Exhibit 10.1
Agreement and Plan of Reorganization
by and between
Premium Enterprises, Inc.
a Colorado corporation
and
eTotalsource, Inc.
a California corporation
dated: December 18, 2002
AGREEMENT AND PLAN OF REORGANIZATION
Premium Enterprises, Inc..
and
eTotalsource, Inc.
This Agreement and Plan of Reorganization ("Agreement"), dated as of
December 18, 2002, among Premium Enterprises, Inc. ("PMN"), a Colorado
Corporation, eTotalsource, Inc. ("ETS"), a California Corporation, and the
subscribing shareholders of eTotalsource, Inc. ("ETS Shareholders") who will
join this Agreement by execution.
W I T N E S S E T H:
A. WHEREAS, ETS and PMN are corporations duly organized under the laws of
the State of California and Colorado, respectively.
B. Plan of Reorganization. The subscribing ETS Shareholders are the owners
of at least 90%of the issued and outstanding common stock of ETS. It is the
intention that 90% of the issued and outstanding stock of ETS shall be acquired
by PMN in exchange solely for its voting stock. For federal income tax purposes
it is intended that this exchange shall qualify as a reorganization within the
meaning of SEC 368 (a)(1)(B) of the Internal Revenue Code of 1986, as amended
(the "Code").
C. Exchange of Shares. PMN and the subscribing ETS Shareholders agree that
90% of the approximately 3,143,434 common shares issued and outstanding of ETS
shall be exchanged with PMN for 17,000,000 shares of the common stock of PMN.
The PMN shares, on the closing date, shall be delivered ratably divided to the
individual subscribing shareholders of ETS in exchange for their ETS shares as
hereinafter set forth.
D. WHEREAS, the parties hereto wish to enter into this Agreement, pursuant
to the provisions of the Colorado Business Corporation Act.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein on the "Effective Date" (as
herein defined), the subscribing Shareholders of ETS shall exchange all of their
shares of ETS (constituting at least 90% of the issued and outstanding common
stock of ETS) for
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17,000,000 common shares of PMN common stock. The transactions contemplated by
this Agreement shall be completed at a closing ("Closing") on a closing date
("Closing Date") which shall be as soon as practicable after joinder in this
exchange by ETS Shareholders holding at least 90% of the outstanding ETS common
shares, except that such transaction must be completed on or before Oct. 30,
2002, or this Agreement shall expire unless extended in writing.
On the Closing Date, all of the documents to be furnished to PMN and ETS,
including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. Xxxxxxx, to be held in escrow until the
Effective Date or the date of termination of this Agreement, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 At the Effective Date, ETS shall become a wholly owned subsidiary of
PMN. ETS's shareholders shall receive pro rata shares of no par value voting
common stock as follows:
PMN shall issue 17,000,000 of its shares of common stock for 90% of
the outstanding common shares of ETS to the subscribing shareholders
of ETS, ratably according to their interests.
1.3 If this Agreement is duly executed by the holders of 90% of the
outstanding common stock of ETS, subject to the other provisions hereof, it
shall become effective, and such date of final execution shall be the effective
date of this Agreement.
ARTICLE II
Issuance and Exchange of Shares
2.1 The shares of no par value common stock of PMN shall be issued by it to
the subscribing ETS shareholders at Closing.
2.2 PMN represents that no outstanding options or warrants for its unissued
shares exist, however, after this transaction and after effecting a reverse
split of one for four issued and outstanding shares after completion of this
transaction, the company has committed to and intends to issue a total of
300,000 common shares registered on form S-8, for past services rendered, by the
transfer agent, attorneys, compensation to the President and 500,000 restricted
common shares, for cash advances made to pay for services for the company, and
consulting fees in satisfaction of certain accrued and accruing liabilities.
2.3 The stock transfer books of ETS shall be closed on the Effective Date,
and thereafter no transfers of the stock of ETS shall be made. ETS shall appoint
an exchange agent ("Exchange Agent"), to accept surrender of the certificates
representing
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the common shares of ETS, and to deliver in exchange for such surrendered
certificates, shares of common stock of PMN. The authorization of the Exchange
Agent may be terminated by PMN after six months following the Effective Date.
Upon termination of such authorization, any shares of ETS and any funds held by
the Exchange Agent for payment to ETS shareholders pursuant to this Agreement
shall be transferred to PMN or its designated agent who shall thereafter perform
the obligations of the Exchange Agent. If outstanding certificates for shares of
ETS are not surrendered or the payment for them not claimed prior to such date
on which such payments would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and other applicable law, become the property of PMN (and
to the extent not in its possession shall be paid over to it), free and clear of
all claims or interest of any persons previously entitled to such items.
Notwithstanding the foregoing, neither the Exchange Agent nor any party to this
Agreement shall be liable to any holder of ETS shares for any amount paid to any
governmental unit or agency having jurisdiction of such unclaimed item pursuant
to the abandoned property or other applicable law of such jurisdiction.
2.4 No fractional shares of PMN stock shall be issued as a result of the
Agreement. Shares shall be rounded up to nearest whole share.
2.5 At the Effective Date, each holder of a certificate or certificates
representing common shares of ETS, upon presentation and surrender of such
certificate or certificates to the Exchange Agent, shall be entitled to receive
the consideration set forth herein, except that holders of those shares as to
which dissenters' rights shall have been validly asserted and perfected pursuant
to California law shall not be converted into shares of PMN common stock, but
shall represent only such dissenters' rights. Upon such presentation, surrender,
and exchange as provided in this Section 2.5, certificates representing shares
of ETS previously held shall be canceled. Until so presented and surrendered,
each certificate or certificates which represented issued and outstanding shares
of ETS at the Effective Date shall be deemed for all purposes to evidence the
right to receive the consideration set forth in Section 1.2 of this Agreement.
If the certificates representing shares of ETS have been lost, stolen, mutilated
or destroyed, the Exchange Agent shall require the submission of an indemnity
agreement and may require the submission of a bond in lieu of such certificate.
ARTICLE III
Representations, Warranties
and Covenants of ETotalsource, Inc.
No representations or warranties are made by any director, officer,
employee or shareholder of ETS as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "ETS Disclosure
Statement"), if any. ETS hereby represents, warrants and covenants to PMN except
as stated in the ETS Disclosure Statement, as follows:
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3.1 ETS is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Certificate of Incorporation and Bylaws of ETS are
complete and accurate, and the minute books of ETS contain a record, which is
complete and accurate in all material respects, of all meetings, and all
corporate actions of the shareholders and board of directors of ETS.
3.2 The aggregate number of shares which ETS is authorized to issue is
40,000,000 shares of common stock of which 2,804,000 shares are issued and
outstanding; 10,000,000 shares of preferred stock, of which 339,434 are issued
and outstanding. There are 2,804,000 shares reserved to cover options, warrants
and convertible Notes.
3.3 ETS has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.4 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
ETS will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of ETS.
3.5 The execution, delivery and performance of this Agreement has been duly
authorized and approved by ETS= Board of Directors.
3.6 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of the executive officers of ETS,
threatened against ETS or affecting any of its assets or properties, and to the
knowledge of ETS' officers, ETS is not in any material breach or violation of or
default under any contract or instrument to which ETS is a party, or under its
respective Articles of Incorporation or Bylaws, nor is there any court or
regulatory order pending, applicable to ETS.
3.7 The representations and warranties of ETS shall be true and correct as
of the date hereof and as of the Effective Date.
3.8 No representation or warranty by ETS in this Agreement, the ETS
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
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3.9 To the knowledge of the executive officers of ETS, all trade names,
inventions, discoveries, ideas, research, engineering, methods, practices,
processes, systems, formulae, designs, drawings, products, projects,
improvements, developments, know-how, and trade secrets which are used in the
conduct of ETS' business, whether registered or unregistered (collectively the
AProprietary Rights@) are owned by ETS. To the knowledge of the executive
officers of ETS, ETS created or developed such Proprietary Rights and such
Proprietary Rights are not subject to any restriction, lien, encumbrance, right,
title or interest in others. All of the Proprietary Rights stand solely in the
name of ETS and not in the name of any shareholder, director, officer, agent,
partner or employee or anyone else known to the executive officers of ETS, and
none of the same have any right, title, interest, restriction, lien or
encumbrance therein or thereon or thereto. To the knowledge of the executive
officers of ETS, ETS" ownership and use of the Proprietary Rights do not and
will not infringe upon, conflict with or violate in any material respect any
patent, copyright, trade secret or other lawful proprietary right of any other
party, and no claim is pending or, to the knowledge of the executive officers of
ETS, threatened to the effect that the operations of ETS infringe upon or
conflict with the asserted rights of any other person under any of the
Proprietary Rights, and to the knowledge of the executive officers of ETS there
is no reasonable basis for any such claim (whether or not pending or
threatened). No claim is pending, or to the knowledge of the executive officers
of ETS, threatened to the effect that any such Proprietary Rights owned or
licensed by ETS, or which ETS otherwise has the right to use, is invalid or
unenforceable by ETS.
3.10 (i) ETS has not received notice of any material violation of or
investigation relating to any environmental or pollution law, regulation, or
ordinance with respect to assets now or previously owned or operated by ETS that
has not been fully and finally resolved; (ii) to the knowledge of the executive
officers of ETS, all permits, licenses and other authorizations which are
required under United States, federal, state, provincial and local laws with
respect to pollution or protection of the environment ("Environmental Laws"),
including Environmental Laws relating to actual or threatened emissions,
discharges or releases of pollutants, contaminants or hazardous or toxic
materials or wastes ("Pollutants") have been obtained; (iii) to the knowledge of
the executive officers of ETS, no conditions exist on, in or about the
properties now or previously owned or operated by ETS or any third-party
properties to which any Pollutants generated by ETS were sent or released that
could give rise on the part of ETS to material liability under any Environmental
Laws, material claims by third parties under Environmental Laws or under common
law or the occurrence of material costs to avoid any such liability or claim;
and (iv) to the knowledge of the executive officers of ETS, all operators of
ETS's assets are in material compliance with all terms and conditions of such
Environmental Laws, permits, licenses and authorizations, and are also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder,
relating to ETS's assets.
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3.11 ETS has delivered to PMN financial statements of ETS dated December
31, 2001. All such statements, herein sometimes called "ETS Financial
Statements," are (and will be) complete and correct in all material respects
and, together with the notes to these financial statements, present fairly the
financial position and results of operations of ETS for the periods indicated.
All financial statements of ETS will have been prepared in accordance with
generally accepted accounting principles.
3.12 Since the dates of the ETS Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of ETS. ETS does not have any material liabilities or obligations,
secured or unsecured except as shown on the updated financials of ETS dated
September 30, 2002 (whether accrued, absolute, contingent or otherwise).
ARTICLE IV
Representations, Warranties and Covenants of
Premium Enterprises, Inc.
No representations or warranties are made by any director, officer,
employee or shareholder of PMN as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
PMN hereby represents, warrants and covenants to ETS and its shareholders,
except as stated in the PMN Disclosure Statement, as follows:
4.1 PMN is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Articles of Incorporation and Bylaws of PMN, copies
of which have been delivered to ETS, are complete and accurate, and the minute
books of PMN contain a record, which is complete and accurate in all material
respects, of all meetings, and all corporate actions of the shareholders and
Board of Directors of PMN.
4.2 The aggregate number of shares which PMN is authorized to issue is
20,000,000 shares of common stock with no par value per share and 10 million
shares of preferred stock, of which 2,025,140 shares of such common stock are
issued and outstanding, fully paid and non-assessable, at the Closing under this
Agreement. PMN will have, on the Closing Date, no outstanding options, warrants
or other rights to purchase, or subscribe to, or securities convertible into or
exchangeable for any shares of capital stock, except options referred to in 2.2
above. No preferred stock of PMN is outstanding.
4.3 PMN has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
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4.4 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
PMN will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of PMN.
4.5 The execution of this Agreement has been duly authorized and approved
by the Board of Directors of PMN.
4.6 PMN has delivered to ETS audited financial statements of PMN dated June
30, 2002. All such statements, herein sometimes called "PMN Financial
Statements," are (and will be) complete and correct in all material respects
and, together with the notes to these financial statements, present fairly the
financial position and results of operations of PMN for the periods indicated.
All statements of PMN will have been prepared in accordance with generally
accepted accounting principles.
4.7 Since the dates of the PMN Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of PMN. PMN does not have any material liabilities or obligations,
secured or unsecured except as shown on the updated financials of PMN dated Sept
30,2002 (whether accrued, absolute, contingent or otherwise).
4.8 There are no legal proceedings or regulatory proceedings involving
material claims pending, or, to the knowledge of the officers of PMN, threatened
against PMN or affecting any of its assets or properties, and PMN is not in any
material breach or violation of or default under any contract or instrument to
which PMN is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by PMN under any contract or other instrument to which PMN is a party or
by which they or any of their respective properties may be bound or affected, or
under their respective Articles of Incorporation or Bylaws, nor is there any
court or regulatory order pending, applicable to PMN. There are, however,
several judgments which have been disclosed to ETS, and are listed on the
disclosure schedule 4.9 attached hereto and made a part hereof.
4.9 PMN shall not enter into or consummate any transactions prior to the
Effective Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition
except pursuant to the proposed minutes of the Board of Directors of PMN
presented herewith for approval by ETS.
4.10 The representations and warranties of PMN shall be true and correct as
of the date hereof and as of the Effective Date.
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4.11 PMN corporate books and records are true records of its actions. PMN
will also deliver to ETS on or before the Closing Date any reports relating to
the financial and business condition of PMN which occur after the date of this
Agreement and any other reports sent generally to its shareholders after the
date of this Agreement.
4.12 PMN has no employee benefit plan in effect at this time, however, PMN
intends to adopt a 2002 Stock Option and Compensation Plan which will provide
for the issuance of up to 300,000 shares of common stock, on a post-reverse
split basis.
4.13 PMN is current in its filing obligations under the federal securities
laws. No report filed by PMN with the Securities and Exchange Commission
contains any untrue statement of a material fact or omits to state any material
fact necessary to make such representation or warranty not misleading, and all
such reports comply as to form and substance in all material respects with all
applicable SEC requirements.
4.14 PMN agrees that all rights to indemnification now existing in favor of
the employees, agents, directors or officers of ETS and its subsidiaries, as
provided in the Articles of Incorporation or Bylaws or otherwise in effect on
the date hereof shall survive the transactions contemplated hereby in accordance
with their terms, and PMN expressly assumes such indemnification obligations of
ETS.
ARTICLE V
Obligations of the Parties Pending the Effective Date
5.1 At all times prior to the Effective Date during regular business hours,
each party will permit the other to examine its books and records and the books
and records of its subsidiaries and will furnish copies thereof on request. It
is recognized that, during the performance of this Agreement, each party may
provide the other parties with information which is confidential or proprietary
information. The recipient of such information shall at all times protect such
information from disclosure, other than disclosure required by rule, regulation,
or law, other than to members of its own or affiliated organizations and its
professional advisers, in the same manner as it protects its own confidential or
proprietary information from unauthorized disclosure, and not use such
information to the competitive detriment of the disclosing party. In addition,
if this Agreement is terminated for any reason, each party shall promptly return
or cause to be returned all documents or other written records of such
confidential or proprietary information, together with all copies of such
writings and, in addition, shall either furnish or cause to be furnished, or
shall destroy, or shall maintain with such standard of care as is exercised with
respect to its own confidential or proprietary information, all copies of all
documents or other written records developed or prepared by such party on the
basis of such confidential or proprietary information. No information shall be
considered confidential or proprietary if it is (a) information already in the
possession of the party to whom disclosure is made, (b) information acquired by
the party to whom the disclosure
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is made from other sources, or (c) information in the public domain or generally
available to interested persons or which at a later date passes into the public
domain or becomes available to the party to whom disclosure is made without any
wrongdoing by the party to whom the disclosure is made.
5.2 PMN and ETS shall promptly provide each other with information as to
any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.3 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
Procedure For Exchange
6.1 At the Closing Date, the exchange shall be effected within 4 business
days after receipt by M. A. Xxxxxxx, as attorney for PMN, of the ETS common
stock certificates representing 90% of the issued and outstanding common stock
of ETS, together with the signed Exchange Agreements, containing the information
necessary to issue the PMN shares to the exchanging shareholders of ETS, by
instructing the transfer agent of PMN to issue the new certificates and sending
the certificates of PMN by Federal Express to the exchanging shareholders.
ARTICLE VII
Conditions Precedent to the
Consummation of the Exchange
The following are conditions precedent to the consummation of the Agreement
on or before the Effective Date:
7.1 ETS and PMN shall have performed and complied with all of its
respective obligations hereunder which are to be complied with or performed on
or before the Effective Date and PMN and ETS shall provide one another at the
Closing with a certificate to the effect that such party has performed each of
the acts and undertakings required to be performed by it on or before the
Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted, at meetings of the
shareholders of ETS duly and properly called for such purpose in accordance with
the applicable laws.
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7.3 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
7.4 All actions, proceedings, instruments and documents required to carry
out this Agreement and the transactions contemplated hereby and the form and
substance of all legal proceedings and related matters shall have been approved
by counsel for ETS and PMN.
7.5 The representations and warranties made by ETS and PMN in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date.
7.6 ETS shall have furnished PMN with:
(1) an agreement from each ETS shareholder who is an "affiliate" of
ETS as defined in the rules adopted under the Securities Act of 1933, as
amended, to the effect that (a) the affiliate is familiar with SEC Rules
144 and 145; (b) none of the shares of PMN common stock will be transferred
by or through the affiliate in violation of the Federal Securities Laws;
(c) the affiliate acknowledges that PMN is under no obligation to register
the sale, transfer, or the disposition of PMN common stock by the
affiliate.
(2) Securities Laws Compliance. Each shareholder of ETS shall sign an
Exchange Agreement as contained on Schedule A. It is anticipated that the
following SEC filings will need to be made as a result of the Plan and
Agreement and the exchange: Forms 8-K, 8K12(g) 3, 13d and 13g, and
appropriate amendments to the forms 8-k as may be necessary to include pro
forma financials and consolidated financials.
7.7 PMN shall furnish ETS with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of PMN, approving this
Agreement and the transactions contemplated by it.
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ARTICLE VIII
Termination and Abandonment
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Effective
Date:
(a) By mutual consent of ETS and PMN;
(b) By ETS, or PMN, if any condition set forth in Article VII relating
to the other party has not been met by the effective date or has not been
waived in writing by the other party;
(c) By ETS, or PMN, if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before any court
or governmental agency, in which it is sought to restrain, prohibit or
otherwise affect the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material error,
misstatement or omission in the representations and warranties of another
party;
(e) By any party if the Agreement Effective Date is not within 30 days
from the date hereof, or if the Closing Date passes without performance.
8.2 Any of the terms or conditions of this Agreement may be waived in
writing at any time by the party which is entitled to the benefit thereof, by
action taken by its Board of Directors provided; however, that such action shall
be taken only if, in the judgment of the Board of Directors taking the action,
such waiver will not have a materially adverse effect on the benefits intended
under this Agreement to the party waiving such term or condition.
ARTICLE IX
Termination of Representation and
Warranties and Certain Agreements
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished four years after the
Effective Date of the Agreement; provided, however, that the covenants and
agreements of the parties hereto shall survive in accordance with their terms.
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ARTICLE X
Miscellaneous
10.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
10.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of Directors
of each party provided that the shares issuable hereunder shall not be amended
without approval of the requisite shareholders of ETS.
10.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
fees prepaid, addressed as follows:
To: eTotalsource, Inc.: 0000 Xxxxx Xxxx.
Xxxx Xxxx, XX 00000
To: Premium Enterprises, Inc.: 0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of ETS and
PMN. However, either ETS or PMN may issue at any time any press release or other
public statement it believes on the advice of its counsel it is obligated to
issue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
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10.7 The Board of Directors of PMN shall appoint the following individuals
to the Board of Directors of PMN concurrent with the closing of the transaction
contemplated in this agreement:
A) Xxxxx Xxxxxx
B) Xxxxxx Xxxxx
C) Xxxxxxx Xxxxxxxxx
D) Xxxx Xxxxxx
E) Xxxx Xxxxxx
10.8 The Parties to this agreement hereby agree as follows: As soon after
closing as possible, PMN shall take action to obtain shareholder approval of 1)
a name change to a name to eTotalsource, Inc. and 2) a reverse split of one for
four shares of the issued and then outstanding shares of common stock of PMN,
which reverse split will become effective at the same time as the name change.
10.9 As part of the inducement to PMN to enter into this agreement, the
parties agree to the concurrent adoption of an irrevocable "poison pill"
resolution by the Board of Directors of PMN which shall be a continuing covenant
surviving the closing under this agreement, providing for a two year period
within which no actions will be taken by PMN , its Board of Directors or any
successor to PMN, which would reverse split, consolidate, reorganize, merge, or
in any way reduce the number of outstanding shares of stock of PMN or any
successor company (which shall be known as the "No Reverse Covenant") except
that this shall not apply to a proposed one for 4 reverse split of the issued
and outstanding shares immediately after the closing of the share exchange with
the shareholders of ETS. In the event that the "No Reverse Covenant" is
breached, the resolution and this covenant shall provide that it shall trigger a
grant by PMN of an immediate mandatory dividend to each shareholder of PMN as of
Sept 30, 2002, for each share owned after the new reverse split, consolidation,
merger, or reductions of outstanding shares, of a number of shares inversely
proportional to the amount of the reverse split, except that shares subsequently
retired or repurchased by the company to reduce outstanding shares shall not be
deemed a trigger of the No Reverse Covenant.
10.10 Within ten days after the date of this Agreement, five shareholders
of ETS holding a total of 90% of the issued and outstanding shares of ETS shall
join this Agreement by execution of the signature page hereon. In the event this
provision is not complied within the time specified, this Agreement and Plan of
Reorganization shall be null and void and all agreements terminated.
10.11 ETS shall pay or cause to be paid a total of $125,000; $50,000 as a
non-refundable deposit herewith upon signing hereof and $75,000 at closing
hereunder, which funds shall be used to pay legal fees and costs related to this
transaction, accounting fees and audit fees as due, transfer agent fees,
consulting fees due, and fees for services rendered.
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IN WITNESS WHEREOF, the parties have set their hands and seals this 18th
day of December , 2002.
Premium Enterprises, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
President
Attest:________________________
Secretary
eTotalsource, Inc.
By:
-----------------------------
President
Attest: ________________________
Secretary
eTotalsource, Inc. SHAREHOLDERS (by signature below or pursuant to
execution of the Exchange Agreement and Representations incorporating this
Agreement by reference.)
Signatures Please Print Names
1_________________________ _____________________________
2_________________________ _____________________________
3_________________________ _____________________________
4_________________________ _____________________________
5_________________________ _____________________________
14
Schedule 4.9
Judgments:
1. Ally Capital vs. Premium Enterprises-Boulder County District Court -
originally for $47,000, approximately, in 1996. The Secretary of State does
not show Ally Capital as a company registered to do business in Colorado
any more. This judgment still shows as outstanding.
2. Tusco, Inc. vs. Premium Enterprises, Inc. Xxxxx County District Court -
originally for $75,000 approximately in 1997. This was a landlord suit for
rent and damages, and is enforceable for 20 years, and then may be renewed.
No action has ever been taken to enforce this.
Other Payables include old legal and accounting fees accrued in 1994-1996
upon which no suit has been filed and which are now beyond the applicable
Statute of Limitations in Colorado (six years). They can be written off the
payables list (next year is probably prudent). There are payables for legal
fees, accounting, management compensation and advances, which are current, and
these items will be settled with the issuance of a total of 300,000 S-8 shares
of common stock (post split) and 500,000 restricted shares of common stock (post
reverse) of PMN after the closing of this transaction. The parties agree that
the judgments above, if sought to be enforced, are the continuing legal
obligation of PMN and any shares or cash which may be used to settle these
debts, are not the responsibility of former management or employees of PMN, nor
any other agent of PMN, and PMN shall bear the sole responsibility for such
judgments to the extent necessary to resolve any enforcement thereof.
