1
b. 2.1 Plan of Acquisition
AGREEMENT OF REORGANIZATION
By and Between
BEACH COUCH, INC.
A Delaware Corporation,
and
Xxxxxx X. Xxxxx III
As SHAREHOLDERS
and
CALIFORNIA BEACH COUCH, INC.
A California Corporation
Page 1
2
AGREEMENT OF REORGANIZATION
THIS AGREEMENT is made effective June 5, 1998, at San Diego, California, by
and between BEACH COUCH, INC., a Delaware Corporation (hereinafter referred
to as "BEACH COUCH, INC."), Xxxxxx X. Xxxxx III, hereinafter referred to as
"SHAREHOLDERS"), and CALIFORNIA BEACH COUCH, INC. a California Corporation
(hereinafter referred to as the "CORPORATION").
WHEREAS, the SHAREHOLDERS have represented that they own all of the
outstanding stock of the CORPORATION, and
WHEREAS, BEACH COUCH, INC. desires to acquire from the SHAREHOLDERS and the
SHAREHOLDERS desire to exchange stock with the owners of California Beach
Couch, Inc., which are 100% of the outstanding stock of the CORPORATION
("the shares"), and
WHEREAS, the CORPORATION desires that this transaction be consummated.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
conditions, agreements, representations and warranties contained in this
Agreement, setting aside all previous agreements both oral and written the
parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1. The parties hereto adopt this Agreement as a Type B tax-free plan of
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code
Page 24
1.2. Subject to the terms and conditions set forth in this Agreement, on
the closing, SHAREHOLDERS will transfer and convey to BEACH COUCH, INC.,
10,000 shares of common stock in the CORPORATION which represents 100% of
the issued and outstanding shares of stock in the CORPORATION.
1.3. As consideration for the transfer of the shares by SHAREHOLDERS,
BEACH COUCH, INC. shall deliver at the closing, certificates representing
100,000 shares of BEACH COUCH, INC.'S common stock.
1.4. The 100,000 shares of BEACH COUCH, INC.' common stock shall be issued
in the amount following each SHAREHOLDER'S name in Schedule "A".
2. REPRESENTATIONS AND WARRANTIES OF THE PARTIES
2.1. The SHAREHOLDERS represent and warrant that the SHAREHOLDERS are
owners, beneficially and of record, of all the shares free and clear of
liens, encumbrances, security agreements, equities, options, claims
charges, and restrictions, other than any restriction set forth by the
California Commissioner of Corporations. SHAREHOLDERS have full power to
transfer the shares to BEACH COUCH, INC. without obtaining the consent or
approval of any other person, governmental authority or the Corporation.
Page 2
3
2.2. The SHAREHOLDERS and the CORPORATION to the best of their knowledge,
represent and warrant as follows:
a. CORPORATION is a corporation duly organized validly existing, and in
good standing under the laws of California and has all
necessary corporate powers to own its properties and to operate its
business as now owned and operated by it.
b. The authorized capital stock of the CORPORATION consists of 1,000,000
shares of common stock, having a par value of $0.0001, of which 10,000
shares (the shares) are issued and outstanding. All the shares are validly
issued, fully paid, and non-assessable, and such shares have been so issued
in full compliance with all federal and state securities laws. There are
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating the CORPORATION
to issue or to transfer from treasury any additional shares of its capital
stock of any class.
c. That there is no suit, action, arbitration, or legal administrative,
or other proceeding, to the best knowledge of CORPORATION; against or
effecting CORPORATION or any other business, assets, or financial
condition.
d. The financial statements in Exhibit B have been prepared in
accordance with generally accepted accounting principles consistently
followed by the CORPORATION as of the respective dates of said financial
statements, and the results of its operation for the respective periods
indicated.
e. That there has not been since the date of the attached financial
statements any material change in the financial condition, liabilities,
assets, business or prospects of the CORPORATION.
f. Since June 5, 1998, that within the times and in the manner
prescribed by law, the CORPORATION has filed all federal, state, and local
tax returns required by law and has paid all taxes assessments, and
penalties due and payable. There are not present disputes as to taxes of
any nature payable by the CORPORATION.
g. The CORPORATION is in possession of all premises leased to it from
others.
h. Neither the SHAREHOLDERS, nor any officer, director, or employee of
the CORPORATION, nor any spouse, child, or other relative of any of these
persons, owns, or has any interest, directly or indirectly, in any of the
real or personal property owned by or leased to the CORPORATION. That the
CORPORATION does not occupy any real property in violation of any law,
regulation, or decree.
i. The execution and delivery of this Agreement by the CORPORATION, and
the performance of its covenants and obligations under it, shall have been
duly authorized by all necessary corporate action, and the CORPORATION
shall have received copies of all resolutions pertaining to that
authorization, certified by the secretary of the CORPORATION.
Page 3
4
k. Each SHAREHOLDER is acquiring the stock of the CORPORATION as an
investment and not with a view to distribution, and each hereby consents
that the shares of the CORPORATION, may be legended to the effect that such
shares are not registered under the Securities Act of 1933.
l. The CORPORATION has given no options or other rights to purchase or
subscribe for any shares of stock of the CORPORATION in favor of any
person, firm or corporation. Stockholders do not have preemptive rights.
m. The CORPORATION has no assets or business other than those shown in
these financial statements.
n. The CORPORATION is not party to any employment agreements.
2.3 BEACH COUCH, INC. represents and warrants as follows:
a. BEACH COUCH, INC. is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware and has all necessary
corporate powers to own its properties and to operate its business as now
owned and operated by it; and neither the ownership of its properties nor
the nature of its business requires BEACH COUCH, INC. to be qualified in
any jurisdiction other than the state of its incorporation.
b. The authorized capital stock of BEACH COUCH,INC. consists of
50,000,000 shares of common stock, having a par value of $0.00001 each,
4,000,000 of which are issued and outstanding. Such shares have been so
issued full compliance with all federal and state securities laws. BEACH
COUCH, INC. has also authorized 20,000,000 shares of preferred stock,
having a par value of $0.00001, none of which are issued. There are no
outstanding subscriptions, options, rights, warrants, convertible securities,
or other agreements or commitments obligating BEACH COUCH, INC.
to issue or to transfer from treasury any class of stock.
c. The financial statements in Exhibit A have been prepared in
accordance with generally accepted accounting principles consistently
followed by BEACH COUCH, INC. throughout the periods indicated and fairly
preset the financial position of BEACH COUCH, INC. as of the respective
dates of said financial Statements, and the results of its operations for
the respective periods indicated.
d. That there has not been since the date of the attached financial
statements any material change in the financial condition, liabilities,
assets, business or prospects of BEACH COUCH, INC..
e. That BEACH COUCH, INC. does not have any debt, liability, or
obligation of any nature, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not reflected in the
financial statements or set forth in Exhibit A to this Agreement, and that
all debts, liabilities, and obligations incurred after that date were
incurred in the ordinary course of business, and are usual and normal in
amount both individually and in the Agreement.
f. That the total liabilities on the part of BEACH COUCH, INC. does not
exceed the approximate amount of $1,000.00.
Page 4
5
g. That within the times and in the manner prescribed by law, BEACH
COUCH, INC. has filed all federal, state, and local tax returns required by
law and has paid all taxes, assessments, and penalties which in BEACH
COUCH, INC.'S opinion are due and payable and has made all filings required
by all applicable state and federal laws.
h. That BEACH COUCH, INC. has good and marketable title to all of its
respective assets and interests in assets, whether real, personal, mixed,
tangible, and intangible, which constitute all the assets and interests in
assets that are used in the business of BEACH COUCH, INC.. All these
assets are free and clear of restrictions or of conditions of transfer or
assignment, and free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions, except for (i) these disclosed in BEACH COUCH,
INC. financial statements in Exhibit A to this Agreement; (ii) the lien of
current taxes not yet due and payable; and (iii) possible minor matters
that in the aggregate, are not substantial in amount and do not materially
detract from or interfere with the present or intended use of any of these
assets, nor materially impair business operations. All real property and
tangible personal property of BEACH COUCH, INC. is in good operating
condition and repair, ordinary wear and tear excepted. BEACH COUCH, INC.
is in possession of all premises leased to it from others.
i. That there is no suit, action, arbitration, or legal administrative,
or other proceeding, or governmental investigation pending or, to the best
knowledge BEACH COUCH, INC. threatened, against or affecting BEACH COUCH,
INC., or any of its business, assets, or financial condition.
j. The execution and delivery of this Agreement by BEACH COUCH, INC. and
the performance of its covenants and obligations under it, shall have been
duly authorized by all necessary corporate action, and SHAREHOLDERS have
received copies of allresolutions pertaining to that authorization,
certified by the secretary of BEACH COUCH, INC.
k. That they have had an opportunity to review the financial statements
in Exhibits B to this Agreement and based upon such financial statements
they have entered into this Agreement.
3. DOCUMENTATION, DELIVERY AND COOPERATION
3.1. The CORPORATION will furnish to BEACH COUCH, INC. for its examination
(i) copies of the Article of Incorporation and By-Laws of the CORPORATION;
(ii) the minute books of the CORPORATION containing all records required to
be set forth of all proceedings, consents, actions, and meetings of the
SHAREHOLDERS and Boards of Directors of the CORPORATION; (iii) all permits,
orders, and consents issued with Respect to corporation, or any security,
and all applications for such permits, orders, and consents; and (iv) the
stock transfer books of the CORPORATION setting forth all transfers of any
capital stock.
Page 5
6
3.2. At the closing, the SHAREHOLDERS shall deliver to BEACH COUCH, INC.
the following instruments, in form and substance satisfactory to BEACH
COUCH, INC. and its counsel:
a. A certificate or certificates representing the shares, registered in
the names of the SHAREHOLDERS, duly endorsed by the SHAREHOLDERS transfer
or accompanied by an assignment of the shares duly executed by the
SHAREHOLDERS. On submission of that certificate or certificates to the
CORPORATION for transfer, the CORPORATION shall issue to BEACH COUCH, INC.
a certificate representing the shares, registered in the name of BEACH
COUCH, INC..
b. The stock books, stock ledgers, minute books, and corporate seals of
the CORPORATION, and;
3.3. At the closing, BEACH COUCH, INC. shall deliver to SHAREHOLDERS the
following instruments and documents:
a. The share certificates as set forth in paragraph1.3.
3.4. All of the parties further agree that they will do all things
necessary and reasonable to accomplish and facilitate the transfer of the
shares in conformance with any and all governmental bodies and regulatory
agencies, and that they will sign and execute any and all documents
necessary to bring about and perfect the purposes of the Agreement.
4.1. The obligations of the SHAREHOLDERS hereunder are, at the option of
the SHAREHOLDERS, subject to the conditions that on or before the Closing:
a. The SHAREHOLDERS shall not have discovered any material error, or
misstatement or omission in the representations, and warranties made by
BEACH COUCH, INC. herein, and all the terms and conditions of this
Agreement to be complied with and performed by BEACH COUCH, INC. at or
before the Closing shall have been complied with and performed in all
material
respects.
b. The representations and warranties made by BEACH COUCH, INC. in this
Agreement shall be correct in all material respects at and as of the
Closing.
c. The Commissioner of Corporations of the State of California has
issued, if necessary, the appropriate permit or permits pursuant to the
California Corporations Code the qualification of the securities which are
the subject of this Agreement.
4.2. The obligations of BEACH COUCH, INC. hereunder are, at the option of
BEACH COUCH, INC., subject to the conditions that on or before the Closing:
a. BEACH COUCH, INC. shall not have discovered any material error,
misstatement or omission in the presentations and warranties made by the
SHAREHOLDERS of the CORPORATION, and all the terms and conditions of this
Agreement to be complied with and performed by the SHAREHOLDERS and the
CORPORATION on or before the Closing shall have been complied with and
performed in all material respects.
Page 6
7
b. The representations and warranties made by the SHAREHOLDERS and the
CORPORATION in this Agreement shall be correct in all material respects at
and as of the Closing.
c. The Commissioner of Corporations of the State of California has, if
necessary, issued the appropriate permit or permits pursuant to the
California Corporations Code for the qualification of the securities which
are the subject of this Agreement.
4.3. The Closing under this Agreement shall take place at the law offices
of Xxxxxxx Xxx, 0000 Xxxxxx Xxx Xxx Xxxxx Xxx. 000, Xxx Xxxxx, XX 00000, or
at such place, time or date, as may be agreed upon by the parties.
This Agreement may be signed in one or more counterparts.
BEACH COUCH, INC. CALIFORNIA BEACH COUCH, INC.
(a Delaware Corporation) (a California Corporation)
STOCKHOLDERS
\\ Xxxxxx X. Xxxxx III \\
__________________________
Xxxxxx X. Xxxxx III
Page 7
8
EXHIBIT A
SELECTED FINANCIAL INFORMATION
SUMMARY BALANCE SHEET DATA: June 5, 1998
Current Assets: $ 0.00
Other Assets: $ 0.00
Total Assets: $ 0.00
Total Liabilities: $ 0.00
Shareholders Equity $ 0.00
SUMMARY STATEMENT OF OPERATIONS DATA: (for period ending Feb. 14, 98)
Total Income $ 0.00
Net Loss $ 0.00
Net Loss Per Share: $ 0.00
Page 8
9
Exhibit B
SELECTED FINANCIAL INFORMATION
SUMMARY BALANCE SHEET DATA: June 5, 1998
Current Assets
Cash On Hand $ 000.00
Computer Equipment $ 000.00
Organization Expense $ 715.00
Total Assets: $ 715.00
Total Liabilities: $ 0.00
Shareholders Equity $ 715.00
SUMMARY STATEMENT OF OPERATIONS DATA:
(for period ending June 05, 98)
Total Income $ 0.00
Net Loss $ 0.00
Net Loss Per Share: $ 0.00
Schedule A
Stock Acquired by California Stock Issued
Shareholders Beach Couch, Inc. in Exchange
Xxxxxx X. Xxxxx III 10,000 100,000
Page 9
