EXHIBIT 2.1
PLAN AND AGREEMENT OF REORGANIZATION
by exchange by
FAR EAST VENTURES, INC.
of its voting stock for
all voting stock of
XXXXXXXXX RESOURCES, INC.
FAR EAST VENTURES, INC., a Nevada corporation, hereinafter sometimes
called Buyer, and XXXXXXXXX RESOURCES, INC., a Delaware corporation, hereinafter
sometimes called Seller, agree as follows:
ARTICLE 1. PLAN OF REORGANIZATION
Plan Adopted
Section 1.01. A plan of reorganization of the parties hereto pursuant
to the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986
is adopted as follows.
(a) Seller and its Shareholders will transfer to Buyer all of its
shares of its common stock.
(b) In exchange for the voting stock transferred by Seller and its
Shareholders, Buyer will issue and deliver to Seller Four Million Five
Hundred Thousand (4,500,000) newly issued restricted shares of its common
stock.
(c) Seller will wind up its affairs, pay-off its liabilities,
liquidate and distribute its assets, including the shares of common stock
of Buyer received pursuant to the exchange, and voluntarily dissolve.
Closing Date
Section 1.02. Subject to the conditions precedent set forth herein to
the obligations of the parties to consummate the transaction, the plan of
reorganization shall be consummated at the office of XXXXXXXXX RESOURCES, INC.,
0000-X Xxxxxxx XX Xxxxx 000, Xxxxxxxxxxx, XX 00000, on or before November 24,
1999, at 2:00 p.m., or such other place and date as may be fixed by mutual
consent of the parties. The date of such consummation is the "closing date"
referred to herein.
Due Diligence
Section 1.03. Buyer acknowledges that upon execution of this Agreement,
it has completed any and all due diligence which it wishes to undertake and
approves the assets of Seller.
1
ARTICLE 2. COVENANTS, REPRESENTATIONS,
AND WARRANTIES OF SELLER
Legal Status
Section 2.01. Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, with corporate
power to own property and carry on its business as it is now being conducted.
Seller is duly qualified to do business in each jurisdiction in which the
character and location of its properties make such qualification necessary.
Subsidiaries
Section 2.02. Seller has no subsidiaries nor any interest in any other
corporation, firm, or partnership.
Capitalization
Section 2.03. Seller has an authorized capitalization of Fifteen
Hundred (1,500) shares of common stock. As of the date of this agreement
approximately One Thousand (1,000) shares of the common stock are validly issued
and outstanding, fully paid and non-assessable.
Financial Statements
Section 2.04. Seller has delivered to Buyer its latest unaudited
financial statement together with the latest balance sheet of Seller and the
related statements of income and retained earnings for the period then ended. As
soon as possible Seller shall provide audited financial statements of the Fraser
Downs Raceway assets. All such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and present fairly the financial position of Fraser Downs Raceway for its
latest fiscal year, and the results of operations for the period then ended
subject, however, to normal changes resulting from year-end audit of the
financial statements.
Businesses and Properties
Section 2.05. (a) Seller has delivered to Buyer materials regarding the
Fraser Downs Raceway assets which when acquired will be the businesses and
properties of Seller. The materials are substantially complete and the
information reported therein is correct in all material respects. Except as
previously disclosed to Buyer in writing, Seller does not know of any
circumstances, events, or other information, occurring prior to or subsequent to
April 30, 1999, which would adversely affect the values as of December 31, 1998,
or subsequent thereto, set forth in the list of properties.
(b) Except for business interests and properties sold or otherwise
disposed of in the ordinary course of business since April 30, 1999, on or
within sixty (60) days after the closing
2
date Seller will have good and marketable title to all of the businesses
and interests in properties known as the Fraser Downs Raceway, real and
personal, reflected in the list as of April 30, 1999 free and clear of all
mortgages, liens, or encumbrances, other than the following:
(i) The lien of current taxes not yet due and payable.
(ii) Minor exceptions, not in the aggregate material.
(iii)Such imperfections of title as do not materially detract from or
interfere with the operations, value, or use of the properties
subject thereto or affected thereby, or materially affect the
title thereto.
(iv) A one time payment to the former owners of Fraser Downs Raceways
in the sum of Two Million Dollars ($2,000,000) due one (1) year
after receipt of regulatory approval of the transfer.
(c) All leases included among the properties, or to which any of the
properties are subject, are in good standing, valid and effective and, to
the best of Seller's knowledge, information, and belief after reasonable
investigation by Seller, there is not under any of such leases any existing
material default or event of default or event which with notice or lapse of
time or both would constitute a material default.
(d) The equipment, including racing related equipment of Seller,
included among the properties are in good condition and repair, subject
only to ordinary wear and tear.
(e) Except to the extent set forth in Schedule 5 hereto, there exists
no restriction on the right of Seller to convey, assign, and transfer all
of the properties, and convey good title thereto to Buyer.
Activities Since Balance Sheet Date
Section 2.06. Except as previously disclosed to Buyer in writing, since
April 30, 1999, Seller has not:
(a) Suffered any change in its financial condition or the operations
of its business, materially and adversely affecting its properties, or the
earning power thereof, nor suffered any damage, destruction or loss,
whether covered by insurance or not, materially and adversely affecting the
properties or the earning power thereof.
(b) Sold, exchanged, or otherwise disposed of any of its business or
properties or any interest therein.
(c) Except in the ordinary course of business, entered into any
agreement or arrangement selling, exchanging, or otherwise disposing of any
of its assets or granting any
3
preferential or other right to purchase any of its assets or rights or
requiring the consent of any party to the transfer and assignment of such
assets or rights.
(d) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability, absolute or contingent, other than current
liabilities shown on its balance sheet, including noncurrent liabilities so
shown which have become current by the passage of time, and current
liabilities incurred since that date in the ordinary course of business.
(e) Except current liabilities incurred or obligations under contracts
entered into in the ordinary course of business, incurred or agreed to
incur any contractual obligation or liability, absolute or contingent.
(f) Issued any stock, bonds, or other corporate securities, or any
options with respect thereto.
(g) Except to the extent consistent with past practice, granted any
increase in the compensation of, or paid any bonus to, any employee.
(h) Except in the ordinary course of business, waived any right or
claim having value. (i) Declared or paid any dividends, or made, or agreed
to make, any other distribution to any shareholder.
(i) Mortgaged or pledged or, except in the ordinary course of
business, subjected to lien, charge, or any other encumbrance any of its
assets, tangible or intangible.
(k) Entered into any transaction or transactions the effect of which,
considered as a whole, would be to cause its net ownership in any of its
businesses to be materially less than it was at such date.
(l) Sold, assigned, or transferred any patents, copyrights, or other
intangible assets.
(m) Had any labor troubles other than routine grievance matters, none
of which is material.
(n) Entered into any transaction other than in the ordinary course of
business.
(o) Made any expenditure for capital items, including construction and
work-in-process, or investment in stock of or advances in any form to
corporations or business firms in excess of twenty five thousand dollars
($25,000).
Schedules Furnished
Section 2.07. Seller has delivered to Buyer the schedules enumerated
below. To the extent that any such schedule identifies any contract, agreement,
or other instrument in general terms in lieu of specific descriptions thereof,
the schedule will be supplemented by setting forth
4
specific descriptions as Buyer may request. If after the date hereof there shall
be any change in the matters reflected in any such schedule, Seller will deliver
to Buyer prior to the effective date appropriate supplements to the schedule so
affected, making such deletions, modifications, and additions as may be required
in order that Buyer shall have received complete and correct information as to
the matters to be reflected in each such schedule. Each of the schedules and any
supplement thereto, delivered by Seller to Buyer, is substantially complete and
the information reported therein or in any documents provided thereunder is
correct in all material respects as of the date of such schedule or supplement.
Off-Balance Sheet Liabilities and Obligations
(a) Schedule 1: This schedule lists all indebtedness or liabilities
affecting Seller or any of its assets or rights which arise under sale and
leaseback arrangements, through-put agreements, and any other agreements or
arrangements which fall within the category or concept of off-balance sheet
financing.
Guaranties
(b) Schedule 2: This schedule lists all indebtedness or liabilities of
any person, firm, or corporation which Seller has guaranteed or otherwise
become liable for, absolutely or contingently.
Certain Material Contracts
(c) Schedule 3: This schedule lists all agreements, contracts, and
other instruments, to the extent not listed in any other schedule, not
cancellable by Seller on ninety (90) days notice without penalty which
involve a payment or payments to be made by or to Seller, or a liability or
liabilities of or to Seller, in excess of twenty five thousand dollars
($25,000) any year.
Pending Litigation
(d) Schedule 4: This schedule lists all litigation and proceedings
pending or threatened in courts and governmental commissions and bureaus
affecting Seller or any of its properties or rights which are not fully
covered by insurance.
Restrictions on Transfer of Properties
(e) Schedule 5: This schedule lists any of the properties, the
transfer of which by Seller as herein contemplated is subject to any
restriction, or which requires the consent of any third party, pursuant to
a preferential or other right of purchase or otherwise, and describes in
detail each such restriction, consent requirement, or purchase right.
Options, Warrants, or Other Stock Purchase Rights
5
(f) Schedule 6: This schedule lists all commitments by Seller to issue
shares of capital stock pursuant to outstanding options, warrants, or
rights of conversion.
Employment and Deferred Compensation Contracts
(g) Schedule 7: This schedule lists all employment, deferred
compensation, and similar contracts by which Seller is bound.
Insurance
(h) Schedule 8: This schedule lists all fire, liability, and other
insurance now in effect with respect to any of the properties of Seller.
Compliance With Laws and Regulations
Section 2.08. Seller is in compliance with all laws, regulations, and
orders applicable to its business.
Agreement Not Violative of Law or Instrument
Section 2.09. The execution and carrying out of this agreement and
compliance with the provisions thereof by Seller will violate, with or without
the giving of notice or passage of time, any provision of law applicable to the
Seller, and will not conflict with, or result in the breach or termination of
any provision of, or constitute a default under, or result in the creation of
any lien, charge, or encumbrance upon any of the businesses or properties,
pursuant to any corporate charter, bylaws, indenture, mortgage, deed of trust,
or other agreements or instrument to which Seller is a party or by which Seller
of any of its properties may be bound.
Taxes
Section 2.10. The respective amounts owed for the payment of all unpaid
federal, state, county, and local taxes, including current ad valorem taxes.
Seller has filed all federal, state, county, and other local tax returns which
are required to be filed, and will make payment of all taxes which have or may
become due pursuant to said returns or pursuant to any assessment received by
Seller.
Not in Default
Section 2.11. Seller has not received any notice of default and, to the
knowledge of any of its officers or directors, is not in default under.
(a) Any order, writ, injunction, or decree of any court or any
commission or other administrative agency. Any agreement or obligation to
which it is a party or by which it is bound or to which it may be subject.
6
Not Obligated for Broker's Fee
Section 2.12. Seller has not incurred any obligation or liability,
contingent or otherwise, for a broker's or finder's fee in respect of the
matters provided for in this agreement.
Contract or Commitment Relating to Businesses or Properties
Section 2.13. Except as set forth in the list of business and/or
properties as of April 30, 1999, Seller does not have any lease, contract, or
commitment, written or oral, which relates to any of the properties, and it has
duly complied with all provisions of such lease, contract, or commitment set
forth in the list and is not in default with respect to any of them.
Litigation
Section 2.14. Except for matters disclosed in Schedule 4, there is no
litigation, proceeding, or governmental investigation pending, or, to the
knowledge of any of the officers or directors of Seller, threatened, affecting
Seller or any of its properties, or its right to enter into this agreement or to
perform its obligations hereunder, nor do any of such officers or directors know
of any ground for any such litigation, proceeding, or investigation.
Insurance
Section 2.15. Seller now has in force fire, liability, and other
insurance with respect to its properties as set forth in Schedule S and, except
in accordance with the written approval of Buyer pending the closing date, will
not change, increase, or decrease any such insurance.
Approval of Board
Section 2.16. The Board of Directors of Seller, acting at a special
meeting thereof called for the purpose and duly held on November 23, 1999, has
duly approved the transactions contemplated hereby and has authorized the
execution and delivery of this agreement by Seller, and the performance by
Seller.
Character of Statements
Section 2.17. The information provided and to be provided by Seller and
its officers and directors to Buyer pursuant to this agreement, for use in any
proxy statement or listing application, does not and will not contain any
statement which, at the time and in the light of the circum- stances under which
it is made, is false or misleading with respect to any material fact, and does
not and will not omit to state any material fact in order to make the statements
therein not false or misleading.
7
ARTICLE 3. COVENANTS, REPRESENTATIONS,
AND WARRANTIES OF BUYER
Legal Status
Section 3.01. Buyer is a corporation duly organized; validly existing,
and in good standing under the laws of the State of Nevada, with corporate power
to own property and carry on its business as it is now being conducted.
Subsidiaries
Section 3.02. Buyer has no subsidiaries nor any interest in any other
corporation, firm, or partnership.
Capitalization
Section 3.03. Buyer has an authorized capitalization of Fifty Million
(50,000,000) shares of common stock. As of the date of this agreement Four
Million Three Hundred Thousand (4,300,000) shares of the common stock are
validly issued and outstanding, fully paid and non-assessable.
Financial Statements
Section 3.04. Buyer has delivered to Seller its latest balance sheet
and the related statements of income and retained earnings for the period then
ended. All such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis and
present fairly the financial position of Buyer.
Properties
Section 3.05. (a) Buyer has delivered to Seller a list as of October
31, 1999, of the properties of Buyer. The list is substantially complete and the
information reported therein is correct in all material respects. Except as
previously disclosed to Buyer in writing, Seller does not know or any
circumstances, events, or other information, occurring prior to or subsequent to
October 31, 1999, which would adversely affect the values as of October 31,
1999, or subsequent thereto, set forth in the list of the properties.
(b) Except for properties and interests in properties sold or
otherwise disposed of in the ordinary course of business since October 31,
1999, on the closing date Buyer will have good and marketable title to all
of the properties and interests in properties, real and personal, reflected
in the list as of October 31, 1999, free and clear of all mortgages, liens,
or encumbrances, other than the following:
(i) The lien of current taxes not yet due and payable.
8
(ii) Minor exceptions, not in the aggregate material.
(iii)Such imperfections of title or easements as do not materially
detract from or interfere with the operations, value, or use of
the properties subject thereto or affected thereby, or materially
affect the title thereto.
(c) All leases included among the properties, or to which any of the
properties are subject, are in good standing, valid and effective and, to
the best of Buyer's knowledge, information, and belief after reasonable
investigation by buyer, there is not under any of such leases any existing
material default or event of default or event which with notice or lapse of
time or both would constitute a material default and in respect of which
Buyer has not taken adequate steps to prevent a default from occurring.
Activities Since Balance Sheet Date
Section 3.06. Except as previously disclosed to Seller in writing,
since October 31, 1999, Buyer has not:
(a) Suffered any change in its financial condition or the operations
of its business, materially and adversely affecting its properties, or the
earning power thereof, nor suffered any damage, destruction, or loss,
whether covered by insurance or not, materially and adversely affecting the
properties or the earning power thereof.
(b) Except in the ordinary course of business, sold, exchanged, or
otherwise disposed of, or entered into any agreement or arrangement to
sell, exchange, or otherwise dispose of, any of its properties, rights, or
any interest therein.
Litigation
Section 3.07. There are no actions or proceedings pending, or, to the
knowledge of Buyer, threatened against, by, or affecting the Buyer in any court
or before any govern- mental agency, domestic or foreign, which, if decided
adversely to the Buyer, would materially and adversely affect the condition or
operations, financial or otherwise, of Buyer. The Buyer, to its knowledge, is
not in default with respect to any order, writ, injunction, or decree of any
such court or agency.
Employment of Seller Employees
Section 3.08. At the closing, Buyer will offer to employ those
employees of Seller listed in Schedule 7, upon terms and conditions satisfactory
to Buyer.
Status of Shares Deliverable
Section 3.09. The shares of stock of Buyer deliverable pursuant to this
agreement, when issued and delivered as provided in this agreement, will be
validly issued and outstanding shares of common stock of Buyer, fully paid and
non-assessable, and will be voting stock of the Buyer.
9
Approval of Board
Section 3.10. The Board of Directors of Buyer, acting at a special
meeting thereof called for the purpose and duly held on November____, 1999, has
duly approved the transactions contemplated hereby and has authorized the
execution and delivery of this agreement by Buyer, and the performance by Buyer.
The resolution giving such authorization and approval have not since been
altered, amended or revoked.
ARTICLE 4. CONDUCT OF BUSINESS OF
SELLER PENDING CLOSING
Preservation of and Access to Properties, Information,
and Documents
Section 4.01. From the date of this agreement until the closing date,
Seller will:
(a) Except for depreciation through ordinary wear and tear, maintain
and keep its businesses and properties in as good financial condition as at
present.
(b) Use its best efforts to perform all its obligations under
contracts relating to or affecting the businesses and/or its properties.
Submission to Shareholder
Section 4.02. Seller has secured approval of its outstanding shares,
for this agreement and the plan of liquidation and distribution contemplated by
Section 1.01 hereof.
Furnish Proxy and Listing Information
Section 4.03. Seller, and its officers and directors, will furnish to
Buyer such information as shall be needed for use in any proxy statement or
listing application which may be required or deemed desirable by Buyer in order
to consummate the transactions contemplated hereby.
Satisfy Conditions Precedent
Section 4.04. Seller will use its best efforts to cause the
satisfaction of all conditions precedent contained in this agreement.
10
ARTICLE 5. CONDUCT OF BUSINESS
OF BUYER PENDING CLOSING
Carry on Business as Usual
Section 5.01. Pending the consummation of the plan of reorganization,
Buyer will carry on its business in substantially the same manner as heretofore.
Satisfy Conditions Precedent
Section 5.02. Buyer will use its best efforts to cause the satisfaction
of all conditions precedent contained in this agreement.
Negative Covenants
Section 5.03. Except with the prior written consent of Seller, Buyer
will not declare or pay any dividend, or declare or make any other distribution
to its shareholders.
Submission to Shareholders
Section 5.04. Buyer shall submit to its outstanding shares of each
class for their approval, if necessary, this agreement and the principal terms
of the shares-for-shares exchange described in it. Buyer shall use its best
efforts to cause its outstanding shares of each class to approve this agreement
in the manner required by Nevada's Corporation Law.
ARTICLE 6. CONDITIONS PRECEDENT
TO OBLIGATIONS OF BUYER TO CLOSE
Section 6.01. The obligations of the Buyer hereunder are, at its
option, subject to the conditions that on or before the closing date:
Proceedings and Instruments Approved by Counsel for Buyer
(a) All actions, proceedings, instruments, and documents required to
carry out this agreement, or incidental thereto, and all other related
legal matters shall have been approved by counsel for the Buyer.
Opinion of Counsel for Seller
(b) Buyer shall have received an opinion of Xxxxxx X. Xxxxxxx, counsel
for Seller, dated the closing date, in form and substance satisfactory to
Buyer and its counsel, to the effect that:
11
(i) Seller is duly incorporated, validly existing, and in good
standing under the laws of its state of incorporation; and is
duly qualified to do business in each jurisdiction in which the
character and location of its properties make such qualification
necessary.
(ii) Seller has an authorized capitalization of fifteen hundred
(1,500) shares of common stock, of which one thousand (1,000)
shares are validly issued and outstanding, fully paid and
non-assessable.
(iii)Seller has complied with all laws, regulations, and orders
applicable to its business.
(iv) Seller is not in default under any order, writ, injunction, or
decree of any court or of any commission or other administrative
agency, nor under any agreement or obligation to which it is a
party or by which it is bound or December be subject.
(v) Except as set forth in the list of businesses and properties as
of October 31, 1999, Seller does not have any lease, contract, or
commitment, written or oral, which relates to any of the
properties, and it has duly complied with all provisions of such
lease, contract, or commitment set forth in the list and is not
in default with respect to any of them.
(vi) Except for matters disclosed in Schedule 4, such counsel does not
know or have reason to believe that there is any litigation,
proceeding, or investigation pending or threatened which might
result in any material adverse change in the properties,
business, or prospects or in the condition, financial or
otherwise, of Seller, or which questions the validity of this
agreement or of any action taken or to be taken by Seller or its
shareholders, including without limitation the liquidation and
dissolution proceedings of Seller, or by Buyer pursuant to or in
connection with the provisions of this agreement.
(vii)All corporate acts and other proceedings require to be taken by
or on the part of the Seller to authorize it to carry out this
agreement and to sell and transfer its properties as provided
herein, and to liquidate and dissolve, have been duly and
properly taken, including the approval and consent of
shareholders, and this agreement has been duly executed by the
Seller and is the valid and binding obligation of the Seller
enforceable in accordance with its terms.
(viii) No provision of the articles of incorporation or the bylaws of
Seller, or of any indenture, mortgage, or other agreement known
to such counsel, prevents Seller from transferring good title to
the properties in the manner contemplated by this agreement or
has or will result in a breach of the Seller's warranties
contained in Section 2.09.
12
(ix) Except as set forth in the list of properties as of October 31,
1999, good and marketable title to all of the properties has been
or will be duly vested in the Buyer, free of all claims, liens,
and encumbrances.
(x) The issuance of shares of its common stock here- under by Buyer
to Seller and the transfer by the latter to its shareholders of
the shares upon its liquidation and dissolution do not require
the registration of the shares under the Securities Act of 1933.
Compliance With Terms, Conditions, and Covenants
(c) All the terms, conditions, and covenants of this agreement to be
complied with by the Seller on or before the closing date shall have been
complied with, and Seller shall have delivered to Buyer a certificate
signed by its chairman and treasurer to such effect.
Truth of Representations and Warranties
(d) The representations and warranties by Seller herein shall be
correct, as of the closing date, with the same force as though such
representations and warranties had been made on the closing date, and
Seller shall have delivered to Buyer a certificate signed by its chairman
and treasurer to such effect and as to such other matters as the Buyer may
reasonably request.
Permit Granted
(e) The Nevada Commissioner of Corporations or other official as
appropriate shall have granted to Buyer an appropriate permit, if
necessary, authorizing it to issue shares of its common stock in accordance
with this agreement.
Approval by Outstanding Shares
(f) The principal terms of this agreement and the shares-for-shares
exchange covered by it shall have been approved as required by the General
Corporation Law of Nevada and Delaware by the outstanding shares of each
class of both Buyer and Seller.
Stock Exchange Listing
(g) The shares of common stock of Buyer to be delivered to Seller
pursuant to this agreement shall have been duly listed on the Over The
Counter Electronic Bulletin Board, subject to official notice of issuance
or distribution or other formal condition
Commitment as to Investment Purpose
(h) All holders or owners of shares of capital stock of Seller deemed
by Buyer to be controlling or dominant shareholders of Seller, shall have
delivered to Buyer, in form
13
satisfactory to Buyer, agreements to the effect that they are taking the
shares of common stock of Buyer to be delivered hereunder for purposes of
investment and that they will not sell or distribute any of the shares in a
manner which would result in a violation of the Securities Act of 1933 or
the regulations thereunder.
ARTICLE 7. CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLER TO CLOSE
Section 7.01. The obligations of the Seller hereunder are, at its
option, subject to the conditions that on or before the closing date:
Proceedings and Instruments Approved by Counsel for
Seller
(a) All actions, proceedings, instruments, and documents required to
carry out this agreement, or incidental thereto, and all other related
legal matters shall have been approved by Xxxxxx X. Xxxxxxx, counsel for
the Seller.
Opinion of Counsel for Buyer
(1) Seller shall have received an opinion of counsel for Buyer, dated the
closing date, in form and substance satisfactory to Seller and its
counsel, to the effect that:
(i) Buyer is duly incorporated, validly existing, and in good
standing under the laws of its state of incorporation.
(ii) Buyer has an authorized capitalization of fifty million
(50,000,000) shares of common stock of which three million
(4,300,000) shares are validly issued and outstanding, fully paid
and non-assessable.
(iii)Buyer is not in default under any order, writ, injunction, or
decree of any court or of any commission or other administrative
agency, nor under any agreement or obligation to which it is a
party or by which it is bound or may be subject.
(iv) Such counsel does not know or have reason to believe that there
is any litigation, proceeding, or investigation pending or
threatened which might result in any material adverse change in
the properties, business, or prospects or in the condition,
financial or otherwise, of Buyer, or which questions the validity
of this agreement or of any action taken or to be taken by Buyer,
or by Seller pursuant to or in connection with the provisions of
this agreement.
(v) All corporate acts and other proceedings require to be taken by
or on the part of the Buyer to authorize it to carry out this
agreement and to deliver the shares of common stock of Buyer
deliverable as provided herein have been duly and properly taken
and this agreement has been duly executed by the Buyer and is the
valid and binding obligation of the Buyer enforceable in
accordance with its terms.
14
(vi) An appropriate permit, if necessary, by Buyer in connection with
the issuance of its common stock hereunder.
(vii)No provision of the articles of incorporation or the bylaws of
the Buyer, or of any indenture, mortgage, or other agreement,
known to such counsel, prevents the Buyer from issuing and
delivering to the Seller good title to all of the shares of
common stock of Buyer being delivered pursuant to the terms of
this agreement.
(viii) The shares of common stock of Buyer, on delivery of the
certificates representing said shares in accordance with the
terms of this agreement, will be duly and validly issued, fully
paid and non-assessable, and voting stock of Buyer and Seller
will have good title to such shares issued to it.
(ix) The assumption by Buyer of the debts, liabilities, and
obligations of Seller, as provided in this agreement, has been
duly and validly authorized, and the agreement evidencing such
assumption has been duly executed and delivered by Buyer and is
valid and binding upon Buyer in accordance with its terms.
(x) The issuance of shares of its common stock hereunder by Buyer to
Seller and the transfer by the latter to its shareholders of the
shares upon its liquidation and dissolution do not require the
registration of the shares under the Securities Act of 1933.
(xi) The shares of common stock of Buyer to be issued hereunder have
been duly authorized for listing on the Over The Counter
Electronic Bulletin Board.
Compliance With Terms, Conditions, and Covenants
(c) All the terms, conditions, and covenants of this agreement to be
complied with by Buyer on or before the closing date shall have been
complied with, and Buyer shall have delivered to Seller a certificate
signed by its chief executive officer to such effect.
Truth of Representations and Warranties
(d) The representations and warranties made by Buyer herein shall be
correct, as of the closing date, with the same force as though such
representations and warranties had been made on the closing date, and Buyer
shall have delivered to Seller a certificate signed by its chief executive
officer to such effect and as to such other matters as the Seller may
reasonably request.
15
Favorable Tax Ruling
(e) Seller has not received a written ruling or rulings of the
Internal Revenue Service, to the effect that the sale of the assets and
business of Seller and the distribution to the shareholders of Seller of
the shares of common stock of Buyer in connection with the liquidation and
dissolution of Seller, all as contemplated herein, will not result in the
recognition of any taxable income or deductible loss by Seller or by its
shareholders.
No Substantial Adverse Change
(f) There shall have been no substantial adverse change in the
financial condition or operations of Buyer and no suspension of trading in
its stock on the Over The Counter Electronic Bulletin Board.
Approval of Shareholders
(g) All corporate proceedings requisite to the sale and transfer by
Seller and its Shareholders of its voting stock, and its liquidation and
dissolution, shall have been approved and consented to by the Shareholders
of Seller in the manner required by applicable law or other applicable
requirements.
Approval by Outstanding Shares
(h) The principal terms of this agreement have been approved, as
required by the General Corporation Law of Nevada and Delaware by the
outstanding shares of each class of both Buyer and Seller.
ARTICLE 8. CONSUMMATION OF
TRANSACTION
Consideration of Seller
Section 8.01. Except for cash, not exceeding ten thousand dollars
($10,000) in such amount as Seller shall deem necessary to pay all fees, costs,
and expenses incurred by it in carrying out this plan and agreement of
reorganization, Seller and Seller's shareholders will deliver to Buyer, on the
closing date, all of its voting shares or an affidavit that the certificate
representing the voting shares is lost. Except for minute books, stock books,
and corporate records which shall be delivered within a reasonable time after
its dissolution, Seller shall deliver to Buyer, on the closing date, possession
of all its properties so transferred to it. Seller shall use the retained cash
only to pay fees, costs, and expenses incurred by it in carrying out this plan
and agreement of reorganization and shall pay over to Buyer, at the expiration
of one hundred twenty (120) days after the closing date, any balance remaining.
Consideration of Buyer
Section 8.02. (a) Except for liabilities and obligations specified in
Subsection (b), upon receipt of the stock of Seller and Seller's Shareholders,
Buyer will assume, and will deliver to
16
Seller, the appropriate instruments evidencing assumption by Buyer of all of the
liabilities and obligations of Seller reflected or referred to in its list of
properties and thereafter incurred in the ordinary course of business to and
including the closing date, including all obligations under agreements,
contracts, and other arrangements to which it is a part.
(b) Buyer shall assume and be responsible for any and all liabilities
of the Seller.
(c) Buyer shall cause to be delivered to Seller at the closing date
Four Million Five Hundred Thousand (4,500,000) shares of Buyer's restricted
common stock.
(d) The directors of Buyer shall tender to Seller resignations
effective upon closing of this transaction and Buyer shall allow cooperate
with Seller in the election of a new Board of Directors.
Dissolution of Seller
Section 8.03. (a) Promptly after the closing date, Seller shall proceed
with due diligence to wind up its affairs, liquidate, and distribute its assets,
including the shares of common stock of Buyer received pursuant to the exchange,
and voluntarily dissolve.
(b) In connection with the winding up of its affairs, Seller shall
proceed promptly after the closing date to prepare and file all income tax
returns and reports required under applicable law, state or federal,
covering all periods prior to the closing date for which tax returns and
reports have not previously been filed and, if requested in writing by
Buyer, shall file a request for prompt assessment under Section 6501(d) of
the Internal Revenue Code of 1986 for all open years. Expenses
Section 8.04. Each party hereto shall pay its own expenses incident to
this agreement and the transactions contemplated hereby, including all fees of
its counsel, accountants, and employees whether or not such transactions shall
be consummated.
ARTICLE 9. INTERPRETATION AND
ENFORCEMENT
Indemnification
Section 9.01. (a) Each party hereto agrees to protect, defend,
indemnify, and hold harmless the other party, its successors and assigns,
against and in respect of all loss, dam- age, or expense occasioned by any
breach by such indemnifying party of any of its representations, warranties,
covenants, or agreements contained herein.
17
(b) Each party hereto will indemnify and hold harmless the other party
against and in respect of any claim for brokerage or other commission
relative to this agreement or to the transactions contemplated hereby,
based in any way on agreements, arrangements, or understandings claimed to
have been made by such party with any third party.
(c) Seller agrees to indemnify and hold harmless the Buyer from any
loss, damage, or expenses, including reasonable counsel fees, sustained or
incurred by Buyer by reason of any claim asserted against Buyer to pay or
discharge any liability or obligation of Seller not expressly assumed by
Buyer under the terms hereof.
Specific Performance
Section 9.02. Seller acknowledges that the voting common stock to be
transferred to Buyer pursuant to plan and agreement of reorganization are unique
and that Buyer will have no adequate remedy at law if Seller shall fail to
perform any of its obligations hereunder. In such event, Buyer shall have the
right, in addition to all other rights, and remedies, to specific performance of
this plan and agreement of reorganization.
Survival of Covenants, Representations, and Warranties
Section 9.03. All covenants, agreements, representations, and
warranties made hereunder and in any certificates delivered at the closing shall
be deemed to be material and to have been relied upon by Buyer and Seller,
notwithstanding any investigation made by Buyer and Seller or on their
respective behalf, and shall survive the closing.
Assignment
Section 9.04. Except with the written consent of the other party, the
rights and obligations under this agreement shall not be assignable by either
party. Nothing herein expressed or implied is intended to confer upon any
person, other than the parties hereto or their respective successors, assigns,
heirs, and legal representatives, any fights, remedies, or liabilities under or
by reason of this agreement.
Notices
Section 9.05. Any notice or other communication required or permitted
hereunder shall be deemed to be properly given when deposited in the United
States mails for transmittal by certified or registered mail, postage prepaid,
or when deposited with a public telegraph company for transmittal, charges
prepaid, if such communication is addressed:
(a) In the case of Seller, to: X. X. Xxxxxxxxx, at 0000-X Xxxxxxx XX,
Xxxxx 000, Xxxxxxxxxxx, XX 00000, or to such other person or address as
Seller may from time to time furnish to Buyer for the purpose.
(b) In the case of Buyer, to: Xxxx Xxxxxx, at 0000 Xxxxx Xxxxxx, Xxxxx
0000 , Xxx Xxxxx, XX 00000, or to such other person or address as Buyer may
from time to time furnish to Seller for the purpose.
18
Entire Agreement; Counterparts
Section 9.06. This instrument and the exhibits hereto contain the
entire agreement between the parties with respect to the transaction
contemplated hereby. It may be executed in any number of counterparts, each of
which shall be deemed an original, but such counterparts together constitute
only one and the same instrument. A facsimile signature shall constitute an
original signature.
Controlling Law
Section 9.07. The validity, interpretation, and performance of this
agreement shall be controlled by and construed under the laws of the State of
Nevada, the state in which each the Buyer hereto is incorporated.
Executed on November ____, 1999, at Las Vegas, Nevada and Albuquerque,
New Mexico.
SELLER
XXXXXXXXX RESOURCES, INC.
By:____________________________
R, X. Xxxxxxxxx
BUYER
FAR EAST VENTURES, INC.
By:____________________________
Xxxxxxx Xxxxxx
c:\wpdocs\churchil\reorg.n24
19
