PLAN OF REORGANIZATION
AND
SETTLEMENT
OF
HESED ENERGY INTERNATIONAL, INC.,
AND
NESS ENERGY INTERNATIONAL, INC.
AND THE
SHAREHOLDERS OF
HESED ENERGY INTERNATIONAL, INC.
(STOCK FOR STOCK EXCHANGE)
THIS AGREEMENT is entered into as of the 10th day of April, 2003 by, between,
and among HESED ENERGY INTERNATIONAL, INC., a corporation organized under the
laws of the State of Texas ("HESED"), NESS ENERGY INTERNATIONAL, INC., a
corporation organized under the laws of the State of Washington (hereinafter
"NESS INTERNATIONAL"), and certain or all of the shareholders of HESED who act
in accord with this Agreement and thereby participate in the transaction (the
"SHAREHOLDERS").
R E C I T A L S:
1. For some time, in excess of one year prior to this date, NESS INTERNATIONAL
and HESED determined to combine related company HESED and NESS INTERNATIONAL,
given related ownership and common objectives, and the shareholders of HESED
have had an expectation of having physical shares in NESS INTERNATIONAL, as
beneficial owners of business pursuits subject to risks of NESS INTERNATIONAL;
and 2. in light of the foregoing, and in settlement of the aforesaid matter,
NESS INTERNATIONAL would like to acquire the issued and outstanding common stock
of HESED in exchange for shares of common stock in NESS INTERNATIONAL, and HESED
intends to facilitate this by the SHAREHOLDERS of HESED exchanging their shares
in HESED, with the assistance of Management of HESED, for the shares of NESS
INTERNATIONAL, and the parties wish to agree to certain related terms and
conditions, all as set forth herein;
NOW, THEREFORE, in consideration of the premises, mutual promises,
covenants, terms and conditions contained herein and other good and valuable
considerations, the receipt and sufficiency of which are acknowledged by the
parties hereto, the parties agree, warrant, represent and covenant to one
another as follows:
1. Recitals and Definitions.
A. The above recitals are true, correct and complete.
B. The following terms have the following meanings as defined more
specifically herein:
CERTAIN DEFINITIONS
-- NESS INTERNATIONAL is NESS ENERGY INTERNATIONAL, INC., a Washington
corporation publicly trading, as described herein;
-- HESED is HESED ENERGY INTERNATIONAL, INC., a Texas corporation
owned by the SHAREHOLDERS;
-- SHAREHOLDERS are the owners of HESED but more specifically those
owners who conform to this Agreement exchanging their shares as
stated herein;
-- HESED SHARES are the shares of ownership in HESED to be delivered to
NESS INTERNATIONAL on or after the "Closing" herein; and
-- NESS INTERNATIONAL SHARES are the shares in NESS INTERNATIONAL to be
issued to HESED for the owners of HESED in exchange for the HESED
SHARES on or after the Closing.
2. Plan of Reorganization (Exchange of Shares) and Other Matters.
A. HESED agrees to supply sufficient shares of common stock in order for NESS
INTERNATIONAL to own 80% or more of HESED in exchange for shares of common stock
in NESS INTERNATIONAL to be issued to HESED with the intentions of the parties
that HESED will supply most or all of the shares due from HESED from the
SHAREHOLDERS on or following the Closing (if, for any reason, within 45 days of
Closing HESED cannot supply such ownership, it can make arrangements to issue
shares of HESED, as close as possible to 100% ownership, to NESS INTERNATIONAL)
and HESED and the Management of HESED promises that a complete list of all the
SHAREHOLDERS, who are 100% owners of HESED, will be delivered to NESS
INTERNATIONAL as soon as possible. At and following Closing, it shall be the
responsibility of HESED to cause the delivery to NESS INTERNATIONAL of the
ownership in HESED, hereinafter the "HESED SHARES," in exchange for a total of
10,460,488 shares of stock, to be delivered to HESED, in NESS INTERNATIONAL, as
standard restricted securities under applicable law (the "NESS INTERNATIONAL
SHARES"), with this transaction intended to qualify as a tax-free reorganization
under the current Federal Income Tax Code.
B. The parties acknowledge that the determination of how many NESS INTERNATIONAL
SHARES should be due for the transaction is not readily determinable without
some effort, but such effort, to the satisfaction of the Board of Directors of
both companies, has been undertaken for some time now and is concluded and
merged into this Agreement by the setting of the figure herein, and such
considerations taken into account have included the following, among others:
consultations and some negotiations, advice from professionals, contemplation of
the market price and volume of NESS INTERNATIONAL common stock including
volatility and other attributes of the stock as well as the HESED stock, the
resolution/settlement of claims to stock or otherwise relating to both companies
and the SHAREHOLDERS, and the benefit to NESS INTERNATIONAL of having
controlling ownership of all the assets and opportunities of HESED by making it
a wholly owned subsidiary.
C. The parties agree to cooperate with one another so that if a reasonable
number of additional days is needed to perform hereunder, the deadlines herein
are extended, within reason, unless either HESED or NESS INTERNATIONAL makes
written demand of performance and threat of default.
D. Shareholders of HESED, in whole or part, make claim, in effect, to ownership
interest or right in NESS INTERNATIONAL, while NESS INTERNATIONAL believes such
claim has not been liquidated or confirmed as such prior to this date but in
settlement of ALL claims between and among the parties, it is agreed that the
exchange of shares is binding as a settlement of such matter.
3. Delivery of Shares. At Closing or as soon as possible thereafter, HESED will
tender ownership in HESED to NESS INTERNATIONAL in the form of certificates of
stock and NESS INTERNATIONAL shall tender to HESED a certificate in NESS
INTERNATIONAL as to the NESS INTERNATIONAL SHARES, with HESED to determine the
manner and timing of it's matters with it's SHAREHOLDERS relating to this
Agreement. The NESS INTERNATIONAL SHARES will be the voting common stock of NESS
INTERNATIONAL, equal in all respects to other shares of its class of voting
common stock, and shall be standard restricted securities within the meaning of
Rule 144. The HESEDSHARES will be the voting common stock of HESED, equal in all
respects to other shares of its class of voting common stock, and shall be
standard restricted securities within the meaning of Rule 144 of the SEC.
4. Representations as to HESED. HESED and for each SHAREHOLDER hereby
represents:
a. the HESED SHARES, to be delivered by thestockholders of HESED or
otherwise, will constitute valid and legally issued shares of HESED, be equal to
at least 80% of HESED and such shares are fully paid, and non-assessable;
b. the HESED SHARES are free of claims, liens or other encumbrances
and the owners have the unqualified right to transfer such shares pursuant to
the terms and conditions of this Agreement;
c. the SHAREHOLDERS of HESED are the sole owners of the issued and
outstanding shares of common stock of HESED, being the HESED SHARES;
d. other than the HESED SHARES, here is no person, natural or
otherwise, having any ownership interest, or right, in HESED and there are no
options, warrants, or similar rights as to ownership in HESED, and there is no
other class of security authorized or issued as to HESED;
e. HESED agrees to supply it's most recent available financial
statements of HESED (the financial statements are true, complete and accurate)
audited within 60 days after the Closing, and there shall be no liabilities,
either fixed, contingent, liquidated or unliquidated, other than those reflected
in said financials and in no event will undisclosed liquidated liabilities
exceed $200,000. Further, HESED agrees the financial statements will :(i) fairly
and accurately reflect the financial condition of HESED as of the dates thereof
and the results of operations for the periods reflected therein, and (ii) be
prepared in accordance with generally accepted accounting principles,
consistently applied (all references herein to financial statements, unless
otherwise noted, will be to those of HESED to be delivered as aforesaid;
f. as of this date and Closing there is no pledge, lien, or security
interest upon any of the assets of HESED, and HESED has no accrued liabilities,
whether or not contingent, fixed or liquidated, except as disclosed herein or in
its financial statements, and there will not be any negative material changes in
the conditions of HESED from this date, except reasonable changes arising in the
ordinary course of business;
g. HESED is not involved in any litigation or governmental
investigation or proceeding not disclosed herein, and no written litigation,
claims, assessments, or governmental investigation or proceeding is threatened
in against HESED;
h. HESED is in good standing in the jurisdiction identified for
HESED above;
i. except as may be disclosed herein, HESED has not been advised in
writing of any material breach of any agreement to which it is a party;
j. HESED has no subsidiary corporations and as of this date and Closing
there is no pledge, lien, or security interest upon any of the assets of HESED;
k. the corporate financial records, minutes book, and other corporate
documents and records of HESED do not contain anything whatsoever contrary to
this Agreement or that would be reasonably deemed by NESS INTERNATIONAL as
material and adverse ;
l. the execution of this Agreement will not materially violate or
breach any agreement, contract, or commitment to which HESED, or the
SHAREHOLDERS is/are a party, and this Agreement has been, or will be prior to
the Closing, duly authorized by appropriate corporate action of HESED;
m. HESED is active and in operation;
n. HESED shall not change the number of shares of any class
authorized, issued or outstanding during the term of this Agreement;
o. all outstanding shares in HESED have been duly authorized,
validly issued, and are fully paid and non-assessable and there are no
outstanding or presently authorized securities, warrants, options or other
similar commitments of any nature not described herein;
p. as to the list of all record stockholders of HESED, said list shall
remain true, correct and complete up to the Closing and thereafter will change
only due to the transfer or issuance of shares as provided herein;
q. HESED has good and marketable title to the assets under ownership
at Closing, free and clear of all liens, claims, and encumbrances whatsoever,
and the HESED SHARES shall be validly issued, fully paid and non-assessable
shares of common stock under law, except such shares will be unregistered and
will be transferred in a non-public offering, or isolated, private transaction,
in compliance with applicable laws; and
r. as of the date of this Agreement, HESED has, and at the Closing
will have, disclosed all material events, conditions and facts materially
affecting HESED, and has not, and will not have as of the Closing, withheld
disclosure of any material event, condition, matter, fact, or other information
which has or may have a material adverse affect on HESED, its business or
prospects, or otherwise.
5. Representations of NESS INTERNATIONAL. NESS INTERNATIONAL hereby
represents, except to the extent otherwise disclosed in it's filings with the
SEC:
a. the NESS INTERNATIONAL SHARES will constitute valid and legally
issued, restricted (as described herein) shares, and such shares shall be fully
paid and non-assessable;
b. the President of NESS INTERNATIONAL is duly authorized to execute
this Agreement, the Board of Directors of NESS INTERNATIONAL will, as of this
date or by the Closing, approve this Agreement, and the execution hereof will
not constitute a material breach of any agreement to which NESS INTERNATIONAL is
a party;
x. XXXX INTERNATIONAL is not involved in any pending litigation,
claims or governmental investigations or proceedings, and there are no lawsuits,
claims assessments, investigations, proceedings or similar matters threatened or
contemplated against them to the best knowledge of the management of both
companies;
x. XXXX INTERNATIONAL is duly organized, validly existing and in good
standing under the laws of Texas identified above and is qualified to do
business in every jurisdiction where such qualification is necessary and has the
corporate power to own property and to carry on business as now being conducted;
x. XXXX INTERNATIONAL has not breached, nor is there any pending or
threatened claim that NESS INTERNATIONAL has breached to the best knowledge of
its management, the terms or conditions of any agreements, contracts or
commitments to which it is a party or is bound;
g. by delivery, the NESS INTERNATIONAL SHARES will have been duly
authorized, validly issued, and fully paid and non-assessable;
h. as of the Closing, NESS INTERNATIONAL has no undisclosed
corporations and does not own shares of stock or other securities in any
undisclosed entity;
i. the NESS INTERNATIONAL SHARES contemplated herein will be, when
issued, free and clear of all liens, claims, and encumbrances whatsoever, and
such shares shall be validly issued, fully paid and non-assessable shares of
common stock except for the application of restrictions under applicable laws;
and
x. XXXX INTERNATIONAL is authorized for trading and is trading on the
NASD Bulletin Board without any current known unusual restrictions or
limitations in trading of its common stock, which is its voting common shares,
and all material information about it contained in its filings with the SEC, all
of which HESED and the SHAREHOLDERS have reviewed or have access to, subject to
normal amendment and future filings.
6. Closing Date and Situs. The "Closing" of this Agreement shall occur
on the "Closing Date," which shall be the date of this Agreement or such date as
the parties shall agree to in writing. The Closing shall take place in person,
or by fax or at such place as the parties agree to in writing.
7. Conditions Precedent to the Obligations of NESS INTERNATIONAL. All
obligations of NESS INTERNATIONAL under this Agreement are subject to the
fulfillment, as the parties have agreed to in writing, of each of the following
conditions precedent:
a. the representations by HESED and the SHAREHOLDERS contained in this
Agreement, or in any certificate or document delivered by any of them,
pursuant to the provisions hereof, shall be true, correct and complete when
made, and as of the Closing;
b. HESED and the SHAREHOLDERS shall have performed and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by each of them including they shall have executed
and delivered the documents to be executed and delivered by them;
d. all instruments and documents, attached hereto, and delivered
pursuant to the provisions hereof, will be true, correct and complete;
e. HESED is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
f. HESED has the corporate power to carry on its business, as now being
conducted, and is duly qualified to do business in any jurisdiction where so
required;
g. this Agreement has been duly authorized, executed and delivered by
HESED and is a valid and binding obligation of HESED and the SHAREHOLDERS
enforceable in accordance with its terms;
h. HESED, through its Board of Directors, has taken all corporate
action necessary for the performance of all of its obligations under this
Agreement; and
i. in respect of stock certificates, as to the HESED SHARES to be
transferred or issued by HESED, vest all rights, title and interest in and to
the shares.
8. Conditions Precedent to the Obligations of HESED. All obligations
of HESED and the SHAREHOLDERS under this Agreement are subject to the
fulfillment of the following:
a. the representations by NESS INTERNATIONAL contained in this
Agreement or in any certificate or document delivered by NESS INTERNATIONAL or
SUB. pursuant to the provisions hereof, shall be true, correct and complete;
b. the NESS INTERNATIONAL SHARES certificates to be executed and
delivered hereunder vest right, title and interest in the stock and said stock
will be, as of issuance, duly and validly issued, fully paid and non-assessable;
and
x. XXXX INTERNATIONAL has executed and delivered to HESED this document.
9. Indemnification. As to each of NESS INTERNATIONAL and HESED,
each party to this Agreement shall indemnify and hold harmless each other party
at all times after the date of this Agreement against and in respect of any
liability, damage, deficiency, action, suit, proceeding, demand, assessment,
judgment, cost and expense, including attorney's fees, resulting from any
misrepresentation, and/or breach of promise on the part of any such party under
this Agreement.
10. Nature and Survival Representations. All representations made
by the parties in this Agreement shall survive the Closing, and the parties are
carrying out the provisions of this Agreement in reliance solely on the
representations, covenants and agreements contained in this Agreement, or made
in writing at the Closing of the transaction herein provided for, and not upon
any investigation which any such party may have made, or any representation,
warranty, agreement, promise or information, written or oral, made by another
person or firm other than as specifically set forth herein.
11. Documents at Closing. At Closing, in addition to what is required
elsewhere herein, all EXHIBITS attached hereto, and the signature page hereto,
shall be executed and or initialed, delivered by all appropriate parties, except
the parties shall have such additional days as identified herein to perform as
expressly provided herein, in which case such provisions shall be subject to
additional time beyond the Closing notwithstanding anything to the contrary
(provided, however, it shall be deemed that the Closing of this Agreement
occurred on the Closing Date).
12. Additional Agreements. SHAREHOLDERS agree that the following
attached CERTIFICATION applies to them. The parties agree to execute additional
documents as requested by NESS INTERNATIONAL as relating to this Agreement.
13. Miscellaneous Provisions.
A. Gender. Wherever the context shall require, all words herein in
the masculine gender shall be deemed to include the feminine or neuter gender,
singular.
B. Severability. If any provision hereof is deemed
unenforceable by a court of competent jurisdiction, the remainder of this
Agreement, and the application of such provision in other circumstances shall
not be affected thereby.
C. Further Cooperation. From and after the date of this
Agreement, each of the parties hereto agrees to execute whatever additional
reasonable documentation or instruments as are necessary to carry out the intent
and purposes of this Agreement or to comply with any law.
D. Waiver. No waiver of any provision of this Agreement shall
be valid unless in writing and signed by the waiving party. The failure of any
party at any time to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein, shall not be construed as a waiver
or relinquishment of any other condition, promise, agreement or understanding
set forth herein or of the right to insist upon strict performance of such
waived condition, promise, agreement or understanding at any other time.
E. Expenses. Except as otherwise provided herein, each party
hereto shall bear all expenses incurred by each such party in connection with
this Agreement and in the consummation of the transactions contemplated hereby
and in preparation thereof.
F. Amendment. This Agreement may only be amended or modified at
any time, and from time to time, in writing, executed by HESED and NESS
INTERNATIONAL.
G. Captions. Captions herein are for the convenience of the
parties and shall not affect the interpretation of this Agreement.
H. Counterpart Execution and Fax. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument, and may
be executed by fax.
I. Assignment. This Agreement is not assignable.
J. Parties in Interest. Provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
specifically HESED and NESS ENERGY INTERNATIONAL, INC. and, their heirs,
executors, administrators, other permitted successors and assigns, if any.
Nothing contained in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it (HESED and NESS ENERGY INTERNATIONAL, INC.)
and their respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action against, any party to this Agreement.
K. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties on the subject matter hereof and
supersede all prior agreements and understandings.
L. Construction. This Agreement shall be governed by the laws of
the State of Texas, without reference to conflict of laws and the venue for any
action, claim or dispute in respect of this Agreement shall be such court of
competent jurisdiction as is located in Texas. The parties agree and acknowledge
that each has reviewed this Agreement and the normal rule of construction that
agreements are to be construed against the drafting party shall not apply in
respect of this Agreement given the parties have mutually negotiated and drafted
this Agreement.
M. Cooperation. The parties hereto agree to ooperate with one
another in respect of this Agreement, including reviewing and executing any
document necessary for the performance of this Agreement, to comply with law or
as reasonably requested by any party hereto, or legal counsel to any party
hereto.
N. Independent Legal Counsel. The parties hereto agree that (I)
each has retained independent legal counsel as confirmed in writing in
connection with the negotiation, preparation and execution of this Agreement,
(II) each has been advised of the importance of retaining legal counsel, and
(III) by the execution of this Agreement, each party who has not retained
independent legal counsel acknowledges having waived such right.
The parties have executed this Agreement as of the date first written
above.
NESS ENERGY INTERNATIONAL, INC
Its: President
HESED ENERGY INTERNATIONAL, INC.
Its: President
