Exhibit 10.1.
The Agreement of Purchase and Reorganization dated March 18, 2002.
AGREEMENT
AND
PLAN OF REORGANIZATION
by and between
VPN COMMUNICATIONS CORPORATION
and
SOUTHWICK MANAGEMENT, INC..
This agreement and plan of reorganization made as of the 18th day of March
2002 between VPN Communications Corporation, a Nevada corporation (hereinafter
called "Buyer or VPN"), party of the first part; and Southwick Management,
Inc.., a Nevada Corporation ("hereinafter called OMN or Seller") and the
individuals whose names are set forth in the attached Exhibit A (hereinafter
called "Selling Shareholders"), parties of the second part,
WITNESSETH:
The parties desire that Buyer shall acquire a majority of the issued and
outstanding shares of common stock of Southwick Management, Inc.. a Nevada
corporation (hereinafter called "Seller"), by an exchange of at least 3,000,000
shares of said issued and outstanding shares of common stock of Seller, together
with 1, 000, 000 shares of Class A Convertible Preferred Stock, solely for
shares of the voting common stock of Buyer, on the terms and conditions
hereinafter set forth.
Accordingly, the parties hereto covenant and agree as follows:
1. Selling Shareholders represent that:
1 (a) Seller is a corporation duly organized and existing under the
laws of the State of Nevada with authorized capital stock consisting of 25,000
shares of capital stock of no par value per share, of which 25,000 common shares
are duly issued and now outstanding, fully-paid and non-assessable; Seller does
not have issued or outstanding any other shares of common stock or any
subscription or other rights to the issuance or receipt of shares of its common
stock; all voting rights are vested exclusively in such common stock.
1 (b) The unaudited balance sheet of Seller as of even date hereof,
copies of which, including accompanying notes, have previously been delivered to
Buyer, has been prepared from the books and records of the Seller and fairly
present the financial position of Seller at such date.
1 (c) The shares of the outstanding common stock of Seller to be
exchanged hereunder are owned beneficially and of record by the Selling
Shareholders as follows:
NAME NUMBER of SHARES
Individuals listed not less than 25,000 shares total
in Exhibit A attached
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and each of the Selling Shareholders represent that he or she has full right and
title, without any lien or encumbrance whatsoever, to the number of shares of
common stock of Seller set opposite his or her name and full and unrestricted
right and power to exchange and deliver the same pursuant to the provisions of
this agreement and plan of reorganization.
1 (d) Seller is duly qualified and entitled to its respective
properties and to carry on its business all as and in the places where such
properties are now owned or such business is conducted.
1 (e) Seller has good and marketable title to all the property and
assets included in the balance sheet of Seller as of even date herewith referred
to in paragraph 1 (b) hereof, or purported to have been acquired by Seller after
said date, except, however, property and assets sold in the ordinary course of
business subsequent to said date; all the properties and assets of Seller are
free from any liens or encumbrances not disclosed.
1 (f) Seller is not a party to any pending or threatened litigation
which might adversely affect the financial condition, business or properties of
Seller, or interfere with the manufacture or sales of its products, nor to the
knowledge of the Selling Shareholders, is there any threatened or pending
governmental investigation involving Seller or any of its products, including
inquiries, citations or complaints by any Federal government agency , or any
other federal, state or local administration; and there are no outstanding
order, decrees or stipulations affecting Seller or any of its products.
1 (g) Any and all required returns for income taxes, surtaxes and
excess profits taxes of Seller for all prior periods up to and including even
date herewith have either been or will be duly prepared and filed in good faith
and all taxes shown thereon have been paid or accrued on the Seller's books.
1 (h) Seller has not since March 18, 2002
(i) Issued any additional shares of stock or other securities
(ii) Made any distribution to its shareholders, as shareholders,
of any assets by way of dividends, purchase of shares or
otherwise;
(iii) Mortgaged, pledged or subjected to lien or encumbrance any
of its properties or assets beyond that disclosed in the
schedule delivered to Buyer as provider in paragraph 1(c)
hereof,
(iv) Sold or transferred any of its assets, tangible or
intangible, except in each case in the ordinary and usual
course of business;
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(v) incurred any extraordinary losses or incurred or become
liable for any obligations or liabilities except current
liabilities incurred in the ordinary and usual course of
business, or made any extraordinary expenditures other than
for additions and betterments to existing plant, equipment
and facilities; or
(vi) Increased the rate of compensation of its officers.
1 (i) The business, properties and assets of Seller have not since
March 18, 2002 been materially and adversely affected as the result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike, embargo,
confiscation of vital equipment, materials or inventory, cancellation of
contracts by any domestic or foreign government, or any agency thereof, riot,
activities of armed forces or acts of god or the public enemy.
1 (j) Seller has no liabilities, contingent or otherwise, beyond those
stated in the balance sheet of Seller as of June 30, 2001 or described in the
notes accompanying said balance sheet, referred to in paragraph 1(b) hereof,
other than current liabilities incurred in the ordinary and usual course of
business since that date.
1 (k) Selling shareholders, in acquiring shares of common stock of
Buyer as herein contemplated, are acquiring the same for the purposes of
investment only, with no present intention of selling or otherwise marketing or
distributing such shares, unless such sales or distribution is made in
compliance with the registration provisions of the Securities Act of 1933, or
unless an exemption from registration can be established, or unless sold
pursuant to Rule 144 under the Securities Act of 1933, as amended.
l (1) No representation by Selling Shareholders made in this agreement
and to statement made in any certificate or schedule furnished in connection
with the transaction herein contemplated contains or will contain any knowingly
untrue statement of material fact or knowingly omits or will omit to state any
material fact necessary to make any such representation or warrant or any such
statement or misleading to a prospective purchase of all of the stock of Seller
who is seeking full information as to Seller and its affairs.
2. Buyer represents:
2 (a) That it is a corporation duly organized and existing under the
laws of the state of Nevada with an amendment pending authorizing its capital
stock to consist of 40,000,000 shares of common stock of par value of $.001 per
share, all having full voting power, of which approximately 6,100, 000 shares
have been duly issued and are outstanding full paid and non-assessable; and
10,000,000 shares of preferred stock of par value of $.001 per share, consisting
of Class A and Class B convertible shares, designations and preferences to be
filed with the Secretary of State of Nevada as more particularly set forth in
Attachment B hereto, of which no shares have been issued at this time.
2 (b) That the common shares of Buyer deliverable pursuant to this
agreement will be shares of common stock of the same class of common stock
presently issued and outstanding, which shares Buyer shall have full and lawful
authority to deliver, and when so delivered to Selling Shareholders, will have
full and equal voting rights and will be fully paid and non-assessable and will
represent 3,000,000 shares of issued and outstanding stock of the Buyer after
this plan of reorganization takes place.
2 (c) That in acquiring the shares of stock of Sellers hereunder,
Buyer is acquiring the same for purposes of investment only with no present
intention of selling or otherwise marketing or distributing them.
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2 (d) In regards to the stock of Buyer, Buyer acknowledges all rights
to the stock are vested exclusively in the common and Class A Preferred stock,
3,000,000 shares of which are being issued to the Selling Shareholders, together
with 1,000,000 shares of Class A Convertible Preferred Stock, pursuant to this
plan of reorganization.
2 (e) The balance sheet as of the 31st day of December, 2001, a copy
of which including company notes have been previously delivered to Sellers, had
been prepared from the books and records of the Buyer and fairly represent the
financial condition to Buyer as of such date.
2 (f) The Buyer is duly qualified and entitled to its respective
properties and to carry on its business all as and in the places where such
properties are now owned or such business is conducted.
2 (g) The Buyer is not a party to any pending or threatened litigation
which might adversely affect the financial condition, business or properties of
Buyer, or interfere with any manufacturing or sale of its products, nor to the
knowledge of Buyers' shareholders is there any threatened or pending
governmental investigation involving Buyer or any of its products, including
inquiries, citations or complaints by any federal governmental agency or any
federal, state or local administration; there are no outstanding orders, decrees
or stipulations affecting Buyer or any of its products or previous work done.
2 (h) That all returns for income taxes, surtaxes and excess profit
taxes of Buyer for all prior periods up to and including December 31, 2001 have
been or will be filed and prepared in good faith and all taxes shown thereon
have been or will be paid and that there are no other outstanding federal or
state taxes of any sort including income taxes, sales taxes, withholding taxes,
etc.
2 (i) The Buyer has not;
(i) Issued any additional shares of stock other than the
securities mentioned herein;
(ii) Made any distributions to the shareholders of any assets by
way of dividends, purchase of shares or otherwise not
disclosed to Seller; or
2 (j) The Buyer has no liabilities, contingent or otherwise, beyond
those stated in this agreement and the balance sheets, copies of which are
attached hereto, reflects the financial condition of Buyer, have been accurately
prepared, in accordance with generally accepted accounting principles. Buyer
represents that there are no other rights held by other parties to have stock
issued except that as set for in Seller's Board of Directors resolutions dated
December 20, 2001, a copy of which has been presented to Seller and disclosed in
Buyer's 10Q report filed with the Securities and Exchange Commission .
2 (k) No representation by Buyer or any of its shareholders made in
regards to this agreement and no statement made in any certificate or schedule
furnished in conjunction with this agreement contains or will contain any
knowingly untrue statement of or material fact or knowingly omits or will omit
to state any material fact necessary to make any such representation or warranty
or any such statement not misleading to Selling Shareholders or to Seller. Buyer
acknowledges that Seller and Selling Shareholders are relying on the statements
and representations of Buyer as to Buyer's financial condition including its
liabilities, if any, and that Seller and Selling Shareholders are being induced
to enter into this agreement with the understanding that Selling Shareholders
will receive and own, after the plan of reorganization contemplated herein has
been finalized, 3,000,000 shares of the outstanding and issued common stock of
Buyer together with 1,000,000 shares of Class A Preferred Convertible Stock of
Buyer.
2 (l) It is specifically agreed herein that if any of the
representations made by Buyer in this agreement are found to be untrue or
incorrect that in that case Selling Shareholders at their option may declare
this plan of reorganization null and void, and rescind this transaction,
thereafter taking back all stock of Seller.
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2 (m) Buyer acknowledges that certain fees and costs will be incurred
in order to affect the plan or reorganization and that all such fees and costs
will be disclosed in writing to Seller and Selling Shareholders.
2 (n) Buyer further represent to Sellers that it has not made any
statements which would prove to be untrue, false, or misleading to any
shareholder or investor of Buyer, that they have not violated or have its agents
violated any state or federal securities law in selling interests in Buyer to
prospective investors; that neither Buyer nor any representative or agent of
Buyer has made any representations concerning Buyer or Seller to any investor or
prospective investor which contain any untrue statement of a material fact, nor
have they omitted to a material fact, nor have they omitted to state a material
fact necessary to make such representations or warranties or any such other
statements nor misleading to prospective investors or purchasers of the stock of
Buyer or Seller, who are seeking full information as to Seller and its affairs.
Further Buyer specifically indemnifies and holds harmless Seller and Selling
Shareholders from any and all liabilities to which Selling Shareholders or
Seller could become liable for because of any acts, statements, or omissions of
Buyer or Buyer's agents. This indemnification and hold harmless agreement
specifically, although not exclusively, applies to any securities violations,
fraud, or other related liabilities to which Seller or Selling Shareholders
could become liable for and which acts are caused by Buyer or its agents.
3. Selling shareholders shall not cause, suffer or permit Seller,
subsequent to the date hereof and prior to the delivery hereunder to:
(i) issue any additional shares of stock or other securities;
(ii) make any distribution to its shareholders, as shareholders,
of any assets by way of dividends, purchase of shares or
otherwise;
(iii) mortgage, pledge or subject to Lien or encumbrance, any of
its properties or assets; (iv) sell or transfer any of its
assets, tangible or intangible, except in each case in the
ordinary course of business;
(v) incur or become liable for any obligations or liabilities
except current liabilities in the ordinary course of
business, or make any unusual or extraordinary expenditures;
or
(vi) increase the rate of compensation of its officers.
4. During the period prior to the closing date hereunder Selling
Shareholders shall cause Seller to conduct its business in the usual and normal
course.
5. Selling shareholders shall cause Seller to grant to Buyer the right and
opportunity to make such examination and investigation of Seller's business,
properties and affairs as Buyer may deem necessary or desirable for all purposes
relating to this agreement and to that end to open its books of account and
records for examinations by Buyer's representatives, accounts, and counsel.
6. Subject to the terms and conditions of this agreement, the parties have
adopted and agreed to the following plan of reorganization to be performed on
the closing date hereinafter provided for. This exchange of shares shall
constitute an Internal Revenue Code Section 368 a(1)B Reorganization and is
intended to qualify under that said Code section or other applicable Code
section as a tax-free exchange of shares.
6 (a) Selling shareholders shall transfer and deliver to Buyer at
least 25,000 shares of common stock of Seller owned by them respectively, such
shares and the certificates representing the same to be free and clear of all
liens and encumbrances. The certificates representing such shares shall be duly
endorsed in blank for transfer or accompanied by separate written instrument of
assignment, with signatures guaranteed by a commercial trust or band company or
by a member firm of the New York Stock Exchange and shall be accompanied by such
supporting documents as Buyer or its counsel may reasonably require.
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6 (b) Subject to the provisions of this paragraph 6 and paragraphs 7
and 8 hereof, Buyer shall deliver, in exchange for all the outstanding shares of
common stock of Seller, to Selling Shareholders, prorata in accordance with
their respective holdings of common stock of Seller, certificates representing
one share of Seller for each share of Buyer offered by Selling Shareholders,
totaling not less that 3,000,000 shares of common stock, $.001 par value, of
Buyer, together with 1,000,000 shares of Class A Preferred Convertible Stock of
Buyer. This will result in the exchanging shareholders of Seller owning not less
than 33% of the then outstanding common shares of Buyer.
6 (c) If less than all of the required shares of common stock of
Seller required hereunder are duly tendered for exchange, Buyer shall have the
right, at its option, either to withdraw from this agreement and plan of
reorganization, or to deliver to the respective Selling Shareholders duly
tendering their shares for the exchange the same number of shares of Buyer
common stock for which they would otherwise have received, without hereby being
deemed to have elected any remedy or to have waived any of its rights against
any selling stockholder failing to duly tender all his or her shares.
6 (d) All transfer fees payable in connection with the transfer of
shares of common stock of Buyer to be delivered to Selling Shareholders pursuant
to this agreement and plan of reorganization shall be paid by Buyer, and taxes,
including documentary and stock transfer taxes, payable on the transfer or
delivery to Buyer of shares of stock of Seller shall be payable by Selling
Shareholders.
7. All obligations of Buyer under this agreement are subject to the
fulfillment, on or prior to the closing date, of each of the following
conditions in addition to the conditions set forth in paragraph 6 hereof.
7a. That the representations of the Selling Shareholders shall be true
at and as of the closing date as though such representations were made at and as
of such time.
7b. That Buyer shall have received a certificate dated on the closing
date, signed by the president of Seller, that since the date of this agreement
and plan of reorganization Seller has not done or permitted to be done any of
the acts or things forbidden in paragraph 3 of this agreement and plan of
reorganization.
7c. That no claim or liability not fully covered by insurance shall
have been asserted against Seller and that Seller shall not have suffered any
loss on account of fire, flood, accident or other calamity of such a character
as to materially adversely affect its financial condition, regardless of whether
or not such loss shall have been insured.
7d. That all covenants herein made by Selling Shareholders which are
to be performed at or prior to the closing date hereunder shall have been duly
performed.
8. Under no circumstances shall Buyer be required to register with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Act of 1933, as amended, any shares of its common stock deliverable to Selling
Shareholders hereunder.
9. All transactions contemplated by this agreement and plan of
reorganization as well as the form and substance of all legal proceedings and of
all papers and documents used or deliverable hereunder, shall be subject to the
approval at the election of Buyer and Sellers hereunder.
10. The closing under this agreement and plan of reorganization and all
deliveries hereunder shall take place on or before the 18th day of March, 2002.
Upon closing Seller may call upon one of the three members of the Board of
Directors of Buyer to immediately resign, and a new Board of Directors to
replace him shall be appointed at the option of Seller by the Shareholders of
Seller. However, Seller agrees to retain E.G. Marchi or his designee as Board
members with full rights thereof for a period of two years.
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11. All notices under this agreement and plan of reorganization shall be in
writing and any notice to Buyer shall be considered delivered in all respects
when it has been trailed, first class postage prepaid, addressed as follows:
VPN Communications Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxx, Xx 00000
12. This agreement and plan of reorganization shall bind and inure to the
benefit of the parties hereto and their assigns, provided however, that this
agreement and plan of reorganization cannot be assigned by any party except by
or with the written consent of the others. Nothing herein expressed or implied
is intended of shall be construed to confer upon or to give to any person, firm,
or corporation other than the parties hereto and their respective legal
representatives, successors, and assigns any rights or benefits under or by any
reason of this agreement and plan of reorganization.
13. This agreement and plan of reorganization may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. The validity, interpretation of terms, and performance of this
agreement shall be governed by and construed under the laws of the State of
Nevada.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
agreement and plan of reorganization as of the day and year first above written.
Date of Signature:
Buyer: VPN COMMUNICATIONS CORPORATION
By /s/ E. G. Marchi
--------------------------------------------
President
Seller: SOUTHWICK MANAGEMENT, INC.
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
President
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EXHIBIT A
SOUTHWICK MANAGEMENT, INC.. SELLING SHAREHOLDERS:
Name: Shares owned:
----- -------------
Xxxxxxx X. Xxxxxx, Xx. 12,500
Xxxxxx Xxxxxxx 12,500
Total 25,000
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CONSENT RESOLUTION OF THE
SHAREHOLDERS AND DIRECTORS
OF
SOUTHWICK MANAGEMENT, INC..
We, being all of the directors and shareholders of SOUTHWICK MANAGEMENT, INC.. a
Nevada corporation, do hereby consent and agree that effective this 26th day of
March, 2002, the following resolution is hereby adopted:
RESOLVED, that the shareholders of SOUTHWICK MANAGEMENT, INC.. do hereby consent
and agree that they shall transfer the majority of the issued and outstanding
stock of SOUTHWICK MANAGEMENT, INC.. which they own, and not less than 25,000
shares, to that corporation known as VPN COMMUNICATIONS CORPORATION a Nevada
corporation, in return for not less than 3,000,000 shares of that corporation's
common stock issued and outstanding, together with 1,000,00 shares of Class A
Convertible Preferred Stock, after completion of a plan of reorganization with
this corporation. This shall be an Internal Revenue Code Section 368 a(1)B
Reorganization and is intended to qualify under that said Code section as a
tax-free exchange of shares. Further that the agreement and plan of
reorganization shall be substantially in the form shown on the attached
agreement and Plan of Reorganization.
DATED this 18th day of March 2002.
DIRECTORS:
BY /s/ Xxxxxx Xxxxxxx
-------------------
Xxxxxx Xxxxxxx
BY /s/ Xxxxxxx Xxxxxx
-------------------
Xxxxxxx Xxxxxx
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