EXHIBIT 7.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
CONTRACT POWER, INC.
A COLORADO CORPORATION
AND
COLORADO GOLD & SILVER, INC.
A COLORADO CORPORATION
DATED: OCTOBER 14, 1998
AGREEMENT AND PLAN OF REORGANIZATION
CONTRACT POWER, INC.
AND
COLORADO GOLD & SILVER, INC.
This Agreement and Plan of Reorganization ("Agreement"), dated as of
October 14, 1998, among CONTRACT POWER, INC. ("CPI"), a Colorado Corporation,
COLORADO GOLD & SILVER, INC. ("CGS") , a Colorado Corporation, and the
shareholders of CONTRACT POWER, INC. ("CPI Shareholders") who will join this
agreement by execution.
W I T N E S S E T H:
A. WHEREAS, CPI and CGS are corporations duly organized under the
laws of the State of Colorado.
B. PLAN OF REORGANIZATION. The CPI Shareholders are the owners of all
of the issued and outstanding common stock of CPI. It is the intention that all
of the issued and outstanding stock of CPI shall be acquired by CGS in exchange
solely for its voting stock. For federal income tax purposes it is intended that
this exchange shall qualify as a reorganization within the meaning of SEC 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
C. EXCHANGE OF SHARES. CGS and the CPI Shareholders agree that all of
the common shares issued and outstanding of CPI shall be exchanged with CGS for
35,782,600 shares of the common stock of CGS (post reverse split). The pro rata
numbers of the CGS shares, on the closing date, shall be delivered to the
individual shareholders in exchange for their CPI shares as hereinafter set
forth.
D. WHEREAS, the parties hereto wish to enter into this Agreement,
pursuant to the provisions of the Colorado Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
1.1 Subject to the conditions set forth herein on the "Effective Date"
(as herein defined), Shareholders of CPI shall exchange all of their shares of
CPI for 35,782,600 common shares of CGS common stock. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on a
closing date ("Closing Date") which shall be as soon as possible after all
regulatory approvals and shareholder approvals are obtained in accordance with
law as set forth in this Agreement, but no later than 30 days after date hereof.
On the Closing Date, all of the documents to be furnished to CGS and CPI,
including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. Xxxxxxx, to be held in escrow until the
Effective Date or the date of termination of this Agreement, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 At the Effective Date, CPI shall become a wholly owned subsidiary
of CGS. CPI's shareholders shall receive pro rata shares of $.0001 par value
voting common stock as follows:
CGS shall issue 35,785,600 of its shares of common stock for
100% of the outstanding common shares of CPI, pro rata to the
shareholders of CPI, plus warrants to purchase an additional
500,000 shares (post-reverse split) at $.01 per share.
1.3 If this Agreement is duly adopted by the holders of the requisite
number of shares, in accordance with the applicable laws and subject to the
other provisions hereof, such documents as may be required by law to accomplish
the Agreement shall be filed as required by law to effectuate same, and it shall
become effective. The time of filing the last document required by law shall be
the Effective Date for the Agreement. For accounting purposes, the Agreement
shall be effective as of 12:01 a.m., on the last day of the month preceding the
Effective Date.
ARTICLE II
ISSUANCE AND EXCHANGE OF SHARES
2.1 The shares of $.0001 par value common stock of CGS shall be issued
by it to CPI shareholders at closing.
2.2 It represents that no outstanding options or warrants for its
unissued shares exist. All preferred stock of CGS due for redemption as of the
date hereof shall have been redeemed as of closing date, if any.
2.3 The stock transfer books of CPI shall be closed on the Effective Date,
and thereafter no transfers of the stock of CPI shall be made. CPI shall appoint
an exchange agent ("Exchange Agent"), to accept surrender of the certificates
representing the common shares of CPI, and to deliver in exchange for such
surrendered certificates, shares of common stock of CGS. The authorization of
the Exchange Agent may be terminated by CGS after six months following the
Effective Date. Upon termination of such authorization, any shares of CPI and
any funds held by the Exchange Agent for payment to CPI shareholders pursuant to
this Agreement shall be transferred to CGS or its designated agent who shall
thereafter perform the obligations of the Exchange Agent. If outstanding
certificates for shares of CPI are not surrendered or the payment for them not
claimed prior to such date on which such payments would otherwise escheat to or
become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and other applicable law,
become the property of CGS (and to the extent not in its possession shall be
paid over to it), free and clear of all claims or interest of any persons
previously entitled to such items. Notwithstanding the foregoing, neither the
Exchange Agent nor any party to this Agreement shall be liable to any holder of
CPI shares for any amount paid to any governmental unit or agency having
jurisdiction of such unclaimed item pursuant to the abandoned property or other
applicable law of such jurisdiction.
2.4 No fractional shares of CGS stock shall be issued as a result of
the Agreement. Shares shall be rounded to nearest whole share.
2.5 At the Effective Date, each holder of a certificate or certificates
representing common shares of CPI, upon presentation and surrender of such
certificate or certificates to the Exchange Agent, shall be entitled to receive
the consideration set forth herein, except that holders of those shares as to
which dissenters' rights shall have been asserted and perfected pursuant to
Colorado law shall not be converted into shares of CGS common stock, but shall
represent only such dissenters' rights. Upon such presentation, surrender, and
exchange as provided in this Section 2.5, certificates representing shares of
CPI previously held shall be canceled. Until so presented and surrendered, each
certificate or certificates which represented issued and outstanding shares of
CPI at the Effective Date shall be deemed for all purposes to evidence the right
to receive the consideration set forth in Section 1.2 of this Agreement. If the
certificates representing shares of CPI have been lost, stolen, mutilated or
destroyed, the Exchange Agent shall require the submission of an indemnity
agreement and may require the submission of a bond in lieu of such certificate.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF CONTRACT POWER, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of CPI as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "CPI Disclosure
Statement"), if any. CPI hereby represents, warrants and covenants to CGS except
as stated in the CPI Disclosure Statement, as follows:
3.1 CPI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Articles of Incorporation and Bylaws of CPI are
complete and accurate, and the minute books of CPI contain a record, which is
complete and accurate in all material respects, of all meetings, and all
corporate actions of the shareholders and board of directors of CPI.
3.2 The aggregate number of shares which CPI is authorized to issue is
100,000,000 shares of common stock with $.0001 par value of which 1,000,000
shares are issued and outstanding. 10,000,000 preferred shares are authorized -
none outstanding.
3.3 CPI has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by CPI will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of CPI.
3.5 The execution, delivery and performance of this Agreement has been
duly authorized and approved by CPI's Board of Directors.
3.6 CPI will deliver to CGS consolidated audited financial statements
of CPI, as of September 30, 1997, within 30 days. All such statements, herein
sometimes called "CPI Financial Statements", are complete and correct in all
material respects and, together with the notes to these financial statements,
present fairly the financial position and results of operations of CPI for the
periods included. The September 30, 1997, statements will have been prepared in
accordance with generally accepted accounting principles.
3.7 Since the dates of the CPI Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise of CPI.
3.8 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of the officers of CPI, threatened
against CPI or affecting any of its assets or properties, and CPI is not in any
material breach or violation of or default under any contract or instrument to
which CPI is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by CPI under any contract or other instrument to which CPI is a party or
by which it or any of its properties may be bound or affected, or under its
respective Articles of Incorporation or Bylaws, nor is there any court or
regulatory order pending, applicable to CPI.
3.9 All liability of CPI has been properly provided for and is adequate
to comply with all regulatory requirements regarding same.
3.10 The representations and warranties of CPI shall be true and
correct as of the date hereof and as of the Effective Date.
3.12 CPI has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors.
3.13 No representation or warranty by CPI in this Agreement, the CPI
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
3.14 INTELLECTUAL PROPERTY. All trade names, inventions, discoveries,
ideas, research, engineering, methods, practices, processes, systems, formulae,
designs, drawings, products, projects, improvements, developments, know-how, and
trade secrets which are used in the conduct of CPI's business, whether
registered or unregistered (collectively the "Proprietary Rights") are owned by
CPI. To the knowledge of each Seller and CPI, CPI created or developed such
Proprietary Rights and such Proprietary Rights are not subject to any
restriction, lien, encumbrance, right, title or interest in others. All of the
foregoing Proprietary Rights that are not in the public domain stand solely in
the name of CPI and not in the name of any shareholder, director, officer,
agent, partner or employee or anyone else known to any Seller or CPI and none of
the same have any right, title, interest, restriction, lien or encumbrance
therein or thereon or thereto. To the knowledge of each Seller and CPI, CPI's
ownership and use of the Proprietary Rights do not and will not infringe upon,
conflict with or violate in any material respect any patent, copyright, trade
secret or other lawful proprietary right of any other party, and no claim is
pending or, to the knowledge of any Seller or CPI, threatened to the effect that
the operations of CPI infringe upon or conflict with the asserted rights of any
other person under any of the Proprietary Rights, and to the knowledge of each
Seller and CPI there is no reasonable basis for any such claim (whether or not
pending or threatened). No claim is pending, or to the knowledge of each Seller
and CPI, threatened to the effect that any such Proprietary Rights owned or
licensed by CPI, or which CPI otherwise has the right to use, is invalid or
unenforceable by CPI and there is no reasonable basis for any such claim
(whether or not pending or threatened). CPI has not granted or assigned to any
other person or entity any right to manufacture, have manufactured, assemble or
sell the products or proposed products or to provide the services or proposed
services of Seller.
3.15 a. LIENS. Except as disclosed on Schedule 3.15(a), no one other
than Seller has any right, title, interest, lien, claim, security interest,
restriction or encumbrance in, on or to CPI's assets.
b. MATERIAL CONTRACTS. Other than as disclosed on Schedule
3.15(b), Seller does not have any material obligation, contract, agreement,
lease, sublease, commitment or understanding of any kind, nature or description,
oral or written, fixed or contingent due or to become due, existing or inchoate.
c. NO UNDISCLOSED LIABILITIES. CPI does not have any material
liabilities or obligations, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in CPI's Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any Exhibit or Schedule to this Agreement, and (iii) liabilities not in excess
of $2,000 in the aggregate.
d. ENVIRONMENTAL MATTERS. (i) CPI has not received notice of
any violation of or investigation relating to any environmental or pollution
law, regulation, or ordinance with respect to assets now or previously owned or
operated by CPI that has not been fully and finally resolved; (ii) All permits,
licenses and other authorizations which are required under United States,
federal, state, provincial and local laws with respect to pollution or
protection of the environment ("Environmental Laws") relating to assets now
owned or operated by CPI or any of its subsidiaries, including Environmental
Laws relating to actual or threatened emissions, discharges or releases of
pollutants, contaminants or hazardous or toxic materials or wastes
("Pollutants"), have been obtained and are effective, and, with respect to
assets previously owned or operated by CPI, were obtained and were effective
during the time of CPI's operation; (iii) To the knowledge of CPI, no conditions
exist on, in or about the properties now or previously owned or operated by CPI
or any third-party properties to which any Pollutants generated by CPI were sent
or released that could give rise on the part of CPI to liability under any
Environmental Laws, claims by third parties under Environmental Laws or under
common law or the occurrence of costs to avoid any such liability or claim; and
(iv) to the knowledge of CPI, all operators of CPI's assets are in compliance
with all terms and conditions of such Environmental Laws, permits, licenses and
authorizations, and are also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder, relating to CPI's assets.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLORADO GOLD & SILVER, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of CGS as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
CGS hereby represents, warrants and covenants to CPI, except as stated
in the CGS Disclosure Statement, as follows:
4.1 CGS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Articles of Incorporation and Bylaws of CGS, copies
of which have been delivered to CPI, are complete and accurate, and the minute
books of CGS contain a record, which is complete and accurate in all material
respects, of all meetings, and all corporate actions of the shareholders and
Board of Directors of CGS.
4.2 The aggregate number of shares which CGS is authorized to issue is
1,00,000,000 shares of common stock with a par value of $.001 per share, of
which 64,217,400 shares of such common stock will be issued and outstanding,
fully paid and non-assessable, prior to closing under this agreement. CGS has no
outstanding options, warrants or other rights to purchase, or subscribe to, or
securities convertible into or exchangeable for any shares of capital stock. No
preferred stock of CGS is outstanding.
4.3 CGS has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement. The execution of this Agreement has been duly
authorized and approved by the CGS's Board of Directors.
4.4 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
CGS will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of CGS.
4.5 CGS will bring all of its SEC filings current within 30 days after date
hereof.
4.6 CGS has delivered to CPI audited financial statements of CGS dated
March 31, 1992. All such statements, herein sometimes called "CGS Financial
Statements" are (and will be) complete and correct in all material respects and,
together with the notes to these financial statements, present fairly the
financial position and results of operations of CGS of the periods indicated.
All statements of CGS will have been prepared in accordance with generally
accepted accounting principles.
4.7 Since the dates of the CGS Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of CGS. CGS does not have any material liabilities or obligations,
secured or unsecured except as shown on updated financials (whether accrued,
absolute, contingent or otherwise).
4.8 CGS has delivered to CPI a list and description of all pending legal
proceedings involving CGS, none of which will materially adversely affect them,
and, except for these proceedings, there are no legal proceedings or regulatory
proceedings involving material claims pending, or, to the knowledge of the
officers of CGS, threatened against CGS or affecting any of its assets or
properties, and CGS is not in any material breach or violation of or default
under any contract or instrument to which CGS is a party, and no event has
occurred which with the lapse of time or action by a third party could result in
a material breach or violation of or default by CGS under any contract or other
instrument to which CGS is a party or by which they or any of their respective
properties may be bound or affected, or under their respective Articles of
Incorporation or Bylaws, nor is there any court or regulatory order pending,
applicable to CGS.
4.9 CGS shall not enter into or consummate any transactions prior to
the Effective Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition,
or issue any new shares.
4.10 CGS is not a party to any contract performable in the future.
4.11 The representations and warranties of CGS shall be true and
correct as of the date hereof and as of the Effective Date.
4.12 CGS has delivered, or will deliver within two weeks of the date of
this Agreement, to CPI, all of its corporate books and records for review, true
and correct copies of CGS tax return since 1996, if any. CGS will also deliver
to CPI on or before the Closing Date any reports relating to the financial and
business condition of CGS which occur after the date of this Agreement and any
other reports sent generally to its shareholders after the date of this
Agreement.
4.13 CGS has no employee benefit plan in effect at this time.
4.14 No representation or warranty by CGS in this Agreement, the CGS
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
4.15 CGS agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of CPI and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and CGS expressly assumes
such indemnification obligations of CPI.
4.16 a. LIENS. Except as disclosed on Schedule 3.15(a), no one
other than Seller has any right, title, interest, lien, claim, security
interest, restriction or encumbrance in, on or to CPI's assets.
b. MATERIAL CONTRACTS. Other than as disclosed on Schedule
3.15(b), Seller does not have any material obligation, contract, agreement,
lease, sublease, commitment or understanding of any kind, nature or description,
oral or written, fixed or contingent due or to become due, existing or inchoate.
c. NO UNDISCLOSED LIABILITIES. CPI does not have any material
liabilities or obligations, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in CPI's Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any Exhibit or Schedule to this Agreement, and (iii) liabilities not in excess
of $2,000 in the aggregate.
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE DATE
5.1 This Agreement shall be duly submitted to the shareholders of CPI
for the purpose of considering and acting upon this Agreement in the manner
required by law at a meeting of shareholders on a date selected by CPI, such
date to be the earliest practicable date. The Board of Directors of CPI, subject
to its fiduciary obligations to shareholders, shall use its best efforts to
obtain the requisite approval of CPI shareholders of this Agreement and the
transactions contemplated herein. CPI and CGS shall take all reasonable and
necessary steps and actions to comply with and to secure CPI shareholder
approval of this Agreement and regulations of such states.
5.2 At all times prior to the Effective Date during regular business
hours, each party will permit the other to examine its books and records and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other parties with information which is confidential or
proprietary information. During the term of this Agreement, and for four years
following the termination of this Agreement, the recipient of such information
shall protect such information from disclosure to persons, other than members of
its own or affiliated organizations and its professional advisers, in the same
manner as it protects its own confidential or proprietary information from
unauthorized disclosure, and not use such information to the competitive
detriment of the disclosing party. In addition, if this Agreement is terminated
for any reason, each party shall promptly return or cause to be returned all
documents or other written records of such confidential or proprietary
information, together with all copies of such writings and, in addition, shall
either furnish or cause to be furnished, or shall destroy, or shall maintain
with such standard of care as is exercised with respect to its own confidential
or proprietary information, all copies of all documents or other written records
developed or prepared by such party on the basis of such confidential or
proprietary information. No information shall be considered confidential or
proprietary if it is (a) information already in the possession of the party to
whom disclosure is made, (b) information acquired by the party to whom the
disclosure is made from other sources, or (c) information in the public domain
or generally available to interested persons or which at a later date passes
into the public domain or becomes available to the party to whom disclosure is
made without any wrongdoing by the party to whom the disclosure is made.
5.3 CGS and CPI shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE FOR EXCHANGE
6.1 At the Effective Date, the exchange shall be effected as set forth
in Colorado Revised Statutes with common stock certificates of CGS being
exchanged for CPI common stock certificates as and when submitted to the
transfer agent.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE EXCHANGE
The following are conditions precedent to the consummation of the
Agreement on or before the Effective Date:
7.1 CPI shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Effective Date and CGS and CPI shall provide one another at the Closing with
a certificate to the effect that such party has performed each of the acts and
undertakings required to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted, at meetings of the
shareholders of CPI duly and properly called for such purpose in accordance with
the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
7.4 All actions, proceedings, instruments and documents required to carry
out this Agreement and the transactions contemplated hereby and the form and
substance of all legal proceedings and related matters shall have been approved
by counsel for CPI and CGS.
7.5 The representations and warranties made by CPI and CGS in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Effective Date, except to the extent that such
representations and warranties may be untrue on and as of the Effective Date
because of (1) changes caused by transactions suggested or approved in writing
by CPI or (2) events or changes (which shall not, in the aggregate, have
materially and adversely affected the business, assets, or financial condition
of CGS or CPI during or arising after the date of this Agreement.)
7.6 CPI will have sought and obtained from its legal counsel an opinion in
form and substance satisfactory to CPI to the effect that: if the transactions
contemplated hereby are consummated in accordance with the terms of this
Agreement, they will constitute a reorganization within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"); CGS and CPI will each be
a party to the reorganization; no gain or loss will be recognized pursuant to
the Code by CGS or CPI as a consequence of the transactions contemplated hereby;
CPI will succeed to and take into account the items of CGS described in the
Code; when a CPI shareholder receives solely CGS common stock in accordance with
the transactions contemplated hereby, such CPI shareholder will not recognize
gain or loss; the basis for the CGS common stock to be received by CPI
shareholders will be the same as the basis for the shares of CPI stock they
surrender in connection with the transactions contemplated hereby; and the
holding period for any CPI shareholder of the CGS common stock received in the
transactions contemplated hereby will include the period during which the shares
of the CPI stock surrendered were held provided that the CPI stock was a capital
asset in the hands of such CPI shareholder on the Effective Date.
7.7 CPI shall have furnished CGS with:
(1) a certified copy of a resolution or resolutions duly adopted
by the Board of Directors of CPI approving this Agreement and
the transactions contemplated by it and directing the
submission thereof to a vote of the shareholders of CPI;
(2) a certified copy of a resolution or resolutions duly adopted
by a majority of all of the classes of outstanding shares of
CPI capital stock approving this Agreement and the
transactions contemplated by it;
(3) an opinion of its counsel dated as of the Closing Date in
accordance with 7.6 hereof;
(4) an agreement from each "affiliate" of CPI as defined in the
rules adopted under the Securities Act of 1933, as amended, to
the effect that (a) the affiliate is familiar with SEC Rules
144 and 145; (b) none of the shares of CGS common stock will
be transferred by or through the affiliate in violation of the
Federal Securities Laws; (c) the affiliate will not sell or in
any way reduce his risk relative to any CGS common stock
received pursuant to this Agreement until such time as
financial results covering at least 30 days of post-closing
date combined operations shall have been published by CGS on
SEC Form 10-Q or otherwise; and (d) the affiliate acknowledges
that CGS is under no obligation to register the sale,
transfer, or the disposition of CGS common stock by the
affiliate or to take any action necessary in order to make an
exemption from registration available to the affiliate, but
understands that CGS will satisfy the public information
requirements of Rules 144 and 145 during the three-year period
following the Closing Date.
(5) Each U.S. citizen shareholder of CPI shall sign a
Consent/Subscription Agreement as contained on Exhibit "A."
7.8 CGS shall furnish CPI with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of CGS, approving this
Agreement and the transactions contemplated by it.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary
notwithstanding, the Agreement may be terminated and abandoned at any time
(whether before or after the approval and adoption thereof by the shareholders
of CPI) prior to the Effective Date:
(a) By mutual consent of CPI and CGS;
(b) By CPI, or CGS, if any condition set forth in Article VII
relating to the other party has not been met or has not been
waived;
(c) By CPI, or CGS, if any suit, action or other proceeding shall
be pending or threatened by the federal or a state government
before any court or governmental agency, in which it is sought
to restrain, prohibit or otherwise affect the consummation of
the transactions contemplated hereby;
(d) By any party, if there is discovered any material
error, misstatement or omission in the representations
and warranties of another party;
(e) By any party if the Agreement Effective Date is not within 30
days from the date hereof; or
8.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors provided; however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to the party waiving such term or condition.
ARTICLE IX
TERMINATION OF REPRESENTATION AND
WARRANTIES AND CERTAIN AGREEMENTS
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the parties
hereto shall survive in accordance with their terms.
ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties among
the parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of the
Exchange Agreement and Representations by all shareholders.
10.3 CGS and CPI each agree that if it has employed any investment
bankers, brokers, finders, or intermediaries in connection with the transaction
contemplated hereby who might be entitled to any fee or other payment from CPI
or CGS, such shall be the sole responsibility of the party entering into such
Agreement. The parties specifically understand, acknowledge and agree to issue
250,000 shares (post reverse split) Registered with SEC on Form S-8, which
shares are deemed earned upon the completion of this agreement, for acquisition
and merger services, and officers services previously rendered. 83,333 shares
each shall be issued to Coke Xxxxxx, Xxxx Xxxxxxxx and Field Systems, Inc.
10.4 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances as
are deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.5 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not be
amended without approval of the requisite shareholders of CPI.
10.6 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To Contract Power, Inc.:
00000 X. 00xx Xxx., #000
Xxxxx Xxxxx, XX 00000
To Colorado Gold & Silver, Inc.:
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.7 No press release or public statement will be issued relating
to the transactions contemplated by this Agreement without prior approval of
CPI and CGS. However, either CPI or CGS may issue at any time any press release
or other public statement it believes on the advice of its counsel it is
obligated to issue to avoid liability under the law relating to disclosures,
but the party issuing such press release or public statement shall make a
reasonable effort to give the other party prior notice of and opportunity to
participate in such release or statement.
10.8 The parties agree that Coke Xxxxxx shall cause to be effective and
grant a proxy therefore for 19,790,000 shares to approve, a reverse split of the
outstanding shares of CGS in a ratio of one new share for each existing 200
shares of CGS. Coke Xxxxxx shall deliver, proxies for an additional 12,900,000
shares to new management at or prior to the shareholders' meeting to approve a
reverse split.
10.9 In consideration heretofore, CPI shall cause payment of $10,000
for the audit fees of Xxxxxxx X. Xxxxxxx concurrent with execution as a
non-refundable deposit.
10.10 CPI may elect to close this transaction at any time.
10.11 CGS agrees that upon closing its directors will appoint two
directors designated by CPI subject to any section 14f compliance.
10.12 Coke Xxxxxx hereby covenants and agrees that for and in
consideration of a Promissory Note for $100,000 payable monthly over twelve
months, he will waive and further claims whatsoever for notes, interest, or
funds advanced to CGS. Two Notes for $25,000 each shall be issued for services
rendered; one Note to United Stock Transfer, Inc. and one Note to Xxxxx, LTD, a
BVI corporation.
IN WITNESS WHEREOF, the parties have set their hands and seals this
14th day of October, 1998.
Contract Power, Inc.
By:/s/Xxxxxx X. Xxxxxxx
__________________________
Vice-President
Attest:________________________
Secretary
Colorado Gold & Silver, Inc.
By:/s/M.Coke Xxxxxx
___________________________
President
Attest: X.X. Xxxxxx
________________________
Secretary
CONTRACT POWER, INC., SHAREHOLDERS (by signature below or pursuant to
execution of the Exchange Agreement and Representations incorporating this
Agreement by reference.)
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