XXXXXXXX # 0 TO AGREEMENT AND PLAN OF REORGANIZATION
WHEREAS an AGREEMENT AND PLAN OF REORGANIZATION dated as of August 25,
1997 (the "Agreement") was executed and delivered by and among (a) GOLF
VENTURES, INC., a Utah corporation ("GVI") , U.S. GOLF COMMUNITIES, INC., a
Delaware corporation ("USGCD"), and the USGCD Securityholders; and
WHEREAS all capitalized terms used in this Addendum are used exactly
as defined in the Agreement; and
WHEREAS unanticipated regulatory and other delays in completing the
conditions and expectations of the parties have occurred and the parties are now
agreed on a method for bringing this Agreement to Closing sooner than would
otherwise occur were the Agreement to continue under its present terms; and
WHEREAS US Golf has been unable to produce audited financial statements
as of either December 31, 1996 or as of a recent date near the Closing through
no fault nor bad faith on its part, and is therefore unable to comply with the
requirements of Section 11(a)(v); and
WHEREAS the parties desire to create and enter into this Addendum to
the Agreement to modify the Agreement only in the ways and specifics contained
in this Addendum, and otherwise affirm the particulars of the Agreement as being
in full force and effect; and,
WHEREAS the parties have used the same paragraph and section numbering
in this Addendum as they used in the Agreement, for ease of comparison between
this Addendum and the Agreement,
NOW THEREFORE IT IS AGREED AS FOLLOWS:
2. Plan of Reorganization. By virtue of their respective execution of
this Agreement, GVI and the USGCD Securityholders hereby agree and consent that,
subject to the satisfaction by USGCD and the Affiliated Shareholders on the one
hand, and by GVI on the other hand, of the covenants and conditions precedent
described in this Agreement in Sections 8 and 11, respectively, on the one hand,
and in Sections 9 and 11, respectively, on the other hand, on the Closing Date
(as hereinafter defined) all of the USGCD Securities shall be exchanged with GVI
for shares of GVI's Series D Convertible Preferred Stock or, in the case of the
Option Holders, for GVI options entitling the holder thereof to acquire GVI
Common Stock. The Series D Preferred Stock to be issued under the Agreement is
comprised of authorized but unissued shares of GVI Series D Preferred Common
Stock and shall be exchanged on the following basis: 5.2499 shares of Series D
Preferred Stock for each one (1) USGCD Common Share(s) tendered and exchanged
therefor (the "Conversion Ratio"). It is the intent of the parties hereto that
the pre-Reorganization, as defined herein, shareholders of GVI shall retain
approximately 19% of the Common Stock following conversion of the Series D
Preferred Stock into Common Stock (the "Reorganization"). In the event that
either USGCD or GVI should issue additional equity or rescind any currently
outstanding equity prior to the Closing Date, as defined erein, the Conversion
Ratio shall be adjusted proportionately to preserve the foregoing expectation.
Fractional shares of USGCD shall be rounded up to the nearest whole share. Prior
to such exchange, GVI also shall establish its Long Term Equity-Based Incentive
Plan, and shall reserve 3,000,000 (post-Reorganization) shares of GVI Common
Stock for issuance thereunder. The Option Holders shall be entitled to exercise
their respective USGCD Options with respect to their pro rata portion of such
reserved shares. GVI hereby agrees to issue to the USGCD Securityholders and the
USGCD Securityholders hereby accept, in exchange for all of the USGCD
Securities, an aggregate of 6,672,578 shares of Series D Preferred Stock and the
GVI stock option plan as described above. The shares of Series D Preferred Stock
shall be issued to the USGCD Securityholders based upon the number of USGCD
Common Shares held as indicated on EXHIBITS 1 AND 2, and as summarized in a
schedule attached to this Addendum labeled "Addendum Schedule 1".
3. Delivery of the USGCD Securities. On the Closing Date, the USGCD
Common Shareholders will deliver to GVI, in exchange for the Series D Preferred
Stock as hereinabove provided, certificates representing all of the issued and
outstanding USGCD Common Shares duly endorsed in blank with signature guaranteed
or with executed stock powers attached thereto with signature guaranteed and in
transferrable form with any required documentary or transfer tax stamps affixed
at the USGCD Common Shareholders' sole and exclusive expense so as to make GVI
the sole owner thereof, free and clear of any and all liens, claims and
encumbrances, of any nature whether accrued, absolute, contingent or otherwise.
...............
7. Representations and Warranties of GVI. By virtue of its execution of
this Agreement, GVI hereby represents and warrants to USGCD and the USGCD
Securityholders as follows:
...............
(e) Capitalization. The capitalization of GVI as of the
Closing Date will be substantially as follows:
Authorized Issued and Outstanding
25,000,000 shares of Common Stock 6,290,692 shares1
10,000,000 shares of Preferred Stock 58,676 shares2
--------
1 Includes shares presently issued and outstanding plus: (a) up to
225,700 shares to be converted from Class A Preferred; (b) 3,942,450 to convert
GVI Class B Preferred; and (c) 30,000 shares to be issued to settle the
obligation owed to Airport Development Group. This amount does not include any
shares that may be issuable to Xxxxxx Xxxxxx or to American Resources and
Development Co., a Utah corporation ("ARDCO") following the Closing.
2 The preferred stock issued to date is as follows:
Series A Convertible Preferred 350,000 authorized 25,000 issued 25,000 outstanding
Series B Convertible Preferred 350,000 authorized 259,427 issued 33,676 outstanding
Series C Preferred 136,093 authorized 136,093 issued 0 outstanding
2
All shares of Common Stock and Preferred Stock issued and outstanding are duly
authorized, validly issued, fully paid and nonassessable. The shares of GVI
Series D Preferred Stock issued under this Agreement to the USGCD
Securityholders who received USGCD Common Shares in connection with the Golf
Interests Acquisition (defined below) shall, in the aggregate, constitute not
less than eighty-one percent (81%) of the total voting power and economic
interest of immediately following such issuance. The parties acknowledge that
GVI will have at Closing insufficient authorized but unissued shares of its
Common Stock to allow for the conversion of all of the Series D Preferred Stock,
which will all be in the hands of the USGCD Securityholders. The parties agree
to work together following the Closing to call a shareholders meeting of GVI for
the purpose, among others, to increase the authorized common shares of GVI to
100,000,000 shares.
........
(r) Shares Validly Issued without Assessment or Liabilities. All of
the shares of Series D Preferred Stock, as and when delivered as required
pursuant to this Agreement, will be duly and validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof and
will convey to the USGCD Securityholders good and valid title to such
securities, free and clear of any liens, encumbrances or claims of any nature,
contingent or otherwise, and will entitle the USGCD Securityholders to all the
rights of holders of such securities, subject in each case to the restrictions
on transferability imposed by the Securities Act and the rules and regulations
of the United States Securities and Exchange Commission (the "SEC") promulgated
thereunder. The GVI Common Stock issuable upon the conversion of the Series D
Preferred Stock will be similarly endowed legally.
..........
(y) Actions Not to be Taken Prior to Closing. Prior to the Closing
Date, GVI will not, without the prior written consent of USGCD, do or agree to
do any of the following:
..........
(iii) No Contracts or Modifications. Except for a settlement and
release to be entered into with ARDCO, a similar agreement to be entered into
with Xxxxxx Xxxxxx, and a similar agreement with certain engineers who have
rendered valuable service to GVI and deserve compensation in a negotiated
settlement, [to continue as in the Agreement] ...........
(vii) No Issuance of Securities. Other than the issuance of
common stock to ARDCO, Xxxxxx Xxxxxx, the engineers referenced in (iii), above,
and the creation and issuance of Series D Preferred Stock to the shareholders of
USGCD, [to continue as in the Agreement]
..........
3
10. Registration Rights.
(a) "Piggy-back Rights." If at any time, or from time to time,
GVI proposes to file a registration statement on any appropriate form (a
"Registration Statement") (other than in connection with an exchange offer or a
registration statement on Form S4 or S-8 or at the demand of, or on behalf of,
any shareholder of GVI) under the Securities Act with respect to any Common
Stock for sale to the public for its own account which would permit registration
of Common Stock (for the purposes of this Section 10 "Registrable Securities"),
to be received upon the conversion of the Series D Preferred Stock and upon the
exercise of any option, by the USGCD Securityholders, Banque SCS, Olympus
Investments and Miltex Industries (collectively for the purposes of this Section
10, the "Holder(s)"), GVI shall: [to continue as in the Agreement]
11. Conditions Precedent to Closing.
(a) Conditions Precedent of GVI.
(v) Financial Statements. USGCD Audited Financial
Statements reflecting a minimum net book value of USGCD's properties of twelve
million dollars ($12,000,000) shall not be a condition of closing for GVI, but
shall become a covenant of USGDCD to perform as soon as possible following
Closing recognizing that significant financial statements for USGCD will need to
be filed with the SEC on or before the 75th day following Closing. [Section
11(a) to continue as in the Agreement]
(b) Conditions Precedent of USGCD. All of the obligations of
USGCD and the USGCD Securityholders under and pursuant to this Agreement are and
shall be subject to the representations and warranties of GVI being true and
correct at the Closing Date except for such representations and warranties that
are expressly given as of a specific date or as of the date hereof and the
fulfillment prior to or on the Closing Date of each of the following:
(i) Stock Certificates. Certificates for the
shares of Series D Preferred Stock in such names and in such denominations as
the USGCD Securityholders as shown in the attached Appendix A.
(vii) Satisfaction of SEC Requirements. GVI (A)
shall have responded to all outstanding comments of the SEC regarding its Form
10-SB, (B) shall have amended its Form 10-SB (to the extent and/or including the
requirement that its Financial Statements be amended as needed to meet the SEC
comments, (C) shall have filed preliminary proxy materials with the SEC in
connection with a stockholder's meeting (i) entitling it to modify its capital
structure to enable it to convert the Series D Preferred Stock, (ii) adopting
the GVI Long Term Equity-Based Incentive Plan; and (D) shall have issued Press
Releases and/or filed any required Forms 3 and 4 and Reports on Form 8-K and
Schedules 14D, or Schedules 13D, to reflect changes in management and/or control
which occurred or, if reportable, which were agreed upon prior to Closing.
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(xi) Shareholder Matters. [Waived]
...............
(13) (b) Restrictive Legend. The USGCD Securityholders further covenant
and agree that the certificates representing all of the shares of Series D
Preferred Stock to be delivered pursuant to this Agreement, as well as all
shares of Common Stock issuable in conversion of the Series B Preferred Stock,
shall bear a restrictive legend in substantially the following form:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 as amended. They
may not be sold, assigned or transferred in the absence of an
effective registration statement for the Shares under the said
Securities Act, receipt of a 'no action' letter from the
Securities and Exchange Commission or an opinion of counsel
satisfactory to the Corporation that registration is not
required under said Securities Act."
...............
16. Closing Date. The closing of the transaction contemplated herein
(the "Closing") shall take place in person, by mail or otherwise and be
consummated on Wednesday, November 12, 1997, or as soon thereafter as is
practically possible.
...............
29. Notices. Any notice hereunder shall be given, and any instrument
delivered, four days after being mailed or registered certified mail, postage
prepaid, or 24 hours after such notice has been sent by straight telegram,
telex, facsimile or other means of instantaneous transmission, charges pre-paid
as follows:
NAME ADDRESS
If to GVI Attn: Xxxxx X. Xxxxxxxx
000 Xxxxx 0000 Xxxx
Xx. Xxxxxx, Xxxx 00000
000-000-0000
000-000-0000 facsimile
with a simultaneous copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxx Xxxxxxx & Xxxxxxx, P.C.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
000-000-0000
000-000-0000 facsimile
If to USGCD and the USGCD Attn: Xx. Xxxxxx Xxxxxxxxx
Security Holders within 000 Xxxxx Xxxxxx Xxx. Xxxxx 0000
twelve (12) months following Xxxxxxx, Xxxxxxx 00000
the Closing: 000-000-0000
000-000-0000 facsimile
5
with a simultaneous copy to: Xxxxx X. Xxxxx, Esq.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx 00000
000-000-0000
000-000-0000 facsimile
All provisions of the Agreement not specifically amended by this
Xxxxxxxx # 0 shall be read together with the provisions of this Addendum effect
the parties' desire to amend the Agreement as shown by the words and context of
this Addendum No. 1.
IN WITNESS WHEREOF, the parties have executed this Xxxxxxxx # 0 as of
October 31, 1997.
GOLF VENTURES, INC. U.S. GOLF COMMUNITIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxxxxx, President Xxxxxx X. Xxxxxxxxx, President
USGCD SECURITYHOLDERS
By: /s/ Xxxxxxxx Xxxxx
-----------------------------------
Xxxxxxxx Xxxxx, Attorney-In-Fact
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Appendix A
NUMBER OF RESTRICTED
NAME OF SERIES D
US GOLF SHAREHOLDER PREFERRED SHARES
Autohaus Augsburg 155,237
Xxxxx Xxxxxx-Xxxxxxxxxx 20,354
Gotz Xxx Xxxxxxx 42,756
xx Xxxx, Xxxxxx 37,564
Xxxxxxxx Xxxxx 102,448
Xxxxxxxx Xxxxx 1,164,859
Xxxxxxx Xxxxxxxxxx 659,195
Xxxxxxxx Xxxxxxx 75,133
Xxxxxx Xxxxxxxxxxx 31,757
Xxxxxx Xxxxxxx 37,564
Xxxxxxxx Xxxxxx 68,234
Xx. Xxxxxxxx Xxxxxx 75,133
Xx. Xxxxxx Xxxxxxxx 210,577
Xx. X. Xxxxx 0
Xxxxx Xxxxxx 112,696
Xxxxxx Xxxxxxx 52,500
Xxxxxx Xxxxxxxxxxx 37,564
Xxxxx Xxxxxx 37,564
Xxx and Xxxxxxxx Xxxxxxxxx 15,750
Double Eagle Properties, Ltd. 1,306,614
Xxxxxxxx Xxxxxxxxx 95,875
Xx. Xxxxxxx Xxxxxxxxx 614,470
Xxxxxxxx Xxxxx, Trustee (Cutter Sound,
M-K-R - N & C Xxxxxx GBR) 111,145
Xxxxxxxx Xxxxx, Trustee (Cutter Sound,
M-K-R - X. Xxxxxxx) 111,145
Xxxxxxxx Xxxxx, Trustee (Cutter Sound,
M-K-R - Xxxxx Share) 231,362
Sub Total for Share Exchange 5,407,498
Xxxxxxxx Xxxxx, Trustee (PGP) 1,265,080
Sub Total for Loan Conversion Shares 1,265,080
Total GVI Stock To Be Issued To USG Shareholders 6,672,578
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