EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
GALAXY MINERALS, INC.
A FLORIDA CORPORATION
AND
YELLOW JACKET FINANCE LIMITED, A BRITISH VIRGIN ISLANDS CORPORATION
EFFECTIVE AS OF APRIL 16, 2004
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, is made and entered into
this 16th day of April, 2004, by and between Galaxy Minerals, Inc., a Florida
corporation ("Galaxy Minerals") and Yellow Jacket Finance Limited, a British
Virgin Islands corporation ("YJF"), and the 100% shareholder of YJF, Bait Shop
Limited, a British Virgin Islands corporation ("YJF Shareholder"), and
specifically incorporated herein by reference (YJF and YJF Shareholder shall be
hereinafter jointly referred to as "YJF Parties").
PREMISES
A. This Agreement provides for the reorganization of YJF with and into
Galaxy Minerals, with YJF becoming a wholly-owned subsidiary of Galaxy Minerals,
and in connection therewith, the exchange of the outstanding common stock of YJF
into shares of common voting stock of Galaxy Minerals, all for the purpose of
effecting a tax-free reorganization pursuant to sections 351, 354 and
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended ("IRC"). On the
terms and conditions set forth herein, the parties hereby adopt the Plan of
Reorganization embodied in this Agreement.
B. The boards of directors of YJF and Galaxy Minerals have determined,
subject to the terms and conditions set forth in this Agreement, that the
exchange contemplated hereby, as a result of which YJF would become a wholly
owned subsidiary of Galaxy Minerals is desirable and in the best interests of
their shareholders. This Agreement is being entered into for the purpose of
setting forth the terms and conditions of the proposed exchange.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
YJF AND YJF SHAREHOLDER
YJF and YJF Shareholder, individually and neither jointly nor
severally, represents and warrants to Galaxy Minerals, except as disclosed in
this Agreement or in the case of any representation qualified by its terms to a
particular Schedule, as hereinafter defined, of YJF attached hereto, that the
statements made in this Article I will be correct and complete at the Effective
Date, as hereinafter defined, provided, however, if there is no Effective Date,
then no party shall be liable for any inaccuracy.
SECTION 1.1 SHAREHOLDER. The YJF Shareholder is the owner of 100
ordinary shares of YJF, which are all of the issued and outstanding shares of
the capital stock of YJF attributed to such Shareholder; the YJF Shareholder has
full legal title to all YJF Shares as being owned by such YJF Shareholder free
from any and all claims, liens or other encumbrances. YJF Shareholder has the
unqualified right to sell, transfer, and dispose of its YJF Shares subject to
the applicable securities laws and the laws of bankruptcy, insolvency and
general creditors' rights. The YJF Shareholder represents and warrants that, in
regards to such YJF Shareholder's shares of YJF, such YJF Shareholder has full
right and authority to execute this Agreement and to transfer his shares of YJF
to Galaxy Minerals.
SECTION 1.2 ORGANIZATION. YJF is a corporation duly organized, validly
existing, and in good standing under the laws of British Virgin Islands and has
the 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
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the 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 YJF Schedules (as
hereinafter defined) are complete and correct copies of the articles of
association, by-laws and amendments thereto of YJF as in effect on the date
hereof. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not violate any provision of YJF's articles of
incorporation or bylaws. YJF has full power, authority and legal right and has
taken all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
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SECTION 1.3 CAPITALIZATION. The authorized capitalization of YJF
consists of a total of 100 ordinary shares (the "YJF Common Shares"), par value
at $1.00 each. As of the date of this Agreement, 100 of the authorized ordinary
shares are issued and outstanding. All issued and outstanding shares are legally
issued, fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. Except as may be disclosed in YJF
Schedules, YJF has no other securities, warrants or options authorized or
issued.
SECTION 1.4 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as
otherwise set forth in the YJF Schedules, YJF does not have any other
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation. For purposes herein, all references to YJF shall include YJF
and all of its subsidiaries.
SECTION 1.5 FINANCIAL INFORMATION.
(a) Attached hereto as Schedule 1.5 are unaudited financial
statements from the inception of YJF until February 29, 2004 (the "YJF
Financial Statements").
(b) YJF has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) YJF has filed all state, federal and local income tax
returns, including extensions of such tax returns, if any, required to
be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of YJF are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) Except as and to the extent disclosed herein and the YJF
Schedules, YJF has no material contingent liabilities, direct or
indirect, matured or unmatured.
SECTION 1.6 INFORMATION. The information concerning YJF set forth in
this Agreement and in the YJF Schedules to the best of YJF's knowledge, is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
SECTION 1.7 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 1.7, there are no existing options, warrants, calls or
commitments of any character to which YJF is a party and by which it is bound.
Pursuant to the existing option agreements (see Schedule 1.7 Options),
appropriate adjustments shall be made in the number of shares for which such
options may be exercised based upon the exchange rate at which each share of
common stock YJF shall be exchanged for certain number of shares of Galaxy
Minerals (see Section 3.2 of this Agreement).
SECTION 1.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in this Agreement, the YJF Schedules, or as otherwise disclosed to Galaxy
Minerals, since February 29, 2004:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of YJF; or (ii)
any damage, destruction or loss to YJF (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of YJF;
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(b) YJF has not: (i) amended its articles of association or
by-laws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to shareholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or material considering
the business of YJF; (iv) made any material change in its method of
management, operation or accounting other than in its ordinary course
of business; (v) entered into any other material transaction; (vi) made
any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of
compensation; or (viii) made any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement or other employee
benefit plan, payment or arrangement made to, for, or with its
officers, directors or employees.
(c) YJF has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contin gent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent YJF balance sheet
and current liabilities incurred since that date in the ordinary course
of business; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties or rights (except assets, properties or
rights not used or useful in its business which, in the aggregate have
a value of less than $10,000); (v) made or permitted any amendment or
termination of any contract, agreement or license to which it is a
party if such amendment or termination is material, considering the
business of YJF; or (vi) issued, delivered or agreed to issue or
deliver any stock, bonds or other corporate securities, including
debentures (whether authorized and unissued or held as treasury stock);
and
(d) to the best knowledge of YJF, it has not become subject to
any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets or condition of YJF.
SECTION 1.9 TITLE AND RELATED MATTERS. Except as provided herein or in
the YJF Schedules, YJF has good and marketable title to and is the sole and
exclusive owner of all of its properties, inventory, interests in properties and
assets, real and personal including technical information, copyrights,
trademarks, service marks and tradenames (collectively, the "Assets") which are
reflected in the YJF Schedules or acquired after that date (except properties,
interests in properties and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will
not, materially detract from or interfere with the present or proposed use of
the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the YJF Schedules. Except as set forth in the YJF Schedules, YJF owns free and
clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management
or other information utilized in connection with YJF's business. Except as set
forth in the YJF Schedules, no third party has any right to, and YJF has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a materially adverse affect on the business,
operations, financial conditions or income of YJF or any material portion of its
properties, assets or rights.
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SECTION 1.10 LITIGATION AND PROCEEDINGS. To the best of YJF's knowledge
and belief, there are no actions, suits, proceedings or investigations pending
or threatened by or against YJF or affecting YJF or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse affect on the business, operations, financial condition or
income of YJF. YJF does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality or
of any circumstances which, after reasonable investigation, would result in the
discovery of such a default.
SECTION 1.11 CONTRACTS.
(a) Except as included or described in the YJF Schedules,
there are no material contracts, agreements, franchises, license
agreements or other commitments to which YJF is a party or by which it
or any of its assets, products, technology or properties are bound;
(b) Except as included or described in the YJF Schedules or
reflected in the most recent YJF balance sheet, YJF is not a party to
any oral or written: (i) contract for the employment of any officer or
employee which is not terminable on thirty (30) days or less notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement or
arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which YJF is a primary obligor, for collection and
other guaranties of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of $10,000 in
the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of YJF; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the aggregate; and
(c) To YJF's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which YJF is a party or by
which its properties are bound and which are material to the operations
of YJF taken as a whole, are valid and enforceable by YJF in all
respects, except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally.
SECTION 1.12 MATERIAL CONTRACT DEFAULTS. Except as set forth in the YJF
Schedules, to the best of YJF's knowledge and belief, YJF is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease or other commitment which is material to the business, operations,
properties, assets or condition of YJF, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which YJF has not taken adequate steps to prevent such a default
from occurring.
SECTION 1.13 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which YJF is a
party or to which any of its properties or operations are subject.
SECTION 1.14 GOVERNMENTAL AUTHORIZATIONS. To the best of YJF's
knowledge and except as provided herein or in the YJF Schedules, YJF has all
licenses, franchises, permits or other governmental authorizations legally
required to enable YJF to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, or registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by YJF of this Agreement and the consummation by YJF of the
transactions contemplated hereby.
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SECTION 1.15 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of YJF's
knowledge, except as disclosed in the YJF Schedules, YJF has complied with all
applicable statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets or
condition of YJF or would not result in YJF's incurring any material liability.
SECTION 1.16 INSURANCE. Except as disclosed on Schedule 1.16, YJF has
no insurable properties and no insurance policies will be in effect at the
Closing Date, as hereinafter defined.
SECTION 1.17 APPROVAL OF AGREEMENT. The YJF Shareholder and the board
of directors of YJF have authorized the execution and delivery of this Agreement
by YJF and have approved the transactions contemplated hereby.
SECTION 1.18 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the YJF Schedules, there exists no material contract, agreement or
arrangement between YJF and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director or person owning
of record, or known by YJF to own beneficially, ten percent (10%) or more of the
issued and outstanding YJF Common Shares and which is to be performed in whole
or in part after the date hereof. In all of such transactions, the amount paid
or received, whether in cash, in services or in kind, has been during the full
term thereof, and is required to be during the unexpired portion of the term
thereof, no less favorable to YJF than terms available from otherwise unrelated
parties in arms length transactions. There are no commitments by YJF, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
SECTION 1.19 LABOR RELATIONS. YJF has never had a work stoppage
resulting from labor problems. To the best knowledge of YJF, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of YJF.
SECTION 1.20 PREVIOUS SALES AND ISSUANCE OF SECURITIES. Since
inception, YJF has issued YJF Common Shares in reliance upon applicable
exemptions from the registration requirements under the laws of the jurisdiction
of British Virgin Islands and other applicable state and federal securities
laws, to the YJF Shareholder. The shares of YJF Common Stock issued to the YJF
Shareholder are legally issued, fully paid and nonassessable and are not issued
in violation of the preemptive or other rights of any person.
SECTION 1.21 REORGANIZATION RELATED REPRESENTATIONS.
(a) following the Effective Date, YJF will continue its
historic business or use a significant portion of its historic business
assets in its business;
(b) YJF is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of IRC;
(c) YJF is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the IRC.
SECTION 1.22 YJF SCHEDULES. Upon execution hereof, YJF will deliver to
Galaxy Minerals the following schedules, which are collectively referred to as
the "YJF Schedules" and which consist of separate schedules dated as of the date
of this Agreement and instruments and data as of such date, complete, true and
correct in all material respects:
(a) copies of the articles of association, by-laws and all
minutes of shareholders' and directors' meetings of YJF;
(b) the financial information of YJF referenced hereinabove in
Section 1.5;
(c) a list indicating the name and address of the shareholder
of YJF, together with the number of shares owned by them;
(d) the YJF Business Plan which includes, among other matters,
information concerning all of YJF's material licenses, permits and
other governmental authorizations, requests or applications therefor,
pursuant to which YJF carries on or proposes to carry on its business
(except those which in the aggregate, are immaterial to the present or
proposed business of YJF), as well as a description of any material
adverse change in the business operations, property, inventory, assets
or condition of YJF since the most recent YJF balance sheet required to
be provided pursuant to Section 1.7; and
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YJF shall cause the YJF Schedules and the instruments and data
delivered to Galaxy Minerals hereunder to be updated after the date hereof up to
and including the Closing Date, as hereinafter defined.
SECTION 1.23 TAXES. YJF has complied with applicable tax filing
requirements, if any.
SECTION 1.24 ADDITIONAL INFORMATION AVAILABLE. YJF will make available
to Galaxy Minerals the opportunity to ask questions and receive answers
concerning acquisition of YJF shares in this transaction, and to obtain any
additional information related thereto which YJF possesses or can acquire
without unreasonable effort or expense.
SECTION 1.25 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, YJF shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article I, if Galaxy Minerals has actual knowledge of such misrepresentation or
breach.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF GALAXY MINERALS
As an inducement to, and to obtain the reliance of YJF, Galaxy Minerals
represents and warrants as follows:
SECTION 2.1 ORGANIZATION. Galaxy Minerals is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Florida and has the 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 in all material respects as it is now being conducted,
including qualification to do business as a foreign corporation in the states 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 Galaxy
Minerals Schedules (as hereinafter defined) are complete and correct copies of
the articles of incorporation, amended articles of incorporation (collectively,
hereinafter referred to as the "articles of incorporation"), bylaws of Galaxy
Minerals as in effect on the date hereof and a certificate of Good Standing. The
execution and delivery of this Agreement does not and the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof
will not, violate any provision of Galaxy Minerals's articles of incorporation
or bylaws. Galaxy Minerals has taken all action required by law, its articles of
incorporation, its bylaws or otherwise to authorize the execution and delivery
of this Agreement. Galaxy Minerals has full power, authority and legal right and
has taken all action required by law, its articles of incorporation, bylaws or
otherwise to consummate the transactions herein contemplate.
SECTION 2.2 CAPITALIZATION. The authorized capitalization of Galaxy
Minerals consists of 500 million shares of Common Stock, par value $0.001 per
share, of which 2,067,500 shares are issued and outstanding, and 10 million
shares of Preferred Stock, $0.001 par value, of which no shares are issued nor
outstanding. All issued and outstanding shares are legally issued, fully paid
and nonassessable and are not issued in violation of the preemptive or other
rights of any person. Except as may be disclosed in Galaxy Minerals Schedules,
Galaxy Minerals has no other securities, warrants or options authorized or
issued.
SECTION 2.3 SUBSIDIARIES. At the Closing, other than as disclosed
herein, Galaxy Minerals shall own no securities or have any interest in any
corporation, partnership, or other form of business organization, including its
current subsidiaries.
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SECTION 2.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 2.4 are audited financial
statements for the years ended December 31, 2003 and December 31, 2002,
together with the related footnotes and report thereon of the auditors
rendering such reports (the "Galaxy Minerals Financial Statements").
The Galaxy Minerals Financial Statements are correct and complete in
all respects and fairly present, in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, the consolidated
financial position of Galaxy Minerals as of such dates and the results
of operations and changes in financial position for such periods all in
accordance with GAAP. The Galaxy Minerals Financial Statements comply
with the requirements of Regulation S-X of the Securities and Exchange
Commission and the provisions of the Securities Act of 1933 (the "1933
Act") and will be suitable for inclusion in any subsequent filing with
any state or federal regulatory agency under the Securities Exchange
Act of 1934 (the "1934 Act"). As of the date of this Agreement, Galaxy
Minerals does not have any source of revenues. Accordingly, Galaxy
Minerals's independent public accountant, issued an opinion in its
Independent Auditor's Report for the fiscal year ended December 31,
2003 questioning the ability of Galaxy Minerals to continue as a going
concern. An investment in Galaxy Minerals Shares involves a high degree
of risk. YJF shareholder should review and carefully consider the
disclosure materials attached hereto as Exhibit "A", including the risk
factors contained therein, prior to executing this Agreement;
(b) The books and records, financial and others, of Galaxy
Minerals are in all material respects complete and correct and have
been maintained in accordance with good business accounting practices;
(c) Galaxy Minerals has no liabilities with respect to the
payment of any federal, state, county, local or other taxes, current or
accrued (including any deficiencies, interest or penalties);
(d) Galaxy Minerals has filed all state, federal and local
income tax returns, including extensions of such tax returns, if any,
required to be filed by it from inception to the date hereof, if any;
(e) except as and to the extent disclosed herein and the
Galaxy Minerals Schedules, Galaxy Minerals has no material contingent
liabilities, direct or indirect, matured or unmatured.
SECTION 2.5 INFORMATION. The information concerning Galaxy Minerals as
set forth in this Agreement and in the Galaxy Minerals Schedules, to the best of
Galaxy Minerals's knowledge, is complete and accurate in all material respects
and does not contain any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
SECTION 2.6 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 2.6, there are no existing options, warrants, calls or
commitments of any character to which Galaxy Minerals is a party and by which it
is bound.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
herein or in the Galaxy Minerals Schedules, since December 31, 2003:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Galaxy
Minerals; or (ii) any damage, destruction or loss to Galaxy Minerals
(whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets or condition of
Galaxy Minerals;
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(b) Galaxy Minerals has not: (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any
kind whatsoever to shareholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or material considering
the business of Galaxy Minerals; (iv) made any material change in its
method of management, operation or accounting other than in its
ordinary course of business; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees.
(c) Except as disclosed to YJF or as included in the Galaxy
Minerals Schedules, Galaxy Minerals has not: (i) granted or agreed to
grant any options, warrants or other rights for its stocks, bonds or
other corporate securities calling for the issuance thereof; (ii)
borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; (iii)
paid any material obligation or liability (absolute or contingent)
other than current liabilities reflected in or shown on the most recent
Galaxy Minerals balance sheet and current liabilities incurred since
that date in the ordinary course of business; (iv) sold or transferred,
or agreed to sell or transfer, any of its assets, properties or rights
(except assets, properties or rights not used or useful in its business
which, in the aggregate have a value of less than $10,000); (v) made or
permitted any amendment or termination of any contract, agreement or
license to which it is a party if such amendment or termination is
material, considering the business of Galaxy Minerals; or (vi) issued,
delivered or agreed to issue or deliver any stock, bonds or other
corporate securities, including debentures (whether authorized and
unissued or held as treasury stock); and
(d) to the best knowledge of Galaxy Minerals, it has not
become subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect, the business,
operations, properties, assets or condition of Galaxy Minerals.
SECTION 2.8 TITLE AND RELATED MATTERS. As of the Closing Date, Galaxy
Minerals will own no real, personal or intangible property, other than as
disclosed herein.
SECTION 2.9 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the best of Galaxy Minerals's knowledge and belief,
threatened by or against or affecting Galaxy Minerals, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind that would have a material adverse
effect on the business, operations, financial condition, income or business
prospects of Galaxy Minerals. Galaxy Minerals does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality.
SECTION 2.10 CONTRACTS. On the Closing Date and other than as disclosed
herein in Schedule 2.9 or otherwise:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Galaxy Minerals is a
party or by which it or any of its properties are bound;
(b) Galaxy Minerals is not a party to any contract, agreement,
commitment or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or award
which materially and adversely affects, or in the future may (as far as
Galaxy Minerals can now foresee) materially and adversely affect, the
business, operations, properties, assets or conditions of Galaxy
Minerals; and
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(c) Galaxy Minerals is not a party to any material oral or
written: (i) contract for the employment of any officer or employee;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension, benefit or retirement plan, agreement or
arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation for
the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations, which, in the aggregate
exceeds $1,000; (v) consulting or other similar contract with an
unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or
director of Galaxy Minerals; or (viii) contract, agreement, or other
commitment involving payments by it of more than $10,000 in the
aggregate.
SECTION 2.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Galaxy
Minerals is a party or to which any of its properties or operations are subject.
SECTION 2.12 MATERIAL CONTRACT DEFAULTS. To the best of Galaxy
Minerals's knowledge and belief, Galaxy Minerals is not in default in any
material respect under the terms of any outstanding contract, agreement, lease
or other commitment which is material to the business, operations, properties,
assets or condition of Galaxy Minerals, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which Galaxy Minerals has not taken adequate steps to prevent such
a default from occurring.
SECTION 2.13 GOVERNMENTAL AUTHORIZATIONS. To the best of Galaxy
Minerals's knowledge, Galaxy Minerals has all licenses, franchises, permits and
other governmental authorizations that are legally required to enable it to
conduct its business operations in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Galaxy Minerals of
the transactions contemplated hereby.
SECTION 2.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of
Galaxy Minerals's knowledge and belief, Galaxy Minerals has complied with all
applicable statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets or
condition of Galaxy Minerals or would not result in Galaxy Minerals's incurring
any material liability.
SECTION 2.15 INSURANCE. Galaxy Minerals has no insurable properties and
no insurance policies will be in effect at the Closing Date, as hereinafter
defined.
SECTION 2.16 APPROVAL OF AGREEMENT. The majority shareholder and the
board of directors of Galaxy Minerals have authorized the execution and delivery
of this Agreement by Galaxy Minerals and has approved the transactions
contemplated hereby.
SECTION 2.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as stated
herein or in the Galaxy Minerals Schedules, as of the Closing Date there will
exist no material contract, agreement or arrangement between Galaxy Minerals and
any person who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known by Galaxy Minerals to own
beneficially, ten percent (10%) or more of the issued and outstanding common
stock of Galaxy Minerals and which is to be performed in whole or in part after
the date hereof. Galaxy Minerals has no commitment, whether written or oral, to
lend any funds to, borrow any money from or enter into any other material
transactions with, any such affiliated person.
SECTION 2.18 LABOR RELATIONS. Galaxy Minerals has never had a work
stoppage resulting from labor problems. Galaxy Minerals has no employees other
than its officers and directors.
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SECTION 2.19 TAXES. (a) Except as provided in Schedule 2.19, Galaxy
Minerals has timely filed (within the applicable extension periods) with the
appropriate governmental agencies all governmental tax returns, information
returns, tax reports and declarations which are monetary liabilities. All
governmental tax returns, information returns, tax reports and declarations
filed by Galaxy Minerals for years for which the statute of limitations has not
run (the "Tax Returns") are correct in all material respects. Galaxy Minerals
has timely paid (or has collected and paid over in the case of sales, use or
similar taxes) all taxes, additions to tax, penalties, interest, assessments,
deposits, and other governmental charges imposed by law upon it or any of its
properties, tangible or intangible assets, income, receipts, payrolls,
transactions, capital, net worth and franchises, or upon the sale, use or
delivery of any item sold by the Company, other than as may be disclosed in the
Schedule of Taxes. Except as set forth in the Schedule of Taxes, no tax returns
have been examined by the Internal Revenue Service or any other governmental
authority. Except as may be disclosed in the Schedule of Taxes or in any
document delivered to Galaxy Minerals therewith, Galaxy Minerals (i) is not
currently being audited with respect to any tax, assessment or other
governmental charge; (ii) has not received formal or informal notice from any
governmental agency that an audit or investigation with respect to any tax,
assessment or other governmental charge is to be initiated; (iii) is not
formally or informally discussing material pending ruling requests or other
material tax or assessment issues with the Internal Revenue Service or any other
governmental taxing authority in connection with any matter concerning any
member of Galaxy Minerals's group; or (iv) has not been formally or informally
notified of any potential tax or assessment issue which the Internal Revenue
Service or any other governmental taxing authority intends to raise in
connection with any matter concerning any member of Galaxy Minerals's group.
Except (i) as may be disclosed in the Schedule of Taxes, or (ii) in connection
with any pending audit or investigation, Galaxy Minerals has not granted or
proposed any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment or collection of, or any offer in
compromise of any governmental tax. The accruals and reserves for taxes
reflected in the financial statements are adequate to cover substantially all
taxes (including additions to tax, interest, penalties, and other charges or
assessments, if any) which become due and payable or accruable by reason of the
business conducted by Galaxy Minerals through the Closing Date herein. Galaxy
Minerals is not now or has it ever been a corporation which meets the tests of
Section 542(b)(2) of the Internal Revenue Code. Galaxy Minerals has not
participated in, or is required to participate in, for any period prior to the
date of this Agreement the filing of any consolidated tax return other than (i)
as set forth in the Schedule of Taxes, or (ii) as a member of an affiliated
group of which Galaxy Minerals is the common parent.
SECTION 2.20 REPORTING ACT DOCUMENTS. Except as set forth in Galaxy
Minerals's Schedules, Galaxy Minerals has, in all reporting act documents,
complied in all material respects with the reporting requirements of the
Exchange Act and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder. The information contained in each reporting
act document of Galaxy Minerals, to the best of Galaxy Minerals's knowledge, is
true and correct in all material respects as of the date thereof, and no
reporting act document contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading as of the date thereof. To the best knowledge
of current management of Galaxy Minerals, there is no negative matters, such as
pending investigation or formal inquiry, which are outstanding concerning
Exchange Act reports filed by Galaxy Minerals prior to the Closing.
SECTION 2.21 GALAXY MINERALS SCHEDULES. Upon execution hereof, Galaxy
Minerals shall deliver to YJF the following schedules, which are collectively
referred to as the "Galaxy Minerals Schedules" which are dated the date of this
Agreement, all complete, true and accurate in all material respects:
(a) complete and correct copies of the articles of
incorporation, bylaws and Certificate of Good Standing of Galaxy
Minerals as in effect as of the date of this Agreement;
(b) copies of all financial statements of Galaxy Minerals
identified in Section 2.4(a);
(c) the description of any material adverse change in the
business, operations, property, assets, or condition of Galaxy Minerals
since December 31, 2003 required to be provided pursuant to Section
2.6; and
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(d) any other information, together with any required copies
of documents, required to be disclosed in the Galaxy Minerals Schedules
under this Agreement.
Galaxy Minerals shall cause the Galaxy Minerals Schedules and the
instruments to be delivered to YJF hereunder to be updated after the date hereof
up to and including the Closing Date.
SECTION 2.22 ADDITIONAL INFORMATION AVAILABLE. Galaxy Minerals will
make available to each YJF Shareholder the opportunity to ask questions and
receive answers concerning the acquisition of Galaxy Minerals Common Stock in
the transaction, and to obtain any additional information which Galaxy Minerals
possesses or can acquire without unreasonable effort or expense.
SECTION 2.23 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, Galaxy Minerals shall not have any
liability for any misrepresentation or breach of any representation or warranty
contained in this Article II, if YJF or any of the YJF Shareholders has actual
knowledge of such misrepresentation or breach.
ARTICLE III
EXCHANGE PROCEDURE
SECTION 3.1 DELIVERY OF YJF SECURITIES. On the Closing Date, the
holders of the YJF Common Shares shall deliver to Galaxy Minerals (i)
certificates or other documents evidencing all of the issued and outstanding YJF
Common Shares, duly endorsed in blank or with executed stock power attached
thereto in transferrable form; and (ii) Investment Letter, the form of which is
attached hereto as Exhibit "B".
SECTION 3.2 ISSUANCE OF GALAXY MINERALS COMMON SHARES. (a) In exchange
for all of the YJF Common Shares tendered pursuant to Section 3.1, Galaxy
Minerals shall instruct its Transfer Agent to issue an aggregate of 241,000,000
"restricted" Galaxy Minerals Common Shares to the YJF Shareholder shall cause
such shares to be delivered to YJF. Each share of YJF shall be exchanged for
2,410,000 Common Shares of Galaxy Minerals (based on the total issuance of
241,000,000 Galaxy Minerals Common Shares).
(b) No fractional Galaxy Minerals Common Shares shall be
issued pursuant to this Section 3.2. In lieu of such fractional shares,
all shares to be issued shall be rounded up or down to the nearest
whole share.
(c) The total of 241,000,000 Common Shares to be issued to the
YJF Shareholder by Galaxy Minerals (the "YJF Shares") are not being
registered under the Securities Act of 1933, as amended (the "Act") and
are issued in reliance on the exemptions from the registration
requirements provided by Regulation D, and are to be issued as
"restricted securities", as that term is defined in Rule 144
promulgated under the Act, and that the certificates representing the
YJF Shares will bear a legend to that effect, substantially in the form
set forth below:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF CERTAIN STATES,
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER
THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS AVAILABLE.
SECTION 3.3 UNDERTAKINGS.
(a) Upon execution hereof or as soon thereafter as practical,
management of Galaxy Minerals and YJF shall execute, acknowledge and
deliver (or shall cause to be executed, acknowledged and delivered) any
and all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this
Agreement to be so delivered, together with such other items as may be
reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
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(b) YJF hereby undertakes and provides assurances to Galaxy
Minerals that it will file a current report on Form 8-K within 15 days
of the Closing in compliance with the Exchange Act, with the audited
financial statements of YJF and the pro forma statements required by
the Exchange Act and by Regulation S-B by amendment of the Form 8-K
within the time parameters established by the Exchange Act, and will
otherwise comply with the reporting requirements of the Exchange Act.
SECTION 3.4 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date in which all of the
shareholders of YJF have approved the terms of this Agreement, all conditions to
Closing referenced in this Agreement have been satisfied or waived by YJF and
all documentation referenced herein is delivered to the respective party herein,
which shall be the date of April 20, 2004, unless a different date is mutually
agreed to in writing by the parties hereto ("Closing Date").
SECTION 3.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors
of either Galaxy Minerals or YJF at any time prior to the Closing Date
if:
(i) there shall be any action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated
by this Agreement and which, in the judgment of such board of
directors, made in good faith and based on the advice of its
legal counsel, makes it inadvisable to proceed with the
exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Article VI below
have not been satisfied in full; or
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Galaxy Minerals if
YJF shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of YJF contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days' written notice thereof is given to YJF. If
this Agreement is terminated pursuant to this paragraph (b) of this
Section 3.5, this Agreement shall be of no further force or effect and
no obligation, right or liability shall arise hereunder; and
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of YJF if Galaxy
Minerals shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Galaxy Minerals contained herein shall
be inaccurate in any material respect, which noncompliance or
inaccuracy is not cured after 20 days written notice thereof is given
to Galaxy Minerals. If this Agreement is terminated pursuant to this
paragraph (c) of Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder.
(d) This Agreement shall be terminated if the Closing of the
transactions contemplated in this Agreement have not occurred by the
Closing Date as that term is defined in Section 3.4.
SECTION 3.6 EFFECTIVE DATE. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 5:00 P.M. Pacific
Standard Time on April 20, 2004, unless the parties agree otherwise, in writing.
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ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 ACCESS TO PROPERTIES AND RECORDS. Galaxy Minerals and YJF
will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of Galaxy Minerals and YJF, as
the case may be, in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of Galaxy Minerals
and YJF, as the case may be, as the other shall from time to time prior to
Closing reasonably request. In addition, Galaxy Minerals shall provide to YJF
subsequent to Closing all information necessary to allow YJF to properly prepare
and file all reports required to be filed pursuant to the Exchange Act,
including all information concerning Galaxy Minerals's subsidiaries which
existed prior to Closing.
SECTION 4.2 INFORMATION FOR GALAXY MINERALS PUBLIC REPORTS. YJF will
furnish Galaxy Minerals with all information concerning YJF and the YJF
Shareholder, including all financial statements, required for inclusion in any
public report to be filed by Galaxy Minerals pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. YJF covenants that
all information so furnished to Galaxy Minerals, including the financial
statements described in Section 1.4, shall be true and correct in all material
respects without omission of any material fact required to make the information
stated not misleading. Similarly, Galaxy Minerals will provide all information
concerning its history and operations reasonably requested by YJF.
SECTION 4.3 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE GALAXY
MINERALS COMMON SHARES TO BE ISSUED IN THE EXCHANGE. The consummation of this
Agreement, including the issuance of the Galaxy Minerals Common Shares to the
shareholder of YJF as contemplated hereby, constitutes the offer and sale of
securities under the Securities Act, and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, INTER ALIA,
upon the circumstances under which the YJF shareholder acquires such securities.
In connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, YJF shall cause to
be delivered, and the YJF shareholders shall deliver to Galaxy Minerals, the
Investment Letter referenced in Section 3.1. The shareholder of YJF shall
receive disclosure materials attached hereto as Exhibit "A".
SECTION 4.4 THIRD PARTY CONSENTS. Galaxy Minerals and YJF agree to
cooperate with each other in order to obtain any required third party consents
to this Agreement and the transactions herein contemplated.
SECTION 4.5 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the Galaxy Minerals or YJF
Schedules or as permitted or contemplated by this Agreement, YJF and
Galaxy Minerals, to the extent applicable, will each use its best
efforts to:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of
good repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its
obligations under material contracts, leases and instruments
relating to or affecting its assets, properties and business;
(v) maintain and preserve its business organization
intact, to retain its key employees and to maintain its
relationship with its material suppliers and customers; and
13
(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the
Closing Date, neither Galaxy Minerals nor YJF will, without the prior
consent of the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective certificates or
articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding
shares of capital stock, except as may otherwise be required
by law, or effect any stock split or otherwise change its
capitalization, except as provided herein;
(iii) enter into or amend any employment, severance
or similar agreements or arrangements with any directors or
officers;
(iv) grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date
hereof to acquire any shares of its capital stock; or
(v) purchase or redeem any shares of its capital
stock, except as disclosed herein.
SECTION 4.6 INDEMNIFICATION.
(a) YJF and its officers and directors hereby agree to
indemnify Galaxy Minerals and each of the officers, agents and
directors of Galaxy Minerals as of the date of execution of this
Agreement against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject incurred as a result of YJF's
breach of any representation, warranty or covenant made by YJF in this
Agreement. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions contemplated
hereby and termination of this Agreement for a period of 18 months; and
(b) Galaxy Minerals and its officers and directors hereby
agrees to indemnify YJF and each of the officers, agents, directors and
current shareholders of YJF as of the Closing Date against any loss,
liability, claim, damage or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened
or any claim whatsoever), to which it or they may become subject
incurred as a result of Galaxy Minerals's breach of any representation,
warranty or covenant made by Galaxy Minerals in this Agreement and
particularly the representation regarding no liabilities referred to in
Section 2.4(b). The indemnification provided for in this Section shall
survive the Closing and consummation of the transactions contemplated
hereby and termination of this Agreement for a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF GALAXY MINERALS
The obligations of Galaxy Minerals under this Agreement are subject to
the satisfaction, at or before the Closing Date, of the following conditions:
SECTION 5.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by YJF in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at the Closing Date (except for changes therein
permitted by this Agreement), and YJF shall have performed or complied with all
covenants and condi tions required by this Agreement to be performed or complied
with by YJF prior to or at the Closing. Galaxy Minerals shall be furnished with
a certificate, signed by a duly authorized officer of YJF and dated the Closing
Date, to the foregoing effect.
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SECTION 5.2 YJF'S APPROVAL OF AGREEMENT. The Board of Directors and
shareholders of YJF, if such shareholders' approval is so required under British
Virgin Islands law, shall have approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
SECTION 5.3 OFFICER'S CERTIFICATE. Galaxy Minerals shall have been
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of YJF to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of YJF,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the YJF Schedules, by or against YJF which might result
in any material adverse change in any of the assets, properties, business or
operations of YJF.
SECTION 5.4 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of YJF.
SECTION 5.5 OTHER ITEMS. Galaxy Minerals shall have received such
further documents, certificates or instruments relating to the transactions
contemplated hereby as Galaxy Minerals may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF YJF
The obligations of YJF under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Galaxy Minerals in this Agreement were true when made and
shall be true as of the Closing Date (except for changes therein permitted by
this Agreement) with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and Galaxy Minerals shall
have performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Galaxy Minerals prior to or at the
Closing. YJF shall have been furnished with a certificate, signed by a duly
authorized executive officer of Galaxy Minerals and dated the Closing Date, to
the foregoing effect.
SECTION 6.2 OFFICER'S CERTIFICATE. YJF shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Galaxy Minerals to the effect that no litigation, proceeding, investigation or
inquiry is pending or, to the best knowledge of Galaxy Minerals, threatened,
which might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement or, to the extent not disclosed in
the Galaxy Minerals Schedules, by or against Galaxy Minerals which might result
in any material adverse change in any of the assets, properties, business or
operations of Galaxy Minerals.
SECTION 6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Galaxy
Minerals.
SECTION 6.5 COMPLIANCE WITH REPORTING REQUIREMENTS. As of the Closing
Date, Galaxy Minerals shall be current in, and in compliance with all
requirements of, all filings required to be tendered to the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
SECTION 6.6 GALAXY MINERALS'S TRADING STATUS. As of the Closing Date,
as defined herein, Galaxy Minerals's Common Stock is trading on the NASD's
over-the-counter Bulletin Board under the symbol "GAXY".
SECTION 6.7 NO LIABILITIES. As of the Closing Date, as defined herein
the Galaxy Minerals balance sheet and the notes thereto, shall reflect that
Galaxy Minerals has: (i) no receivables; (ii) no accounts payable; (iii) except
as stated herein or in the Galaxy Minerals Schedules, no liabilities, whether
absolute, accrued, known or unknown, contingent or otherwise, whether due or to
become due, including, without limitation, liabilities as guarantor under any
guaranty or other governmental charges.
15
SECTION 6.8 OTHER ITEMS. YJF shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as YJF may reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 BROKERS AND FINDERS. Except as set forth in Schedule 7.1,
each party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
SECTION 7.2 LAW. FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
California.
SECTION 7.3 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Galaxy Minerals: Galaxy Minerals , Inc.
000 Xxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxxx 00000
With copies to: Xxxxx X. Xxxxx, Esq.
Law Offices of Xxxxx X. Xxxxx
610 Newport Center Dr., Suite 1400
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
If to YJF: Yellow Jacket Finance Limited
________________________
British Virgin Islands
or such other addresses 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, or
telegraphed.
SECTION 7.4 ATTORNEYS' FEES. The prevailing party in any proceeding
brought to enforce or interpret any provision of this Agreement shall be
entitled to recover its reasonable attorney's fees, costs and disbursements
incurred in connection with such proceeding, including but not limited to the
costs of experts, accountants and consultants and all other costs and services
reasonably related to the proceeding, including those incurred in any bankruptcy
or appeal, from the non-prevailing party or parties.
SECTION 7.5 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
SECTION 7.6 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
SECTION 7.7 THIRD PARTY BENEFICIARIES. This contract is solely between
Galaxy Minerals and YJF and, except for the YJF shareholders or as otherwise
specifically provided herein, no director, officer, shareholder, employee,
agent, independent contractor or any other person or entity shall be deemed to
be a third party beneficiary of this Agreement.
16
SECTION 7.8 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
SECTION 7.9 SURVIVAL; TERMINATION. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for three years.
SECTION 7.10 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original and
all of which taken together shall be but a single instrument. This Agreement may
be executed by providing facsimile signatures by the parties hereto, however,
the original signatures shall be delivered within five (5) business days from
the date of execution of this Agreement.
SECTION 7.11 AMENDMENT OR 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 herewith, 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 then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement 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
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
SECTION 7.12 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
SECTION 7.13 EXPENSES. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
SECTION 7.14 HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
SECTION 7.15 BENEFIT. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
SECTION 7.16 PUBLIC ANNOUNCEMENTS. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
SECTION 7.17 SEVERABILITY. In the event that any particular provision
or provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
SECTION 7.18 FAILURE OF CONDITIONS; TERMINATION. In the event any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the parties have the right either to proceed or,
upon prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
SECTION 7.19 NO STRICT CONSTRUCTION. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment, and
not strictly for or against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof.
17
SECTION 7.20 EXECUTION KNOWING AND VOLUNTARY. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprized of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
SECTION 7.21 JOINT PREPARATION. This Agreement is to be deemed to have
been prepared jointly by the parties hereto and any uncertainty or ambiguity
existing herein, if any, shall not be interpreted against any party, but shall
be interpreted according to the application of the rules of interpretation for
arm's length agreements.
SECTION 7.22 ARBITRATION AND VENUE. Any controversy arising out of or
relating to this Agreement or any modification or extension thereof, including
any claim for damages and/or rescission, shall be settled by arbitration in Los
Angeles, British Virgin Islands in accordance with the Commercial Arbitration
Rules of the American Arbitration Association before one arbitrator. The
arbitrator sitting in any such controversy shall have no power to alter or
modify any express provisions of this Agreement or to render any award which by
its terms effects any such alteration, or modification. The parties consent to
the jurisdiction of the Superior Court of Florida, and of the United States
District Court for the Central District of Florida for all purposes in
connection with such arbitration including the entry of judgment on any award.
The parties consent that any process or notice of motion or other application to
either of said courts, and any paper in connection with arbitration, may be
served by certified mail or the equivalent, return receipt requested, or by
personal service or in such manner as may be permissible under the rules of the
applicable court or arbitration tribunal, provided a reasonable time for
appearance is allowed. Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees except the arbitrators
shall have the power to award recovery of all costs (including the attorneys'
fees, administrative fees, arbitrators' fees and court fees) to the prevailing
party, as determined by the arbitrators. This section shall survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
and entered into as of the date first above written.
GALAXY MINERALS, INC.
ATTEST:
_________________________ By: ______________________________
Secretary or President
Assistant Secretary
ATTEST: YELLOW JACKET FINANCE LIMITED
____________________________ By: _______________________________
Secretary or President
Assistant Secretary
YJF SHAREHOLDER:
Name: BAIT SHOP LIMITED, a BVI corporation
By:_____________________________
Its:____________________________
19
EXHIBIT "A"
DISCLOSURE MATERIALS
EXHIBIT "B"
FORM OF INVESTMENT LETTER
INVESTMENT LETTER
April __, 2004
Galaxy Minerals , Inc.
Lake Villa, Illinois
Ladies & Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common
stock of Yellow Jacket Finance Limited ("YJF"), as described below (endorsed, or
having executed stock powers attached) in acceptance of and subject to the terms
and conditions of that certain Agreement and Plan of Reorganization (the
"Agreement"), between YJF and Galaxy Minerals, Inc. ("Galaxy Minerals" or the
"Company"), dated April 16, 2004, receipt of which is hereby acknowledged, in
exchange for shares of Common of Galaxy Minerals (the "Exchange Shares"). If any
condition precedent to the Agreement is not satisfied within the relevant time
parameters established in the Agreement (or any extension thereof), the
certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with
you that, in connection with the undersigned's acceptance of the terms of the
Agreement and Exchange Shares and as of the date of this letter:
1. The undersigned has received and has read the Agreement, and hereby
agrees to and accepts the terms and conditions of the Agreement.
2. The undersigned is aware that his, her or its acceptance of the
Exchange Shares is irrevocable, absent an extension of the Expiration Date of
any material change to any of the terms and conditions of the Agreement.
3. The undersigned warrants full authority to deposit all shares
referred to above and that Galaxy Minerals will acquire a good and unencumbered
title thereto.
4. The undersigned has full power and authority to enter into this
agreement and that this agreement constitutes a valid and legally binding
obligation of the undersigned.
5. The undersigned represents that the undersigned is_____/ is
not_____an "Accredited Investor" as that term is defined in Section 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), because the undersigned meets one or more of the requirements set forth
in Section 501 of regulation D.
6. By execution hereof, the undersigned hereby confirms that the Galaxy
Minerals common stock to be received in exchange for YJF common stock (the
"Securities"), will be acquired for investment for the undersigned's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party, with respect to any of the Securities.
7. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as me by an impartial review of such a
registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available. In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares that the
Securities are "restricted securities" under the 1933 Act and that they may not
be transferred by the undersigned to any person without the prior consent of the
Company, which consent of the Company will require an opinion of my counsel to
the effect that, in the event the Securities are not registered under the 1933
Act, any transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a restrictive legend will be placed upon the
certificate representing the Securities and that the Transfer Agent has been
advised of such facts.
8. The undersigned represents that it is experienced in evaluation and
investing in securities of companies and acknowledges that he/she/it is able to
fend for itself, can bear the economic risk of this investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.
9. The undersigned represents that all information provided by the
undersigned herein is true and correct as of the date thereof.
IN WITNESS WHEREOF, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: April __, 2004
Very truly yours,
BAIT SHOP LIMITED, a BVI corporation
_______________________________________
(signature)
_______________________________________
(print name in full)
________________________________________________________________________________
(address)
Schedule 2.7
Amendment to the Articles of Incorporation