
2.8 Compliance with Laws and Other Instruments. To the best of Acquired's
knowledge, Acquired has complied with all existing laws, rules,
regulations,
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ordinances, orders, judgements and degrees now or hereafter applicable
to its business, properties or operations as presently conducted.
Neither the ownership nor use of Acquired's properties nor the conduct
of its business conflicts with the rights of any other person, firm or
corporation or violates, or with or without the giving of notice or
the passage of time, or both, will violate, conflict with, or result
in a default, right to accelerate or loss of right under agreement,
order, regulation or decree.
2.9 Title to Assets. Acquired has good, marketable and insurable title to
all the tangible and intangible assets, including all intellectual
property it owns or uses in its business or purports to own,
including, without limitation, those reflected in its books and
records and in the Balance Sheet (except inventory sold after the
Balance Sheet Date in the ordinary course of business.) None of such
assets are subject to any pledge, charge, security interest,
encumbrance, restriction, lease, license, liability or adverse claim
of any nature whatsoever, direct or indirect, whether accrued,
absolute, contingent or otherwise, except (a) as expressly set forth
in the Balance Sheet as securing specific liabilities or as otherwise
expressly permitted by the terms hereof, or (b) those encumbrances, if
any, which (i) are not substantial in character, amount or extent and
do not materially detract from the value of the assets subject
thereto; (ii) do not interfere with either the present and continued
use of such assets; and (iii) have arisen only in the ordinary course
of business. All of the assets owned, leased or used by Acquired are
in good operating condition and repair, are suitable for the purpose
used.
2.10 Schedules. Attached hereto as Schedule 3 is a separate schedule
containing an accurate and complete list and description of:
(a) All real property owned by Acquired or in which Acquired has a
leaschold or other interest or which is used by Acquired in
connection with the operation of its business, together with a
description of each lease.
(b) All of Acquired's receivables.
(c) All equipment, motor vehicles and other tangible and intangible
personal property (other than inventory and supplies), owned,
lease or used by Acquired except for items having a value of less
than One Thousand ($1,000) Dollars, including software, website
codes and agreements and all assets necessary to operate
Acquired's business;
(d) All trademarks, trademark registrations, and applications
thereof, service marks, service names, trade names, copyrights
and copyright registrations, and applications therefore, wholly
or partially owned or held by Acquired or used in the operation
of Acquired's business.
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(e) All fire, theft, casualty, liability and other insurance policies
insuring Acquired.
(f) All contracts, agreements, commitments or other understandings or
arrangements to which Acquired is a party or by which it or any
of its property is bound or affected but excluding purchase and
sales orders and commitments made in the ordinary course of
business involving payments or receipts by Acquired of less than
Five Thousand Dollars ($5,000).
All of the contracts, agreements, leases, licenses and commitments required
to be listed on Schedule 3 (other than those which have been fully performed)
are valid and binding, enforceable in accordance with their respective terms, in
full force and effect and, except as otherwise specified in Schedule 3, validly
assignable to Acquirer without the consent of any other party so that, after the
assignment thereof to Acquirer pursuant hereto, Acquirer will be entitled to the
full benefits thereof. True and complete copies of all such contracts,
agreements, leases, licenses, and other documents listed on Schedule 3 together
with any and all amendments thereto) have been delivered to Acquirer and
initialed by Acquired's Secretary and identified with a reference to this
Section of this Agreement.
2.11 Receivables. All receivables of Acquired (including accounts
receivables, loans receivables and advances) which are reflected in
the Balance Sheet, and all such receivables which will have arisen
since the date thereof, shall have arisen only from bona fide
transactions in the ordinary course of Acquired's business. Acquired
makes no guarantees as to the collectability of the receivables.
2.12 Title To Stock and Assets of Acquired. On the Closing, Shareholders
will own all of the issued and outstanding stock and assets of the
Acquired, free and clear of all liens and encumbrances, and upon
delivery ownership will be free and clear of all liens and
encumbrances and other adverse interests of any kind.
2.13 Commission or Broker Fees. Acquired has not used a finder or broker in
connection with the Transaction.
2.14 Restricted Stock. Acquired understands that the Stock is not being
registered under the Securities Act of 1933 (the "Act") on the ground
that the issuance is exempt from registration as a transaction by an
issuer not involving any public offering. The Stock may not be sold
unless subsequently registered under the Act or unless an exemption
from registration is available. Acquired agrees not to sell, assign or
transfer the Stock unless, (i) a registration statement with respect
thereto is in effect; or (ii) the sale is in compliance with Rule 144;
or (iii) a written opinion of counsel to Acquirer has been received
that the transfer is exempt from registration. The certificate
representing the Stock will bear a legend restricting transfer.
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3. Representation and Warranties by Acquirer, Acquirer represents and warrants
to Acquired as follows:
3.1 Organization. Acquirer is a corporation duly organized, validly
existing and in good standing under the laws of Nevada and has full
corporate power and authority to enter into this Agrecrnent and the
related agreements referred to herein and to carry out the
transactions contemplated by this Agreement and to carry on its
business as now being conducted and to own, lease or operate its
properties. Acquirer is in good standing under the laws of the state
of Nevada.
3.2 Authority and Approval of Agreement. All proceedings or corporate
action required to be taken by Acquirer relating to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been taken at or prior to the Closing.
3.3 Execution, Delivery and Performance of Agreement. Neither the
execution, delivery nor performance of this Agreement by Acquirer
will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default, right to accelerate or loss
of rights under any agreement or understanding to which Acquirer is a
party or by which it may be bound or affected. Acquirer has full power
and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, all proceedings required to be taken
by Acquirer to authorize the execution, delivery and performance of
this Agreement and the agreements relating hereto have properly taken
and this Agreement constitutes a valid and binding obligation of
Acquirer.
3.4 Capitalization. The authorized capital of the Acquirer is 100,000,000
shares of common stock and 5,000,000 shares of preferred stock. On the
Effective Date the Acquirer shall have 23,306,500shares of common
stock outstanding and 5,000,000 shares of preferred stock outstanding.
3.5 Commissions or Brokers. Acquirer has not engaged any broker or finder,
in connection with the transactions contemplated herein,
3.6 Appointment as Director. On the Effective Date the Acquirer shall
appoint Xxxxxxx Xxxxx as a Director of the Acquirer for a minimum term
of two years. Buyer shall be appointed President and Director of
Acquired and Acquired shall enter into an employment agreement with
Xxxxx.
3.7 Reporting Company Status. The Acquirer is a reporting company pursuant
to the Securities Exchange Act of 1934 and is current with all of its
reporting requirements. The Acquirer will undertake to file such forms
as may be necessary to report the Transaction and will continue to
file such reports as are necessary for the shareholders of Acquired to
sell their shares of Stock pursuant to the terms of Rule 144. Acquirer
will be responsible for all accounting expenses associated with
matters of SEC compliance, including
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audit expenses of Acquired.
4. Conduct of Business Prior to Closing.
4.1 Prior to the Closing, Acquired shall conduct its business and affairs
only in the ordinary course and consistent with its prior practices
and shall maintain, keep and preserve its Stock and properties in good
condition and repair, and maintain insurance thereon in accordance
with present practices.
4.2 Acquired shall give Acquirer prompt written notice of any change in
any of the information contained in the representations and warranties
made in Section 3 or elsewhere in this Agreement or the Schedules
referred to herein which occurs prior to the Closing.
5. Conditions Precedent to Acquirer's Obligations. All obligations of Acquirer
hereunder are subject, at the option of Acquirer, to the fulfillment of
each of the following conditions at or prior to I;he Closing, and Acquired
shall exert their best efforts to cause each such condition to be so
fulfilled:
5.1 All representations and warranties of Acquired contained herein or in
any document delivered pursuant hereto shall be true and correct in
all material respects when made and shall be deemed to have been made
again at and as of the date of the Closing, and shall be true and
correct in all material respects except for changes in the ordinary
course of business after the date hereof in conformity with the
covenants and agreements contained herein.
5.2 All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Acquired before the Closing shall
have been duly and properly performed in all material respects.
5.3 Since the date of this Agreement there shall not have occurred any
material adverse change in the condition (financial or otherwise),
business, properties or prospects of Acquired.
5.4 All documents required to be delivered to Acquirer at or prior to the
Closing shall have been so delivered.
5.5 Acquired shall have obtained written consents to the transfer or
assignment to Acquirer of all agreements, licenses, leases and other
material contracts of Acquired (other than immaterial purchase and
sales orders in the ordinary course of business) where the consent of
an,y other party to any such contract may, in the opinion of
Acquirer's counsel, be required for such assignment or transfer.
5.6 Acquirer shall have obtained the approval of the Transaction by its
Board of Directors and shareholders and provided satisfactory evidence
thereof to Acquired.
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6. Conditions Precedent to Acquired's Obligations. All obligations of Acquired
at the Closing are subject to the fulfillment of each of the following
conditions at or prior to the Closing, and Acquirer shall exert its best
efforts to cause each such condition to be so fulfilled:
6.1 All representations and warranties of Acquirer contained herein or in
any document delivered pursuant hereto shall be true and correct in
all material respects when made and as of Closing.
6.2 All obligations required by the terms of this Agreement to be
performed by Acquirer or before the Closing shall have been duly and
properly performed in all material respects.
6.3. The Acquired shall have obtained the approval of the Transaction by
its Board of Directors and shareholders and provided evidence thereof
to Acquirer.
7. Indemnification.
7.1 Acquired hereby indemnifies and agrees to defend and hold Acquirer
harmless for, from, against and in respect of (and shall on demand
reimburse Acquirer for):
(a) Any and all loss, liability or damage suffered or incurred by
Acquirer by reason of any untrue representation, breach of
warranty or nonfulfillment of any covenant by Acquired or
contained herein or in any certificate, document or instrument
delivered to Acquirer pursuant hereto or in connection herewith.
(b) Any and all loss, liability or damage suffered or incurred by
Acquirer in respect of or in connection with any liabilities of
Acquired not expressly assumed by Acquirer.
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgements, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof, or in enforcing this
indemnity.
7.2 Acquirer hereby agrees to indemnify and hold Acquired harmless from,
against and in respect of (and shall on demand reimburse them for):
(a) Any and all loss, liability or damage resulting from any untrue
representation, breach of Warranty or non-fulfillment of any
covenant or agreement by Acquirer contained herein or in any
certificate, document or instrument delivered to Acquired
hereunder;
(b) Any and all liabilities or obligations of Acquired specifically
assumed by Acquirer pursuant to this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof, or in enforcing this
indemnity.
8. Nature and Survival of Representations and Warranties. Each statement,
representation, warranty, indemnity, covenant and agreement made by
Acquired in this Agreement or in any document, certificate or other
instrument delivered by (or on behalf of) Acquired pursuant to this
Agreement, or in connection herewith, shall be deemed the joint and several
statement, representation, warranty, indemnity, covenant and agreement of
Acquired and each of its sharcholders and directors. All statements,
representations, warranties, indemnities, covenants and agreements made by
each of the parties hereto shall survive the Closing.
9. Notices: All notices, consents, approvals, waivers or other items given or
required to be given by one party to the other shall be in writing; these
"Notices" shall be delivered by one of these methods:
9.01 If personally delivered, then notice i I effective on the next
business day following receipt; or
9.02 If delivered by mail, Notice is deemed given and delivered 72 hours
after being deposited in any duly authorized United States mail
depository, postage prepaid, registered or certified, return receipt
requested; or
9.03 If sent by a reputable overnight courier service (e.g., Federal
Express), addressed as set forth below, the Notice shall be deemed
effective on the next business day following receipt, as evidenced by
the receipt obtained by the courier service.
9.04 If sent by telecopier to the phone number listed below, then Notice
shall be deemed delivered on the next business day following receipt,
as evidenced by a successful transmission report.
9.05 Notice to an attorney is not complete until the next business day
following actual receipt; addresses and fax numbers for an attorney
should be confirmed by checking with the Arizona State Bar Association
in Phoenix, Arizona. Notice addresses shall be changed by providing
the new address to all of the other parties in conformance with these
provisions.
All Notices shall be addressed as indicated below:
If to Deal Xxxxxx.xxx: 00000 Xxxxx Xxxxxxxxxx Xxxx, #000
Xxxxxxxxxx, XX 00000
Fax:000-000-0000
If to Regency: Regency Group Limited
0000 X. Xxxxxxxxxx Xxxxx Xxxx, #000
Xxxxxxxxxx, XX 00000
Fax : 000-000-0000
With a copy to: Xxxxx X. Xxxxx
0000 X, Xxxxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
With a copy to; Xxxxxx Xxxxx Xxxxx, p. a.
0000 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
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10. Legal and Other Costs.
10.1 If any party (the "Defaulting Party") defaults in his or its
obligations under this Agreement and, as a result thereof, the other
party (the "Non-Defaulting Party") seeks to legally enforce his or its
rights hereunder against the Defaulting Party, then, in addition to
all damages and other remedies to which the Non-Defaulting Party is
entitled by reason of such default, the Defaulting Party shall
promptly pay to the Non-Defaulting Party an amount equal to all costs
and expenses (including reasonable attorneys' fees) paid or incurred
by the NonDefaulting Party in connection with such enforcement.
10.2 In the event that the Non-Defaulting Party is entitled to receive an
amount of money by reason of the Defaulting Party's default hereunder,
then, in addition to such amount of money, the Defaulting Party shall
promptly pay to the Non-Defaulting Party a sum equal to interest on
such amount of money accruing at the rate of one percent (1 %a) per
month during the period between the date such payment should have been
made hereunder and the date of the actual payment thereof.
11. Default; Remedies
11.1 If the sale is riot consummated as a result of the failure of Acquired
to meet all of its obligations under this Agreement, then Acquirer
shall have such remedies as may be available to it at law or in
equity, but shall have no right to xxx for consequential or punitive
damages.
11.2 If the sale is not consummated as a result of the failure of Acquirer
to meet all of its obligations under this Agreement, then Acquired
shall have only the remedy of specific performance in. equity but not
have the right to xxx for consequential, general or punitive damages.
12. Miscellaneous.
12.1 This writing constitutes the entire agreement of the parties with
respect to the subject matter hereof and may not be modified, amended
or terminated except by a written
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agreement specifically referring to this Agreement signed by all of
the parties hereto.
12.2 No waiver of any breach or default hereunder shall be considered valid
unless in writing and signed by the party giving such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
12.3 This Agreement shall be binding upon and inure to the benefit of each
corporate party hereto, its successors and assigns, and each
individual party hereto and his heirs, personal representatives,
successors and assigns.
12.4 The paragraph headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents
of said paragraphs.
12.5 Each party hereto shall cooperate, shall take such further action and
shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and
purposes of this Agreement.
12.6 This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed one original.
12.7 This Agreement and all amendments thereof shall be governed by and
construed in accordance with the law of the State of Arizona
applicable to contracts made and to be performed therein.
12.8 No public statements or news releases relating to the Transaction
shall be made by any party without the written consent of Acquirer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DEAL XXXXXX.XXX, INC. REGENCY GROUP LIMITED,
a Nevada Corporation
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxxx Xxxxxx
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Its: President Its: President
