[Exhibit 2.1]
STOCK PURCHASE AND REORGANIZATION AGREEMENT
AMERICAN BUSING CORPORATION
XXXXXX XXXXXXXX
and
W.W. CYCLES, INC.
XXXXXXX X. XXXXX
XXXXXXX X. XXXXX
XXXXXX X. XXXXXXX
Dated as of December 30, 2003
STOCK PURCHASE AND REORGANIZATION AGREEMENT
STOCK PURCHASE AND REORGANIZATION AGREEMENT dated as of December 30,
2003 by and among American Busing Corporation, a Nevada corporation with offices
located at 00000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("ABC"), Xxxxxx
Xxxxxxxx, the sole Director, the President and Chief Executive Officer and a
controlling shareholder of ABC with an address at 00000 Xxxxx 00xx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxxx X.
Xxxxxxx, all with a business address at 00000 Xxxxx 00, Xxxxx, Xxxx 00000 (each
a "CYCLES' SHAREHOLDER," and collectively, the "CYCLES' SHAREHOLDERS"), and W.W.
Cycles, Inc., an Ohio corporation with offices located at 00000 Xxxxx 00, Xxxxx,
Xxxx 00000 ("CYCLES").
WHEREAS, ABC is a corporation formed in August 2002, is subject to the
reporting requirements of Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), and whose shares of common stock, par value
$.001 per share (the "ABC SHARES"), are quoted on the NASD Bulletin Board under
the symbol "ABSC";
WHEREAS, since its incorporation and through the date hereof, and based
upon the SEC Reports (as defined in Section 3.12 below), all of the business of
ABC has been conducted through its one wholly-owned subsidiary, Able Busing
Company (the "Subsidiary"), which provides busing services to the handicapped;
WHEREAS, ABC, as of the date hereof, has (i) the number of shareholders
of record as set forth in the shareholder list provided by ABC's transfer agent,
which is annexed hereto as Exhibit 1 (which list will be updated by a faxed
certified shareholder list from ABC's transfer agent, as further provided
herein), (ii) 11,075,000 ABC Shares issued and outstanding, and (iii) no shares
of preferred stock, options, warrants or other convertible or exchangeable
securities are outstanding;
WHEREAS, Cycles is in the business of selling, financing and servicing
new and used motorcycles, scooters, personal watercraft and all terrain vehicles
and providing related services and products (the "BUSINESS");
WHEREAS, Cycles has 100 shares of common stock, no par value per share,
issued and outstanding ("CYCLES SHARES"), all of which are owned by the Cycles
Shareholders;
WHEREAS, ABC desires to acquire all of the issued and outstanding
shares of Cycles Stock from the owners thereof (the "ACQUISITION");
WHEREAS, it is contemplated that in the Acquisition the Cycles'
Shareholders shall be issued by ABC in the aggregate 7,850,000 restricted ABC
Shares in exchange for all of the issued and outstanding Cycles Shares in a tax
free exchange pursuant to Section 368 of the Internal Revenue Code (the "IRC");
WHEREAS, simultaneously with the closing of the Acquisition and the
related transactions (the "CLOSING") IFG Investments Services Inc. (the "ABC
SELLING SHAREHOLDER"), pursuant to a separate Stock Purchase Agreement by and
between the ABC Selling Shareholder and Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx
(the "SHARE PURCHASE AGREEMENT"), will sell to Xxxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxx 150,000 ABC Shares (the "SHARE PURCHASE") for an aggregate purchase price
of US$178,750;
WHEREAS, prior to or simultaneously with the Closing, pursuant to a
separate Share Purchase Agreement by and between ABC and Xxx Xxxxxxxxxx (the
"SUBSIDIARY SALE AGREEMENT"), ABC shall sell to Xx. Xxxxxxxxxx all of the issued
and outstanding stock of the Subsidiary for $10.00 Canadian, resulting in ABC
having no subsidiaries and/or operating business (the "SUBSIDIARY SALE").
WHEREAS, simultaneously with the Closing, Xx. Xxxxxxxx, who
beneficially owns 8,500,000 ABC Shares, shall sell to ABC pursuant to a separate
Repurchase Agreement between ABC and Xx. Xxxxxxxx (the "REPURCHASE AGREEMENT"),
all of his 8,500,000 beneficially owned ABC Shares and shall cancel all loans by
him to ABC then outstanding, for an aggregate purchase price of US$21,250 (the
"XXXXXXXX SHARE BUYBACK");
WHEREAS, simultaneously with the Closing, all of the directors and
officers of ABC shall resign and be replaced by designees of Cycles;
WHEREAS, immediately following the Closing (a) ABC shall have issued
and outstanding on a fully-diluted basis 10,425,000 ABC Shares consisting of (i)
7,850,000 ABC Shares to be issued to the Cycles Shareholders in the Acquisition;
(ii) 150,000 ABC Shares to be purchased by the Cycles Shareholders in the Share
Purchase; and (iii) 2,425,000 ABC Shares owned by the ABC shareholders
immediately prior to the Closing, and (b) Cycles shall be a wholly-owned
subsidiary of ABC; and
WHEREAS, the parties to this Agreement acknowledge and agree that they
shall deliver to Xxxxxx Xxxxxxxxx, Esq., as escrow agent (the "ESCROW AGENT"),
pursuant to the terms and conditions of the Escrow Agreement, in the form of
Exhibit 2 annexed hereto (the "ESCROW AGREEMENT"), all documents, funds and
certificates required to be delivered by this Agreement, prior to the Closing;
NOW, THEREFORE, in consideration of the mutual agreements recited
herein, the parties hereto hereby agree as follows:
ARTICLE I
THE SUBSIDIARY SALE; THE XXXXXXXX SHARE BUYBACK; THE
ACQUISITION; THE SHARE PURCHASE AND RELATED TRANSACTIONS
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1.01 The Subsidiary Sale. Simultaneously with the Closing, pursuant to
the Subsidiary Sale Agreement, ABC shall sell in the Subsidiary Sale to Xx.
Xxxxxxxxxx all of the issued and outstanding stock of the Subsidiary for $10.00
Canadian, resulting in ABC having no subsidiary and/or operations.
1.02 The Acquisition. Prior to the Closing, the Cycles Shareholders
shall deposit the certificates for their Cycles Shares with the Escrow Agent and
ABC shall deposit with the Escrow Agent either (i) certificates for an aggregate
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of 7,850,000 ABC Shares to such persons and in the amounts set forth in SCHEDULE
1.02 hereto or (ii) a letter of direction from ABC to the transfer agent for the
ABC Shares to issue to such Cycles Shareholders certificates for an aggregate of
7,850,000 ABC Shares shortly after the Closing. At the Closing, the Cycles
Shares and the 7,850,000 ABC Shares shall be exchanged in a "tax free" exchange
pursuant to Rule 368 of the IRC, by the Escrow Agent's release of such
documents, pursuant to the terms and conditions of the Escrow Agreement.
1.03 The Xxxxxxxx Share Buyback. On the date of Closing described in
Section 7.01 hereafter (the "CLOSING DATE") and simultaneously with the
Acquisition described in Section 1.02, ABC shall purchase from Xx. Xxxxxxxx
pursuant to the Repurchase Agreement all 8,500,000 ABC Shares beneficially owned
by him, and Xx. Xxxxxxxx also shall cancel all loans from him to ABC that are
outstanding at the Closing Date (the "XXXXXXXX LOANS"), all in consideration for
ABC's payment of US$21,250 to Xx. Xxxxxxxx. Payment of the US$21,250 payable to
Xx. Xxxxxxxx shall be made by ABC by a wire transfer of such amount by certain
of the Cycles Shareholders, or its attorneys, to the Escrow Agent, on behalf of
ABC, prior to the Closing, and the issuance of a promissory note to such Cycles
Shareholders, in the form of EXHIBIT 1.03(I) hereto (the "CYCLES SHAREHOLDERS
NOTE"), evidencing the loan of such amount to ABC. Xx. Xxxxxxxx shall deliver to
the Escrow Agent, prior to the Closing, documentation canceling the Xxxxxxxx
Loans in the form attached as EXHIBIT 1.03 (II) hereto (the "LOAN CANCELLATION
DOCUMENTS"). On the Closing Date, the Escrow Agent shall release the 8,500,000
ABC Shares to ABC for cancellation and shall release the US$21,250 to Xx.
Xxxxxxxx, pursuant to the terms and conditions of the Escrow Agreement. The
Xxxxxxxx Share Buyback shall be undertaken in accordance with all Federal and
state laws, rules and regulations and the Articles of Incorporation of ABC,
including, but not limited to, Nevada law and the Federal securities laws.
Immediately following the Xxxxxxxx Share Buyback, the issued and outstanding
capital stock of ABC shall be 10,425,000 ABC Shares.
1.04 The Share Purchase. On the Closing Date, Xxxxxxx X. Xxxxx and
Xxxxxxx X. Xxxxx shall purchase from the ABC Selling Shareholder, pursuant to
the Share Purchase Agreement, 150,000 ABC Shares for in the aggregate
US$178,750, as between them as set forth in SCHEDULE 1.04. The ABC Selling
Shareholder shall have deposited the certificate(s) and stock power for the
150,000 ABC Shares with the Escrow Agent prior to the Closing and Xxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxx shall have deposited an aggregate of US$178,750 by
wire transfer to the Escrow Agent, also prior to the Closing. On the Closing
Date the Escrow Agent shall release the certificate(s) with stock power for the
150,000 shares to Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx and shall release the
funds to the ABC Selling Shareholder, pursuant to the terms and conditions of
the Escrow Agreement.
1.05 Post Capital Structure. Immediately following the Xxxxxxxx Share
Buyback and the Closing of the Acquisition and the Share Purchase (i) there
shall be no outstanding securities of ABC except 10,425,000 ABC Shares owned as
follows: (a) 2,425,000 ABC Shares owned by the ABC shareholders immediately
prior to the Closing; and (b) 8,000,000 ABC Shares owned by the Cycles
Shareholders and received by such persons in the Acquisition and the Share
Purchase consisting of 7,850,000 ABC Shares received in the Acquisition and
150,000 ABC Shares received in the Share Purchase; and (ii) Cycles shall be a
wholly-owned subsidiary of ABC.
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1.06 Simultaneous Closing of Transactions. It is acknowledged and
agreed by the parties to this Agreement that the Acquisition and the Xxxxxxxx
Share Buyback shall be consummated simultaneously so as to assure that at no
time will any person, who was a shareholder of ABC prior to the Acquisition and
the Share Purchase, become an "affiliate" of ABC (as such term is defined in
Rule 144 promulgated under the Securities Act).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CYCLES
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Cycles makes the following representations and warranties to ABC:
2.01 Valid Corporate Existence Qualification; Authority. Cycles is a
corporation duly incorporated, validly existing and in good standing under the
laws of Ohio. Cycles has the corporate power to carry on the business as now
conducted and to own its assets. Cycles is duly qualified to conduct its
business and is in good standing as a foreign corporation in such jurisdictions
as its business is now conducted (except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on Cycles). The
copies of Cycles' Articles of Incorporation and By-Laws, as amended to date,
which will be delivered to ABC prior to the Acquisition Closing will be true and
complete copies of those documents as then in effect.
2.02 Capitalization. Cycles has (a) authorized (i) 750 Cycles shares,
and (ii) no shares of preferred stock; and (b) 100 Cycles Shares issued and
outstanding and all owned by the Cycles Shareholders. All of the issued and
outstanding shares of Cycles Common Stock are duly authorized and validly issued
and outstanding, fully paid and non-assessable.
2.03 Subsidiaries. There are no corporations, partnerships or other
business entities controlled by Cycles (the "SUBSIDIARIES"). As used in this
Agreement, "CONTROLLED BY" means (i) the ownership of not less than fifty (50%)
percent of the voting securities or other interests of a corporation,
partnership or other business entity, or (ii) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a corporation, partnership or other business entity, whether through
the ownership of voting shares, by contract or otherwise. Cycles has not made
any investments in, nor does it own, any of the capital stock of, or any other
proprietary interest in, any other corporation, partnership or other business
entity.
2.04 Consents. All requisite consents of governments and other
regulatory agencies, foreign or domestic, and of any other parties, required to
be received by or on the part of Cycles, to enable it to enter into and carry
out all of the transactions contemplated in this Agreement in all material
respects, have been, or prior to the Acquisition Closing will have been
obtained.
2.05 Binding Nature of Agreement. This Agreement constitutes Cycles
valid and binding obligation and is enforceable in accordance with its terms,
except as may be limited by bankruptcy, reorganization, moratorium, insolvency
and other laws or regulations of general applicability relating to or affecting
the enforcement of creditors' rights and remedies or by other equitable
principles of general application.
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2.06 Financial Statements. The audited financial statements of Cycles
for the years ended December 31, 2001 and 2002 prepared by Xxxx Xxxxx & King LLC
(collectively, the "CYCLES FINANCIAL STATEMENTS"), previously delivered to ABC
accurately reflect the income, expenses, assets and liabilities in all material
respects of Cycles for the applicable periods and at and as of the applicable
dates. The Cycles Financial Statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP")
and Regulation S-B under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Cycles Financial Statements fairly represent the financial position
of Cycles at the applicable dates and the results of operations of the Business
for such periods and disclose all material liabilities and debts.
2.07 Litigation, Compliance with Law. Except as set forth in SCHEDULE
2.07, there are no actions, suits, proceedings or governmental investigations
relating to Cycles pending or, to the knowledge of Cycles, threatened, or any
order, injunction, award or decree outstanding against Cycles. Except as set
forth in SCHEDULE 2.07 to the best knowledge of Cycles, Cycles is not in
violation of any law, regulation, ordinance, order, injunction, decree, award or
other requirement of any governmental body, court or arbitrator which violation
could have a material adverse effect on Cycles.
2.08 Real Property. SCHEDULE 2.08 sets forth a brief description of all
real property which is owned by, or leased to Cycles.
2.09 Permits and Licenses. SCHEDULE 2.09 sets forth all permits,
licenses, orders, franchises and approvals from all federal, state, local and
foreign governmental regulatory bodies held by Cycles. Cycles has all permits,
licenses, orders, franchises and approvals of all federal, state, local and
foreign governmental or regulatory bodies required of it to carry on its
business as presently conducted in all material respects; all such other
permits, licenses, orders, franchise and approvals are in full force and effect;
and Cycles is in compliance in all material respects with all requirements,
standards and procedures of the federal, state, local and foreign governmental
bodies which have issued such permits, licenses, orders, franchises and
approvals.
2.10 No Breach. Neither the execution and delivery of this Agreement
nor compliance by Cycles with any of the provisions hereof nor the consummation
of the Acquisition will:
(a) violate or conflict with any provision of Cycles' Articles
of Incorporation or By-Laws;
(b) violate or, alone or with notice of the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a material default
under, the terms of any agreement or other document or undertaking,
oral or written to which Cycles is a party or by which it or any of its
properties or assets may be bound (except for such violations,
conflicts, breaches or defaults as to which required waivers or
consents by other parties have been, or will, prior to the Closing, be,
obtained or which will not have a material adverse effect on Cycles);
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(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Cycles
pursuant to the terms of any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, ABC or upon any of its properties or assets;
or
(e) violate any law or regulation of any jurisdiction relating
to Cycles or any of its securities, assets or properties.
2.11 Cycles Shareholders. The Cycles Shareholders have the power and
authority to enter into this Agreement and perform all actions required of them
in the Share Purchase and in the Acquisition; and the Cycles Shares exchanged
for the 7,850,000 ABC Shares in the Acquisition will be when received by ABC
free and clear of any liens, encumbrances and/or other clouds on title
("Encumbrances")
2.12 No Brokers. The Cycles Shareholders have not employed any broker,
finder or similar agent and no person or entity with which they have had any
dealings or communications of any kind is entitled to any brokerage, finder's or
placement fee or any similar compensation in connection with the Acquisition,
the Xxxxxxxx Share Buyback, the Share Purchase, or any other transaction
contemplated hereby
2.13 Continued Preparation of Financial Statements and Filing of SEC
Reports. The Cycles Shareholders agree to use their best efforts to cause, after
the Closing of the Acquisition, the preparation of all required financial
statements, on behalf of ABC, and the filing of all SEC Reports (as such term is
defined in Section 3.12 hereafter) in a timely manner, to provide for the
continued quotation of the ABC Shares on the Bulletin Board (as such term is
defined in Section 3.22 hereafter).
2.14 Investment Representation. The Cycles Shareholders, severally,
each with respect to the portion of the 7,850,000 ABC Shares being issued to him
in exchange for the Cycles Shares, acknowledges that the issuance of such ABC
Shares to such Cycles Shareholder in exchange for his Cycles Shares has not been
reviewed by the Commission (as such term is defined in Section 3.12) and that
such transaction is intended to be a non-public offering pursuant to Sections
4(2) or 3(b) of the Act. Such ABC Shares and the purchase of the 150,000 ABC
Shares pursuant to the Share Purchase Agreement are being acquired for such
Cycles Shareholder's own account, for investment and not for distribution or
resale to others. Each Cycles Shareholder agrees that he will not sell or
otherwise transfer any of such ABC Shares unless they are registered under the
Securities Act and any applicable state securities law, unless an exemption from
such registration is available.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ABC, ET AL.
---------------------------------------------
ABC and Xx. Xxxxxxxx jointly and severally (except as otherwise
specifically provided herein) make the following representations and warranties
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to Cycles and the Cycles Shareholders. In executing this Agreement, Cycles and
the Cycles Shareholders have relied and will rely on the correctness and
completeness of such representations and warranties.
3.01 Valid Corporate Existence; Qualification. ABC is a corporation
duly organized validly existing and in good standing under the laws of the State
of Nevada. ABC has the corporate power to carry on its business as now conducted
and to own its assets. ABC is not qualified or licensed to do business as a
foreign corporation in any other jurisdiction and neither the location of its
assets nor the nature of its business requires it to be so qualified, and there
has not been any claim by any other jurisdiction to the effect that ABC is
required to qualify or otherwise be authorized to do business as a foreign
corporation therein (except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on ABC). The copies of ABC's
Articles of Incorporation (certified by the Secretary of State of Nevada), as
amended to date, which will be delivered to Cycles prior to the Acquisition
Closing, are true and complete copies of those documents as now in effect. The
minute books of ABC contain accurate records of all material meetings of its
Board of Directors and stockholders since its incorporation, and accurately
reflect in all material respects all transactions authorized by such persons in
such capacities including, without limitation, actions authorized by written
consent in lieu of a meeting.
3.02 Capitalization. ABC has authorized (i) 75,000,000 ABC Shares, and
(ii) no shares of preferred stock, of which as of the date hereof and prior to
the Acquisition closing 11,075,000 ABC Shares are issued and outstanding and
owned by the number of shareholders of record set forth in Exhibit 1 (which list
will be updated by a faxed certified shareholder list from ABC's transfer agent,
as further provided herein). ABC has no outstanding options, warrants, rights,
calls, and/or other direct and/or indirect commitments or agreement to issue any
other securities of ABC. All of the issued and outstanding ABC Shares are duly
authorized and validly issued and outstanding, fully paid and non-assessable.
Except for the ABC Shares to be issued in the Acquisition pursuant to the terms
of this Agreement, there are no subscriptions, options, warrants, rights or
calls or other commitments or agreements to which ABC is a party or by which any
of its officers, controlling shareholders and/or directors, or to ABC's best
knowledge any of its affiliates is bound regarding the issuance, transfer, or
sale or other disposition of any class of securities of ABC.
3.03 The Xxxxxxxx ABC Shares. Xx. Xxxxxxxx beneficially owns prior to
the Xxxxxxxx Share Buyback 8,500,000 ABC Shares free and clear of Encumbrances;
no person has any right to acquire all and/or any portion of such ABC Shares;
such ABC Shares are not subject to any pre-emptive and/or other rights; Xx.
Xxxxxxxx has the power to enter into this Agreement and effectuate the Xxxxxxxx
Share Buyback.
3.04 Subsidiaries. Other than the Subsidiary, there are no
subsidiaries, corporations, partnerships or other business entities controlled
by ABC.
3.05 Consents. Except as set forth in SCHEDULE 3.05 to be delivered at
the Acquisition Closing, all requisite consents of governmental and other
regulatory agencies, foreign or domestic, and of other parties required to be
received by or on the part of ABC to enable ABC to enter into and carry out this
Agreement, the Acquisition and all related transactions in all material respects
have been, or prior to the Acquisition Closing will have been, obtained.
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3.06 Binding Nature of Agreement; Title to ABC Shares. This Agreement
constitutes the valid and binding obligation of ABC and is enforceable in
accordance with its terms, except as may be limited by bankruptcy,
reorganization, moratorium, insolvency and other laws or regulations of general
applicability relating to or affecting the enforcement of creditors' rights and
remedies or by other equitable principles of general application. The 7,850,000
ABC Shares to be issued in the Acquisition, when issued in accordance with the
terms hereof, will be duly authorized, validly issued, non-assessable and vest
to each holder thereof, free and clear of any Encumbrances, and will not be
subject to any pre-emptive rights or similar rights of first refusal.
3.07 Litigation, Compliance with Law. There are no actions, suits,
proceedings, or governmental investigations (or any investigation of any
self-regulatory organization) relating to ABC and/or the Subsidiary, their
securities or to any of their respective properties, assets or businesses
pending or, to the best of its knowledge, threatened, or any order, injunction,
award or decree outstanding against ABC, the Subsidiary or against or relating
to any of their respective properties, assets or businesses. ABC is not, to the
best of its knowledge, in violation of any law, regulation, ordinance, order,
injunction, decree, award or other requirements of any governmental body, court
or arbitrator relating to its properties, assets or business.
3.08 Agreements and Obligations; Performance. Other than as described
in this Agreement, ABC is not a party to, or bound by any: (i) contract,
arrangements, commitment or understanding which involves aggregate payments or
receipts in excess of $250; (ii) contractual obligation or contractual liability
of any kind to any ABC stockholder, other than the outstanding Xxxxxxxx Loans,
all of which are being canceled, pursuant to the terms and conditions of the
Xxxxxxxx Share Buyback; (iii) contract, arrangement, commitment or understanding
with its customers or any officer, employee, stockholder, director,
representative or agent thereof for the repurchase of products, sharing of fees,
the rebating of charges to such customers, bribes, kickbacks from such customers
or other similar arrangements; (iv) contract for the purchase or sale of any
materials, products or supplies which contain, or which commits or will commit
it for a fixed term; (v) contract of employment with any officer or employee not
terminable at will without penalty or premium or any continuing obligation of
liability; (vi) deferred compensation, bonus or incentive plan or agreement not
cancelable at will without penalty or premium or any continuing obligation or
liability: (vii) management or consulting agreement not terminable at will
without penalty or premium or any continuing obligation or liability; (viii)
lease for real or personal property (including borrowings thereon), license or
royalty agreement; (ix) union or other collective bargaining agreement; (x)
agreement, commitment or understanding relating to the indebtedness for borrowed
money, other than the outstanding Xxxxxxxx Loans, all of which are being
canceled, pursuant to the terms and conditions of the Xxxxxxxx Share Buyback;
(xi) contract involving aggregate payments or receipts of $250 or more which, by
its terms, requires the consent of any party thereto to the consummation of the
transactions contemplated hereby; (xii) contract containing covenants limiting
the freedom of ABC to engage or compete in any line of business or with any
person in any geographic area; (xiii) contract or opinion relating to the
acquisition or sale of any business; (xiv) voting trust agreement or similar
stockholders' agreement; (xiv) other contract, agreement, commitment or
understanding which materially affects any of its properties, assets or
business, whether directly or indirectly, or which was entered into other than
in the ordinary course of business.
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3.09 Permits and Licenses. ABC is in compliance in all material
respects with all requirements, standards and procedures of the federal, state,
local and foreign governmental bodies which issued such permits, licenses,
orders, franchises and approvals.
3.10 Employee Benefit Plans. ABC does not maintain and is not required
to make contributions to any "pension" and "welfare" benefit plans (within the
respective meanings of Section 4(2) and Section 4(1) of the Employee Retirement
Income Security Act of 1974, as amended).
3.11 No Breach. Neither the execution and delivery of this Agreement
nor compliance by ABC and/or Xx. Xxxxxxxx with any of the provisions hereof nor
the consummation of the Acquisition, the Xxxxxxxx Share Buyback, the Subsidiary
Sale, the Share Purchase and/or related transactions contemplated hereby will:
(a) violate or conflict with any provision of the Articles of
Incorporation of ABC;
(b) violate or, alone or with notice of the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a material default
under, the terms of any agreement or other document or undertaking,
oral or written to which ABC and/or Xx. Xxxxxxxx is a party or by which
either of them or any of their properties or assets may be bound;
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of ABC
and/or Xx. Xxxxxxxx pursuant to the terms of any such agreement or
instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, ABC and/or Xx. Xxxxxxxx or upon any of their
properties or assets; or
(e) in respect of ABC only, violate any law or regulation of
any jurisdiction relating to ABC or any of its securities, assets or
properties.
3.12 SEC Reports, Etc. The representations and warranties provided in
this Section 3.12 are given solely by ABC. ABC has filed in a timely manner with
the Securities and Exchange Commission (the "COMMISSION"), all reports required
to be filed and is "current" in its reporting obligations. The following reports
have been filed by ABC with the Commission and currently available on the
Commission's website: (i) Quarterly Reports on Form 10-QSB for the quarters
ended May 31, 2003, and February 28, 2003, (ii) the Registration Statement on
Form 8-A filed with the Commission on April 17, 2003; and (iii) the Registration
Statement on Form SB-2 filed with the Commission on December 10, 2002 (and all
amendments thereto), and declared effective on April 14, 2003. In addition,
except as provided in SCHEDULE 3.12 annexed hereto, Xx. Xxxxxxxx has filed all
Reports on Form 3 and Form 4 required to be filed with the Commission, if any,
and to the best of ABC's knowledge no other shareholders of ABC have been
required to file any Reports on Form 3 or Form 4. In addition, ABC will have
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filed its Annual Report on Form 10-KSB for the fiscal year ended August 31,
2003, on or before November 30, 2003. All reports required to be filed by ABC
with the Commission are hereinafter referred to as the "SEC Reports." The SEC
Reports are, or will be when they are filed, true and correct in all material
respects and constitute all of the documents and reports that ABC and/or its
shareholders were/are required to file with the Commission pursuant to the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder since August 2002. As of their respective dates, the SEC Reports
comply in all material respects with the requirements of the Securities Act and
Exchange Act and the rules and regulations promulgated thereunder and none of
the SEC Reports contained an untrue statement of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.13 Financial Statements. The consolidated financial statements of ABC
included in the SEC Reports (including in each case the related notes thereto)
(i) are in accordance with the books and records of ABC, (ii) are correct and
complete in all material respects, (iii) present fairly the financial position
and results of operations of ABC as of the respective dates indicated (subject,
in the case of unaudited statements, to normal, recurring adjustments, none of
which were material) and (iv) have been prepared in accordance with GAAP.
3.14 Articles of Incorporation and By-Laws. Annexed hereto as EXHIBIT
3.14 is a true and complete copy of the Articles of Incorporation of ABC as in
effect on the date hereof, certified by the Secretary of State of the State of
Nevada. ABC has not, since its inception adopted and has never had By-Laws. In
lieu of By-Laws, ABC has managed all of its affairs including, without
limitation, the election of directors, the appointment of officers and the
approval of all matters submitted to the Board of Directors and the shareholders
for their approval, in accordance with the provisions of the Nevada Revised
Statutes.
3.15 Officers and Directors. Attached hereto as SCHEDULE 3.15 is a list
of the names and titles of all officers and directors of ABC.
3.16 Liabilities, Etc.
(a) ABC has filed all federal, state and local tax returns
which are required to be filed by it, including its Federal Income Tax
Returns and for the fiscal year ended August 31, 2002, and all taxes
shown to be due thereon (together with any applicable penalties and
interest) have been paid. ABC has not filed any Nevada Franchise Tax
Returns nor paid any Nevada franchise taxes since inception. Since
August 31, 2002, ABC has not incurred any liability for taxes except in
the ordinary course of business. ABC has paid or provided adequate
reserves for all taxes which have become due for all periods prior to
the date of this Agreement or pursuant to any assessments received by
it or which ABC is obligated to withhold from amounts owing to any
employee, creditor or other third party as at or with respect to any
period prior to the date of this Agreement. The Federal Income tax
Returns of ABC have never been audited by the Internal Revenue Service.
ABC has not waived any statute of limitations in respect of taxes, nor
agreed to any extension of time with respect to a tax assessment or
deficiency.
(b) Except as described in ABC's consolidated financial
statements for the fiscal year ended August 31, 2003, or otherwise set
forth on SCHEDULE 3.16 hereof, on the date hereof, there are no
liabilities, debts or obligations of the Company, whether accrued,
absolute, contingent or otherwise ("LIABILITIES")
10
3.17 Absence of Certain Events. Since August 31, 2003, ABC has been
conducted solely in the usual and ordinary course. Without limiting the
generality of the foregoing, the Company has not:
(a) waived any right or rights of substantial value or paid,
directly or indirectly, any Liability before such Liability became due
in accordance with its terms;
(b) other than in the ordinary and usual course of business,
created any Liability (whether absolute or contingent and whether or
not currently due and payable), or entered into or assumed any
contract, agreement, arrangement, lease (as lessor or lessee), license
or other commitment otherwise than in the ordinary and usual course of
business; or
(c) purchased, sold or transferred any assets other than in
the ordinary and usual course of the operations of ABC; granted any
security interest or other lien or encumbrance affecting any of its
assets or properties other than in the ordinary and usual course of
business and in amounts not material; or amended any agreement or
contract to which ABC is a party or by which its assets and properties
are bound.
3.18 Adverse Developments. Since August 31, 2003 there has been no
material adverse change in the business, operations or condition (financial or
otherwise) of ABC; nor has there been since such date, any damage, destruction
or loss, whether covered by insurance or not, materially or adversely affecting
the business, properties or operations of ABC or the Subsidiary.
3.19 Actions and Proceedings. Neither ABC nor the Subsidiary is subject
to any outstanding orders, writs, injunctions or decrees of any court or
arbitration tribunal or any governmental department, commission, board, agency
or instrumentality, domestic or foreign, against, involving or affecting the
business, properties or employees of ABC's or the Subsidiary's right to enter
into, execute and perform this Agreement (or any of the transactions
contemplated hereby). There are no actions, suits, claims or legal,
administrative or arbitration proceedings or investigations, including any
warranty or product liability claims (whether or not the defense thereof or
liabilities in respect thereof are covered by policies of insurance) relating to
or arising out of the business, properties or employees of ABC or the Subsidiary
pending or, to the best knowledge of ABC, threatened against or affecting ABC or
the Subsidiary.
3.20 Bank Accounts and Credit Cards. Except as set forth on SCHEDULE
3.20, as of the date hereof, ABC does not have any bank account, safe deposit
box or credit or charge cards.
3.21 ABC Securities. The ABC Shares to be issued pursuant to this
Agreement will be duly authorized and reserved for issuance and when issued in
accordance with this Agreement, will be validly issued and outstanding, fully
paid and non-assessable and vest in the holders thereof free and clear from any
and all Encumbrances and will not be subject to any pre-emptive or other similar
rights.
3.22 NASD Bulletin Board. The ABC Shares are quoted on the NASD
Bulletin Board (the "BULLETIN BOARD") under the symbol "ABSC," and ABC has not
received nor is it aware of any proceeding to prevent the continued quotation of
the ABC Shares on the Bulletin Board.
11
3.23 Insurance. Except as set forth on SCHEDULE 3.23, neither ABC nor
the Subsidiary has any insurance policies.
3.24 The Xxxxxxxx Share Buyback. ABC and Xx. Xxxxxxxx have the power
and ability to effectuate the Xxxxxxxx Share Buyback on the terms set forth
herein.
3.25 Due Diligence. To the best knowledge of Xx. Xxxxxxxx, ABC and the
ABC Selling Shareholder, all documents and other materials relating to ABC and
provided to the Cycles Shareholders and Cycles, or any of them, in connection
with the Acquisition, the Share Purchase and related transactions are true and
correct in all material respects and do not contain any misstatement and/or
omission.
3.26 No Registration Rights. No shareholder of ABC has any registration
and/or similar rights at any time or under any circumstances to register ABC
Shares, or any other securities of ABC, for sale under the Federal securities
laws.
3.27 Prior Sales of Securities. All prior sales of securities by ABC,
to the best of its knowledge, were either properly registered under the Federal
and/or State Securities laws or pursuant to an exemption therefrom and all such
sales were all done in accordance with all laws, rules and regulations and no
person/entity has any rescission and/or similar rights with respect to any ABC
Shares.
3.28 The Subsidiary Sale. ABC has the power, ability and has obtained
all authorizations to conduct the Subsidiary Sale. The Subsidiary Sale shall be
conducted in accordance with all domestic and foreign laws, rules and
regulations and will not result in any income (whether ordinary or capital gain)
to ABC and/or any other negative tax and/or accounting affect to ABC.
3.29 Environmental. As used in this Agreement, the term "HAZARDOUS
MATERIALS" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which the ABC conducts business,
or the United States Government, including, but not limited to, any material or
substance which is (i) defined as "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste" under any provision of Nevada or Arizona law, (ii) petroleum, (iii)
asbestos, (iv) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (v) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6901), or (vi) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C.
9601). The current operations of ABC and its current and, to the best of its
knowledge, its past use comply and then complied in all material respects with
all applicable laws and governmental regulations including all applicable
federal, state and local laws, ordinances, and regulations pertained to air and
water quality. Hazardous Materials, waste, disposal or other environmental
matters, including the Clean Water Act, the Clean Air Act, the Federal Water
Pollution Control Act, the Solid Waste Disposal Act, the Resource Conservation
Recovery Act, and the statutes, rules and regulations and ordinances or the
state, city and country in which ABC's property is located.
12
3.30 No Brokers. Neither ABC nor Xx. Xxxxxxxx has employed any broker,
finder or similar agent that would cause any brokerage, finder's or placement
fee or any similar compensation in connection with the Acquisition, the Xxxxxxxx
Share Buyback, or any other transaction contemplated hereby.
ARTICLE IV
PRE-CLOSING COVENANTS
---------------------
Each of the parties hereto hereby covenants and agrees that, from the
date hereof and until the Closing or earlier termination of this Agreement
pursuant to the terms hereof:
4.1 Access. Each shall afford to the officers, attorneys, accountants
and other authorized representatives of the other free and full access, during
regular business hours and upon reasonable notice, to its books, records,
personnel and properties (including, without limitation, the work papers
prepared by its auditors) so that each may have full opportunity to make such
review, examination and investigation as it may desire of their respective
businesses and affairs. Each will cause its employees, accountants and attorneys
to cooperate fully with said review, examination and investigation and to make
full disclosure to the other of all material facts affecting their respective
financial conditions and business operations.
4.2 Conduct of Business. Cycles and ABC shall each conduct its business
only in the ordinary and usual course and make no material change in any of
their policies.
4.3 Liabilities. Neither Cycles nor ABC shall incur any obligation or
liability, absolute or contingent, except for those incurred in the ordinary and
usual course of their respective businesses.
4.4 No Breach. Each of the parties hereto will (i) use its best efforts
to assure that all of its representations and warranties contained herein are
true in all material respects (a) at and as of the date hereof, except to the
extent that they speak expressly as of an earlier date or to reflect changes
contemplated herein or in the other agreements necessary to consummate the
Acquisition and related transactions and (b) at and as of the Acquisition
Closing and no breach shall occur with respect to any of its covenants,
representations or warranties contained herein that has not been cured by the
Acquisition Closing; (ii) not voluntarily take any action or do anything which
will cause a material breach of or default respecting such covenants,
representations or warranties; and (iii) promptly notify the other of any event
or fact which represents a breach or default.
4.5 No Negotiations. Other than in connection with the consummation of
the Acquisition and related transactions, neither Cycles nor ABC, nor any of
their respective officers or directors shall enter into or conduct negotiations,
or enter into any agreement or understanding, for the sale or possible sale of
any of its securities, business, or assets, with anyone other than the other
unless and until this Agreement is terminated in accordance with the terms
hereto.
13
4.6 Other Approvals; Resignations. The parties shall use their best
efforts to obtain all approvals, consents and authorizations necessary to
authorize the Acquisition and related transactions on the terms and conditions
set forth herein, including the respective consents of the Board of Directors of
each entity and shareholders to the extent required. ABC shall obtain all
written resignations of its current officers and directors which shall go into
effect simultaneously with the Acquisition Closing and immediately prior to the
effectiveness of such resignations ABC shall appoint a new slate of officers and
directors, which persons shall be as designated by Cycles and shall be set forth
in SCHEDULE 4.06 hereto.
4.7 Other SEC/NASD Filings. ABC shall file with the Commission and the
NASD (if required) all required forms and disclosure items in a timely manner
(which forms and disclosure items must be approved by legal counsel to ABC and
Cycles prior to filing and/or disclosure) required and/or relating to the
Acquisition. In furtherance thereof, ABC agrees to file its Form 10-KSB, for the
fiscal year ended August 31, 2003, with the Commission, as soon as possible
after the completion of its audited financial statements for the fiscal year
ended August 31, 2003.
4.8 Public Announcements. No party hereunder shall, without the express
written consent of ABC and Cycles, make any announcement or otherwise disclose
any information regarding the Acquisition, the Xxxxxxxx Share Buyback, the Share
Purchase and/or related transactions other than as required by law or otherwise
deemed advisable in counsel's opinion to ensure compliance with public
disclosure requirements under the federal securities laws.
4.9 Reasonable Efforts. Upon the terms and subject to the conditions
provided herein, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to assist and to cooperate with
the other parties hereto in doing or causing to be done, all things necessary or
advisable to consummate, in the most expeditious manner practicable, the
Acquisition and related transactions contemplated hereby.
4.10 S&P Manual Exemption. ABC, with the assistance of the Cycles
Shareholders, agrees to apply for Standard & Poor's Market Access Program
Coverage, for the purpose of obtaining a listing in the Standard & Poor's
corporate manual listing, and to use its best efforts to obtain such listing
shortly after the Closing, in order to facilitate the sale of the ABC shares in
states that recognize the Standard & Poor's manual exemption.
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ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF ABC AND XX. XXXXXXXX TO CLOSE
--------------------------------
The obligations of ABC and Xx. Xxxxxxxx to complete and effectuate the
Acquisition, the Xxxxxxxx Share Buyback, and other related transactions, as
provided herein, is subject to the fulfillment, prior to or on the date of the
Closing (the "CLOSING DATE"), of each of the following conditions, any one or
more of which may be waived by ABC and Xxxxxxxx (except when the fulfillment of
such condition is a requirement of law).
5.01 Representations and Warranties. All representations and warranties
of Cycles and the Cycles Shareholders contained in this Agreement and in any
written statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the date hereof, except to the extent that they
speak expressly as of an earlier date or to reflect changes contemplated herein.
Any changes in information set forth in the Schedules hereto shall be set forth
on amended Schedules which shall be delivered to ABC at the Closing. Except as
set forth in such amended schedules, all representations and warranties of
Cycles and the Cycles Shareholders contained in this Agreement and in any
written statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the Closing.
5.02 Covenants. Cycles and the Cycles Shareholders shall have performed
and complied in all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by them prior to the Closing.
5.03 No Action. No action, suit, proceeding or investigation shall have
been instituted, and be continuing before a court or before or by a governmental
body or agency, and be unresolved, to restrain or to prevent or to obtain
damages in respect of, the carrying out of the transactions contemplated hereby,
or which might materially and adversely affect the right of ABC to consummate
the Acquisition.
5.04 No Material Adverse Change. There shall have been no materially
adverse change at the Closing Date in the business, assets and properties or
financial status of Cycles since the date hereof.
5.05 Approvals of Cycles. The Board of Directors and shareholders of
Cycles (to the extent required by law) shall have approved the terms of this
Agreement in accordance with all applicable laws, rules and regulations.
5.06 Due Diligence. ABC shall have completed its due diligence of
Cycles and be satisfied with the results thereof.
5.07 Closing Documents. The Escrow Agent shall have received all of the
documents and funds to be delivered to ABC, Xx. Xxxxxxxx and the Selling ABC
Shareholder set forth in Article 7.02 hereto in form and substance reasonably
satisfactory to ABC and its legal counsel, and shall be held by the Escrow
Agent, pursuant to the terms and conditions of the Escrow Agreement.
15
5.08 Schedule 14f-1 Information Statement. A period of at least ten
(10) days shall have passed since ABC's filing of a Schedule 14f-1 Information
Statement with the Commission, reporting a contemplated change in control of the
Board of Directors of ABC, along with the distribution of such Information
Statement to all shareholders of record of ABC.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF CYCLES AND THE CYCLES SHAREHOLDERS
-------------------------------------
The obligation of Cycles and the Cycles Shareholders to complete and
effectuate the Closing of the Acquisition, the Share Purchase and the other
related transactions is subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions by ABC and Xx. Xxxxxxxx, any one or
more of which may be waived by Cycles and/or the Cycles Shareholders (except
when the fulfillment of such condition is a requirement of law).
6.01 Representations and Warranties. All representations and warranties
of ABC and Xx. Xxxxxxxx contained in this Agreement and in any written
statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the date hereof, except to the extent that they
speak expressly as of an earlier date or to reflect changes contemplated herein
or in the other agreements necessary to consummate the Acquisition, the Xxxxxxxx
Share Buyback, the Share Purchase and related transactions. Any changes in
information set forth in the schedules hereto shall be set forth on amended
schedules which shall be delivered to Cycles and the Cycles Shareholders at the
Closing. Except as set forth in such amended schedules, all representations and
warranties of ABC and Xx. Xxxxxxxx contained in this Agreement and in any
written statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the Closing Date (as defined herein).
6.02 Covenants. ABC and Xx. Xxxxxxxx shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by each of them prior to or at the
Closing.
6.03 No Actions. No action, suit, proceedings or investigation shall
have been instituted, and be continuing, before a court or before or by a
governmental body or agency, or have been threatened, and be unresolved, by any
governmental body or agency to restrain or prevent, or obtain damages in respect
of, the carrying out of the transactions contemplated hereby.
6.04 Approvals by Cycles. The Board of Directors and shareholders (to
the extent required by law) of Cycles shall have approved the terms of this
Agreement, the Acquisition and related transactions to be consummated at or
immediately following the Closing, in accordance with all applicable laws, rules
and regulations.
16
6.05 Approvals by ABC. The Board of Directors and shareholders (to the
extent required by law) of ABC shall have approved the term of this Agreement
and all transactions contemplated hereby including, but not limited to, the
Acquisition, the Xxxxxxxx Share Buyback, the Share Purchase and related
transactions, in accordance with all applicable laws, rules and regulations .
6.06 SEC Filings. ABC shall be current in all of its filings with the
Commission.
6.07 NASD. The ABC Shares shall continue to be eligible for quotation
on the NASD Bulletin Board and no notice and/or other item the Parties become
aware of could reasonably be expected to prevent such continued eligibility.
6.08 The Xxxxxxxx Share Buyback. The Xxxxxxxx Share Buyback shall have
occurred on the terms set forth herein and pursuant to the Repurchase Agreement
shall have occurred in accordance with all laws, rules and regulations.
6.09 Due Diligence. Cycles and the Cycles Shareholders shall have
completed to their sole satisfaction their due diligence of ABC and shall be
satisfied with the results thereof.
6.10 Liabilities, Etc. Except as reported in the consolidated financial
statements of ABC for the fiscal year ended August 31, 2003, or otherwise set
forth in SCHEDULE 6.10, there shall be no direct and/or indirect liabilities,
indebtedness or other financial or similar obligations ("OBLIGATIONS"),
contingent or otherwise, of ABC outstanding, and to the extent that any such
Obligations are outstanding, ABC shall have made sufficient arrangements for the
satisfaction of all of such Obligations by the Closing Date.
6.11 The Subsidiary Sale. The Subsidiary Sale shall have occurred on
the terms and conditions set forth in the Subsidiary Sale Agreement.
6.12 Closing Documents. The Escrow Agent shall have received, prior to
the Closing, all of the documents set forth in Section 7.03 of this Agreement,
which documents shall be in form and substance reasonably satisfactory to
Cycles, the Cycles Shareholders and their legal counsel, and shall be held by
the Escrow Agent, pursuant to the terms and conditions of the Escrow Agreement.
6.13 Schedule 14f-1 Information Statement. A period of at least ten
(10) days shall have passed since ABC's filing of a Schedule 14f-1 Information
Statement with the Commission, reporting a contemplated change in control of the
Board of Directors of ABC, along with the distribution of such Information
Statement to all shareholders of record of ABC.
ARTICLE VII
CLOSING
-------
7.01 Location. The Closing provided for herein shall take place at the
office of Gusrae, Xxxxxx & Xxxxx, PLLC, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
17
New York 10005 at 10:00 a.m. on or around January 5, 2004. The time and place of
the Closing may be changed as shall be mutually agreed to by the parties hereto.
7.02 Items to be Delivered by Cycles and the Cycles Shareholders. At
the Closing, Cycles and the Cycles Shareholders will deliver or cause to be
delivered to ABC (or the appropriate party as may be specified below), through
the release of such items by the Escrow Agent, pursuant to the terms and
conditions of the Escrow Agreement, the following:
(a) Stock certificates representing all of the issued and
outstanding Cycles Shares with appropriate stock transfer powers
transferring such Cycles Shares to ABC in exchange for the 7,850,000
ABC Shares.
(b) Secretary's Certificate of Cycles in the form of EXHIBIT
7.02(B) annexed hereto, certifying as to (i) the corporate
authorization of the Acquisition and related transactions; (ii) the
organizational documents of Cycles (Articles of Incorporation and
By-Laws), (iii) the incumbency of any and all Cycles signatories in the
Acquisition and related transactions; and (iv) the closing documents
executed in connection with the Acquisition and Share Purchase.
(c) Officers' certificate of Cycles in the form of EXHIBIT
7.02(C) annexed hereto.
(d) All schedules required by this Agreement, including
amendments thereto.
(e) Such other resolutions, documents and certificates as are
reasonably requested by ABC.
(f) US$178,750 (paid to the Escrow Agent by wire transfer) to
the ABC Selling Shareholder representing the purchase price of the
150,000 ABC Shares under the Share Purchase Agreement.
(g) US$21,250 (paid to Escrow Agent by Wire transfer) to ABC
as a loan for payment to Xx. Xxxxxxxx in connection with the Xxxxxxxx
Share Buyback.
(h) A letter from Cycles and the applicable Cycles
Shareholders to the Escrow Agent, in the form of EXHIBIT 7.02(H)
annexed hereto, authorizing the irrevocable release of all of the items
listed in this Section 7.02, subject to ABC's and Xx. Xxxxxxxx'x
satisfaction of the conditions described in Article VI.
7.03 Items to be Delivered by ABC and Xx. Xxxxxxxx. At the Closing ABC
and Xx. Xxxxxxxx, as applicable, will deliver or cause to be delivered to Cycles
and/or the applicable Cycles Shareholders, through the release of such items by
the Escrow Agent, pursuant to the terms and conditions of the Escrow Agreement,
the following:
(a) Restricted stock certificates (with standard federal
securities law restrictive legends thereon) for 7,850,000 ABC Shares
(to the persons and in the amounts as set forth in SCHEDULE 1.02
hereto), free and clear of all Encumbrances, to be delivered in
18
exchange for stock certificates representing all of the issued and
outstanding Cycles Shares; or, in the alternative a letter of direction
to the transfer agent for the ABC Shares to issue to such Cycles
Shareholders such certificates for an aggregate of 7,850,000 ABC Shares
shortly after the Closing.
(b) Secretary's Certificate of ABC in the form of EXHIBIT
7.03(B) annexed hereto, certifying as to, among other items (i) the
corporate authorization of the Acquisition and related transactions,
(ii) the organizational documents of ABC (which shall also be
delivered); (iii) the incumbency of any and all ABC signatories in this
Agreement and related transactions; and (iv) the closing documents
executed in connection with the Acquisition Closing.
(c) The original minute book, tax returns, bank statements,
accounting and auditing records and correspondences, all tax filings
and correspondences, leases and all other original records of ABC,
including, without limitation, all records of ABC.
(d) Good standing certificate dated not earlier than three (3)
days prior to the Closing Date, to be updated as of the Closing Date,
if such update can be reasonably obtained from the State of Nevada.
(e) Resignations of all current officers and directors of ABC.
(f) Officer's certificate in the form of EXHIBIT 7.03(F)
annexed hereto.
(g) Such other resolutions (including, but not limited to, all
Board and Shareholder resolutions and consents), documents and
certificates as are reasonably required by Cycles and its legal
counsel.
(h) A stock certificate from Xx. Xxxxxxxx (with appropriately
executed transfer documents) for the transfer of the 8,500,000
restricted ABC Shares purchased by ABC in the Xxxxxxxx Share Buyback.
(i) Consents of the Directors of ABC with respect to the
Acquisition, the Xxxxxxxx Share Buyback and related transactions to be
consummated at the Closing.
(j) Stock certificate(s) from the ABC Selling Shareholder with
appropriately executed transfer documents for the transfer of the
150,000 ABC Shares in the Share Purchase to the applicable Cycles
Shareholders.
(k) The Loan Cancellation Documents.
(l) A Shareholders' list certified by ABC's transfer agent
dated not earlier than three (3) days prior to the Closing Date, with a
certification of no change from the Transfer Agent on the Closing Date.
(m) The executed Subsidiary Sale Agreement and all other
related documents in the form of EXHIBIT 7.03(M) annexed hereto.
(n) The executed Xxxxxxxx Repurchase Agreement in the form of
EXHIBIT 7.03(N) annexed hereto.
19
(o) A Certificate from Xx. Xxxxxxxx in the form of EXHIBIT
7.03(O) annexed hereto.
(p) An Opinion from Xxxxx X. Xxxxxxxx, Esq. in the form
annexed hereto as EXHIBIT 7.03(P).
(q) An Opinion from Xxxxx X. Xxxxxxxx, Esq. in the form
annexed hereto as EXHIBIT 7.03(Q)
(r) The Cycles Shareholders Note.
(s) A letter from ABC and Xx. Xxxxxxxx to the Escrow Agent, in
the form of EXHIBIT 7.03(S) annexed hereto, authorizing the irrevocable
release of all of the items listed in this Section 7.03, subject to
Cycles' and the Cycles' Shareholders satisfaction of the conditions
described in Article V.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
The parties hereto agree that their respective representations and
warranties contained in this Agreement or delivered on their behalf pursuant
hereto shall terminate one (1) year following the Closing.
ARTICLE IX
INDEMNIFICATION BY ABC AND XX. XXXXXXXX
---------------------------------------
9.01 Indemnification.
(a) ABC and Xx. Xxxxxxxx, jointly and severally (except as
otherwise specifically provided herein), shall indemnify and hold
Cycles and the Cycles Shareholders harmless from and against any loss,
damage or expense (including reasonable attorneys' fees) caused by or
arising out of any claim made against Cycles or the Cycles
Shareholders:
(i) for any broker's or finder's fee or any similar
fee, charge or commission incurred by ABC or Xx. Xxxxxxxx
prior to or in connection with this Agreement or any of the
transactions contemplated hereby;
(ii) for any foreign, Federal, state or local tax of
any kind arising out of or by reason of the existence or
operations of ABC prior to the Closing, including, without
limitation, any payroll taxes owed by ABC or the Subsidiary on
account of compensation paid to any employee of ABC or the
Subsidiary prior to such date;
(iii) in respect of transactions occurring prior to
the Closing arising under the Securities Act, the Exchange
Act, or any state "blue sky" or securities law; provided,
however, that this indemnification is limited to ABC only;
20
(iv) in respect of any salary, bonus, wages or other
compensation of any kind owed by ABC or the Subsidiary to its
employees for services rendered on or prior to the Closing;
(v) for any damages to the environment caused by or
arising out of any pollution resulting from or otherwise
attributable to the operation of the business of ABC or the
Subsidiary prior to the Closing;
(vi) in respect of any payable of ABC or the
Subsidiary incurred prior to the Closing;
(vii) in respect of any liability or indebtedness for
borrowed money or otherwise incurred by ABC or the Subsidiary
on or prior to the Closing; and
(viii) for expenses required to be borne by ABC
and/or Xx. Xxxxxxxx under the provisions of this Agreement.
(b) ABC and Xx. Xxxxxxxx, jointly and severally, shall also
indemnify and hold Cycles and the Cycles Shareholders harmless from and
against any loss, damage or expense (including reasonable attorneys'
fees) caused by or arising out of (i) any breach or default in the
performance by ABC and/or Xx. Xxxxxxxx of any covenant or agreement of
ABC or Xx. Xxxxxxxx contained in this Agreement, (ii) any breach of
warranty or inaccurate or erroneous representation made by ABC and/or
Xx. Xxxxxxxx herein or in any schedule, certificate or other instrument
delivered by or on behalf of ABC and/or Xx. Xxxxxxxx pursuant hereto,
and (iii) any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal and
accounting fees) incident to any of the foregoing. Notwithstanding the
foregoing, Xx. Xxxxxxxx shall not be required to provide
indemnification hereunder for any breach by ABC of any of its
representations or warranties made in Sections 3.12 or 3.27 hereof.
9.02 Notice and Opportunity to Defend. Promptly after the receipt by
ABC, Cycles or the Cycles Shareholders of notice of any action, proceeding,
claim or potential claim (any of which is hereinafter individually referred to
as a "CLAIM") which could give rise to a right to indemnification under Section
9.01, Cycles and/or the Cycles Shareholders (each an "INDEMNIFIED PARTY") shall
give prompt written notice to the party or parties who may become obligated to
provide indemnification hereunder (the "INDEMNIFYING Party"). Such notice shall
specify in reasonable detail the basis and amount, if ascertainable, of any
claim that would be based upon the Claim. The failure to give such notice
promptly shall relieve the Indemnifying Party of its indemnification obligations
under this Agreement, unless the Indemnified Party establishes that the
Indemnifying Party either had knowledge of the Claim or was not prejudiced by
the failure to give notice of the Claim. The Indemnifying Party shall have the
right, at its option, to compromise or defend the claim, at its own expense and
by its own counsel, and otherwise control any such matter involving the asserted
liability of the Indemnified Party, provided that any such compromise or control
shall be subject to obtaining the prior written consent of the Indemnified Party
which shall not be unreasonably withheld. If any Indemnifying Party undertakes
to compromise or defend any asserted liability, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party agrees to
21
cooperate fully with the Indemnifying Party and its counsel in the compromise of
or defense against any such asserted liability. All costs and expenses incurred
in connection with such cooperation shall be borne by the Indemnifying Party. In
any event, the Indemnified Party shall have the right at its own expense to
participate in the defense of an asserted liability.
ARTICLE X
TERMINATION AND WAIVER
----------------------
10.01 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior to the Closing Date:
(a) By mutual written consent of ABC and Cycles.
(b) By ABC on or before the Closing Date if (i) any of the
conditions set forth in ARTICLE V hereof shall not have been fulfilled
by such date and shall not have been waived including, without
limitation, the delivery of the irrevocable authorization release
letter by Cycles and the Cycles Shareholders, pursuant to the
provisions of Section 7.02(h); or (ii) the Purchasers fail to obtain
such third party consents as may be required to consummate the
Transactions, on or prior to such date unless waived by ABC;
(c) By Cycles on or before the Closing Date if any of the
conditions set forth in ARTICLE VI hereof shall not have been fulfilled
by such date, and shall not have been waived including, without
limitation, the delivery of the irrevocable authorization release
letter by ABC and Xxxxxxxx, pursuant to the provisions of Section
7.03(s) and the delivery of the irrevocable authorization release
letter by the ABC Selling Shareholder, pursuant to the provisions of
the Share Purchase Agreement;
(d) By ABC and vice versa by Cycles, if any material legal
action or proceeding shall have been instituted or threatened seeking
to restrain, prohibit, invalidate or otherwise affect the consummation
of the transactions contemplated by this Agreement which makes it
inadvisable, in the judgment of the other, to consummate same;
provided, however, that the right to terminate this Agreement under
this Section 10.01(d) shall not be available to any party whose failure
to fulfill any obligation under this Agreement was the cause of, or
resulted in, the failure to consummate the transactions contemplated
hereby to such date.
In the event that this Agreement is terminated as described above, this
Agreement shall be void and of no force and effect, without any liability or
obligation on the part of any of the parties hereto except for any liability
which may arise pursuant to a breach of Section 11.02. Any such termination
shall be without prejudice to the rights of any party arising out of the willful
breach by any other party of any provision of this Agreement. In any such case
the Escrow Agent shall return all documents and funds to the respective parties
as provided under the Escrow Agreement.
10.02 Waiver. Any condition to the performance of any party hereto
which legally may be waived on or prior to the Closing Date may be waived at any
time by the party entitled to the benefit thereof by action taken or authorized
by an instrument in writing executed by the relevant party or parties. The
22
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such party at a later
time to enforce the same. No waiver by any party of the breach of any term,
covenant, representation or warranty contained in this Agreement as a condition
to such party's obligations hereunder shall release or affect any liability
resulting from such breach, and no waiver of any nature, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or of any breach of any other
term, covenants, representation or warranty of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.01 Expenses. Each of the parties hereto shall bear its own expenses
in connection herewith.
11.02 Confidential Information. Each party agrees that such party and
its representatives will hold in strict confidence all information and documents
received from the other parties and, if the transactions herein contemplated
shall not be consummated, each party will continue to hold such information and
documents in strict confidence and will return to such other party all such
documents (including the documents annexed to this Agreement) then in such
receiving party's possession without retaining copies thereof: provided,
however, that each party's obligations under this Section 10.02 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that become in the public
domain thereafter through any means other than as a result of any act of the
receiving party or of its agents, officers, directors or stockholders which
constitutes a breach of this Agreement, or that are required by applicable law
to be disclosed (including, without limitation, any and all disclosure
requirements under Section 14 of the Exchange Act and any and all other
requirements under the federal securities laws).
11.03 Modification, Termination or Waiver. This Agreement may be
amended, modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
11.04 Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and either be delivered personally or by
23
reputable overnight delivery service, or be mailed, certified or registered
mail, postage prepaid, as follows:
If to Cycles or the Cycles Shareholders:
To their respective addresses first appearing above.
With a copy to:
Gusrae, Xxxxxx & Bruno, PLLC
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
If to ABC or Xx. Xxxxxxxx:
To their respective addresses first appearing above.
With a copies to:
Xxxxxx Xxxxxxxxx, Esq. Xxxxx X. Xxxxxxxx, Esq.
00 Xx. Xxxxxx Xxxxx 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
The parties may change the persons and addresses to which the notices
or other communications are to be sent to it by giving written notice of any
such change in the manner provided herein for giving notice.
10.5 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by any party without the express
consent of the other parties hereto.
10.6 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.
10.7 Schedules and Exhibits. All Schedules and Exhibits annexed hereto
and the documents and instruments referred to herein or required to be delivered
simultaneously herewith or at the Closing are expressly made a part of this
Agreement as fully as though completely set forth herein, and all references to
this Agreement herein or in any of such Schedules, documents or instruments
shall be deemed to refer to and include all such Schedules, documents and
instruments.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York without regard to
the conflicts of laws principles thereof. The parties hereto hereby agree that
any suit or proceeding arising directly and/or indirectly pursuant to or under
this Agreement, shall be brought solely in a federal or state court located in
the City, County and State of New York. By its execution hereof, the parties
hereby covenant and irrevocably submit to the in personam jurisdiction of the
federal and state courts located in the City, County and State of New York and
agree that any process in any such action may be served upon any of them
personally, or by certified mail or registered mail upon them or their agent,
24
return receipt requested, with the same full force and effect as if personally
served upon them in New York City. The parties hereto waive any claim that any
such jurisdiction is not a convenient forum for any such suit or proceeding and
any defense or lack of in personam jurisdiction with respect thereto. In the
event of any such action or proceeding, the party prevailing therein shall be
entitled to payment from the other party hereto of its reasonable counsel fees
and disbursements in an amount judicially determined.
10.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
10.10 Section Headings. The section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
10.11 Facsimile Signatures. The parties may execute and deliver this
Agreement, all related agreements and any certificates or other documents
required to be delivered in connection herewith, by facsimile transmission, and
facsimile signatures shall be legally binding on each of the parties.
[Remainder of Page Intentionally Left Blank]
25
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first appearing above.
AMERICAN BUSING CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx, President
W.W. CYCLES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx, President
/s/ Xxxxxx Xxxxxxxxx
-----------------------------
XXXXXX XXXXXXXX
/s/ Xxxxxxx X. Xxxxx
-----------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-----------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
XXXXXX X. XXXXXXX
26
SCHEDULES
Schedule 1.02 Amount of Shares and Persons Receiving the 7,850,000 ABC
Shares
Schedule 1.04 Allocation of Payments and Receipt of ABC Shares by Cycles
Shareholders in Share Purchase
Schedule 2.07 Cycles Litigation, Etc.
Schedule 2.08 Cycles Real Property
Schedule 2.09 Cycles Permits and Licenses
Schedule 3.01 ABC Jurisdictions
Schedule 3.05 ABC Consents
Schedule 3.12 SEC Reports not Filed
Schedule 3.15 ABC Officers / Directors
Schedule 3.16 ABC Liabilities
Schedule 3.20 ABC Bank Accounts, Etc.
Schedule 3.23 ABC Insurance
Schedule 4.06 Cycles Officer / Director Designees
Schedule 6.10 ABC Obligations
EXHIBITS
Exhibit 1 Escrow Agreement
Exhibit 1.03(i) Cycles Shareholders Note
Exhibit 1.03(ii) Loan Cancellation Documents
Exhibit 3.14 ABC Articles of Incorporation (and amendments, if any)
Exhibit 7.02(b) Form of Cycles Secretary's Certificate
Exhibit 7.02(c) Form of Cycles Officers' Certificate
Exhibit 7.02(h) Form of Cycles Escrow Agent Authorization Release Letter
Exhibit 7.03(b) Form of ABC Secretary's Certificate
Exhibit 7.03(f) Form of ABC Officer's Certificate
Exhibit 7.03(m) Form of Subsidiary Sale Agreement
Exhibit 7.03(n) Form of Xxxxxxxx Repurchase Agreement
Exhibit 7.03(o) Form of Certificate of Xx. Xxxxxxxx
Exhibit 7.03(p) Form of Opinion of Xxxxx X. Xxxxxxxx, Esq.
Exhibit 7.03(q) Form of Opinion of Xxxxx X. Xxxxxxxx, Esq.
Exhibit 7.03(s) Form of ABC and Xxxxxxxx Escrow Agent Authorization Release
Letter
SCHEDULE 1.02 TO STOCK PURCHASE AND
------------------------------------
REORGANIZATION AGREEMENT
Amount of Shares and Persons Receiving the 7,850,000 ABC Shares
---------------------------------------------------------------
------------------------------------- -----------------------------------
Name Number of ABC Shares
------------------------------------- -----------------------------------
Xxxxxxx X. Xxxxx 2,740,000
------------------------------------- -----------------------------------
Xxxxxxx X. Xxxxx 4,710,000
------------------------------------- -----------------------------------
Xxxxxx X. Xxxxxxx 400,000
------------------------------------- -----------------------------------
SCHEDULE 1.04 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
Allocation of Payments and Receipt of ABC Shares by Cycles Shareholders in Share Purchase
-----------------------------------------------------------------------------------------
------------------------------------- ------------------------------------ ----------------------------------
Name Amount of Payment Number of ABC Shares
------------------------------------- ------------------------------------ ----------------------------------
Xxxxxxx X. Xxxxx $89,425 75,000
------------------------------------- ------------------------------------ ----------------------------------
Xxxxxxx X. Xxxxx $89,425 75,000
------------------------------------- ------------------------------------ ----------------------------------
SCHEDULE 2.07 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
Cycles Litigation, Etc.
-----------------------
None.
SCHEDULE 2.08 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
Cycles Real Property
--------------------
LEASE OF MOTORCYCLE DEALERSHIP LOCATED AT 00000 XXXXX XXXXX 00, XXXXX, XXXX
0000. Lease is for 30,000 square feet of space until October 31, 2009. Rent for
the leased premises is $15,000 per month.
SCHEDULE 2.09 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
Cycles Permits and Licenses
---------------------------
MOTOR VEHICLE DEALER LICENSE. License issued by the State of Ohio Department of
Taxation. License expires on March 31, 2004.
SCHEDULE 3.01 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
ABC is duly qualified to conduct business and is in good standing as a foreign
corporation in these jurisdictions
AMERICAN BUSING CORPORATION: Nevada
ABLE BUSING CORPORATION: Saskatchewan, Canada
SCHEDULE 3.05 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
AMERICAN BUSING CORPORATION CONSENTS
------------------------------------
NONE
SCHEDULE 3.15 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
AMERICAN BUSING CORPORATION
LISTING OF OFFICERS AND DIRECTORS
---------------------------------
DIRECTOR: XXXXXX XXXXXXXX
SECRECTARY: XXXXXX XXXXXXXX
PRESIDENT: XXXXXX XXXXXXXX
CHIEF EXECUTIVE OFFICER: XXXXXX XXXXXXXX
CHIEF FINANCIAL OFFICER: XXXXXX XXXXXXXX
SCHEDULE 3.16 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
AMERICAN BUSING CORPORATION
LISTING OF LIABILITIES
----------------------
XX XXXXXXXX SHAREHOLDERS LOAN: $30,450
XXXXXX AND XXXXXXXX $10,614
DTC FINANCIAL PUBLISHING $ 376
XXXX XXXXXXX $ 1,270
SCHEDULE 3.20 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
AMERICAN BUSING CORPORATION
BANK ACCOUNTS
-------------
XXXXXX TRUST BANK ACCOUNT NO. 3100018121
SCOTTSDALE, ARIZONA
SCHEDULE 3.23 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
AMERICAN BUSING CORPORATION
INSURANCE
---------
SASKATCHEWAN GOVERNMENT INSURANCE
REGISTRATION INSURANCE ON THE BUSES OWNED BY
ABLE BUSING CORPORATION AND COMPREHENSIVE LIABILITY INSURANCE
SCHEDULE 4.06 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
Cycles Officer/Director Designees
---------------------------------
------------------------------------------------------- -----------------------------------------------------
Name Positions
------------------------------------------------------- -----------------------------------------------------
Xxxxxxx X. Xxxxx President, Chief Operating Officer, Treasurer and a
Director
------------------------------------------------------- -----------------------------------------------------
Xxxxxxx X. Xxxxx Chairman, Chief Executive Officer, Secretary and a
Director
------------------------------------------------------- -----------------------------------------------------
SCHEDULE 6.10 TO STOCK PURCHASE AND REORGANIZATION AGREEMENT
------------------------------------------------------------
XX XXXXXXXX SHAREHOLDERS LOAN: $30,450
XXXXXX AND XXXXXXXX $10,614
DTC FINANCIAL PUBLISHING $ 376
XXXX XXXXXXX $ 1,270
