21
01312/0002 6275.4
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the
"Agreement") is entered into effective as of this 15th day of
February, 2000, by and among Bud Financial Group, Inc., a Nevada
corporation (hereinafter "Bud"); BFG Subsidiary, Inc., a newly-
formed Delaware corporation (hereinafter "Bud Sub"); Xxxxxx X.
Xxxxxx, the principal stockholder and sole director of Bud and
Bud Sub (hereinafter "Xxxxxx"); and CodeStream Technologies
Corporation, a Delaware corporation (hereinafter "CTC").
RECITALS
WHEREAS, Bud desires to acquire CTC as a wholly-owned
subsidiary and to issue shares of Bud common stock to the
stockholders of CTC upon the terms and conditions set forth
herein. Bud Sub is a wholly-owned subsidiary corporation of Bud
which shall be merged into CTC, whereupon CTC shall be the
surviving corporation of said merger and shall become a wholly-
owned subsidiary of Bud (Bud Sub and CTC are sometimes
collectively hereinafter referred to as the "Constituent
Corporations").
WHEREAS, the boards of directors of Bud and CTC,
respectively, deem it advisable and in the best interests of such
corporations and their respective stockholders that Bud Sub merge
with and into CTC pursuant to this Agreement and the Certificate
of Merger (in the form attached hereto as Exhibit "A") and
pursuant to applicable provisions of law (such transaction
hereafter referred to as the "Merger").
WHEREAS, Bud Sub has an authorized capitalization consisting
of 5,000 shares of no par value common stock, of which 1,000
shares shall be issued and outstanding and owned by Bud as of the
closing of the Merger;
WHEREAS, CTC has an authorized capitalization consisting of
15,730,656 shares of common stock, $.001 par value ("CTC Common
Stock"), of which 7,424,266 shares are currently issued and
outstanding, as of the date hereof; and 42,206 authorized shares
of preferred stock, $.001 par value ("Preferred Stock"). CTC
currently has 42,206 shares of Preferred Stock outstanding. All
of said outstanding shares of CTC Common Stock and Preferred
Stock are owned by the stockholders of CTC as set forth on the
attached Exhibit "B" (hereafter "CTC Stockholders").
WHEREAS, prior to the closing of the Merger, CTC will (i)
exchange all of its currently outstanding shares of Preferred
Stock and certain of its outstanding indebtedness for additional
shares of CTC Common Stock, and (ii) effect a reverse stock
split, so that the total number of shares of CTC Common Stock
outstanding immediately prior to the Merger will be 10,000,000
shares and that no shares of its Preferred Stock will be
outstanding.
NOW THEREFORE, for the mutual consideration set out herein,
and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. The parties hereto do hereby agree
that Bud Sub shall be merged with and into CTC upon the terms and
conditions set forth herein and in accordance with the provisions
of Delaware General Corporation Law. It is the intention of the
parties hereto that this transaction qualify as a tax-free
reorganization under Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, and related sections thereunder.
2. Terms of Merger. In accordance with the provisions of this
Agreement and the requirements of applicable law, Bud Sub shall
be merged with and into CTC as of the Effective Date (the terms
"Closing" and "Effective Date" are defined in Section 6 hereof).
CTC shall be the surviving corporation (hereinafter sometimes the
"Surviving Corporation") and the separate existence of Bud Sub
shall cease when the Merger shall become effective. Consummation
of the Merger shall be upon the following terms and subject to
the conditions set forth herein:
(a) Corporate Existence.
(1) At the Effective Date, the Surviving Corporation shall
continue its corporate existence as a Delaware corporation and
(i) it shall thereupon and thereafter possess all rights,
privileges, powers, franchises and property (real, personal and
mixed) of each of the Constituent Corporations; (ii) all debts
due to either of the Constituent Corporations, on whatever
account, all causes in action and all other things belonging to
either of the Constituent Corporations shall be taken and deemed
to be transferred to and shall be vested in the Surviving
Corporation by virtue of the Merger without further act or deed;
and (iii) all rights of creditors and all liens, if any, upon any
property of any of the Constituent Corporations shall be
preserved unimpaired, limited in lien to the property affected by
such liens immediately prior to the Effective Date, and all
debts, liabilities and duties of the Constituent Corporations
shall thenceforth attach to the Surviving Corporation.
(2) At the Effective Date, (i) the Certificate of Incorporation
and the By-laws of the Surviving Corporation, as existing
immediately prior to the Effective Date, shall be and remain the
Certificate of Incorporation and By-Laws of the Surviving
Corporation; (ii) the members of the Board of Directors of the
Surviving Corporation holding office immediately prior to the
Effective Date shall remain as the members of the Board of
Directors of the Surviving Corporation (if on or after the
Effective Date a vacancy exists on the Board of Directors of the
Surviving Corporation, such vacancy may thereafter be filled in a
manner provided by applicable law and the By-laws of the
Surviving Corporation); and (iii) until the Board of Directors of
the Surviving Corporation shall otherwise determine, all persons
who hold offices of the Surviving Corporation at the Effective
Date shall continue to hold the same offices of the Surviving
Corporation.
(b) Events Occurring at Closing.
Immediately after the time that the Merger becomes effective
under Delaware law, and on the day of such effectiveness, Bud
shall (i) close a private offering under Regulation D, Rule 506,
as promulgated by the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended, of 5,000,000 shares
of its common stock (the "Bud Common Stock") at $1.00 per share
pursuant to a Private Placement Memorandum and (ii) cause the
release of the gross proceeds of this offering (the "Bud
Financing"), less agreed upon costs of $50,000, to the control of
new management of Bud in good funds. The Bud Financing shall
have been completed in compliance with all applicable laws,
including without limitation, all applicable state and federal
securities laws, and the securities sold shall be delivered as
part of the Closing to the investors in the Bud Financing.
(c) Conversion of Securities.
As of the Effective Date and without any action on the part
of Bud, Bud Sub, CTC or the holders of any of the securities of
any of these corporations, each of the following shall occur:
(1) Each share of CTC Common Stock issued and outstanding
immediately prior to the Effective Date shall be converted into
one share of Bud Common Stock (i.e. a total of 10,000,000 shares
of Bud Common Stock). All such shares of CTC Common Stock shall
no longer be outstanding and shall automatically be canceled and
shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent the right to receive,
upon the surrender of such certificate in accordance with the
provisions of Section 3 hereof, certificates evidencing such
number of shares of Bud Common Stock, respectively, into which
such shares of CTC Common Stock were converted. The holders of
such certificates previously evidencing shares of CTC Common
Stock outstanding immediately prior to the Effective Date shall
cease to have any rights with respect to such shares of CTC
Common Stock except as otherwise provided herein or by law;
(2) Any shares of CTC capital stock held in the treasury of CTC
immediately prior to the Effective Date shall automatically be
canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto;
(3) Each share of capital stock of Bud Sub issued and
outstanding immediately prior to the Effective Date shall remain
in existence as one share of common stock of the Surviving
Corporation, which shall be owned by Bud;
(4) The 2,000,000 shares of Bud Common Stock previously issued
and outstanding immediately prior to the Merger will remain
outstanding after the Merger.
The parties to this Agreement agree that immediately after
the Merger and the completion of the Bud Financing, Bud shall
have a total of 17,000,000 shares of Bud Common Stock
outstanding.
(d) Other Matters.
(1) Upon the effectiveness of the Merger, each outstanding
option to purchase CTC Common Stock, whether or not then
exercisable, shall be converted into an option to purchase (in
substitution for each share of CTC Common Stock subject to a CTC
option) an equal number of shares of Bud Common Stock. All other
terms and conditions of each CTC option shall remain the same.
(2) At the Closing, the number of directors of Bud will be
increased to seven. The then existing sole director of Bud shall
then nominate and elect to the Board of Directors of Bud the
seven persons designated by CTC, and the sole director and
officer of Bud shall thereafter resign from all of his positions
with Bud, effective immediately after the Closing.
3. Delivery of Shares. On or as soon as practicable after the
Effective Date, CTC will use reasonable efforts to cause the CTC
Stockholders to surrender to Bud's transfer agent for
cancellation certificates representing their shares of CTC Common
Stock, against delivery of certificates representing the shares
of Bud Common Stock for which the CTC shares are to be converted
in the Merger. Until surrendered and exchanged as herein
provided, each outstanding certificate which, prior to the
Effective Date, represented CTC Common Stock shall be deemed for
all corporate purposes to evidence ownership of the same number
of shares of Bud Common Stock into which the shares of CTC
Common Stock represented by such CTC certificate shall have been
so converted.
4. Representations of CTC. CTC hereby represents and warrants
as follows, which warranties and representations shall also be
true as of the Effective Date:
(a) Except as noted on Exhibit "B", the CTC Stockholders listed
on the attached Exhibit "B" are the sole owners of record and
beneficially of the issued and outstanding capital stock of CTC.
(b) The CTC Common Stock constitutes duly authorized, validly
issued shares of capital stock of CTC. All shares of CTC Common
Stock are fully paid and nonassessable.
(c) The CTC unaudited financial statements as of and for the
year ended December 31, 1999, December 31, 1998 and 1997, which
have been delivered to Bud (hereinafter referred to as the "CTC
Financial Statements"), fairly present the financial condition of
CTC as of the dates thereof and the results of its operations for
the periods covered. Other than as set forth in any schedule or
Exhibit attached hereto, and except as may otherwise be set forth
or referenced herein, there are no material liabilities or
obligations, either fixed or contingent, not disclosed or
referenced in the CTC Financial Statements or in any exhibit
thereto or notes thereto other than contracts or obligations
occurring in the ordinary course of business since December 31,
1999; and no such contracts or obligations occurring in the
ordinary course of business constitute liens or other liabilities
which materially alter the financial condition of CTC as
reflected in the CTC Financial Statements. CTC has or will have
at Closing, good title to all assets shown on the CTC Financial
Statements subject only to dispositions and other transactions in
the ordinary course of business, the disclosures set forth
therein and liens and encumbrances of record. The CTC Financial
Statements have been prepared in accordance with generally
accepted accounting principles (except as may be indicated
therein or in the notes thereto and except for footnotes).
(d) Since December 31, 1999, there have not been any material
adverse changes in the financial position of CTC except changes
arising in the ordinary course of business, which changes will
not materially and adversely affect the financial position of
CTC. The parties hereto acknowledge and agree that CTC may
hereafter obtain one or more loans, including a loan from Xxxxxx
and/or his affiliates, to fund CTCAEs working capital needs
between the date hereof and the Closing.
(e) Except for investigations, proceedings and related matters
arising directly or indirectly out of or in connection with that
certain Subpoena issued by the United States District Court,
Central District of California, by the United States Attorney on
or about May 18, 1999 and directed to the Custodian of Records of
Research and Development Laboratories, Inc., which investigations
and proceedings are described in greater detail in Exhibit "E"
(the financial records, minute books,
and other corporate documents and records available for review to
present management of Bud prior to the Effective Date, during
reasonable business hours and on reasonable notice.
(k) The execution of this Agreement does not materially violate
or breach any material agreement or contract to which CTC is a
party, this Agreement has been duly authorized by all appropriate
and necessary corporate action, and CTC, to the extent required,
has (or will have by Closing) obtained all necessary approvals or
consents required by any agreement to which CTC is a party.
(l) Information regarding CTC which has been delivered by CTC to
Bud for use in connection with the Merger, is true and accurate
in all material respects.
5. Representations of Bud, Bud Sub and Xxxxxx. Xxx, Xxx Sub
and Xxxxxx hereby jointly and severally represent and warrant as
follows, each of which representations and warranties shall
continue to be true as of the Effective Date:
(a) As of the Effective Date, the shares of Bud Common Stock to
be issued and delivered to the CTC Stockholders hereunder and in
connection herewith will, when so issued and delivered,
constitute duly authorized, validly and legally issued shares of
Bud capital stock, fully-paid and nonassessable and free of all
liens and encumbrances.
(b) Bud has the corporate power to enter into this Agreement and
to perform its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby (i) have been or will prior to the Closing
and the Effective Date be duly authorized by the respective
Boards of Directors of Bud and Bud Sub and by Bud as the sole
stockholder of Bud Sub and (ii) do not have to be approved or
authorized by the stockholders of Bud, except for the amendment
of the Articles of Incorporation of Bud and the adoption of the
Stock Option Plan, which items shall be approved by the necessary
consent of Bud Stockholders prior to Closing. The execution and
performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other
instrument or document to which Bud or Bud Sub is a party or to
which it is otherwise subject and will not violate any judgment,
decree, order, writ, law, rule, statute, or regulation applicable
to Bud, Bud Sub or their properties. The execution and
performance of this Agreement will not violate or conflict with
any provision of the respective Articles or Certificate of
Incorporation or by-laws of either Bud or Bud Sub.
(c) Bud has delivered to CTC a true and complete copy of its
audited financial statements for the fiscal years ended December
31, 1999, 1998 and 1997 (the "Bud Financial Statements"). The
Bud Financial Statements are complete, accurate and fairly
present the financial condition of Bud as of the dates thereof
and the results of its operations for the periods then ended.
There are no material liabilities or obligations either fixed or
contingent not reflected therein. The Bud Financial Statements
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as
may be indicated therein or in the notes thereto) and fairly
present the financial position of Bud as of the dates thereof and
the results of its operations and changes in financial position
for the periods then ended. Bud Sub has no financial statements
because it was recently formed solely for the purpose of
effectuating the Merger and it has been, is and will remain
inactive except for purposes of the Merger, and it has no assets,
liabilities, contracts or obligations of any kind other than as
incurred in the ordinary course in connection with its
incorporation in Delaware. Bud has no subsidiaries or affiliates
except for Bud Sub, and Bud Sub has no subsidiaries or
affiliates.
(d) Since December 31, 1999, there have not been any material
adverse changes in the financial condition of Bud. At Closing,
neither Bud nor Bud Sub shall have any material assets and
neither such corporation now has, nor shall it have, any
liabilities of any kind other than the cash proceeds and assets
derived from the Bud Financing.
(e) Neither Bud nor Bud Sub is a party to, or the subject of,
any pending litigation, claims, or governmental investigation or
proceeding not reflected in the Bud Financial Statements, and to
the Knowledge of Xxxxxx, Xxx and Xxx Sub, there are no lawsuits,
claims, assessments, investigations, or similar matters,
threatened or contemplated against or affecting Bud Sub, Bud, its
management or its properties.
(f) Bud and Bud Sub are each duly organized, validly existing
and in good standing under the laws of the jurisdiction of their
incorporation; each has the corporate power to own its property
and to carry on its business as now being conducted and is duly
qualified to do business in any jurisdiction where so required
except where the failure to so qualify would have no material
negative impact. Neither corporation is required to be qualified
to do business in any state other than the state of its
incorporation.
(g) Bud and Bud Sub have filed all federal, state, county and
local income, excise, property and other tax, governmental and/or
other returns, forms, filings, or reports, which are due or
required to be filed by it prior to the date hereof and have paid
or made adequate provision in the Bud Financial Statements for
the payment of all taxes, fees, or assessments which have or may
become due pursuant to such returns, filings or reports or
pursuant to any assessments received. Neither Bud nor Bud Sub is
delinquent or obligated for any tax, penalty, interest,
delinquency or charge and there are no tax liens or encumbrances
applicable to either corporation.
(h) Bud's authorized capital stock presently consists of: (i)
50,000,000 shares of Bud Common Stock, $.001 par value, of which
2,000,000 shares are presently issued and outstanding, and
1,000,000 shares of preferred stock, $.001 par value per share,
of which no shares are outstanding. Bud Sub's capitalization
consists solely of 5,000 authorized shares of no par value common
stock ("Bud Sub's Common Stock"), of which 1,000 shares are
outstanding, all of which are owned by Bud, free and clear of all
liens, claims and encumbrances. All outstanding shares of
capital stock of Bud and Bud Sub are, and shall be at Closing,
validly issued, fully paid and nonassessable. There are no
existing options, calls, claims, warrants, preemptive rights,
registration rights or commitments of any character relating to
the issued or unissued capital stock or other securities of
either Bud or Bud Sub.
(i) Bud and Bud Sub have (and at the Closing they will have)
disclosed in writing to CTC all events, conditions and facts
materially affecting the business, financial conditions
(including any liabilities, contingent or otherwise) or results
of operations of either Bud or Bud Sub.
(j) The financial records, minute books, and other documents and
records of Bud and Bud Sub have been made available to CTC prior
to the Closing. The records and documents of Bud and Bud Sub
that have been delivered to CTC constitute all of the records and
documents of Bud and Bud Sub that Xxxxxx is aware of or that are
in his possession or in the possession of Bud or Bud Sub.
(k) Neither Bud nor Bud Sub has breached, nor is there any
pending, or to the Knowledge of Xxxxxx and management, any
existing or threatened claim that Bud or Bud Sub has breached,
any of the terms or conditions of any agreements, contracts,
commitments or other documents to which it is a party or by which
it or its properties is bound. The execution and performance
hereof will not violate any provisions of applicable law or any
agreement to which Bud or Bud Sub is subject. Each of Bud and
Bud Sub hereby represent and warrant that it is not a party to
any material contract or commitment other than appointment
documents with BudAEs transfer agent, and that it has disclosed to
CTC all previous or existing relationships or dealings with
related or controlling parties or affiliates. There are no
currently existing agreements with any affiliates, related or
controlling persons or entities.
(l) Bud has complied with the provisions for registration under
the Securities Act of 1933, as amended (the
orders or other actions or investigations relating thereto
involving federal and state securities laws. All issued and
outstanding shares of Bud's equity and other securities were
offered and sold in compliance with federal and state securities
laws.
(m) All information regarding Bud which has been provided to CTC
by Bud or set forth in any document or other communication,
disseminated to any former, existing or potential stockholders of
Bud or to the public or filed with the NASD or the Securities and
Exchange Commission (st for information, or administrative or other
inquiry relating to any alleged violation of an Environmental Law
or the institution of any suit, action, claim or proceeding
alleging such violation or investigation by any governmental
authority or any third party of any such alleged violation, (ii)
manufactured, generated, treated, stored, handled, processed,
released, transported or disposed of any hazardous substance on,
under, from or at any of BudAEs properties or any other
properties, (iii) become aware or received notice of the release
or disposal of any hazardous substances in violation of any
applicable Environmental Law, on, under or at any of BudAEs
properties or any other properties, (iv) become aware or received
notice of any actual or potential material liability on the part
of Bud for the response to or remediation of any hazardous
substance at or arising from any of BudAEs properties or any other
properties owned or operated by Bud or any other person for whose
conduct Bud is legally responsible, or (v) become aware of or
received notice of any actual or potential liability on the part
of Bud for the costs of response to or remediation of hazardous
substances at or arising from any properties owned or operated by
Bud or any other person for whose conduct Bud is or may be held
responsible. For purposes of this Agreement, the term
the definition of, hazardous substances, hazardous wastes,
its operations and
its cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein).
(q) Except as and to the extent specifically disclosed in this
Agreement and as may be specifically disclosed or reserved
against as to amount in the latest balance sheet contained in the
Bud Financials, there is no basis for any assertion against Bud
of any material liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or to
become due, including, without limitation, any liability for
taxes and interest, penalties and other charges payable with
respect thereto. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) result in any payment (whether severance pay,
unemployment compensation or otherwise) becoming due from Bud to
any person or entity, including without limitation any employee,
director, officer or affiliate or former employee, director,
officer or affiliate of Bud, (b) increase any benefits otherwise
payable to any person or entity, including without limitation any
employee, director, officer or affiliate or former employee,
director, officer or affiliate of Bud, or (c) result in the
acceleration of the time of payment or vesting of any such
benefits.
(r) No patent, formula, process, trade secret, trademark, trade
name, assumed name or copyright used by Bud, including all
intellectual property used in the operation of past or present
business of Bud (collectively, the Bud Intellectual Property),
infringes on any patent, copyright, trademark or other
intellectual property right of any person, or violates the terms
of any agreements related thereto, nor have there been any claims
of infringement or to BudAEs Knowledge, threatened against Bud,
nor has there been any other action or inaction by Bud which
would constitute any infringement of intellectual property.
(s) No aspect of BudAEs past or present business, operations or
assets is of such a character as would restrict or otherwise
hinder or impair Bud from carrying on the business of CTC and its
subsidiaries as it is presently being conducted.
(t) Bud has no employees, consultants or independent
contractors. Xxxxxx is the sole director and sole executive
officer of Bud and Bud Sub.
(u) Bud has no material contracts, commitments, arrangements, or
understandings relating to its business, operations, financial
condition, prospects or otherwise. For purposes of this Section
5, pt as specifically indicated elsewhere in this
Agreement, all documents delivered by Bud in connection herewith
have been and will be complete originals, or exact copies
thereof.
(y) Assuming all corporate consents and approvals have been
obtained and assuming the appropriate filings and mailings are
made by Bud under the Securities Act and the NASD and with the
Secretary of State of Delaware and Nevada, the execution and
delivery by Bud of this Agreement and the closing documents and
the consummation by Bud of the transactions contemplated hereby
do not and will not (a) require the consent, approval or action
of, or any filing or notice to, any corporation, firm, person or
other entity or any public, governmental or judicial authority
(except for such consents, approvals, actions, filing or notices
the failure of which to make or obtain will not in the aggregate
have a material adverse effect); (b) violate in any material
respect the terms of any instrument, document or agreement to
which Bud is a party, or by which Bud or the property of Bud is
bound, or be in conflict in any material respect with, result in
a material breach of or constitute (upon the giving of notice or
lapse of time or both) a material default under any such
instrument, document or agreement, or result in the creation of
any lien upon any of the property or assets of Bud; (c) violate
BudAEs Articles of Incorporation or Bylaws; or (d) violate any
order, writ, injunction, decree, judgment, ruling, law, rule or
regulation of any federal, state, county, municipal, or foreign
court or governmental authority applicable to Bud, or its
business or assets. Bud is not subject to, or a party to, any
mortgage, lien, lease, agreement, contract, instrument, order,
judgment or decree or any other material restriction of any kind
or character which would prevent, hinder or impair the continued
operation of the business of Bud and CTC after the Closing.
6. Closing. The Closing of the transactions contemplated
herein shall take place on such date (the "Closing") as mutually
determined by the parties hereto when all conditions precedent
have been met and all required documents have been delivered,
which Closing is expected to be on or about March 14, 2000, or
such later date as mutually agreed to by all parties hereto. The
"Effective Date" of the Merger shall be that date on which
executed copies of the attached Certificate of Merger is filed
with the Secretary of State of Delaware.
7. Actions Prior to Closing.
(a) Prior to the Closing, CTC on the one hand, and Bud and Bud
Sub on the other hand, shall be entitled to make such
investigations of the assets, properties, business and operations
of the other party, and to examine the books, records, tax
returns, financial statements and other materials of the other
party as such investigating party deems necessary in connection
with this Agreement and the transactions contemplated hereby.
Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances, and the
parties hereto shall cooperate fully therein. Until the Closing,
and if the Closing shall not occur, thereafter, each party shall
keep confidential and shall not use in any manner inconsistent
with the transactions contemplated by this Agreement, and shall
not disclose, nor use for their own benefit, any information or
documents obtained from the other party concerning the assets,
properties, business and operations of such party, unless such
information (i) is readily ascertainable from public or published
information, (ii) is received from a third party not under any
obligation to keep such information confidential, or (iii) is
required to be disclosed by any law or order. If this
transaction is not consummated for any reason, each party shall
return to the other all such confidential information, including
notes and compilations thereof, promptly after the date of such
termination. The representations and warranties contained in
this Agreement shall not be affected or deemed waived by reason
of the fact that either party hereto discovered or should have
discovered any representation or warranty is or might be
inaccurate in any respect.
(b) Prior to the Closing, CTC shall convert or exchange all
shares of its Preferred Stock currently outstanding into shares
of CTC Common Stock, and shall exchange the loans referred to in
the Omnibus Loan Agreement, dated as of October 1, 1999, between
CTC and certain lenders, into shares of CTC Common Stock. After
the foregoing exchange and issuance of shares of CTC Common
Stock, CTC shall effect a reverse stock split so that the total
number of shares of CTC Common Stock outstanding immediately
prior to the Merger shall be 10,000,000.
(c) Bud shall complete the offer and sale of 5,000,000 shares of
Bud Common Stock in compliance with all applicable federal and
state securities laws. All investors in the Bud Financing shall
be
501(a) of Regulation D. In addition, Bud shall establish an
escrow account in which all of the gross offering proceeds of the
Bud Financing (totaling at least $5,000,000) will be held pending
the Merger as contemplated hereby, and shall deposit the gross
offering proceeds in such escrow account prior to the Merger for
the purposes specified herein.
(d) Prior to the Closing, CTC, Bud, Bud Sub, and Xxxxxx agree
not to issue any statement or communications to the public or the
press regarding the transactions contemplated by this Agreement
without the prior written consent of the other parties.
(e) There shall be no stock dividend, stock split,
recapitalization, or exchange of shares with respect to or rights
issued in respect of Bud's Common Stock after the date hereof and
there shall be no dividends or other distributions paid on Bud's
Common Stock after the date hereof, in each case through and
including the Effective Date. Bud and Bud Sub shall conduct no
business, prior to the Closing, except as may be necessary in
order to consummate the transactions contemplated hereby.
(f) Bud shall file an amendment to its Articles of Incorporation
with the Secretary of State of the State of Nevada in
substantially the form attached hereto as Exhibit "C" effecting
an amendment to its Articles of Incorporation to (i) reflect a
name change to a new name as selected by CTC, and(ii) adopt
cumulative voting.
(g) Bud shall adopt a stock option plan (the
Bud Sub and Xxxxxx contained in this Agreement or in any
certificate or document delivered pursuant to the provisions
hereof or in connection herewith shall be true at and as of the
Closing and Effective Date as though such representations and
warranties were made at and as of such time.
(b) Bud and Bud Sub shall have performed and complied with all
covenants, agreements, and conditions set forth or otherwise
contemplated in, and shall have executed and delivered all
documents required by, this Agreement to be performed or complied
with or executed and delivered by them prior to or at the
Closing, including depositing $5,000,000 of gross offering
proceeds raised in completion of the Bud Financing into an escrow
account, which proceeds will be available to Bud at Closing and
shall be used by Bud as contemplated hereby.
(c) On or before the Closing, the stockholders of Bud by
majority written consent, the sole director of Bud and Bud Sub,
and Bud as sole stockholder of Bud Sub shall have approved in
accordance with applicable state corporation law the execution
and delivery of this Agreement and the consummation of the
transactions contemplated herein.
(d) On or before the Closing Date, Bud and Bud Sub shall have
delivered certified copies of resolutions of the sole stockholder
and director of Bud Sub and of the sole director and stockholders
of Bud approving and authorizing the execution, delivery and
performance of this Agreement and authorizing all of the
necessary and proper action to enable Bud and Bud Sub to comply
with the terms of this Agreement including the election of CTC's
nominees to the Board of Directors of Bud, the adoption of the
Stock Option Plan in the form provided by CTC and all matters
outlined or contemplated herein.
(e) The Merger shall be permitted by applicable state law and
otherwise and Bud shall have sufficient shares of its capital
stock authorized to complete the Merger and the transactions
contemplated hereby.
(f) At Closing, Xxxxxx shall have resigned in writing from his
positions as sole director and officer of Bud effective upon the
election and appointment of the CTC nominees, and Xxxxxx shall
take such action as may be necessary or desirable regarding such
election and appointment of CTC nominees.
(g) At the Closing, all instruments and documents delivered by
Bud or Bud Sub, including to CTC Stockholders pursuant to the
provisions hereof shall be reasonably satisfactory to legal
counsel for CTC.
(h) The capitalization of Bud and Bud Sub shall be the same as
described in Section 5(h).
(i) The shares of restricted Bud capital stock to be issued to
CTC Stockholders at Closing will be validly issued, nonassessable
and fully-paid under Nevada corporation law and will be issued in
a nonpublic offering in compliance with all federal, state and
applicable securities laws.
(j) CTC shall have received the advice of its tax advisor, to
the extent it deems necessary, that this transaction is a tax
free reorganization as to CTC and all of the CTC Stockholders.
(k) CTC shall have received all necessary and required approvals
and consents from required parties and from its stockholders.
(l) At the Closing, Bud and Bud Sub shall have delivered to CTC
an opinion of its counsel dated as of the Closing to the effect
that:
(1) Each of Bud and Bud Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation;
(2) This Agreement has been duly authorized, executed and
delivered by Bud and Bud Sub and is a valid and binding
obligation of Bud and Bud Sub enforceable in accordance with its
terms;
(3) Bud and Bud Sub each through its Board of Directors and
stockholders have taken all corporate action necessary for
performance under this Agreement;
(4) The documents executed and delivered to CTC and CTC
Stockholders hereunder are valid and binding in accordance with
their terms and vest in CTC Stockholders all right, title and
interest in and to the shares of Bud's Common Stock to be issued
pursuant to Section 2 hereof, and the shares of Bud capital stock
when issued will be duly and validly issued, fully-paid and
nonassessable;
(5) Bud and Bud Sub each has the corporate power to execute,
deliver and perform under this Agreement; and
(6) Legal counsel for Bud and Bud Sub is not aware of any
liabilities, claims or lawsuits involving Bud or Bud Sub.
(m) Xxxxxx shall have signed and delivered to CTC at the Closing
a lock-up agreement (the
9. Conditions Precedent to the Obligations of Bud and Bud Sub.
All obligations of Bud and Bud Sub under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each
of the following conditions:
(a) The representations and warranties by CTC contained in this
Agreement or in any certificate or document delivered pursuant to
the provisions hereof shall be true at and as of the Closing as
though such representations and warranties were made at and as of
such time.
(b) CTC shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by it prior to or
at the Closing;
(c) CTC shall cause at or as soon as practicable after Closing,
each of its stockholders to deliver to Bud, a letter commonly
known as an "Investment Letter," in substantially the form
attached hereto as Exhibit "D", acknowledging that the shares of
Bud Common Stock are being acquired by said stockholders for
investment purposes.
(d) CTC shall have converted all of its shares of Preferred
Stock into shares of CTC Common Stock.
(e) CTC shall deliver an opinion of its legal counsel to the
effect that:
(1) CTC is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
(2) This Agreement has been duly authorized, executed and
delivered by CTC.
10. Survival and Indemnification. All representations,
warranties, covenants and agreements contained in this Agreement,
or in any schedule, certificate, document or statement delivered
pursuant hereto, shall survive (and not be affected in any
respect by) the Closing, any investigation conducted by any party
hereto and any information which any party may receive.
Notwithstanding the foregoing, the representations and warranties
contained in or made pursuant to this Agreement shall terminate
on, and no claim or action with respect thereto may be brought
after, the third anniversary of the Effective Date, except that
(a) the representations and warranties contained in
Sections 5(h), 5(l), 5(o) and 5(p) of this Agreement shall
survive until the fifth anniversary of the Effective Date, and
(c) the representations and warranties contained in Section 5(g)
of this Agreement shall survive indefinitely. The
representations and warranties which terminate on the third
anniversary and fifth anniversary of the Effective Date, and the
liability of any party with respect thereto pursuant to this
Section 10, shall not terminate with respect to any claim,
whether or not fixed as to liability or liquidated as to amount,
with respect to which the appropriate party has been given
written notice setting forth the facts upon which the claim for
indemnification is based prior to the third anniversary or the
fifth anniversary of the Effective Date, as the case may be.
(a) The parties shall indemnify each other as set forth below:
(1) Subject to the provisions of this Section 10, each of
Xxxxxx, Xxx and Xxx Sub (individually and collectively, the
CTC and CTCAEs past, present and future officers, directors,
stockholders, employees, attorneys, and agents (and after the
Closing, Xxxxxx shall also indemnify Bud) (collectively, the ise thereof or
judgment or award
therein) and any fees, costs and expenses related thereto, and
the term
Losses in excess of $50,000.
(3) In order for a CTC Indemnified Party or Bud Group
Indemnified Party (an hrough negotiations, such dispute shall be resolved by
litigation in accordance with the terms of this Agreement.
(4) (i) If the claim involves a third party claim (a
is sought, the Indemnified Party elects to participate in and
jointly control the defense thereof.
(iii) Whenever the Indemnifying Party controls
the defense of a Third Party Claim, the Indemnifying Party may
only settle or compromise the matter subject to indemnification
without the consent of the Indemnified Party if such settlement
includes a complete release of all Indemnified Parties as to the
matters in dispute and relates solely to money damages. The
Indemnified Party will not unreasonably withhold consent to any
settlement or compromise that requires its consent.
(iv) In the event the Indemnifying Party fails to
timely defend, contest, or otherwise protect the Indemnified
Party against any such claim or suit, the Indemnified Party may,
but will not be obligated to, defend, contest, or otherwise
protect against the same, and make any compromise or settlement
thereof, and in such event, or in the case where the Indemnified
Party jointly controls such claim or suit, the Indemnified Party
shall be entitled to recover its costs thereof from the
Indemnifying Party, including attorneysAE fees, disbursements and
all amounts paid as a result of such claim or suit or the
compromise or settlement thereof;
(v) The Indemnified Party shall cooperate and
provide such assistance as the Indemnifying Party may reasonably
request in connection with the defense of the matter subject to
indemnification and in connection with recovering from any third
parties amounts that the Indemnifying Party may pay or be
required to pay by way of indemnification hereunder.
(b) The amount of Losses for which indemnification is provided
hereunder shall be computed without regard to insurance.
11. Nature of Representations. All of the parties hereto are
executing and carrying out the provisions of this Agreement in
reliance solely on the representations, warranties and covenants
and agreements contained in this Agreement and the other
documents delivered at the Closing and not upon any investigation
upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the
other party or any other person other than as specifically set
forth herein.
12. Documents at Closing. At the Closing, the following
documents shall be delivered:
(a) CTC will deliver, or will cause to be delivered, to Bud the
following:
(1) a certificate executed by the President and Secretary of
CTC to the effect that all representations and warranties made by
CTC under this Agreement are true and correct as of the Closing,
the same as though originally given to Bud or Bud Sub on said
date;
(2) a certificate from the state of CTC's incorporation dated
within five business days of the Closing to the effect that CTC
is in good standing under the laws of said state;
(3) Investment Letters in the form attached hereto as Exhibit
"D" executed by each CTC Common Stockholder, some of which may be
delivered after Closing;
(4) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of
this Agreement;
(5) executed copy of the Certificate of Merger for filing in
Delaware; and certified copies of resolutions adopted by the
stockholders and directors of CTC authorizing the Merger; and
(6) all other items, the delivery of which is a condition
precedent to the obligations of Bud and Bud Sub, as set forth
herein.
(7) the legal opinion required by Section 9(d) hereof.
(b) Bud and Bud Sub will deliver or cause to be delivered to
CTC:
(1) stock certificates representing those securities of Bud to
be issued as a part of the Merger as described in Section 2
hereof;
(2) a certificate of the President/Secretary of Bud and Bud Sub,
respectively, to the effect that all representations and
warranties of Bud and Bud Sub made under this Agreement are true
and correct as of the Closing, the same as though originally
given to CTC on said date;
(3) certified copies of resolutions adopted by Bud's and Bud
Sub's Board of Directors and Bud's and Bud Sub's Stockholders
authorizing the Merger and all related matters;
(4) certificates from the jurisdiction of incorporation of Bud
and Bud Sub dated within five business days of the Closing Date
that each of said corporations is in good standing under the laws
of said state;
(5) opinion of Bud's counsel as described in Section 8(l) above;
(6) Net proceeds from Bud Financing;
(7) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement;
(8) resignation of Xxxxxx as the sole officer and director of
Bud and Bud Sub;
(9) Lock-Up Agreement, signed by Xxxxxx;
(10) a voting agreement signed by Bud and certain of the
stockholders listed on Exhibit B.
(11) all other items, the delivery of which is a condition
precedent to the obligations of CTC, as set forth in Section 8
hereof, including the net proceeds of the Bud Financing.
13. Finder's Fees. Xxxxxx, Xxx and Xxx Sub, jointly and
severally, represent and warrant to CTC, and CTC represents and
warrants to each of Xxxxxx, Xxx and Bud Sub, that none of them,
or any party acting on their behalf, has incurred any
liabilities, either express or implied, to any "broker" of
"finder" or similar person in connection with this Agreement or
any of the transactions contemplated hereby.
14. Post-Closing Covenants.
(a) Financial Statements. After the Closing, CTC shall use its
commercially reasonable efforts to complete the audit of its
financial statements in order to enable Bud to timely file a
current report on Form 8-K to report the Merger. In addition,
for a period of 12 months following the Closing, Bud shall use
its commercially reasonable efforts to timely file all reports
and other documents required to be filed by Bud under the
Securities Exchange Act of 1934.
(b) Confidentiality. Xxxxxx hereby agrees that, after the
Closing, he shall not publicly disclose any confidential
information of either Bud, Bud Sub or CTC, and that he shall not
make any public statement or announcement regarding the Merger or
the business, financial condition, prospects or operations of Bud
or CTC, without the prior written consent of CTC.
15. Miscellaneous.
(a) Further Assurances. At any time, and from time to time,
after the Effective Date, each party will execute such additional
instruments and take such action as may be reasonably requested
by the other party to confirm or perfect title to any property
transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed.
(c) Termination. All obligations hereunder may be terminated at
the discretion of (i) either party if the closing conditions
specified in Sections 7 and 8 are not met or waived by March 31,
2000, (with the exception of the delivery of the Investment
Letters) unless such termination date is unanimously extended, or
(ii) the non-breaching party if any of the representations and
warranties made herein by the other party have been materially
breached.
(d) Amendment. This Agreement may be amended only in writing as
agreed to by all parties hereto.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first class registered or
certified mail, return receipt requested to the last known
address of the noticed party.
(f) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
(h) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors and
assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits,
including the Certificate of Merger attached hereto as Exhibit
"A", is the entire agreement of the parties covering everything
agreed upon or understood in the transaction. There are no oral
promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements
to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full
force and effect.
(l) Responsibility and Costs. Whether the Merger is consummated
or not, all fees, expenses and out-of-pocket costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred by the parties
hereto shall be borne solely and entirely by the party that has
incurred such costs and expenses, unless the failure to
consummate the Merger constitutes a breach of the terms hereof,
in which event the breaching party shall be responsible for all
costs of all parties hereto.
(m) Applicable Law. This Agreement shall be construed and
governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
BFG SUBSIDIARY, INC. BUD FINANCIAL GROUP, INC.
By: By:
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
President/ Secretary President/Secretary
CODESTREAM TECHNOLOGIES
CORPORATION
By:
D. Xxxxxx Xxxxxx, President
EXHIBIT "A"
To Agreement and Plan of Reorganization
Certificate of Merger
EXHIBIT "B"
To Agreement and Plan of Reorganization
List of CTC Stockholders
Name
EXHIBIT "C"
To Agreement and Plan of Reorganization
Amendment to Articles of Incorporation of Bud
EXHIBIT "D"
To Agreement and Plan of Reorganization
Investment Letter
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
BUD FINANCIAL GROUP, INC.,
BFG SUBSIDIARY, INC.
AND
CODESTREAM TECHNOLOGIES CORPORATION
1. Plan of Reorganization 2
2. Terms of Merger 2
3. Delivery of Shares 4
4. Representations of CTC 4
5. Representations of Bud, Bud Sub and Xxxxxx 5
6. Closing 11
7. Actions Prior to Closing. 11
8. Conditions Precedent to the Obligations of CTC 12
9. Conditions Precedent to the Obligations of Bud and
Bud Sub 14
10. Survival and Indemnification 15
11. Nature of Representations 17
12. Documents at Closing 17
13. Finder's Fees 19
14. Post-Closing Covenants. 19
15. Miscellaneous. 19
Signature Page 21
Exhibit A - Certificate of Merger
Exhibit B - CTC Stockholder Schedule
Exhibit C - Certificate of Amendment to Articles of
Incorporation of Bud
Exhibit D - Investment Letter
Exhibit E Summary of Investigation
Exhibit F - Lock-Up Letter
