PLAN OF REORGANIZATION
THIS AGREEMENT is effective the 3rd day of November, 1999, and is made by and
among Light Energy Management Inc., a corporation organized under the laws of
the State of Nevada, United States of America, hereinafter called "YNOT",
Beijing Shijiyonglian Ruanjian Jishu Youxian Gongsi (Beijing Forlink Software
Technology Co., Ltd.), a company organized under the laws of China, hereinafter
called "BFSTC", Xxxx Xxxxxxx, Xxx Xxxxx, Song Wei and Xxxxx Xxx, hereinafter
called "SHAREHOLDERS", Xxxxxx & Xxxxxx Management Limited represented by X.
Xxxxxx and Xxxxxx & Co. represented by X. Xxxxxx, hereinafter called "YNOT
SHAREHOLDERS".
RECITALS:
WHEREAS, YNOT desires to acquire 100% of the issued and outstanding
shares of the common stock of BFSTC, in exchange for 20,000,000 authorized but
unissued shares of the $.001 par value common stock of YNOT, pursuant to a plan
of reorganization within the meaning of IRC (1986), Section 368(a)(1)(B), as
amended; and
WHEREAS, SHAREHOLDERS, whose consent is evidenced in Exhibit 1.02
desire to exchange 100% of the issued and outstanding shares of the common stock
of BFSTC (the "BFSTC Shares"), currently owned by SHAREHOLDERS, in exchange for
said 20,000,000 shares of YNOT (the "YNOT Shares").
NOW THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, and to consummate the foregoing plan of
reorganization, the parties hereby adopt said plan of organization and agree as
follows:
ARTICLE I
EXCHANGE OF SECURITIES
1.01 Issuance of YNOT Shares. Subject to all of the terms and
conditions of this Agreement, YNOT agrees to issue to SHAREHOLDERS as
individuals 20,000,000 fully paid and nonassessable unregistered shares of YNOT
common stock in exchange for 100% of the outstanding BFSTC common stock, all of
which is currently owned by SHAREHOLDERS.
1.02 Transfer of BFSTC Shares. In exchange for YNOT's stock being
issued to SHAREHOLDERS as above described, SHAREHOLDERS shall deliver to YNOT
100% of the outstanding common stock of BFSTC.
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ARTICLE II
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF
SHAREHOLDERS AND BFSTC AS OF NOVEMBER 3RD 1999
2.01 Organization. BFSTC is a corporation duly organized, validly
existing, and in good standing under the laws of China, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, is duly qualified to do business and is in good standings in
any jurisdiction its business requires qualification.
2.02 Capital. The BFSTC Shares consist of 100% of the shares of common
stock, of Beijing Shijiyonglian Ruanjian Jishu Youxian Gongsi (Beijing Forlink
Software Technology Co., Ltd.) currently issued and outstanding. All of the
issued and outstanding shares are validly issued, fully paid and nonassessable.
2.03 Subsidiaries. BFSTC does not have any subsidiaries.
2.04 Directors and Officers. Exhibit 2.04 to this Agreement contains
the names and titles of all directors and officers of BFSTC as of the date of
this Agreement.
2.05 Financial Statements. Exhibit 2.05 to this Agreement includes the
unaudited pro forma financial statements of BFSTC as of September 30th 1999.
2.06 Absence of Changes. Since the date of BFSTC's most recent
financial statements included in Exhibit 2.05 there have been no changes in its
financial condition or operations, except for changes in the ordinary course of
business.
2.07 Absence of Undisclosed Liabilities. As of the date of BFSTC's
most recent balance sheet included in Exhibit 2.05 it did not have any material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, as required by GAAP
or other appropriate standards, that is not reflected in such balance sheet.
2.08 Tax Returns. Within the times and in the manner prescribed by
law, BFSTC has filed all federal, state and local tax returns required by law,
has paid all taxes, assessments and penalties due and payable and has made
adequate provision on its most recent balance sheet for any unpaid taxes. There
are no present disputes as to taxes of any nature payable by BFSTC.
2.09 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, YNOT
and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of BFSTC. BFSTC shall make
available to YNOT and/or its attorneys all books and records of BFSTC. If the
transaction contemplated hereby is not completed, all documents received by YNOT
and/or its attorneys shall be returned to BFSTC and all information so received
shall be treated as confidential.
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2.10 Patents Trade Names and Rights. BFSTC owns or holds all necessary
patents, trademarks, service marks, trade names, copyrights and other rights
necessary to the conduct or proposed conduct of its business.
2.11 Compliance with Laws. As of November 0xx 0000, XXXXX has complied
with, and is not in violation of, applicable federal, state or local statutes,
laws and regulations affecting its properties or the operation of its business.
2.12 Litigation. BFSTC is not a party to, nor to the best of its
knowledge is there pending or threatened, any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation
concerning its business, assets or financial condition. BFSTC is not in default
with respect to any order, writ, injunction or decree of any federal , state,
local or foreign court or agency, nor is it engaged in any lawsuits to recover
monies due to it.
2.13 Authority. The Board of Directors of BFSTC authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein and has full power and authority to execute, deliver and
perform this agreement.
2.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by BFSTC and the performance of its obligations hereunder in the
time and manner contemplated will not cause, constitute or conflict with or
result in (i) any breach of the provisions of any license, indenture, mortgage,
charter , instrument, certificate of incorporation, bylaw or other agreement or
instrument to which it is a party or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be required,
(ii) an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation, or (iii) an event that would result in the creation or imposition of
any lien, charge or encumbrance on any asset.
2.15 Full Disclosure. None of the representations and warranties made
by SHAREHOLDERS or BFSTC herein or in any exhibit, certificate or memorandum
furnished or to be furnished by SHARE- HOLDERS or BFSTC, or on either's behalf,
contains or will contain any untrue statement of material fact, or omits any
material fact, the omission of which would be misleading.
2.16 Assets. BFSTC has good and marketable title to all of its
property free and clear of any and all liens, claims or encumbrances except as
may be indicated in Exhibit 2.05.
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2.17 Indemnification. SHAREHOLDERS and BFSTC agree to defend and hold
YNOT and its officers and directors harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney's fees, that it
shall incur or suffer, which arise out of, result from or relate to any breach
of this Agreement or failure by SHAREHOLDERS or BFSTC to perform with respect to
any of its representations, warranties or covenants contained in this Agreement
or in any exhibit or other instrument furnished or to be furnished under this
Agreement.
2.18 Authority to Exchange. As of the date of this Agreement,
SHAREHOLDERS holds 100% of the shares of BFSTC common stock. Such shares are
owned of record and beneficially by SHARE- HOLDERS and such shares are not
subject to any lien, encumbrance or pledge. SHAREHOLDERS holds authority to
exchange such shares pursuant to this Agreement.
2.19 Investment Intent. SHAREHOLDERS understands and acknowledges that
the shares of YNOT common stock offered for exchange or sale pursuant to this
Agreement are being offered in reliance upon the exemption from registration
requirements of the Securities Act of 1993, as amended (the "Act"), pursuant to
Section 4(2) of the Act and the rules and regulations promulgated thereunder,
for nonpublic offerings and makes the following representations, agreements and
warranties with the intent that the same may be relied upon in determining the
suitability of SHAREHOLDERS as a purchaser of YNOT common stock:
(a) The shares of YNOT common stock are being acquired solely for the
account of SHAREHOLDERS for investment purposes only, and not with a view to, or
for sale in connection with, any distribution thereof, and with no present
intention of distributing or reselling any part of the YNOT common stock
acquired;
(b) SHAREHOLDERS agrees not to dispose of its YNOT common stock or any
portion thereof unless and until counsel for YNOT shall have determined that the
intended disposition is permissible and does not violate the Act or any
applicable Federal or state securities laws, or the rules and regulations
thereunder.
(c) SHAREHOLDERS agrees that the certificates evidencing the YNOT
common stock acquired pursuant to this Agreement will have a legend placed
thereon stating that they have not been registered under the Act or any state
securities laws and setting forth or referring to the restrictions on
transferability and sale of the YNOT common stock, and that stop transfer
instructions shall be placed with the transfer agent for said certificate.
(d) SHAREHOLDERS acknowledges that YNOT has made all records and
documentation pertaining to YNOT common stock available to them and to their
qualified representatives, if any, and has offered such person or persons an
opportunity to ask questions and further discuss the proposed acquisitions of
YNOT common stock, and any available information pertaining thereto, with the
officers and directors of YNOT, and that all such questions and information
requested have been answered by YNOT and its officers and directors to
SHAREHOLDERS's satisfaction.
(e) SHAREHOLDERS has carefully evaluated its financial resources and
investment position and the risks associated with this transaction and is able
to bear the economic risks of this transaction; and it has substantial knowledge
and experience in financial, business and investment matters and is qualified as
a sophisticated investor, and is capable of evaluating the merits and risks of
this transaction; and desires to acquire the YNOT common stock on the terms and
conditions set forth;
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(f) SHAREHOLDERS is able to bear the economic risk of an investment in
the YNOT common stock; and
(g) SHAREHOLDERS understands that an investment in the YNOT common
stock is illiquid and SHAREHOLDERS has no need for liquidity in this investment.
2.20 Receipt of Relevant Information. SHAREHOLDERS and BFSTC have
received from YNOT all financial and other information concerning YNOT and its
promoters, officers and directors, including, but not limited to Prospectus
dated June 30th 1993, Annual Report on Form 10-K for the year ended December
31st 1998, Forms 10-Q for the quarters ended March 30th 1999, June 30th 1999,
and September 30th 1999, and Forms 8-K dated April 17th and April 22nd 1997, as
filed with the Securities and Exchange Commission, and all other documents and
information they have requested.
2.21 Public "Shell" Corporation. BFSTC and SHAREHOLDERS are aware that
YNOT has public shareholders and is a "shell" corporation without significant
assets or liabilities, further that public companies are subject to extensive
and complex state, federal and other regulations. Among other requirements,
SHAREHOLDERS and BFSTC are aware that a form 8-K must be filed with the United
States Securities and Exchange Commission within fifteen days after closing,
which filing requires that audited financial statements be filed within sixty
days after the filing of the 8-K, and they agree that such filings shall be the
responsibility of the officers and directors of YNOT. SHAREHOLDERS and BFSTC are
aware of the legal requirements and obligations of public companies, understand
that regulatory efforts regarding public shell transactions similar to the
transaction contemplated herein has been and is currently being exerted by some
states, the U.S. Securities and Exchanges Commission and the National
Association of Securities Dealers, Inc. (NASD), and are fully aware of their
responsibilities, following closing, to fully comply will all securities laws
and regulations, and agree to do so.
2.22 No Assurances or Warranties. SHAREHOLDERS and BFSTC acknowledge
that there can be no assurance regarding the tax consequences of this
transaction, nor can there be any assurance that the Internal Revenue Code or
the regulations promulgated thereunder will not be amended in such manner as to
deprive them of any tax benefit that might otherwise be received. SHAREHOLDERS
and BFSTC are relying upon the advice of their own tax advisors with respect to
the tax aspects of this transaction. No representations or warranties have been
made by YNOT or its officers, directors, affiliates or agents, as to the
benefits to be derived by SHAREHOLDERS or BFSTC in completing this transaction,
nor have any of them made any warranty or agreement, expressed of implied, as to
the tax or securities consequences of the transactions contemplated by this
Agreement or the tax or securities consequences of any action pursuant to or
growing out of this Agreement.
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ARTICLE III
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF YNOT
AS OF NOVEMBER 3RD 1999
YNOT represents, agrees and warrants that:
3.01 Organization. YNOT is a corporation duly organized, validity
existing, and in good standing under the laws of Nevada, has all necessary
corporate powers to own properties and carry on its business as now owned and
operated by it, is duly qualified to do business and is in good standing in each
of the jurisdictions where its business requires qualification.
3.02 Capital. The authorized capital stock of YNOT consists of
100,000,000 shares of $.001 par value common stock of which 5,000,000 shares are
currently issued and outstanding and held by over 500 shareholders. All of the
issued and outstanding shares are validly issued, fully paid and nonassessable.
All currently outstanding shares of YNOT Common Stock have been issued in
compliance with applicable federal and state securities laws. Subsequent to the
closing of this transaction no present YNOT shareholders beneficially hold 5% or
more of YNOT Common Stock.
3.03 Subsidiaries. YNOT has no subsidiaries and does not own any
interest in any other enterprise, whether not such enterprise is a corporation.
3.04 Directors and Officers. Exhibit 3.04 to this Agreement contains
the names and titles of all officers and directors of YNOT as of the date of
this Agreement.
3.05 Financial Statements. Exhibit 3.05 to this Agreement includes
YNOT's financial statements as of December 31st 1998. The financial statements
have been prepared in accordance with generally accepted accounting principles
and practices consistently followed throughout the period indicated and fairly
present the financial position of YNOT as of the dates of the balance sheets
included in the financial statements and the results of operations for the
periods indicated.
3.06 Absence of Changes. Since the date of YNOT's most recent
financial statements, Form 10-Q for the quarter up until September 30th 1999,
there has not been any change in its financial condition or operations except
for changes in the ordinary course of business.
3.07 Absence of Undisclosed Liabilities. As of the date of YNOT's most
recent balance sheet, included in Exhibit 3.05, it did not have any material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not reflected
in such balance sheet.
3.08 Tax Returns. Within the times and in the manner prescribed by
law, YNOT has filed all federal, state or local tax returns required by law, has
paid all taxes, assessments and penalties due and payable and has made adequate
provision on its most recent balance sheet for any unpaid taxes. There are no
present disputes as to taxes of any nature payable by YNOT.
3.09 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, BFSTC and
SHAREHOLDERS shall have the opportunity to meet with YNOT's accountants and
attorneys to discuss the financial condition of YNOT. YNOT shall make available
to BFSTC and SHAREHOLDERS all books and records of YNOT.
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3.10 Patents, Trade Names and Rights. YNOT does not use any patents,
trade marks, service marks, trade names or copyrights in its business.
3.11 Compliance with Laws. YNOT has complied with, and is not in
violation of, applicable federal, state or local statues, laws and regulations
affecting its properties, securities or the operation of its business.
3.12 Litigation. YNOT is not a party to, nor to the best of its
knowledge is there pending or threatened, any suit, action, arbitration or
legal, administrative or other proceedings, or governmental investigation
concerning its business, assets or financial condition. YNOT is not in default
with respect to any order, writ, injunction or decree of any federal, state
local or foreign court or agency, nor is it engaged in, nor does it anticipate
it will be necessary to engage in, any lawsuits to recover money or real or
personal property.
3.13 Authority. The Board of Directors of YNOT has authorized the
execution of this Agreement and the transactions contemplated herein (exhibit
5.01c), and it has full power and authority to execute, deliver and perform this
Agreement. A Majority Consent of YNOT shareholders has been obtained in approval
of this Agreement (exhibit 3.13).
3.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by YNOT and the performance of its obligations hereunder will not
cause, constitute, conflict with or result in (i) any breach of the provisions
of any license, indenture, mortgage, charter, instrument, certificate of
incorporation, bylaw or other agreement or instrument to which it is a party or
by which it may be bound, nor will any consents or authorizations of any party
other than those hereto be required, (ii) an event that would permit any party
to any agreement or instrument to terminate it or to accelerate the maturity of
any indebtedness or other obligation, or (iii) an event that would result in a
creation or imposition of any lien, charge or encumbrance on any asset.
3.15 Full Disclosure. None of the representations and warranties made
by YNOT herein, or in any exhibit, certificate of memorandum furnished or to be
furnished by it or on its behalf, contains or will contain any untrue statement
of a material fact, or omits any material fact the omission of which would be
misleading.
3.16 Assets. YNOT has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances, except as may be
indicated in Exhibit 3.05.
3.17 Indemnification. YNOT agrees to indemnify, defend and hold
harmless BFSTC against and in respect to any and all claims, demands, losses,
cost, expenses, obligations, liabilities or damages, including interest,
penalties and reasonable attorney's fees, incurred or suffered, which arise out
of, result from or relate to any breach of, or failure by YNOT to perform, any
of its representations, warranties or covenants in this Agreement or in any
exhibit or other instrument furnished or to be furnished under this Agreement.
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3.18 Validity of YNOT Shares. The shares of YNOT $.001 par value
common stock to be issued pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable under Nevada law.
3.19 No Assurances or Warranties. YNOT acknowledges that there can be
no assurance regarding the tax consequences of this transaction, nor can there
be any assurance that the Internal Revenue Code or the regulations promulgated
thereunder will not be amended in such manner as to deprive it of any tax
benefit that might otherwise be received. YNOT is relying upon the advice of its
own tax advisors with respect to the tax aspects of this transaction. No
representations or warranties have been made by SHAREHOLDERS or BFSTC or their
officers, directors, affiliates or agents, as to the benefits to be derived by
YNOT in completing this transaction, nor have any of them made any warranty or
agreement, expressed or implied, as to the tax or securities consequences of the
transactions contemplated by this Agreement or the tax or securities
consequences of any action pursuant to or growing out of this Agreement.
ARTICLE IV
ACTIONS PRIOR TO CLOSING
4.01 Investigative Rights. Prior to the Closing Date each party shall
provide to the other parties, including the parties' counsel, accountants and
other authorized representatives, full access during normal business hours (upon
reasonable advance written notice) to such parties' books and records.
4.02 Conduct of Business. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not sell, pledge or assign
any assets, without the prior written approval of the other parties. No party
shall amend its certificate of incorporation or bylaws, declare dividends,
redeem or sell stock or other securities, incur additional liabilities, acquire
or dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay more
on any liability than its stated amount or enter into any other transaction
other than in the regular course of business.
4.03 Status of SEC Filings. Prior to the Closing Date, YNOT, and its
officers and directors shall prepare and file all required filings and reports
including the 8-K required by this transaction, but subject to the filing of an
amendment reflecting the audited consolidated balance sheets of the merged
Companies.
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ARTICLE V
CLOSING
5.01 Closing. The closing (the "Closing") of this transaction shall be
held at the offices of YNOT, or such other place as shall be mutually agreed
upon, on or before November 21, 1999 (the "Closing Date"):
(a) YNOT shall deliver 20,000,000 shares of its $.001 par value common
stock issued pursuant to this Agreement in a certificate or certificates
representing such shares;
(b) SHAREHOLDERS shall deliver the certificates representing 100% of
the shares of BFSTC common stock (the "BFSTC shares");
(c) YNOT shall deliver a signed consent or minutes of its Board of
Directors. and a Majority Consent of its shareholders, approving this Agreement
and authorizing the matters set forth herein;
(d) BFSTC shall deliver a signed consent or minutes of its Board of
Directors approving this Agreement and authorizing the matters set forth herein;
(e) YNOT's existing Board of Directors will (i) elect three new
directors, as named by SHAREHOLDERS to act as officers and directors of YNOT in
the capacities set forth in Exhibit 5.01(e) and (ii) one of the two current
directors will resign their positions with YNOT effective the Closing Date. The
remaining existing director shall resign at such time as the amended 8-K
reflecting the Company's audited combined financial statements is filed with the
SEC.
(f) BFSTC shall provide bank-transfer instructions to YNOT for the
transfer by the latter of US$ 275,000.- from Bank of Montreal, Main Branch,
Vancouver BC, Canada.
ARTICLE VI
MISCELLANEOUS
6.01 Captions and Headings. The article and paragraph headings
throughout this Agreement are for convenience and reference only and shall not
be deemed to define, limit or add to the meaning of any provision of this
Agreement.
6.02 No Oral Change. This Agreement may not be changed or modified
except in writing signed by the party against whom enforcement of any change or
modification is sought.
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6.03 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of a covenant, condition or provision of this Agreement shall be deemed
to have been made unless executed in writing and signed by the party against
whom such waiver is charged. The failure of any party to insist in any one or
more cases upon the performance of any covenant, condition or provision of this
Agreement shall not be construed as a waiver or relinquishment for the future of
any such covenant, condition or provision. No waiver by any party of one breach
by the other shall be construed as a waiver with respect to a subsequent breach.
6.04 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
6.05 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings.
6.06 Choice of Law/ Arbitration. This Agreement and its application,
shall be governed under the laws of the State of Nevada. Any and all disputes
and controversies of every kind and nature between the parties hereto arising
out of or relating to this Agreement relating to the existence, construction,
validity, interpretation or meaning, performance, non-performance enforcement,
operation, breach, continuance of termination thereof shall be subject to an
arbitration mutually agreeable to the parties or, in the absence of such mutual
agreement, then subject to arbitration in accordance with International
Arbitration Rules. It is the intent of the parties hereto and the purpose of
this provision to make the submission to arbitration of any dispute or
controversy arising hereunder an express condition precedent to any legal or
equitable action or proceeding of any nature whatsoever.
6.07 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
6.08 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been given
on the date of service if served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
Light Energy Management Inc. BFSTC and SHAREHOLDERS
2000 -1066 West Hastings St. Beijing Shijiyonglian
Gongsi Ruanjian Jishu Youxian Xxxxxx
Xxxxxxxxx, XX X0X 0X0 0xx Xxxxx, Xxxxx X00,
Xxxxxx Ji Xxx Xx, Xxx Xxxx Xxxxxxxx,
Xxxxxxx 000000, Xxxxx
6.09 Expenses. The parties will pay their own legal, accounting and
other expenses incurred in connection with this Agreement.
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6.10 Survival of Representations and Warranties. The representations,
warranties and covenants set forth in this Agreement or in any instrument,
certificate, opinion or other writing provided for in it, shall survive the
Closing Date.
6.11 Further Documents. The parties agree to execute any and all other
documents and to take such other action or corporate proceedings as may be
necessary or desirable to carry out the terms hereof.
6.12 Legal Counsel. This agreement shall be subject to approval by
legal counsel of both BFSTC and YNOT.
6.13 Signatures. This Agreement and its Exhibits when duly signed,
shall be deemed executed by facsimile. Immediate delivery of originals shall
follow any facsimile transmission.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date stated
above.
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Light Energy Management Inc.
/S/
President
Beijng Shijiyonglian Ruanjian Jishu Youxian Gongsi
(Beijing Forlink Software Technology Co., Ltd.)
/S/ /S/
President Chief Executive Officer
/S/ /S/
Vice Chief Executive Officer Shareholder
Xxxxxx & Xxxxxx Management Limited
represented by X. Xxxxxx
/S/X. Xxxxxx
------------
X. Xxxxxx
Xxxxxx & Co.
represented by X. Xxxxxx
/S/X. Xxxxxx
-----------
X. Xxxxxx
