AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this 31st day
of August, 2001, among USA One Xxxx.Xxx, Inc., a Nevada corporation ("USAS");
Palladium Communications, Inc., a Kentucky corporation, ("Palladium") and the
Shareholders in Palladium (hereinafter "Shareholders").
USAS wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of Palladium for and in exchange for stock of USAS, in a
stock for stock transaction intending to qualify as a tax-free exchange
pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. The parties intend for this Plan to represent the terms and
conditions of such tax-free reorganization, which Plan the parties hereby
adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the Shareholders
agree to, and to cause Palladium to assign, transfer, and deliver to USAS,
free and clear of all liens, pledges, encumbrances, charges, restrictions or
known claims of any kind, nature or description, all of their shares of
Palladium, and USAS agrees to acquire said shares on the date thereof, or as
soon as practicable thereafter, by issuing and delivering in exchange
therefore solely common shares of USAS's stock, par value $0.001, in the
aggregate of 183,000,000 shares, of the then issued and outstanding shares of
USAS subject to the provisions of this Plan. Such shares will represent
approximately 90% of the issued and outstanding shares of USAS. Upon the
consummation of the transaction contemplated herein, Palladium shall become a
wholly owned subsidiary of USAS.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number
of USAS shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in USAS common stock,
which may occur between the date of the execution of this Plan and the date of
the delivery of such shares.
1.3 Delivery of Certificates. Palladium shall transfer to USAS at the
closing provided for in Section 2 (the "Closing") the shares of common stock
of Palladium listed opposite their respective names on Exhibit A hereto (the
"Palladium Shares") in exchange for shares of the common stock of USAS as
outlined above in Section 1.1 hereof (the "USAS Stock"). All of such shares
of USAS stock shall be issued at the closing to the Shareholders, in the
numbers shown opposite their respective names in Exhibit A. The transfer of
Palladium Shares by the Shareholders shall be effected by the delivery to USAS
at the Closing of such documents as counsel for USAS deems reasonably
necessary and appropriate.
1.4 Further Assurances. Subsequent to the execution hereof, and from
time to time thereafter, the parties hereto shall execute such additional
instruments and take such other action as any of the parties may request in
order to more effectively effect the transactions described herein.
Section 2
Closing
2.1 Closing. The Closing may be accomplished by wire, express mail or
other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duty authorized representatives. In
any event, the closing of the transactions contemplated by this plan shall be
effective as soon as practicable after all of the conditions contained herein
have been satisfied.
2.2 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate the
transaction contemplated hereby. At the Closing, the following events will
take place:
(a) The currently elected Board of Directors of USAS shall appoint
Xxxxxxx X. Xxxxxxxxxx, Xxx X. Xxxxxxx, X. Xxxxxxxx Xxxxxxxxx III, and Xxxxxxx
X. Xxxxxxxxx as Directors of USAS.
(b) Upon closing of the reorganization the current officers of
USAS shall submit their resignations and the Board will appoint the following
officers:
Xxxxxxx X. Xxxxxxxxxx President & Chairman of the Board
Xxx Xxxxxxx Chief Operating Officer
Xxxx Xxxxxxxxx Secretary / Treasurer
Xxxxx Xxxxxx Vice-President - Network Marketing
2.3 Mediation Arbitration. If a dispute arises out of or relates to
this Plan, or the breach thereof, and if said dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation under the Commercial Mediation
Rules of the American Arbitration Association, before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out of
or relating this Plan, or breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgement upon the Award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
Section 3
Representations, Warranties and Covenants of USAS
USAS represents and warrants to, and covenants with, the Shareholders
and Palladium as follows:
3.1 Corporate Status. USAS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. USAS has
full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is
no jurisdiction in which the character and location of the assets owned by it,
or the nature of the business transacted by it, requires qualification.
Included in the USAS schedules (defined below) are correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of USAS's
Articles of Incorporation or Bylaws. USAS has taken all action required by
law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of USAS as of the
date hereof consists of 200,000,000 common shares, par value $0.001 and
10,000,000 preferred shares, par value $.001. The common shares of USAS
issued and outstanding are fully paid, non-assessable shares. There are no
outstanding options, warrants, obligations convertible into shares of stock,
or calls or any understanding, agreements, commitments, contracts or promises
with respect to the issuance of USAS's common stock or with regard to any
options, warrants or other contractual rights to acquire any of USAS's
authorized but unissued common shares. As of the date hereof there are
16,000,000 common shares of USAS issued and outstanding, and no preferred
shares outstanding.
3.3 Financial Statements.
(a) USAS hereby warrants and covenants to Palladium that the
audited financial statements for the period ended November 30, 2000, fairly
and accurately represent the financial condition of USAS and that no material
change has occurred in the financial condition of USAS except as that which is
accurately reflected in the 10-Q filed May 14th, 2001 attached, and subsequent
financial statements.
(b) USAS hereby warrants and represents that the audited financial
statements for the periods set forth in subparagraph (a), supra, fairly and
accurately represent the financial condition of USAS as submitted heretofore
to Palladium for examination and review.
3.4 Conduct of Business. USAS is a development stage company engaged in
providing Internet services and telecommunication services, employing a
network marketing system.
USAS will use its best effort to maintain and preserve its business
organization, employee relationships and goodwill intact, and will not,
without the prior written consent of Palladium, enter into any material
commitments except in the ordinary course of business.
USAS will conduct itself in the following manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be made
in the Articles of Incorporation or Bylaws of USAS.
(b) Capitalization, etc. USAS will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
3.5 Options, Warrants and Rights. USAS has no options, warrants or
stock appreciation rights related to the authorized but unissued USAS common
stock. There are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued USAS common stock, except
options, warrants, calls, or commitments, if any, to which USAS is not a party
and by which it is not bound.
3.6 Title to Property. USAS has good and marketable title to all of
its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of USAS, and the properties and assets
of USAS are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of USAS, threatened by or against or
effecting USAS at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
USAS does not have any knowledge of any default on its part with respect to
any judgement order, writ, injunction, decree, warrant, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality.
3.8 Liability Releases. The Undersigned, constituting the Officers
and Directors of USAS, hereby agree that:
All debts, obligations, or other commitments made on behalf of USAS or
its' employees, shareholders or other associated entities have been given to
Palladium in written fashion prior to the date of closing of the merger
between Palladium and USAS and have been acknowledged and agreed to in writing
by Palladium. Any debts, obligations or other commitments made on behalf of
USAS or its employees, shareholders or other associated entities which have
NOT been made available to Palladium in written fashion and agreed to in
writing by Palladium as of the date of closing of the merger between Palladium
and USAS shall be born exclusively by the Undersigned to the extent that such
indemnification is limited to the stock pledged in favor of Palladium to cover
such potential liability (Exhibit C). Any dispute or claim between the
parties to this agreement arising out of or relating to this Agreement or its
breach or termination which has not been resolved within thirty (30) days
after either party shall notify the other in writing of such controversy (the
"Dispute") shall be finally determined by arbitration in accordance with the
Arbitration Rules (the "Rules") of the American Arbitration Associating
("AAA") in effect on the date of this agreement. The arbitration shall take
place, and the arbitrators' award shall be rendered in Louisville, Kentucky.
The parties agree to be bound by the decision of the majority of the
arbitrators. The award of the arbitrators shall be the sole and exclusive
remedy between the parties regarding the Dispute.
3.9 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, USAS and its present management will (i) give to
the Shareholders and Palladium, or their duly authorized representatives, full
access, during normal business hours, to all of its books, records, contracts
and other corporate documents and properties so that the Shareholders and
Palladium, or their duly authorized representatives, may inspect them; and
(ii) furnish such information concerning the properties and affairs of USAS as
the Shareholders and Palladium, or their duly authorized representatives, may
reasonably request. Any such request to inspect USAS's books shall be
directed to Xxxxx Xxxxxx, at the address set forth herein Section 10.4
Notices.
3.10 Confidentiality. Until the Closing (and thereafter if there is no
Closing), USAS and its representatives will keep confidential any information
which they obtain from the Shareholders or from Palladium concerning its
properties, assets and the proposed business operations of Palladium. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. EST on August 31, 2001 or otherwise waived
or extended in writing to a date mutually agreeable to the parties hereto,
USAS will return to Palladium all written matter with regard to Palladium
obtained in connection with the negotiations or consummation of this Plan.
3.11 Conflict with Other Instruments. The transactions contemplated by
this Plan will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreements or instruments to which USAS was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of USAS.
3.12 Corporate Authority. USAS has full corporate power and authority
to enter into this Plan and to carry out its obligations hereunder and will
deliver to the Shareholders and Palladium or their respective representatives,
at the Closing, a certified copy of resolutions of its Board of Directors
authorizing execution of this Plan by its officers and performance thereunder.
3.13 Consent of Director Shareholders. USAS hereby warrants and
represents that the Director Shareholders of USAS consented in writing to the
authorization to execute an Agreement and Plan of Reorganization as between
USAS and Palladium pursuant to a stock-for-stock transaction in which USAS
would acquire one hundred percent of the issued and outstanding shares of
Palladium in exchange for the issuance of a total of 183,000,000 common shares
of USAS.
3.14 Special Covenants and Representations Regarding the Exchanged USAS
Stock. The consummation of this Plan and the transactions herein contemplated
include the issuance of the exchanged USAS shares to the Shareholders, which
constitutes an offer and sale of securities under the Securities Act of 1933,
as amended, and applicable states' securities laws. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
requirements of such statutes which depend interalia on the circumstances
under which the Shareholders acquire such securities. In connection with the
reliance upon exemptions from the registration and prospectus delivery
requirements for such transactions, at the Closing, Shareholders shall cause
to be delivered to USAS a Letter(s) of Investment Intent in the form attached
hereto as Exhibit B and incorporated herein by reference.
3.15 Undisclosed or Contingent Liabilities. USAS hereby represents and
warrants that it has no undisclosed or contingent liabilities which have not
been disclosed to Palladium in writing or in this agreement or in any Exhibit
attached hereto.
3.16 Information. The information concerning USAS set forth in this
Plan, and the USAS schedules attached hereto, are complete and accurate in all
material respects and do not contain, or will not contain, when delivered, any
untrue statement of a material fact or omit to state a material fact the
omission of which would be misleading to Palladium in connection with this
Plan.
3.17 Title and Related Matters. USAS has good and marketable title to
all of its properties, interests in properties, and assets, real and personal,
which are reflected, or will be reflected, in the USAS balance sheets, free
and clear of any and all liens and encumbrances, unless as otherwise
disclosed.
3.18 Contracts or Agreements. USAS is not bound by any material
contracts, agreements or obligations which it has not already disclosed to
Palladium in writing or in this Agreement or in any Exhibit attached hereto.
3.19 Governmental Authorizations. USAS has all licenses, franchises,
permits and other government authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof.
3.20 Compliance with Laws and Regulations. USAS has complied with all
applicable statutes and regulations of any federal, state, or other applicable
jurisdiction or agency thereof, except to the extent that noncompliance would
not materially and adversely effect the business, operations, properties,
assets, or condition of USAS or except to the extent that noncompliance would
not result in the occurrence of any material liability, not otherwise
disclosed to Palladium.
3.21 Approval of Plan. The Board of Directors of USAS has authorized
the execution and delivery of this Plan by USAS and have approved the Plan and
the transactions contemplated hereby. USAS has full power, authority, and
legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
3.22 Obligations. USAS is not aware of any outstanding obligations to
any of its employees or consultants as of the Closing.
3.23 USAS Schedules. USAS has delivered to Palladium the following
items listed below, hereafter referred to as the "USAS Schedules", which is
hereby incorporated by reference and made a part hereof. A certification
executed by a duly authorized officer of USAS on or about the date within the
Plan is executed to certify that the USAS Schedules are true and correct.
a) Copy of Articles of Incorporation, including any amendments, and
Bylaws;
b) Financial statements;
c) Shareholder's list;
d) Resolution of Directors approving Plan
e) Officers' Certificate as required under Section 6.2 of the Plan;
f) Opinion of counsel for Transfer Agent, if deemed necessary by
Transfer Agent;
g) Certificate of Good Standing;
Section 4
Representations, Warranties and Covenants of Palladium
Palladium represents and warrants to, and covenants with USAS as
follows:
4.1 Corporate Status. Palladium is a corporation duly organized, and
validly existing under the laws of The Commonwealth of Kentucky. Palladium
has full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is
no jurisdiction in which the character and location of the assets owned by it,
or the nature of the business transacted by it, requires qualification.
Included in the Palladium schedules (defined below) are complete and correct
copies of its Articles of Incorporation and Bylaws as in effect on the date
hereof. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of Palladium's Articles of Incorporation or Bylaws. Palladium has
taken all action required by law, its Articles of Incorporation, its Bylaws,
or otherwise, to authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of Palladium as of the
date hereof consists of 10,000 common shares, par value $.10. As of the date
hereof there are 6,203 common shares of Palladium issued and outstanding.
There are no preferred shares issued and outstanding. The foregoing shares
are fully paid, non-assessable shares.
4.3 Conduct of Business. Palladium will use its best efforts to
maintain and preserve its business organization, employee relationships and
goodwill intact, and will not, without the prior written consent of USAS,
enter into any material commitments except in the ordinary course of business.
Palladium agrees that Palladium will conduct itself in the following
manner pending the Closing:
(a) Articles of Incorporation and Bylaws. No change will be made
in the Articles of Incorporation or Bylaws of Palladium.
(b) Capitalization, etc. Palladium will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
4.4 Title to Property. Palladium has good and marketable title to all
its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of Palladium, and the properties and
assets of Palladium are subject to no mortgage, pledge, lien or encumbrance,
unless as otherwise disclosed in its financial statements.
4.5 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of Palladium, threatened by or against or
affecting Palladium at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Palladium does not have any knowledge of any default on its part with respect
to any judgement, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
4.6 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, not exceeding six (6) months, Palladium and its
present management will (i) give to USAS, or their duly authorized
representative, full access, during normal business hours, to all of its
books, records, contracts and other corporate documents and properties so that
USAS, or their duly authorized representatives , may inspect them; and (ii)
furnish such information concerning the properties and affairs of Palladium or
their duly authorized representatives, may reasonably request. Any such
request to inspect Palladiums' books shall be directed to Palladium's
representative, at the address set forth herein under Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Palladium and its representatives will keep confidential any
information which they obtain from the Shareholders or from USAS concerning
its properties, assets and the proposed business operations of USAS. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. EST on August 31, 2001 or otherwise waived
or extended in writing to a date mutually agreeable to the parties hereto,
Palladium will return to USAS all written matter with regard to USAS obtained
in connection with the negotiations or consummation of this Plan.
4.8 Investment Intent. The Shareholders represent and covenant that
they are acquiring the unregistered and restricted common shares of USAS to be
delivered to them under this Plan for investment purposes and not with a view
to the subsequent sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns to execute and deliver to USAS on
the date of Closing or no later than the date on which the restricted shares
are issued and delivered to the Shareholders, their assigns, or designees, an
Investment Letter similar in form to that attached hereto as Exhibit B.
4.9 Unregistered Shares and Access to Information. Palladium and the
Shareholders understand that the USAS shares to be exchanged for the Palladium
shares have not been registered with or reviewed by the securities and
Exchange Commission under the Securities Act of 1933, as amended, or with or
by any state securities law administrator, and no federal or state securities
law administrator has reviewed or approved any disclosure or other material
facts concerning USAS or USAS Stock. Palladium and the Shareholders have been
provided with and reviewed all information concerning USAS and USAS Stock, to
be exchanged for the Palladium shares as they have deemed necessary or
appropriate as prudent and knowledgeable investors to enable them to make
informed investment decisions concerning the USAS Stock, to be exchanged for
the Palladium shares. Palladium and the Shareholders have made an
investigation as to the merits and risks of their acquisition of the USAS
Stock, to be exchanged for the Palladium Shares and have had the opportunity
to ask questions of, and have received satisfactory answers from, the officers
and directors of USAS concerning the USAS Stock to be exchanged for the
Palladium Shares and related matters, and have had an opportunity to obtain
additional information necessary to verify the accuracy of such information
and to evaluate the merits and risks of the proposed acquisition of the USAS
Stock to be exchanged for the Palladium Shares.
4.10 Ownership of Shares. The Shareholders are the beneficial and
record owners, free and clear of any liens and encumbrances, of whatever kind
or nature, of all the shares of Palladium of whatever class or series, which
the Shareholders have contracted to exchange.
4.11 Contracts or Agreements.
(a) Set forth in the Palladium Schedules are descriptions of all
material contracts which written or oral, all agreements, franchises,
licenses, or other commitments to which Palladium is a party or by which
Palladium or its properties are bound.
(b) Except as may be set forth in the Palladium Schedules, Palladium
is not a party to any contract, agreement, corporate restriction, or subject
to any judgement, order, writ, injunction, decree, or award, which materially
and adversely effect the business, operations, properties, assets, or
conditions of Palladium.
(c) Except as set forth in the Palladium Schedules, Palladium is not
a party to any material oral or written (i) contract for employment of any
offer which is not terminable on 30 days (or less) notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the Employment
Retirement Income Security Act, as amended, or otherwise covered; (iii)
agreement providing for the sale, assignment or transfer of any of its rights,
assets or properties, whether tangible or intangible, except sales of its
property in the ordinary course of business with a value of less than $2,000;
or (iv) waiver of any right of any value which in the aggregate is
extraordinary or material concerning the assets or properties scheduled by
Palladium, except for adequate value and pursuant to contract. Palladium has
not entered into any material transaction which is not listed in the Palladium
Schedules or reflected in the Palladium financial statements.
4.12 Material Contract Defaults. Palladium is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business, operations, properties or
assets, or condition of Palladium, and there is no event of default or event
which, with notice of lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other
commitment in respect of which Palladium has not taken adequate steps to
prevent such default from occurring, or otherwise compromised, reached a
satisfaction of, or provided for extensions of time in which to perform under
any one or more contract obligations, among others.
4.13 Conflict with Other Instruments. The consummation of the within
transactions will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which Palladium was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of Palladium.
4.14 Governmental Authorizations. Palladium is in good standing in the
Commonwealth of Kentucky. Except for compliance with federal and state
security laws, no authorization, approval, consent in connection with the
execution and delivery by Palladium of this Plan and the consummation by
Palladium of the transactions is contemplated hereby.
4.15 Compliance with Laws and Regulations. Palladium has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Palladium or except to the
extent that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to USAS.
4.16 Approval of Plan. The Board of Directors and Shareholders of
Palladium have authorized the execution and delivery of this Plan by Palladium
and have approved the Plan and the transactions contemplated hereby.
Palladium has full power, authority, and legal right to enter into this Plan
and to consummate the transactions contemplated hereby.
4.17 Information. The information concerning Palladium set forth in
this Plan, and the Palladium Schedules attached hereto, are complete and
accurate in all material respects and do not contain, or will not contain,
when delivered, any untrue statement of material fact or omit to state a
material fact the omission of which would be misleading to USAS in connection
with this Plan.
4.18 Palladium Schedules. Palladium has delivered to USAS the following
items listed below, hereafter referred to as the "Palladium Schedules", which
are hereby incorporated by reference and made a part hereof. A certificate
executed by a duly authorized officer of Palladium on or about the date the
Plan is executed to certify that the Palladium Schedules are true and correct.
(a) Copy of Articles of Incorporation Bylaws;
(b) Financial Statements;
(c) A schedule setting forth the shareholder, together with the
number of shares owned beneficially or of record by each (also
attached as Exhibit A);
(d) Resolutions of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) Officers' Certificate as required by Section 7.2 of the Plan;
(g) A list of key employees, including current compensation, with
notation as to job description and whether or not such employee
is subject to written contract, and if subject to a contract or
employment agreement, a copy of the same;
(h) A schedule showing the name and location of each bank or other
institution with which Palladium has an account and the names
of the authorized persons to draw thereon or having access
thereto;
(i) A schedule setting forth all material contracts;
(j) Certificate of Good Standing.
Section 5
Special Covenants
5.1 Palladium Information Incorporated in USAS's Reports. Palladium
represents and warrants to USAS that all the information furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. Palladium agrees to indemnify and hold USAS harmless, including
each of its Directors and Officers, and each person, if any, who controls such
party, under any applicable law from and against any and all losses, claims,
damages, expenses or liabilities to which any of them may become subject under
applicable law, or reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
actions, whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or based on any
untrue statement, alleged untrue statement, or omission of material fact
contained in such information delivered hereunder.
5.2 USAS Information Incorporated in Palladium's Reports. USAS
represents and warrants to Palladium that all the info furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. The current officers and directors of USAS agree to indemnify and
hold Palladium harmless, including each of its Shareholders, and each person,
if any, who controls such party, under any applicable law from and against any
and all losses, claims, damages, expenses or liabilities to which any of them
may become subject under applicable law, or reimburse them for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such actions, whether or not resulting in liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based on any untrue statement, alleged untrue statement, or omission of a
material fact contained in such information delivered hereunder.
5.3 Special Covenants and Representations Regarding the Exchanged USAS
Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the USAS Stock in exchange for all the
issued and outstanding stock of Palladium and the subsequent transfer of
183,000,000 shares of USAS Common Stock to the Shareholders, constitutes the
offer and sale of securities under the Securities Act and the applicable state
statutes, which depend, inter alia, on the circumstances under which the
Shareholders acquire such securities. USAS intends to rely on the exemption
of the registration provision of the Section 5 of the Securities Act as
provided for under Section 4.2 of the Securities Act of 1933, which states
"transactions not involving a public offering", among others. Each
Shareholder upon receipt of the Shares exchanged for Palladium's Shares shall
execute and deliver to USAS a letter of investment intent to indicate, among
other representations, that the Shareholder is receiving the shares for the
Palladium Stock, for investment purposes and not with a view to the subsequent
distribution thereof. A proposed Investment Letter is attached hereto as
Exhibit B and incorporated herein by reference for the general use by the
Shareholders, as they may determine.
5.4 Action Prior to Closing. Upon the execution hereof until the
Closing date, and the completion of the consolidated audited financials.
(a) Palladium and USAS will (i) perform all of its obligations under
material contracts, leases, insurance policies and/or documents relating to
its assets and business; (ii) use its best efforts to maintain and preserve
its business organization intact, to retain its key employees, and to maintain
its relationship with existing potential customers and clients; and (iii)
fully comply with and perform in all material respects all duties and
obligations imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state governmental
authorities.
(b) Neither Palladium nor USAS will (i) make any change in its
Articles of Incorporation/Organization or Bylaws/Operating Agreement; (ii)
enter into or amend any contract, agreement, or other instrument of the types
described in the parties' schedules, except that a party may enter into or
amend any contract or other instrument in the ordinary course of business
involving the sale of goods or services, provided that such contract does not
involve obligations in excess of $2,000.
Section 6
Conditions Precedent to Obligations of
Palladium and the Shareholders
All obligations of Palladium and the Shareholders under this Plan are
subject to the satisfaction, on or before the Closing date, except as
otherwise provided for herein, or waived or extended in writing by the parties
hereto, of the following conditions:
6.1 Accuracy of Representations. The representations and warranties
made by USAS in this Plan were true when made and shall be true as of the
Closing date (except for the changes therein permitted by this Plan) with the
same force and effect as if such representations and warranties were made at
and as of the Closing date; and, USAS shall have performed and complied with
all aspects of this Agreement, unless waived or extended in writing by the
parties hereto. Palladium shall have been furnished with a certificate,
signed by a duly authorized executive officer of USAS and dated the Closing
date, to the foregoing effect.
6.2 Officers' Certificate. Palladium and the Shareholders shall have
been furnished with a certificate dated the closing date and signed by a duly
authorized executive officer of USAS, to the effect that no litigation,
proceedings, investigation, claim, demand or inquiry is pending, or to the
best knowledge of USAS, threatened, which might result in an action to enjoin
or prevent the consummation of the transactions contemplated by this Plan, or
which might result in any material adverse change in the assets, properties,
business, or operations of USAS, and that this Agreement has been complied
with in all material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of USAS, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
USAS, except as otherwise disclosed to Palladium.
6.4 Opinion of Counsel of USAS. USAS shall furnish to Palladium and
the Shareholders an opinion dated as of the Closing date and in form and
substance satisfactory to Palladium and the Shareholders to the effect that:
(a) USAS is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Nevada, and with all requisite
corporate power to perform its obligations under this Plan.
(b) The business of USAS, as presently conducted, including upon
the consummation hereof, the ownership of all of the issued and outstanding
shares of Palladium, does not require it to register it to do business as a
foreign corporation on any jurisdiction other than under the jurisdiction of
its Articles of Incorporation or Bylaws and USAS has complied to the best of
its knowledge in all material respects with all the laws, regulations,
licensing requirements and orders applicable to its business activities and
has filed with the proper authorities, including the Department of Commerce,
Division of Corporations, Secretary of State for the Commonwealth of Kentucky,
all statements and reports required to be filed.
(c) The authorized and outstanding capital stock of USAS as set
forth in Section 3.2 above, and all issued and outstanding shares have been
duly and validly authorized and issued and are fully paid and non- assessable.
(d) There are no material claims, suits or other legal proceedings
pending or threatened against USAS of any court or before or by any
governmental body which might materially affect the business of USAS or the
financial condition of USAS as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities against USAS.
(e) To the best knowledge of such counsel, the consummation of the
transactions contemplated by this Plan will not violate or contravene the
provisions of the Certificate of Incorporation or Bylaws of USAS, or any
contract, agreement, indenture, mortgage, or order by which USAS is bound.
(f) This Plan constitutes a legal, valid and binding obligation of
USAS enforceable in accordance with its terms, subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors' rights generally and general principles of equity (regardless of
whether such principles are considered in a proceeding in equity or law).
(g) The execution and delivery of this Plan and the consummation of
the transactions contemplated hereby have been ratified by a majority of the
Shareholders of USAS and have been duly authorized by its Board of Directors.
(h) USAS has not, nor will it undertake any action, the result of
which would endanger the tax- free nature of the Plan.
6.5 Good Standing. Palladium shall have received a Certificate of Good
Standing from the Commonwealth of Kentucky, dated within sixty (60) days prior
to Closing, but in no event later than ten days subsequent to the execution
hereof certifying that USAS is in good standing as a corporation in the
Commonwealth of Kentucky.
6.6 Other Items. Palladium and the Shareholders shall have received
such further documents, certificates or instruments relating to the
transactions contemplated hereby as Palladium and the Shareholders may
reasonably request.
Section 7
Conditions Precedent to Obligations of USAS
All obligations of USAS under this Plan are subject, at its option, to
the fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties
made by Palladium and the Shareholders under this Plan were true when made and
shall be true as of the Closing date (except for changes therein permitted by
this Plan) with the same force and effect as if such representations and
warranties were made at and as of the Closing date; and USAS shall have
performed and complied with all aspects of this Agreement, unless waived or
extended in writing by the parties hereto. USAS shall have been furnished
with a certificate, signed by a duly authorized Officer of Palladium and dated
the Closing date, to the foregoing effect.
7.2 Officers' Certificate. USAS shall have been furnished with a
certificate dated the Closing date and signed by the duly authorized Officer
of Palladium, to the effect that no litigation, proceeding, investigation,
claim, deed, or inquiry is pending, or to the best knowledge of Palladium,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties, business, or
operations of Palladium, and that this Agreement has been complied with in all
material respects.
7.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of USAS, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
Palladium, except as otherwise disclosed to USAS.
7.4 Good Standing. USAS shall have received a Certificate of Good
Standing from the Commonwealth of Kentucky, dated within sixty (60) days prior
to Closing, but in no event later than ten days subsequent to the execution
hereof certifying that Palladium is in good standing as a corporation in the
Commonwealth of Kentucky.
7.5 Other Items. USAS shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as USAS may reasonably request.
7.6 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to USAS.
Section 8
Termination
8.1 Termination by Palladium or the Shareholders. This Plan may be
terminated at any time prior to the Closing date by action of Palladium or the
Shareholders, if USAS shall fail to comply in any material respect with any of
the covenants or agreements contained in this Plan, or if any of its
representations and warranties contained herein shall be inaccurate in any
material respect.
8.2 Termination by USAS. This Plan may be terminated at any time prior
to the Closing date by action of USAS if Palladium shall fail to comply in any
material respect with any of the covenants or agreements contained in this
Plan, or if any of its representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent.
(a) This Plan may be terminated at any time prior to the Closing
date by mutual consent of USAS, expressed by action of its Board of Directors,
Palladium or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this Plan
shall be of no further force and effect and no obligation, right or liability
shall arise hereunder. Each party shall bare its own costs in connection
herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Xxxxxxx X.
Xxxxxxxxxx, as their agent and attorney in fact (the "Shareholders'
Representative") with full power and authority until the Closing to execute,
deliver and receive on their behalf all notices, requests and other
communications hereunder; to fix and alter on their behalf the date, time and
place of the Closing; to waive, amend or modify any provisions of this Plan
and to take such other action on their behalf in connection with this Plan,
the Closing and the transactions contemplated hereby as such agent deems
appropriate; provided, however, that no such waiver, amendment or modification
may be made if it would decrease the number of shares to be issued to the
Shareholders under Section 1 hereof or increase the extent of their obligation
to USAS hereunder, unless agreed in writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to time, after the
Closing 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 the Plan.
10.2 Payments of Costs and Fees. USAS and Palladium shall each bear
their own costs and expenses, including any legal and accounting fees in
connection with the negotiation, execution and consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, Palladium and the Shareholders
shall cause to have promptly prepared and disseminated a news release
concerning the execution and consummation of the Plan, such press release and
communication to be released promptly and within the time required by the
laws, rules and regulations as promulgated by the United States Securities and
Exchange Commission, and concomitant therewith to cause to be prepared a full
and complete letter to USAS's shareholders which shall contain information
required by Regulation 240.I4f-I as promulgated under Section I4(f) as
mandated under the Securities and Exchange Act of 1934, as amended.
10.4 Notices. All notices and other communications required or
permitted hereunder shall be sufficiently given if personally delivered, sent
by registered mail, or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission addressed to the following parties
hereto or at such other address as follows:
If to USAS: Xxxxx Xxxxxx
0 Xxxxxxxxx Xxxxxxxxx, Xxxxx XX0
Xxxxxxxxx, Xxxxxxxx 00000
If to Palladium: Palladium Communications
Attn: Xxx Xxxxxxxxxx
000 X. Xxxxxxxx Xxx Xxxx.
Xxxxxxxxxx, Xxxxxxxx 00000
Or at such other address as shall be furnished in writing by any party
in the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so delivered,
mailed, sent by facsimile transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire agreement
between the parties relating to the subject matter hereof, including any
previous letters of intent, understandings, or agreements between USAS,
Palladium and the Shareholders with respect to the subject matter hereof, all
of which are hereby merged into this Plan, which alone fully and completely
expresses the agreement of the parties relating to the subject matter hereof.
Excepting the foregoing agreement, there are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set fourth herein.
10.6 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Kentucky, except
to the extent preempted by federal law, in which event (and to the extent
only) federal law shall govern.
10.7 Tax Treatment. The Transaction contemplated by this Plan is
intended to qualify as a "tax-free" reorganization under the provisions of
Section 368(a)(I)(C) of the Internal Revenue Code of 1986, as amended.
Palladium and USAS acknowledge, however, that each are being represented by
their own tax advisors in connection with this transaction, and neither has
made any representations or warranties to the other with respect to treatment
of such transaction or any par or effect thereof under applicable tax laws,
regulations or interpretations; and no attorney's opinion or tax revenue
ruling has been obtained with respect to the tax consequences of the
transactions contemplated by the within Plan.
10.8 Attorney Fee. In the event that any party prevails in any action
or suit to enforce this Plan, or secure relief from any default hereunder or
breach hereof, the nonprevailing party or parties shall reimburse the
prevailing party for all costs, including reasonable attorney fees, incurred
in connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred
herein, at law or in equity, and may be enforced concurrently or separately,
and no waiver by any party of the performance of any obligation by the other
shall be construed as a waiver of the same or any other default than,
therefore, or thereafter occurring or existing. Any time prior to the
expiration of thirty (30) days form the date hereof, this Plan may be amended
by a writing signed by all parties hereto, with respect to any of the terms
contained herein, and any term or condition of this Plan may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
10.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which together shall constitute one and the same
instruments.
10.11 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not effect in any way the meanings or
interpretation of the Plan.
10.12 Parties in Interest. Except as may be otherwise expressly
provided herein, all terms and provisions of this Plan shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal and legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement of
Reorganization effective the day and year set forth above.
USA OneStar. Net, Inc.
By: /s/ Xxxx X. Xxxxx
__________________________________________
Xxxx. X. Xxxxx, Chairman
/s/ Xxxxx Xxxxxx
By:___________________________
Xxxxx Xxxxxx, President & Director
Palladium Communications, Inc.
Shareholders:
/s/ Xxxxxxx X. Xxxxxxxxxx
___________________________
Xxxxxxx X. Xxxxxxxxxx
/s/ X. Xxxxxxxx Xxxxxxxxx III
___________________________
X. Xxxxxxxx Xxxxxxxxx, III
/s/ Xxxxxxx X. Xxxxxxxxx
___________________________
Xxxxxxx X. Xxxxxxxxx
/s/ Xxx Xxxxxxx
___________________________
Xxx Xxxxxxx
CLOSING DOCUMENTS CONCERNING REORGANIZATION BETWEEN XXXXXXXXXX.XXX, INC.
AND PALLADIUM COMMUNICATIONS, INC.
Agreement and Plan of Reorganization (the "Plan") as between
XXXXxxXxxx.Xxx, Inc. ("USAS") and Palladium Communications, Inc.
("Palladium") dated this 31st day of August, 2001 and Exhibits thereto.
1. USAS Schedules: Documents delivered by USAS to Palladium precedent
to or simultaneous with the closing in accordance with Section 2 of the Plan:
(a) Copy of Articles of Incorporation, including any amendments,
and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolutions of Directors approving Plan;
(e) Officers' Certificate as required under Section 6.2 of the
Plan;
(f) Certificate of Good Standing.
2. Palladium Schedules: Documents to be delivered by Palladium to USAS
precedent or simultaneously with the Closing in accordance with Section 4.21
of the Plan:
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial statements;
(c) A schedule setting forth the shareholder, together with the
number of shares owned or beneficially or of record by each
(also attached as Exhibit A);
(d) Resolutions of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) Officers' Certificate as required by Section 7.2 of the
Plan;
(g) A list of key employees, including current compensation,
with notation as to job description and whether or not such
employee is subject to written contract, and if subject to a
contract or employment agreement, a copy of the same;
(h) A schedule showing the name and location of each bank or
other institution with which USAS has an account and the
names of the authorized persons to draw thereon or having
access thereto;
(i) A schedule setting forth all material contracts;
(j) Certificate of Good Standing.
