EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), entered
into this 12th day of October 1998, is by, between, and among Sun Source,
Inc., a publicly held Nevada corporation (hereinafter the "Purchaser"),
PayStar Communications, Inc., a privately-held Nevada corporation
(hereinafter the "Private Company"), and the shareholders of the Private
Company whose names and signatures are set forth upon the signature page of
this Agreement (the "Shareholders").
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Shareholders are
willing to sell, all of the outstanding stock of the Private Company in
exchange solely for a part of the voting stock of the Purchaser whereby the
Shareholders would acquire a controlling interest of the Purchaser; and
WHEREAS, the parties hereto intend to qualify such transaction as a
tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Purchaser, the Private Company, and the
Shareholders approve and adopt this Agreement and Plan of Reorganization and
mutually covenant and agree with each other as follows:
1. Shares to be Transferred and Shares to be Issued.
1.1 On the Closing Date the Shareholders shall transfer to the
Purchaser certificates for the number of shares of the common stock of the
Private Company described in Schedule "A," attached hereto and incorporated
herein, which in the aggregate shall represent all of the issued and
outstanding shares of the common stock of the Private Company.
1.2 In exchange for the transfer of the common stock of the
Private Company pursuant to subsection 1.1. hereof, the Purchaser shall on
the Closing Date and contemporaneously with such transfer of the common stock
of the Private Company to it by the Shareholders issue and deliver to the
Shareholders the number of shares of common stock of the Purchaser specified
on Schedule "A" hereof such that the Shareholders shall own approximately 68%
of the outstanding common stock of the Purchaser.
2. Representations and Warranties of the Shareholders. Each of the
Shareholders, for himself, herself, or itself, and not for any other
Shareholder, represents and warrants to the Purchaser as set forth below.
These representations and warranties are made as an inducement for the
Purchaser to enter into this Agreement and, but for the making of such
representations and warranties and their accuracy, the Purchaser would not be
a party hereto.
2.1 Ownership of Stock.
a. Each of the Shareholders is the record and beneficial
owner and holder of the number of fully paid and nonassessable shares of the
common stock of the Private Company listed in Schedule "A" hereto as of the
date hereof and will continue to own such shares of the common stock of the
Private Company until the delivery thereof to the Purchaser on the Closing
Date and all such shares of common stock are or will be on the Closing Date
owned free and clear of all liens, encumbrances, charges and assessments of
every nature and subject to no restrictions with respect to transferability.
Each of the Shareholders currently has, and will have at Closing, full power
and authority to dispose, assign, and transfer his, her, or its shares of the
Private Company in accordance with the terms hereof. Each of the
Shareholders currently has, and will have at Closing, full power and
authority to vote his, her, or its shares of the Private Company, without
restriction of any kind.
b. Except for this Agreement, there are no outstanding
options, contracts, calls, commitments, agreements or demands of any
character relating to the common stock of the Private Company listed in
Schedule "A" and owned by each of the Shareholders.
2.2 Accuracy of All Statements Made by the Shareholders. No
representation or warranty by the Shareholders in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Shareholders pursuant to this Agreement, nor
any document or certificate delivered to the Purchaser by the Shareholders
pursuant to this Agreement or in connection with actions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits or
shall omit a material fact necessary to make the statements contained therein
not misleading.
3. Representations and Warranties of the Private Company. The Private
Company represents and warrants to the Purchaser as set forth below. These
representations and warranties are made as an inducement for the Purchaser to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Purchaser would not be a party hereto.
3.1 Organization and Authority. The Private Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
3.2 Capitalization. As of the date of the Closing, the Private
Company will have a total of no more than 10,000 shares of common stock
issued and outstanding. All of the shares will have been duly authorized and
validly issued and will be fully paid and nonassessable. There are no
options, warrants, conversion privileges, or other rights presently
outstanding for the purchase of any authorized but unissued stock of the
Private Company.
3.3 Performance of This Agreement. The execution and performance
of this Agreement and the transfer of stock contemplated hereby have been
authorized by the board of directors of the Private Company.
3.4 Financials. True copies of the financial statements of the
Private Company for the period ended July 31, 1998, (unaudited) have been
furnished to the Purchaser. Said financial statements are true and correct
in all material respects and present an accurate and complete disclosure of
the financial condition of the Private Company as of July 31, 1998, and the
earnings for the periods covered, in accordance with generally accepted
accounting principles applied on a consistent basis.
3.5 Liabilities. There are no material liabilities of the Private
Company, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of the Private Company, its agents or servants
occurring prior to July 31, 1998, which are not disclosed by or reflected in
said financial statements. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Private Company.
3.6 Absence of Certain Changes or Events. Except as set forth in
this Agreement, since July 31, 1998, there has not been (i) any material
adverse change in the business, operations, properties, level of inventory,
assets, or condition of the Private Company, or (ii) any damage, destruction,
or loss to the Private Company (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets, or conditions of the Private Company.
3.7 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Private Company or its subsidiaries, if
any, or their assets, properties, or business, nor does the Private Company
or its subsidiaries know, or have reasonable grounds to know, of any basis
for any such proceedings, investigations or inquiries, product liability or
other claims, judgments, injunctions or restrictions. In addition, there are
no material proceedings existing, pending or reasonably contemplated to which
any officer, director, or affiliate of the Private Company or as to which any
of the Shareholders is a party adverse to the Private Company or any of its
subsidiaries or has a material interest adverse to the Private Company or any
of its subsidiaries.
3.8 Taxes. All federal, state, foreign, county and local income,
profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Private Company, and there are no unpaid taxes
which are, or could become a lien on the properties and assets of the Private
Company, except as provided for in the financial statements of the Private
Company, or have been incurred in the normal course of business of the
Private Company since that date. All tax returns of any kind required to be
filed have been filed and the taxes paid or accrued.
3.9 Hazardous Materials. No hazardous material has been released,
placed, stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or
disposed of on or under any real property currently or previously owned or
leased by the Private Company or any of its subsidiaries.
3.10 Accuracy of All Statements Made by the Private Company. No
representation or warranty by the Private Company in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Private Company pursuant to this Agreement,
nor any document or certificate delivered to the Purchaser by the Private
Company pursuant to this Agreement or in connection with actions contemplated
hereby, contains or shall contain any untrue statement of material fact or
omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Private Company and to the Shareholders as set
forth below. These representations and warranties are made as an inducement
for the Private Company and the Shareholders to enter into this Agreement
and, but for the making of such representations and warranties and their
accuracy, the Private Company and the Shareholders would not be parties
hereto.
4.1 Organization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
4.2 Capitalization. As of the date of the Closing, the Purchaser
will have a total of no more than 1,040,600 shares of common stock issued and
outstanding (excluding the shares to be issued pursuant to this Agreement).
All of the shares will have been duly authorized and validly issued and will
be fully paid and nonassessable. Except for the Purchaser's obligations
hereunder with respect to the shares to be issued pursuant to subsection 1.2
hereof, there are no options, warrants, conversion privileges, or other
rights presently outstanding for the purchase of any authorized but unissued
stock of the Purchaser. As of the Closing, the Articles of Incorporation, as
amended, of the Purchaser (the "Purchaser Articles") and as currently in
effect shall be in the form previously furnished to the Private Company and
the Shareholders. The rights, preferences, and privileges of the common
stock shall be as set forth in the Purchaser Articles.
4.3 Performance of This Agreement. The execution and performance
of this Agreement and the issuance of stock contemplated hereby have been
authorized by the board of directors of the Purchaser.
4.4 Financials. True copies of the financial statements of the
Purchaser consisting of the balance sheets as of the fiscal years ended
December 31, 1997 and 1996 (audited) and the period ended April 30, 1998
(unaudited), and statements of income, cash flow and changes in stockholder's
equity for each of the periods then ended, have been delivered by the
Purchaser to the Private Company. These statements have been examined and
certified by Xxxxxxxx Xxxxxxxx & Xxxxxx, X.X., Certified Public Accountant.
Said financial statements are true and correct in all material respects and
present an accurate and complete disclosure of the
financial condition of the Purchaser as of April 30, 1998, and the earnings
for the periods covered, in accordance with generally accepted accounting
principles applied on a consistent basis.
4.5 Liabilities. There are no material liabilities of the
Purchaser, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of the Purchaser, its agents or servants which are
not disclosed by or reflected in said financial statements. As of the date
hereof, there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of business of the Purchaser.
4.6 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Purchaser or its subsidiaries, if any,
or their assets, properties, or business, nor does the Purchaser or its
subsidiaries know, or have reasonable grounds to know, of any basis for any
such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which
any officer, director, or affiliate of the Purchaser is a party adverse to
the Purchaser or any of its subsidiaries or has a material interest adverse
to the Purchaser or any of its subsidiaries.
4.7 Taxes. All federal, state, foreign, county and local income,
profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Purchaser, and there are no unpaid taxes which
are, or could become a lien on the properties and assets of the Purchaser,
except as provided for in the financial statements of the Purchaser, or have
been incurred in the normal course of business of the Purchaser since that
date. All tax returns of any kind required to be filed have been filed and
the taxes paid or accrued.
4.8 Hazardous Materials. No hazardous material has been released,
placed, stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or disposed of on or under any real property currently
or previously owned or leased by the Purchaser or any of its subsidiaries.
4.9 Legality of Shares to be Issued. The shares of common stock
of the Purchaser to be issued by the Purchaser pursuant to this Agreement,
when so issued and delivered, will have been duly and validly authorized and
issued by the Purchaser and will be fully paid and nonassessable.
4.10 Accuracy of All Statements Made by the Purchaser. No
representation or warranty by the Purchaser in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by the Purchaser pursuant to this Agreement, nor any document or
certificate delivered to the Private Company or the Shareholders pursuant to
this Agreement or in connection with actions contemplated hereby, contains or
shall contain any
untrue statement of material fact or omits to state or shall omit to state a
material fact necessary to make the statements contained therein not
misleading.
5. Covenants of the Parties.
5.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by the
Private Company, if not previously furnished, such entity shall deliver to
the Purchaser copies of the articles of incorporation, as amended, and the
current bylaws of the Private Company, and copies of the resolutions duly
adopted by the board of directors of the Private Company approving this
Agreement and the transactions herein contemplated.
b. Simultaneous with the execution of this Agreement by the
Purchaser, if not previously furnished, such entity shall deliver to the
Private Company copies of the Purchaser Articles, and the current bylaws of
the Purchaser, and copies of the resolutions duly adopted by the board of
directors of the Purchaser approving this Agreement and the transactions
herein contemplated.
5.2 Access to Information.
a. The Purchaser and its authorized representatives shall
have full access during normal business hours to all properties, books,
records, contracts, and documents of the Private Company, and the Private
Company shall furnish or cause to be furnished to the Purchaser and its
authorized representatives all information with respect to its affairs and
business as the Purchaser may reasonably request. The Purchaser shall hold,
and shall cause its representatives to hold confidential, all such
information and documents, other than information that (i) is in the public
domain at the time of its disclosure to the Purchaser; (ii) becomes part of
the public domain after disclosure through no fault of the Purchaser; (iii)
is known to the Purchaser or any of its officers or directors prior to
disclosure; or (iv) is disclosed in accordance with the written consent of
the Private Company. In the event this Agreement is terminated prior to
Closing, the Purchaser shall, upon the written request of the Private
Company, promptly return all copies of all documentation and information
provided by the Private Company hereunder.
b. The Private Company and its authorized representatives
shall have full access during normal business hours to all properties, books,
records, contracts, and documents of the Purchaser, and the Purchaser shall
furnish or cause to be furnished to the Private Company and its authorized
representatives all information with respect to its affairs and business the
Private Company may reasonably request. The Private Company shall hold, and
shall cause its representatives to hold confidential, all such information
and documents, other than information that (i) is in the public domain at the
time of its disclosure to the Private Company; (ii) becomes part of the
public domain after disclosure through no fault of the Private Company; (iii)
is known to the Private Company or any of its officers or directors prior to
disclosure; or (iv) is disclosed in accordance with the written consent of
the Purchaser. In the event this Agreement is terminated prior to Closing,
the Private Company shall, upon the written request of the
Purchaser, promptly return all copies of all documentation and information
provided by the Purchaser hereunder.
5.3 Actions Prior to Closing. From and after the date of this
Agreement and until the Closing Date:
a. The Purchaser and the Private Company shall each carry on
its business diligently and substantially in the same manner as heretofore,
and neither party shall make or institute any unusual or novel methods of
purchase, sale, management, accounting or operation.
b. Neither the Purchaser nor the Private Company shall enter
into any contract or commitment, or engage in any transaction not in the
usual and ordinary course of business and consistent with its business
practices.
c. Neither the Purchaser nor the Private Company shall amend
its articles of incorporation or bylaws or make any changes in authorized or
issued capital stock, except as provided in this Agreement.
d. The Purchaser and the Private Company shall each use its
best efforts (without making any commitments on behalf of the company) to
preserve its business organization intact.
e. Neither the Purchaser nor the Private Company shall do
any act or omit to do any act, or permit any act or omission to act, which
will cause a material breach of any material contract, commitment, or
obligation of such party.
f. The Purchaser and the Private Company shall each duly
comply with all applicable laws as may be required for the valid and
effective issuance or transfer of stock contemplated by this Agreement.
g. Neither the Purchaser nor the Private Company shall sell
or dispose of any property or assets, except products sold in the ordinary
course of business.
h. The Purchaser and the Private Company shall each promptly
notify the other of any lawsuits, claims, proceedings, or investigations that
may be threatened, brought, asserted, or commenced against it, its officers
or directors involving in any way the business, properties, or assets of such
party.
5.4 Shareholders' Approval. The Purchaser shall promptly submit
this Agreement and the transactions contemplated hereby for the approval of
its stockholders by majority written consent or at a meeting of stockholders
and, subject to the fiduciary duties of the Board of directors of the
Purchaser under applicable law, shall use its best efforts to obtain
stockholder approval and adoption of this Agreement and the transactions
contemplated hereby. In connection with such written action by, or meeting
of, stockholders, the Purchaser shall
prepare a proxy or information statement to be furnished to the shareholders
of the Purchaser setting forth information about this Agreement and the
transactions contemplated hereby. The Private Party shall promptly furnish
to the Purchaser all information, and take such other actions, as may
reasonably be requested in connection with any action to be taken by the
Purchaser in connection with the immediately preceding sentence. The Private
Company shall have the right to review and provide comments to the proxy or
information statement prior to mailing to the shareholders of the Purchaser.
5.5 No Covenant as to Tax or Accounting Consequences. It is
expressly understood and agreed that neither the Purchaser nor its officers
or agents has made any warranty or agreement, expressed or implied, as to the
tax or accounting consequences of the transactions contemplated by this
Agreement or the tax or accounting consequences of any action pursuant to or
growing out of this Agreement.
5.6 Indemnification. The Private Company and the Shareholders,
severally and not jointly, shall indemnify Purchaser for any loss, cost,
expense, or other damage (including, without limitation, attorneys' fees and
expenses) suffered by Purchaser resulting from, arising out of, or incurred
with respect to the falsity or the breach of any representation, warranty, or
covenant made by the Private Company or the Shareholders herein, and any
claims arising from the operations of the Private Company prior to the
Closing Date. Purchaser shall indemnify and hold the Private Company and the
Shareholders harmless from and against any loss, cost, expense, or other
damage (including, without limitation, attorneys' fees and expenses)
resulting from, arising out of, or incurred with respect to, or alleged to
result from, arise out of or have been incurred with respect to, the falsity
or the breach of any representation, covenant, warranty, or agreement made by
Purchaser herein, and any claims arising from the operations of Purchaser
prior to the Closing Date. The indemnity agreement contained herein shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any party and shall survive the
consummation of the transactions contemplated by this Agreement.
5.7 Publicity. The parties agree that no publicity, release, or
other public announcement concerning this Agreement or the transactions
contemplated by this Agreement shall be issued by any party hereto without
the advance approval of both the form and substance of the same by the other
parties and their counsel, which approval, in the case of any publicity,
release, or other public announcement required by applicable law, shall not
be unreasonably withheld or delayed.
5.8 Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall bear its own respective expenses incurred in
connection with the negotiation and preparation of this Agreement, in the
consummation of the transactions contemplated hereby, and in connection with
all duties and obligations required to be performed by each of them under
this Agreement.
5.9 Further Actions. Each of the parties hereto shall take all
such further action, and execute and deliver such further documents, as may
be necessary to carry out the transactions contemplated by this Agreement.
5.10 Spin-Off of Subsidiary. On or before the Closing Date, the
Purchaser shall duly sell, transfer, or otherwise dispose of the common stock
of Sun Source Corp., a Utah corporation and wholly owned subsidiary of the
Purchaser, and shall provide a duly executed release from such entity, in
form satisfactory to counsel to the Private Company, that no obligations are
due and owing to such entity, or its affiliates, by the Purchaser.
5.11 Amendment to Bylaws. On or before the Closing Date, the
Purchaser shall duly amend its Bylaws to provide that such Bylaws may be
amended or repealed by the Board of Directors at any meeting or by the
stockholders at any meeting.
5.12 No Assets or Liabilities. On or before the Closing Date, the
Purchaser shall dully dispose of all assets and satisfy all liabilities such
that as of the Closing the Purchaser shall have no assets or liabilities,
contingent or otherwise. At the Closing the Purchaser shall provide to the
Private Company releases, in form satisfactory to counsel for the Private
Company, executed by Xx. Xxxxxxxxxxx, Xx. Xxxx, their affiliates, and any
other members of management of the Purchaser after the date hereof through
Closing, representing that nothing is due or owning, directly or indirectly,
to such persons, their associates, or affiliates by the Purchaser. In
addition, at Closing the Purchaser shall provide to the Private Company an
opinion of counsel, in form satisfactory to counsel to the Private Company,
that the Purchaser has no liability in connection with the prior joint
venture mining operation of the Purchaser in connection with the Suitcase
Mine, or any other mining activity of the Purchaser or any subsidiary of the
Purchaser.
6. Conditions Precedent to the Purchaser's Obligations. Each and
every obligation of the Purchaser to be performed on the Closing Date shall
be subject to the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The representations
and warranties made by the Private Company and the Shareholders in this
Agreement or given on their behalf hereunder shall be substantially accurate
in all material respects on and as of the Closing Date with the same effect
as though such representations and warranties had been made or given on and
as of the Closing Date.
6.2 Performance of Obligations and Covenants. The Private Company
and the Shareholders shall have performed and complied with all obligations
and covenants required by this Agreement to be performed or complied with by
them prior to or at the Closing.
6.3 Officer's Certificate. The Purchaser shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to the Purchaser), executed by an executive
officer of the Private Company, certifying to the fulfillment of the
conditions specified in subsections 6.1 and 6.2 hereof.
6.4 No Litigation or Proceedings. There shall be no litigation or
any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or
validity of the transactions contemplated by this Agreement or which seeks
substantial damages in respect thereof.
6.5 No Material Adverse Change. As of the Closing Date there
shall not have occurred any material adverse change, financially or
otherwise, which materially impairs the ability of the Private Company to
conduct its business or the earning power thereof on the same basis as in the
past.
6.6 Shareholders' Approval. The holders of not less than a
majority of the outstanding common stock of the Purchaser shall have voted
for authorization and approval of this Agreement and the transactions
contemplated hereby.
6.7 Shareholders' Execution of Agreement. This Agreement shall
have been duly executed and delivered by each of the parties owning in the
aggregate all of the outstanding stock of the Private Company as of the
Closing Date.
7. Conditions Precedent to Obligations of the Private Company and the
Shareholders. Each and every obligation of the Private Company and the
Shareholders to be performed on the Closing Date shall be subject to the
satisfaction prior thereto of the following conditions:
7.1 Truth of Representations and Warranties. The representations
and warranties made by the Purchaser in this Agreement or given on its behalf
hereunder shall be substantially accurate in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date.
7.2 Performance of Obligations and Covenants. The Purchaser shall
have performed and complied with all obligations and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
7.3 Officer's Certificate. The Private Company shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to the Private Company), executed by an
executive officer of the Purchaser, certifying to the fulfillment of the
conditions specified in subsections 7.1 and 7.2 hereof.
7.4 No Litigation or Proceedings. There shall be no litigation or
any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
7.5 No Material Adverse Change. As of the Closing Date there
shall not have occurred any material adverse change, financially or
otherwise, which materially impairs the ability of the Purchaser to conduct
its business.
8. Securities Law Provisions.
8.1 Restricted Securities. Each of the parties hereto, severally
and not jointly, represents that he, she, or it is aware that the shares
issued or transferred to him, her, or it will not have been registered
pursuant to the Securities Act of 1933, as amended (the "1933 Act"), or any
state securities act, and thus will be restricted securities as defined in
Rule 144 promulgated by the Securities and Exchange Commission (the "SEC").
Therefore, under current interpretations and applicable rules, he, she, or it
will probably have to retain such shares for a period of at least one year
and at the expiration of such one year period his, her, or its sales may be
confined to brokerage transactions of limited amounts requiring certain
notification filings with the SEC and such disposition may be available only
if the issuer is current in its filings with the SEC under the Securities
Exchange Act of 1934, as amended, or other public disclosure requirements.
8.2 Non-distributive Intent. Each of the parties hereto,
severally and not jointly, covenants and warrants that the shares received
are acquired for his, her, or its own account and not with the present view
towards the distribution thereof and he, she, or it will not dispose of such
shares except (i) pursuant to an effective registration statement under the
1933 Act, or (ii) in any other transaction which, in the opinion of counsel
acceptable to the issuer, is exempt from registration under the 1933 Act, or
the rules and regulations of the SEC thereunder. In order to effectuate the
covenants of this subsection, an appropriate legend will be placed upon each
of the certificates of common stock issued or transferred pursuant to this
Agreement, and stop transfer instructions shall be placed with the transfer
agent for the securities.
8.3 Evidence of Compliance with Private Offering Exemption. Each
of the parties hereto, severally and not jointly, hereby represents and
warrants that he, she, or it, either individually or together with his, her,
or its representative, has such knowledge and experience in business and
financial matters that he, she, or it is capable of evaluating the risks of
this Agreement and the transactions contemplated hereby, and that the
financial capacity of such party is of such proportion that the total cost of
such person's commitment in the shares would not be material when compared
with his, her, or its total financial capacity. Each of the Shareholders
hereby acknowledges receipt of the following documents pertaining to the
Purchaser and this transaction: The Purchaser's broker-dealer due diligence
package pursuant to Rule 15c2-11 dated February 13, 1998, with exhibits.
Upon the written request of the issuer of the securities issued or
transferred pursuant to this Agreement, any party hereto shall provide such
issuer with evidence of compliance with the requirements of any federal or
state exemption from registration. The Purchaser and the Private Company
shall each file, with the assistance of the other and its respective legal
counsel, such notices, applications, reports, or other instruments as may be
deemed by each of them to be necessary or appropriate in an effort to
document reliance on such exemptions, unless an exemption requiring no filing
is available in the particular jurisdiction, all to the extent and in the
manner as may be deemed by such parties to be appropriate.
9. Change of Management. Upon and as a condition of Closing this
Agreement:
9.1 Prior to Closing the Purchaser will present to its
shareholders for approval the election of Xxxxxxx Xxxxx, Xxx Xxxxxxx, and
Xxxxxxxx Xxxxxxxx as directors of the Purchaser
effective immediately following the Closing of this Agreement. Prior to
Closing the Private Company will furnish material information of Xxxxxxx
Xxxxx, Xxx Xxxxxxx, and Xxxxxxxx Xxxxxxxx as nominees to be elected by the
shareholders of the Purchaser. Purchaser reserves the right to refuse to
cause the nomination of any or all such persons as directors of Purchaser if,
after review of the foregoing information concerning said persons, it is the
opinion of Purchaser that the election of such persons would not be in the
best interests of Purchaser.
9.2 The Private Company reserves the right to terminate this
Agreement if nominees selected by it are not elected or appointed as set
forth above.
10. Closing.
10.1 Time and Place. The Closing of this transaction ("Closing")
shall take place at 00 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx, at
10:00 am, on October 30, 1998, or at such other time and place as the parties
hereto shall agree upon. Such date is referred to in this Agreement as the
"Closing Date."
10.2 Documents To Be Delivered by the Private Company and the
Shareholders. At the Closing the Private Company and the Shareholders shall
deliver to the Purchaser the following documents:
a. Certificates for the number of shares of common stock of
the Private Company in the manner and form required by subsection 1.1 hereof.
b. The certificate required pursuant to subsection 6.3
hereof.
c. Such other documents of transfer, certificates of
authority, and other documents as the Purchaser may reasonably request.
10.3 Documents To Be Delivered by the Purchaser. At the Closing
the Purchaser shall deliver to the Private Company and the Shareholders the
following documents:
a. Certificates for the number of shares of common stock of
the Purchaser as determined in sub-section 1.2 hereof.
b. The certificate required pursuant to subsection 7.3
hereof.
c. The release required pursuant to subsection 5.10 hereof.
d. The opinion and releases required pursuant to subsection
5.12 hereof.
e. Such other documents of transfer, certificates of
authority, and other documents as the Private Company and the Shareholders
may reasonably request.
11. Termination. This Agreement may be terminated by the Purchaser or
the Private Company by notice to the other if, (i) at any time prior to the
Closing Date any event shall have occurred or any state of facts shall exist
that renders any of the conditions to its or their obligations to consummate
the transactions contemplated by this Agreement incapable of fulfillment, or
(ii) on October 31, 1998, if the Closing shall not have occurred. Following
termination of this Agreement no party shall have liability to another party
relating to such termination, other than any liability resulting from the
breach of this Agreement by a party prior to the date of termination.
12. Miscellaneous.
12.1 Notices. All communications provided for herein shall be in
writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant
to this subsection:
Purchaser: Xxx X. Xxxxxxxxxxx, President
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
With Copy to: J. Xxxxx XxXxxxxxxx
Attorney at Law
0000 Xxxx Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Private Company
and Shareholders: Xxxxxxx Xxxxx
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 00
Xxxx, XX 00000
With Copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
12.2 Default. Should any party to this Agreement default in any of
the covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee,
which may arise or accrue from enforcing this Agreement, or in pursuing any
remedy provided hereunder or by the statutes of the State of Utah.
12.3 Assignment. This Agreement may not be assigned in whole or in
part by the parties hereto without the prior written consent of the other
party or parties, which consent shall not be unreasonably withheld.
12.4 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
12.5 Partial Invalidity. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder
of this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant,
condition, or provision of this Agreement shall be valid and shall be
enforceable to the fullest extent permitted by law.
12.6 Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions,
letters of intent, and preliminary agreements between the parties hereto
relating to the subject matter of this Agreement.
12.7 Interpretation of Agreement. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
12.8 Survival of Covenants, Etc. All covenants, representations,
and warranties made herein to any party, or in any statement or document
delivered to any party hereto, shall survive the making of this Agreement and
shall remain in full force and effect until the obligations of such party
hereunder have been fully satisfied.
12.9 Further Action. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action
as may be required to carry out fully the transactions contemplated herein.
12.10 Amendment. This Agreement or any provision hereof may
not be changed, waived, terminated, or discharged except by means of a
written supplemental instrument signed by the party or parties against whom
enforcement of the change, waiver, termination, or discharge is sought.
12.11 Full Knowledge. By their signatures, the parties
acknowledge that they have carefully read and fully understand the terms and
conditions of this Agreement, that each party has had the benefit of counsel,
or has been advised to obtain counsel, and that each party has freely agreed
to be bound by the terms and conditions of this Agreement.
12.12 Headings. The descriptive headings of the various
sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
12.13 Counterparts. This Agreement may be executed in two or
more partially or fully executed counterparts, each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement
and Plan of Reorganization as of the day and year first above written.
PURCHASER: Sun Source, Inc.
By /s/ Xxx X. Xxxxxxxxxxx, President
PRIVATE COMPANY: PayStar Communications, Inc.
By /s/ Xxx Xxxxxxx, Vice-President
SHAREHOLDERS: /s/ Xxxxxxx Xxxxx, Individually
/s/ Xxx Xxxxxxx, Individually
/s/ Xxxxxxxx Xxxxxxxx, Individually
SCHEDULE "A"
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
NO. OF SHARES OF NO. OF SHARES OF
NAME OF THE PRIVATE COMPANY THE PURCHASER
SHAREHOLDER TO BE TRANSFERRED TO BE ISSUED
----------- ----------------- ------------
Xxxxxxx Xxxxx 7,500 1,500,000
Xxx Xxxxxxx 2,000 400,000
Xxxxxxxx Xxxxxxxx 500 100,000
------ ---------
TOTAL 10,000 2,000,000
------ ---------
AMENDMENT TO THE
AGREEMENT AND PLAN OF REORGANIZATION
This Pre-Closing Amendment is to the Agreement and Plan of
Reorganization (the "Agreement") dated October 12, 1998, by, between, and
among Sun Source, Inc., a publicly held Nevada corporation (hereinafter the
"Purchaser"), PayStar Communications, Inc., a privately-held Nevada
corporation (hereinafter the "Private Company"), and the shareholders of the
Private Company whose names and signatures are set forth upon the signature
page of this Agreement (the "Shareholders"). The parties mutually agree to
amend the designated provisions of the Agreement as follows:
1. Subsection 1.2 of the Agreement is amended to read as follows:
In exchange for the transfer of the common stock of the Private
Company pursuant to subsection 1.1. hereof, the Purchaser shall on the
Closing Date and contemporaneously with such transfer of the common stock
of the Private Company to it by the Shareholders issue and deliver to the
Shareholders the number of shares of common stock of the Purchaser
specified on Schedule "A" hereof such that the Shareholders shall own
approximately 65% of the outstanding common stock of the Purchaser.
2. Subsection 4.2 of the Agreement is amended to read as follows:
Capitalization. As of the date of the Closing, the Purchaser will
have a total of no more than 540,600 shares of common stock issued and
outstanding (excluding the shares to be issued pursuant to this Agreement).
All of the shares will have been duly authorized and validly issued and
will be fully paid and nonassessable. Except for the Purchaser's
obligations hereunder with respect to the shares to be issued pursuant to
subsection 1.2 hereof, there are no options, warrants, conversion
privileges, or other rights presently outstanding for the purchase of any
authorized but unissued stock of the Purchaser. As of the Closing, the
Articles of Incorporation, as amended, of the Purchaser (the "Purchaser
Articles") and as currently in effect shall be in the form previously
furnished to the Private Company and the Shareholders. The rights,
preferences, and privileges of the common stock shall be as set forth in
the Purchaser Articles.
3. Subsection 5.13 is added to the Agreement to read as follows:
Forward Stock Split. Following the Closing new management of
Purchaser shall effect a two-for-one forward split of the outstanding
shares of common stock of Purchaser, including the shares to be issued to
the Shareholders.
4. Schedule "A" to the Agreement is amended to read as follows:
NO. OF SHARES OF NO. OF SHARES OF
NAME OF THE PRIVATE COMPANY THE PURCHASER
SHAREHOLDER TO BE TRANSFERRED TO BE ISSUED
----------- ----------------- ------------
Xxxxxxx Xxxxx 7,500 750,000
Xxx Xxxxxxx 2,000 200,000
Xxxxxxxx Xxxxxxxx 500 50,000
------ ---------
TOTAL 10,000 1,000,000
------ ---------
IN WITNESS WHEREOF, the undersigned have executed this Amendment this
22nd day of October 1998.
PURCHASER: Sun Source, Inc.
By /s/ Xxxxxx Xxxx, President
PRIVATE COMPANY: PayStar Communications, Inc.
By /s/ Xxx Xxxxxxx, Vice-President
SHAREHOLDERS: /s/ Xxxxxxx Xxxxx, Individually
/s/ Xxx Xxxxxxx, Individually
/s/ Xxxxxxxx Xxxxxxxx, Individually
