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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"), dated as
of the 16th day of October, 2000, by and between Water Petroleum and
Environmental Technologies Company, a Nevada corporation ("WPET") and SkyGivers,
Inc., a Nevada corporation, ("SkyGivers") and the shareholders of SkyGivers
("Shareholders"), with reference to the following:
A. WPET is a Nevada corporation organized on April 24, 1997.
WPET has authorized capital stock of 75,000,000 shares of common stock,
$.0001 par value, of which 1,409,924 shares are issued and outstanding
and 25,000,000 shares of preferred stock, $.0001 par value, of which no
shares are issued and outstanding.
B. SkyGivers, Inc. is a privately held corporation organized
under the laws of the State of Nevada on October 5, 2000. SkyGivers has
authorized capital stock of 1,000 shares of common stock, $.01 par
value, of which 100 shares are issued and outstanding.
C. The respective Boards of Directors of WPET and SkyGivers
have deemed it advisable and in the best interests of WPET and
SkyGivers that SkyGivers be acquired by WPET, pursuant to the terms and
conditions set forth in this Agreement.
D. WPET and SkyGivers propose to enter into this Agreement
which provides among other things that all of the outstanding shares of
SkyGivers be acquired by WPET, in exchange for shares of WPET and such
additional items as more fully described in the Agreement.
E. The parties desire the transaction to qualify as a
tax-free reorganization under Section 368 (a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 100 common shares, which represents
all of the outstanding shares of SkyGivers shall be acquired by WPET in exchange
for 7,008,895 restricted common shares of WPET. The shares of WPET to be issued
in this transaction shall be issued as set forth in Exhibit A to this Agreement.
1.02 At the Closing, SkyGivers will cause it's shareholders to deliver
certificates for the outstanding shares of SkyGivers, duly endorsed so as to
make WPET the sole holder thereof, free and clear of all claims and encumbrances
and WPET shall deliver a transmittal letter directed to the transfer agent of
WPET directing the issuance of shares to the shareholders of SkyGivers as set
forth on Exhibit A of this Agreement.
1.03 Following the reorganization there will be a total of 12,324,549
shares, $.0001 par value, issued and outstanding in WPET.
1.04 Following the reorganization, SkyGivers will be a wholly owned
subsidiary of WPET.
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1.05 At the closing, Carol Fitzgerald shall be appointed a director
of WPET and Curtis Olsen and Allison Olsen shall resign as directors and
officers of WPET.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at Westerman Shapiro Draghi & Miller,
LLP, 600 Old Country Road, Suite 500, Garden City, New York 11530 on or before
November 10, 2000, (the "Closing Date") or at such other place or date and time
as may be agreed to in writing by the parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WPET
WPET hereby represents and warrants to SkyGivers as follows:
3.01 WPET shall deliver to SkyGivers, on or before Closing, each of the
following:
(a) Financial Statements. Audited financial statements of WPET
including, but not limited to, balance sheets and profit and loss
statements for the periods from inception on April 24, 1997 to April
30, 2000, prepared in accordance with generally accepted accounting
principles and which fairly present the financial condition of WPET at
the dates thereof. (Schedule A)
(b) Property. An accurate list and description of all
property, real or personal, owned by WPET of a value equal to or
greater than $10,000.00. (Schedule B.)
(c) Liens and Liabilities. A complete and accurate list of
all material liens, encumbrances, easements, security interests or
similar interests in or on any of the assets listed on Schedule A.
(Schedule C.) A complete and accurate list of all debts, liabilities
and obligations of WPET incurred or owing as of the date of this
Agreement. (Schedule C.1.)
(d) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether of real or
personal property) and each contract, promissory note, mortgage,
license, franchise, or other written agreement to which WPET is a party
which involves or can reasonably be expected to involve aggregate
future payments or receipts by WPET (whether by the terms of such
lease, contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or indemnity
against the failure to pay same) of $1,000.00 or more annually during
the twelve-month period ended December 31, 2000, or any consecutive
twelve-month period thereafter, except any of said instruments which
terminate or are cancelable without penalty during such twelve-month
period. (Schedule D.)
(e) Loan Agreements. Complete and accurate copies of all
loan agreements and other documents with respect to obligations of WPET
for the repayment of borrowed money. (Schedule E.)
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(f) Consents Required. A complete list of all agreements
wherein consent to the transaction herein contemplated is required to
avoid a default thereunder; or where notice of such transaction is
required at or subsequent to closing, or where consent to an
acquisition, consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule F.)
(g) Articles and Bylaws. Complete and accurate copies of the
Certificate and Articles of Incorporation and Bylaws of WPET together
with all amendments thereto to the date hereof. (Schedule G.)
(h) Shareholders. A complete list of all persons or entities
holding capital stock of WPET or any rights to subscribe for, acquire,
or receive shares of the capital stock of WPET (whether warrants,
calls, options, or conversion rights), including copies of all stock
option plans whether qualified or nonqualified, and other similar
agreements. (Schedule H.)
(i) Officers and Directors. A complete and current list of all
Officers and Directors of WPET. (Schedule I.)
(j) Salary Schedule. A complete and accurate list (in all
material respects) of the names and the current salary rate for each
present employee of WPET who received $10,000.00 or more in aggregate
compensation from WPET whether in salary, bonus or otherwise, during
the year 1999, or who is presently scheduled to receive from WPET a
salary in excess of $10,000.00 during the year ending December 2000,
including in each case the amount of compensation received or scheduled
to be received, and a schedule of the hourly rates of all other
employees listed according to departments. (Schedule J.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration
or other such proceedings or investigations (including without
limitations unfair labor practice matters, labor organization
activities, environmental matters and civil rights violations) pending
or, to the knowledge of WPET threatened, which may materially and
adversely affect WPET. (Schedule K.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for WPET for the last fiscal year. (Schedule L.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular
basis) made by WPET under ERISA, EEOC, FDA and all other governmental
agencies (federal, state or local) during the last fiscal year.
(Schedule M.)
(n) Banks. A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the name of
each bank in which WPET has an account or safe deposit box, and (2) the
names and addresses of all signatories. (Schedule N.)
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(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein WPET is qualified to do business and is in good standing.
(Schedule O.)
(p) Subsidiaries. A complete list of all subsidiaries of WPET.
(Schedule P.) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint
ventures, or similar entities in which WPET has an interest, direct or
indirect.
(q) Union Matters. An accurate list and description (in all
material respects) of all union contracts and collective bargaining
agreements of WPET, if any. (Schedule Q.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which WPET may have,
other than those listed in the schedule on Union Matters. (Schedule R.)
(s) Employee Benefit Plans. Complete and accurate copies of
all salary, stock options, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of WPET in effect on the date hereof or to become
effective after the date thereof, together with copies of any
determination letters issued by the Internal Revenue Service with
respect thereto. (Schedule S.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and a description of all material insurance policies
naming WPET as an insured or beneficiary or as a loss payable payee or
for which WPET has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed by WPET
regarding possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming WPET as
beneficiary covering the business activities of WPET. (Schedule T.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of WPET, including presently effective
contracts of WPET to be assigned to WPET, accounting for the principle
revenues of WPET, indicating the dollar amounts of gross income of each
such customer for the current period. (Schedule U.)
(v) Licenses and Permits. A complete list of all licenses,
permits and other authorizations of WPET. (Schedule V.)
3.02 Organization, Standing and Power. WPET is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
all requisite corporate power to own or lease its properties and carry on its
businesses as are now being conducted.
3.03 Qualification. WPET is duly qualified and is licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
its business operations. Such jurisdictions, which are the only jurisdictions in
which WPET is duly qualified and licensed as a foreign corporation, are shown in
Schedule O.
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3.04 Capitalization of WPET. The authorized capital stock of WPET consists of
75,000,000 shares of Common Stock, $.0001 par value, of which 1,409,924 shares
are currently issued and outstanding and 25,000,000 shares of Preferred Stock,
$.0001 par value, of which no shares are currently issued and outstanding. There
are no preemptive rights with respect to the WPET stock.
3.05 Authority. The execution and delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate actions, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of WPET. This
Agreement constitutes the valid and binding obligation of WPET enforceable
against it in accordance with its terms, subject to the principles of equity
applicable to the availability of the remedy of specific performance. This
Agreement has been duly executed by WPET and the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement shall not result in any breach of any terms or provisions of WPET's
Certificate and Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which WPET is a party or bound by.
3.06 Absence of Undisclosed Liabilities. WPET has no material liabilities of any
nature, whether fixed, absolute, contingent or accrued, which were not reflected
on the financial statements set forth in Schedule A or otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached hereto. As of the
Closing, WPET shall have no assets or liabilities of any nature, real, absolute
or contingent, other than those resulting from the acquisition of SkyGivers.
3.07 Absence of Changes. Since April 30, 2000 there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of WPET, except for changes resulting from completion of
those transactions described in Section 5.01.
3.08 Tax Matters. All taxes and other assessments and levies which WPET is
required by law to withhold or to collect have been duly withheld and collected,
and have been paid over to the proper government authorities or are held by WPET
in separate bank accounts for such payment or are represented by depository
receipts, and all such withholdings and collections and all other payments due
in connection therewith (including, without limitation, employment taxes, both
the employee's and employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such purpose. There are no
known deficiencies in income taxes for any periods and further, the
representations and warranties as to absence of undisclosed liabilities
contained in Section 3.06 includes any and all tax liabilities of whatsoever
kind or nature (including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by WPET income or business prior
to the Closing Date.
3.09 Options, Warrants, etc. Except as otherwise described in Schedule H, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which WPET or its shareholders are a party or by which WPET or its
shareholders are bound, or are a party, calling for the issuance of shares of
capital stock of WPET or any securities representing the right to purchase or
otherwise receive any such capital stock of WPET.
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3.10 Title to Assets. Except for liens set forth in Schedule C, WPET is the sole
unconditional owner of, with good and marketable title to, all assets listed in
the schedules as owned by it and all other property and assets are free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever.
3.11 Agreements in Force and Effect. Except as set forth in Schedules D and E,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which WPET is a party
are valid and in full force and effect on the date hereof, and WPET has not
breached any material provision of, and is not in default in any material
respect under the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which breach
or default would have a material adverse effect upon the business, operations or
financial condition of WPET.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either WPET or the shareholders
thereof, threatened, in which, individually or in the aggregate, an adverse
determination would materially and adversely affect the assets, properties,
business or income of WPET. WPET has substantially complied with, and is not in
default in any material respect under, any laws, ordinances, requirements,
regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of WPET and except as set forth
in Schedule K, WPET is not in violation of or in default with respect to any
applicable law or any applicable rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or instrumentality,
or delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of WPET.
3.14 Brokers and Finders. WPET shall be solely responsible for payment to any
broker or finder retained by WPET for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated herein.
3.15 Accuracy of Information. No representation or warranty by WPET contained in
this Agreement and no statement contained in any certificate or other instrument
delivered or to be delivered to SkyGivers pursuant hereto or in connection with
the transactions contemplated hereby (including without limitation all Schedules
and exhibits hereto) contains or will contain any untrue statement of material
fact or omits or will omit to state any material fact necessary in order to make
the statements contained herein or therein not misleading.
3.16 Subsidiaries. Except as listed in Schedule P, WPET does not have any other
subsidiaries or own capital stock representing ten percent (10%) or more of the
issued and outstanding stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or approval of, or
registration, qualification or filing with, any governmental authority or other
person is required to be obtained or accomplished by WPET or any shareholder
thereof in connection with the consummation of the transactions contemplated
hereby.
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3.18 Improper Payments. Neither WPET, nor any person acting on behalf of WPET
has made any payment or otherwise transmitted anything of value, directly or
indirectly, to (a) any official or any government or agency or political
subdivision thereof for the purpose of influencing any decision affecting the
business of WPET (b) any customer, supplier or competitor of WPET or employee of
such customer, supplier or competitor, for the purpose of obtaining, retaining
or directing business for WPET or (c) any political party or any candidate for
elective political office nor has any fund or other asset of WPET been
maintained that was not fully and accurately recorded on the books of account of
WPET.
3.19 Copies of Documents. WPET has made available for inspection and copying by
SkyGivers and its duly authorized representatives, and will continue to do so at
all times, true and correct copies of all documents which it has filed with the
Securities and Exchange Commission and all other governmental agencies which are
material to the terms and conditions contained in this Agreement. Furthermore,
all filings by WPET with the Securities and Exchange Commission, and all other
governmental agencies, including but not limited to the Internal Revenue
Service, have contained information which is true and correct, to the best
knowledge of the Board of Directors of WPET, in all material respects and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not misleading or
which could have any material adverse effect upon the financial condition or
operations of WPET or adversely effect the objectives of this Agreement with
respect to SkyGivers including, but not limited to, the issuance and subsequent
trading of the shares of common stock of WPET to be received hereby, subject to
compliance by the shareholders of SkyGivers with applicable law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
SKYGIVERS
SkyGivers hereby represents and warrants to WPET as follows:
4.01 SkyGivers shall deliver to WPET, on or before Closing, the following:
(a) Financial Statements. Unaudited financial statements of
SkyGivers including, but not limited to, balance sheets and profit and
loss statements from inception to the current period, prepared in
accordance with generally accepted accounting principles and which
fairly present the financial condition of SkyGivers at the dates
thereof. (Schedule AA)
(b) Property. An accurate list and description of all
property, real or personal owned by SkyGivers of a value equal to or
greater than $1,000.00. (Schedule BB)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule AA.
(Schedule CC.) A complete and accurate list of all debts, liabilities
and obligations of SkyGivers incurred or owing as of the date of this
Agreement. (Schedule CC.1.)
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(d) Leases and Contracts. A complete and accurate list
describing all material terms of material leases (whether of real or
personal property) and each contract, promissory note, mortgage,
license, franchise, or other written agreement to which SkyGivers is a
party which involves or can reasonably be expected to involve aggregate
future payments or receipts by SkyGivers (whether by the terms of such
lease, contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or indemnity
against the failure to pay same) of $1,000.00 or more annually during
the twelve-month period ended December 31, 1999 or any consecutive
twelve-month period thereafter, except any of said instruments which
terminate or are cancelable without penalty during such twelve-month
period. (Schedule DD.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of SkyGivers
for the repayment of borrowed money. (Schedule EE.)
(f) Consents Required. A complete list of all agreements
wherein consent to the transaction herein contemplated is required to
avoid a default thereunder; or where notice of such transaction is
required at or subsequent to closing, or where consent to an
acquisition, consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule FF.)
(g) Articles and Bylaws. Complete and accurate copies of the
Articles of Incorporation and Bylaws of SkyGivers, together with all
amendments thereto to the date hereof. (Schedule GG.)
(h) Shareholders. A complete list of all persons or entities
holding capital stock of SkyGivers or any rights to subscribe for,
acquire, or receive shares of the capital stock of SkyGivers (whether
warrants, calls, options, or conversion rights), including copies of
all stock option plans whether qualified or nonqualified, and other
similar agreements. (Schedule HH.)
(i) Officers and Directors. A complete and current list of all
officers and Directors of SkyGivers. (Schedule II.)
(j) Salary Schedule. A complete and accurate list (in all
material respects) of the names and the current salary rate or each
present employee of SkyGivers who received $1,000 or more in aggregate
compensation from SkyGivers whether in salary, bonus or otherwise,
during the year 1999, or who is presently scheduled to receive from
SkyGivers a salary in excess of $1,000.00 during the year ending
December 31, 2000, including in each case the amount of compensation
received or scheduled to be received, and a schedule of the hourly
rates of all other employees listed according to departments.
(Schedule JJ.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration
or other such proceedings or investigations (including without
limitations unfair labor practice matters, labor organization
activities, environmental matters and civil rights violations) pending
or, to the
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knowledge of SkyGivers threatened, which may materially and adversely
affect SkyGivers. (Schedule KK.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for SkyGivers, if any. (Schedule LL.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular
basis) made by SkyGivers under ERISA, EEOC, FDA and all other
governmental agencies (federal, state or local). (Schedule MM.)
(n) A true and complete list (in all material respects), as
of the date of this Agreement, showing (1) the name of each bank in
which SkyGivers has an account or safe deposit box, and (2) the names
and addresses of all signatories. (Schedule NN.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein SkyGivers is qualified to do business and is in good standing.
(Schedule OO.)
(p) Subsidiaries. A complete list of all subsidiaries of
SkyGivers. (Schedule PP.) The term "Subsidiary" or "Subsidiaries" shall
include corporations, unincorporated associations, partnerships, joint
ventures, or similar entities in which SkyGivers has an interest,
direct or indirect.
(q) Union Matters. An accurate list and description (in all
material respects of union contracts and collective bargaining
agreements of SkyGivers, if any. (Schedule QQ.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which SkyGivers may have,
other than those listed in the schedule on Union Matters.
(Schedule RR.)
(s) Employee Benefit Plans. Complete and accurate copies of
all salary, stock option, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of SkyGivers in effect on the date hereof or to become
effective after the date thereof, together with copies of any
determination letters issued by the Internal Revenue Service with
respect thereto. (Schedule SS.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and description of all material insurance policies
naming SkyGivers as an insured or beneficiary or as a loss payable
payee or for which SkyGivers has paid all or part of the premium in
force on the date hereof, specifying any notice or other information
possessed by SkyGivers regarding possible claims thereunder,
cancellation thereof or premium increases thereon, including any
policies now in effect naming SkyGivers as beneficiary covering the
business activities of SkyGivers. (Schedule TT.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of SkyGivers, including all presently
effective contracts of SkyGivers to be
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assigned to SkyGivers, accounting for the principle revenues of
SkyGivers, indicating the dollar amounts of gross revenues of each
such customer for the current period. (Schedule UU.)
(v) Licenses and Permits. A complete list of all licenses,
permits and other authorizations of SkyGivers. (Schedule VV.)
4.02 Organization, Standing and Power. SkyGivers is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, under the name of SkyGivers, Inc., with all requisite corporate power to
own or lease its properties and carry on its business as is now being conducted.
4.03 Qualification. SkyGivers is duly qualified and licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
business operations. Such jurisdictions, which are the only jurisdictions in
which SkyGivers is duly qualified and licensed as a foreign corporation, is
shown in Schedule OO.
4.04 Capitalization of SkyGivers. The authorized capital stock of SkyGivers
consists of 1,000 shares of Common Stock, $.01 par value, of which the only
shares issued and outstanding are 100 shares issued to the shareholders listed
on Schedule HH, which shares were duly authorized, validly issued and fully paid
and nonassessable. There are no preemptive rights with respect to the SkyGivers
stock.
4.05 Authority. The execution and delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate action, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of SkyGivers. This
Agreement constitutes the valid and binding obligation of SkyGivers,
enforceable against it in accordance with its terms, subject to the principles
of equity applicable to the availability of the remedy of specific performance.
This Agreement has been duly executed by SkyGivers and the execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement shall not result in any breach of any terms or provisions of
SkyGivers 's Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which SkyGivers is a party or bound.
4.06 Absence of Undisclosed Liabilities. SkyGivers has no material liabilities
of any nature, whether fixed, absolute, contingent or accrued, which were not
reflected on the financial statements set forth in Schedule AA or otherwise
disclosed in this Agreement or any of the Schedules or Exhibits attached hereto.
4.07 Absence of Changes. Since its inception, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of SkyGivers, except for changes resulting from completion
of those transactions described in Section 5.02.
4.08 Tax Matters. All taxes and other assessments and levies which SkyGivers is
required by law to withhold or to collect have been duly withheld and collected,
and have been paid over to the proper government authorities or are held by
SkyGivers in separate bank accounts for such
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payment or are represented by depository receipts, and all such withholdings and
collections and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and employer's share)
have been paid over to the government or placed in a separate and segregated
bank account for such purpose. There are no known deficiencies in income taxes
for any periods and further, the representations and warranties as to absence of
undisclosed liabilities contained in Section 4.06 includes any and all tax
liabilities of whatsoever kind or nature (including, without limitation, all
federal, state, local and foreign income, profit, franchise, sales, use and
property taxes) due or to become due, incurred in respect of or measured by
SkyGivers income or business prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in Schedule HH, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which SkyGivers or its shareholders are a party or by which
SkyGivers or its shareholders are bound, or are a party, calling for the
issuance of shares of capital stock of SkyGivers or any securities representing
the right to purchase or otherwise receive any such capital stock of SkyGivers.
4.10 Title to Assets. Except for liens set forth in Schedule CC, SkyGivers is
the sole and unconditional owner of, with good and marketable title to, all the
assets and patents listed in the schedules as owned by them and all other
property and assets are free and clear of all mortgages, liens, pledges, charges
or encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in Schedules DD and EE,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which SkyGivers is a
party are valid and in full force and effect on the date hereof, and SkyGivers
has not breached any material provision of, and is not in default in any
material respect under the terms of, any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material adverse effect upon the
business, operations or financial condition of SkyGivers.
4.12 Legal Proceedings, Etc. Except as set forth in Schedule KK, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of SkyGivers, threatened, in which,
individually or in the aggregate, an adverse determination would materially and
adversely affect the assets, properties, business or income of SkyGivers.
SkyGivers has substantially complied with, and is not in default in any material
respect under, any laws, ordinances, requirements, regulations or orders
applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of SkyGivers and except as set
forth in Schedule KK, SkyGivers is not in violation of or in default with
respect to any applicable law or any applicable rule, regulation, order, writ or
decree of any court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report required to be filed
with any governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of SkyGivers.
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4.14 Broker and Finders. SkyGivers shall be solely responsible for payment to
any broker or finder retained by SkyGivers for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by SkyGivers
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered to WPET pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
4.16 Subsidiaries. Except as listed in Schedule PP, SkyGivers does not have any
other subsidiaries or own capital stock representing ten percent (10%) or more
of the issued and outstanding stock of any other corporation.
4.17 Consents. Except as listed in Schedule FF, no consent or approval of, or
registration, qualification or filing with, any other governmental authority or
other person is required to be obtained or accomplished by SkyGivers or any
shareholder thereof, in connection with the consummation of the transactions
contemplated hereby.
4.18 Improper Payments. No person acting on behalf of SkyGivers has made any
payment or otherwise transmitted anything of value, directly or indirectly, to
(a) any official or any government or agency or political subdivision thereof
for the purpose of influencing any decision affecting the business of SkyGivers,
or (b) any political party or any candidate for elective political office, nor
has any fund or other asset of SkyGivers been maintained that was not fully and
accurately recorded on the books of account of SkyGivers.
4.19 Copies of Documents. SkyGivers has made available for inspection and
copying by WPET and its duly authorized representatives, and will continue to do
so at all times, true and correct copies of all documents which it has filed
with any governmental agencies which are material to the terms and conditions
contained in this Agreement. Furthermore, all filings by SkyGivers with
governmental agencies, including but not limited to the Internal Revenue
Service, have contained information which is true and correct in all material
respects and did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein not
misleading or which could have any material adverse effect upon the financial
condition or operations of SkyGivers or adversely affect the objectives of this
Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of SkyGivers represents
and warrants to WPET that the shares of WPET being acquired pursuant to this
Agreement are being acquired for his own account and for investment and not with
a view to the public resale or distribution of such shares and further
acknowledges that the shares being issued have not been registered under the
Securities Act and are "restricted securities" as that term is defined in
Rule 144 promulgated under the Securities Act and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available.
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ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of WPET. During the period from the date hereof to
the date of Closing, WPET shall:
(a) Conduct its operations in the ordinary course of business,
including but not limited to, paying all obligations as they mature,
complying with all applicable tax laws, filing all tax returns required
to be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner that
fairly and correctly reflects its income, expenses, assets and
liabilities.
WPET shall not during such period, except in the ordinary course of
business, without the prior written consent of SkyGivers:
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of its properties or
assets;
(b) Except as set forth in paragraph 5.01(c) above, declare
or pay any dividends on shares of its capital stock or make any other
distribution of assets to the holders thereof;
(c) Except as set forth in paragraph 5.01(d) above, issue,
reissue or sell, or issue options or rights to subscribe to, or enter
into any contract or commitment to issue, reissue or sell, any shares
of its capital stock or acquire or agree to acquire any shares of its
capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all of
its assets or change in any manner the rights of its capital stock or
other securities;
(e) Except as contemplated or required by this Agreement, pay
or incur any obligation or liability, direct or contingent, of more
than $10,000;
(f) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for obligations of
any other party, or make loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees; except in
accordance with existing employment contracts;
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(i) Enter into any agreement or make any commitment to any
labor union or organization;
(j) Make any capital expenditures.
5.02 Conduct and Transactions of SkyGivers. During the period from the date
hereof to the date of Closing, SkyGivers shall:
(a) Obtain an investment letter from each shareholder of
SkyGivers in a form substantially like that attached hereto as
Exhibit B.
(b) Conduct the operations of SkyGivers in the ordinary course
of business.
SkyGivers shall not during such period, except in the ordinary course
of business, without the prior written consent of WPET:
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of the properties or assets
of SkyGivers;
(b) Declare or pay any dividends on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(c) Issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to issue,
reissue or sell, any shares of its capital stock or acquire or agree to
acquire any shares of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all of
its assets or change in any manner the rights of its capital stock or
other securities;
(e) Except as otherwise contemplated and required by this
Agreement, pay or incur any obligation or liability, direct or
contingent, of more than $1,000;
(f) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for obligations of
any other party, or make loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees; except in
accordance with existing employment contracts;
(i) Enter into any agreement or make any commitment to any
labor union or organization;
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(j) Make any material capital expenditures.
(k) Allow any of the foregoing actions to be taken by any
subsidiary of SkyGivers.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the date of Closing of
the acquisition, WPET and SkyGivers agree to use their best efforts to give the
other party, including its representatives and agents, full access to the
premises, books and records of each of the entities, and to furnish the other
with such financial and operating data and other information including, but not
limited to, copies of all legal documents and instruments referred to on any
schedule or exhibit hereto, with respect to the business and properties of WPET
or SkyGivers, as the case may be, as the other shall from time to time request;
provided, however, if there are any such investigations: (1) they shall be
conducted in such manner as not to unreasonably interfere with the operation of
the business of the other parties and (2) such right of inspection shall not
affect in any way whatsoever any of the representations or warranties given by
the respective parties hereunder. In the event of termination of this Agreement,
WPET and SkyGivers will each return to the other all documents, work papers and
other materials obtained from the other party in connection with the
transactions contemplated hereby, and will take such other steps necessary to
protect the confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of SkyGivers. The obligation of SkyGivers to
perform this Agreement is subject to the satisfaction of the following
conditions on or before the Closing unless waived in writing by SkyGivers.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by WPET which in the
opinion of SkyGivers would materially adversely affect the proposed
transaction and intent of the parties as set forth in this Agreement.
The representations and warranties of WPET set forth in Article 3
hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing as though made on and as
of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. WPET shall have in all
material respects performed all agreements required to be performed by
it under this Agreement and shall have performed in all material
respects any actions contemplated by this Agreement prior to or on the
Closing and WPET shall have complied in all material respects with the
course of conduct required by this Agreement.
(c) Corporate Action. WPET shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to counsel for
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SkyGivers that WPET has submitted with this Agreement and any other
documents required hereby to such parties for approval as provided by
applicable law.
(d) Consents. Execution of this Agreement by the shareholders
of SkyGivers and any consents necessary for or approval of any party
listed on any Schedule delivered by WPET whose consent or approval is
required pursuant thereto shall have been obtained.
(e) Financial Statements. SkyGivers shall have been furnished
with audited financial statements of WPET including, but not limited
to, balance sheets and profit and loss statements from inception to
April 30, 2000, prepared in accordance with generally accepted
accounting principles and which fairly present the financial condition
of WPET at the dates thereof.
(f) Statutory Requirements. All statutory requirements for the
valid consummation by WPET of the transactions contemplated by this
Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by WPET for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(h) Changes in Financial Condition of WPET. There shall not
have occurred any material adverse change in the financial condition or
in the operations of the business of WPET, except expenditures in
furtherance of this Agreement.
(i) Absence of Pending Litigation. WPET is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement
or the consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. SkyGivers shall have
received in form and substance satisfactory to counsel for SkyGivers a
letter instructing and authorizing the Registrar and Transfer Agent for
the shares of common stock of WPET to issue stock certificates
representing ownership of WPET common stock to SkyGivers shareholders
in accordance with the terms of this Agreement and a letter from said
Registrar and Transfer Agent acknowledging receipt of the letter of
instruction and stating to the effect that the Registrar and Transfer
Agent holds adequate supplies of stock certificates necessary to comply
with the letter of instruction and the terms and conditions of this
Agreement.
7.02 Conditions to Obligations of WPET. The obligation of WPET to perform this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing unless waived in writing by WPET.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by SkyGivers, which in
the opinion of WPET, would materially
16
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adversely affect the proposed transaction and intent of the parties as
set forth in this Agreement. The representations and warranties of
SkyGivers set forth in Article 4 hereof shall be true and correct in
all material respects as of the date of this Agreement and as of the
Closing as though made on and as of the Closing, except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. SkyGivers shall have in all
material respects performed all agreements required to be performed by
it under this Agreement and shall have performed in all material
respects any actions contemplated by this Agreement prior to or on the
Closing and SkyGivers shall have complied in all respects with the
course of conduct required by this Agreement.
(c) Corporate Action. SkyGivers shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to Counsel for WPET that SkyGivers has submitted
with this Agreement and any other documents required hereby to such
parties for approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval of any
party listed on any Schedule delivered by SkyGivers, whose consent or
approval is required pursuant thereto, shall have been obtained.
(e) Financial Statements. WPET shall have been furnished with
unaudited financial statements of SkyGivers including, but not limited
to, balance sheets and profit and loss statements from inception to the
current period, prepared in accordance with generally accepted
accounting principles and which fairly present the financial condition
of SkyGivers at the dates thereof.
(f) Statutory Requirements. All statutory requirements for the
valid consummation by SkyGivers of the transactions contemplated by
this Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by SkyGivers for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(h) Employment Agreements. Existing SkyGivers employment
agreements will have been delivered to counsel for WPET.
(i) Changes in Financial Condition of SkyGivers. There shall
not have occurred any material adverse change in the financial
condition or in the operations of the business of SkyGivers, except
expenditures in furtherance of this Agreement.
(j) Absence of Pending Litigation. SkyGivers is not engaged in
or threatened with any suit, action, or legal, administrative or other
proceedings or governmental
17
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investigations pertaining to this Agreement or the consummation of the
transactions contemplated hereunder.
(k) Shareholder Approval. The SkyGivers shareholders shall
have approved the Agreement and Plan of Reorganization.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and agree that they
shall, from time to time, execute and deliver or cause to be executed and
delivered all such further instruments of conveyance, transfer, assignments,
receipts and other instruments, and shall take or cause to be taken such further
or other actions as the other party or parties to this Agreement may reasonably
deem necessary in order to carry out the purposes and intent of this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate, schedule, exhibit or
other written instrument delivered by WPET or SkyGivers pursuant hereto, or
otherwise adopted by WPET, by its written approval, or by SkyGivers by its
written approval, or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by WPET or SkyGivers as the case
may be. All representations, warranties and agreements made by either party
shall survive for the period of the applicable statute of limitations and until
the discovery of any claim, loss, liability or other matter based on fraud, if
longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary notwithstanding, this
Agreement and any agreement executed as required hereunder and the acquisition
contemplated hereby may be terminated at any time before the Closing as follows:
(a) By mutual written consent of the Boards of Directors of
WPET and SkyGivers.
(b) By the Board of Directors of WPET if any of the
conditions set forth in Section 7.02 shall not have been satisfied by
the Closing Date.
(c) By the Board of Directors of SkyGivers if any of the
conditions set forth in Section 7.01 shall not have been satisfied by
the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions; Payment of Expenses.
In the event this Agreement and the acquisition are terminated and abandoned
pursuant to this Article 10 hereof, this Agreement shall become void and of no
force and effect and there shall be no liability on the part of any of the
parties hereto, or their respective directors, officers, shareholders or
18
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controlling persons to each other. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and any
of the documents evidencing the transactions contemplated hereby, including
fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.01 Exchange of Shares. At the Closing, WPET shall issue a letter to the
transfer agent of WPET with a copy of the resolution of the Board of Directors
of WPET authorizing and directing the issuance of WPET shares as set forth on
Exhibit A to this Agreement.
11.02 Restrictions on Shares Issued to SkyGivers. Due to the fact that
SkyGivers will receive shares of WPET common stock in connection with the
acquisition which have not been registered under the 1933 Act by virtue of the
exemption provided in Section 4(2) of such Act, those shares of WPET will
contain the following legend:
The shares represented by this certificate
have not been registered under the Securities Act of
1933. The shares have been acquired for investment
and may not be sold or offered for sale in the
absence of an effective Registration Statement for
the shares under the Securities Act of 1933 or an
opinion of counsel to the Corporation that such
registration is not required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced in accordance
with the laws of the State of Nevada excluding the conflicts of laws.
12.02 Notices. All notices necessary or appropriate under this Agreement shall
be effective when personally delivered or deposited in the United States mail,
postage prepaid, certified or registered, return receipt requested, and
addressed to the parties last known address which addresses are currently as
follows:
If to "WPET"
Water Petroleum & Environmental Technologies Company
5228 S. 900 E. Suite 202
Salt Lake City, UT 84117
Attn: Curtis Olsen, President
With copies to:
Cletha A. Walstrand, Esq.
Lehman Walstrand & Associates, LLC
620 Judge Building
8 East Broadway
Salt Lake City, UT 84111-2204
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If to "SkyGivers"
SkyGivers, Inc.
165 Main Street
Penn Yan, NY 14527
Attn: Carol Fitzgerald, President
With copies to:
Alan C. Ederer, Esq.
Westerman Shapiro Draghi & Miller, LLP
600 Old Country Road, Suite 500
Garden City, NY 11530
12.03 Amendment and Waiver. The parties hereby may, by mutual agreement in
writing signed by each party, amend this Agreement in any respect. Any term or
provision of this Agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof, such waiver right shall include, but
not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies in representations by the other
contained in this Agreement or in any document delivered pursuant
hereto;
(c) Waive compliance by the other with any of the covenants
contained in this Agreement, and performance of any obligations by the
other; and
(d) Waive the fulfillment of any condition that is precedent
to the performance by the party so waiving of any of its obligations
under this Agreement. Any writing on the part of a party relating to
such amendment, extension or waiver as provided in this Section 12.03
shall be valid if authorized or ratified by the Board of Directors of
such party.
12.04 Remedies not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies by WPET or
SkyGivers shall not constitute a waiver of the right to pursue other available
remedies.
12.05 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.06 Benefit. This Agreement shall be binding upon, and inure to the benefit
of, the respective successors and assigns of WPET and SkyGivers and its
shareholders.
12.07 Entire Agreement. This Agreement and the Schedules and Exhibits attached
hereto, represent the entire agreement of the undersigned regarding the subject
matter hereof, and supersedes all prior written or oral understandings or
agreements between the parties.
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12.08 Each Party to Bear its Own Expense. WPET and SkyGivers shall each bear
their own respective expenses incurred in connection with the negotiation,
execution, closing, and performance of this Agreement, including counsel fees
and accountant fees.
12.09 Captions and Section Headings. Captions and section headings used herein
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
Executed as of the date first written above.
Water Petroleum & Environmental SkyGivers, Inc.
Technologies Company a Nevada corporation
a Nevada corporation
By: By:
--------------------------- --------------------------------
Curtis Olsen, President Carol Fitzgerald, President
The undersigned hereby approves the Agreement and Plan of
Reorganization with Water Petroleum & Environmental Technologies Company, a
Nevada corporation. The undersigned hereby represents and warrants that the
undersigned has read the Agreement and Plan of Reorganization with Water
Petroleum & Environmental Technologies Company and understands its terms and
conditions.
Shareholders of SkyGivers, Inc., a Nevada corporation
---------------------------------------
Carol Fitzgerald
21
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EXHIBIT A
<TABLE>
<CAPTION>
NAME OF NUMBER OF
SHAREHOLDER SHARES
----------- ---------
<S> <C>
Carol Fitzgerald 7,008,895
</TABLE>
22
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
ACQUIRER: Carol Fitzgerald
ISSUER: Water Petroleum & Environmental Technologies Company
SECURITY: Common Stock, par value $.0001
QUANTITY: 7,008,895 Shares
In connection with the acquisition of the above-listed Securities of
the Company, I, the purchaser represent to the Company the following:
(1) INVESTMENT. I am aware of the Company's business affairs and
financial condition. I am acquiring the Securities for investment for my own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933 (as
Amended). These securities have not been registered under the Securities Act by
reason of a specific exemption therefrom, which exemption depends on, among
other things, the bona fide nature of the investment intent as expressed herein.
In this connection I understand that, in view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
my representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for the period of one year or any other fixed period in the
future.
(2) RESTRICTIONS ON TRANSFER UNDER SECURITIES ACT. I further
acknowledge and understand that the Securities must be held indefinitely unless
they are subsequently registered under the Securities Act or unless an exemption
from such registration is available. Moreover, I understand that the Company is
under no obligation to register the Securities. In addition, I understand that
the certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or unless
the Company receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required.
(3) SALES UNDER RULE 144. I am aware of the adoption of Rule 144 by the
SEC promulgated under the Securities Act, which in substance permits limited
public resale of securities acquired in a non- public offering subject to the
satisfaction of certain conditions, including: (i) the availability of certain
current public information about the Company, (ii) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a " market maker," and (iv) the amount of securities sold during any
three-month period not exceeding specified limitations (generally 1% of the
total shares outstanding).
(4) LIMITATIONS ON RULE 144. I further acknowledge and understand that
the Company is not now, and at any time I wish to sell the Securities may not
be, satisfying the public information requirement of Rule 144, and, in such
case, I would be precluded from selling the Securities under Rule 144 even if
the minimum holding period had been satisfied.
(5) SALES NOT UNDER RULE 144. I further acknowledge that, if all the
requirements of Rule 144 are not met, then Regulation A, or some other
registration exemption will be required; and that,
23
<PAGE>
although Rule 144 is not exclusive, the staff of the Commission has expressed
its opinion (i) that persons proposing to sell private placement securities
other than in a registered offering or exemption from registration is available
for such offers or sales, and (ii) that such persons and the brokers who
participate in the transactions do so their own risk.
(6) STOP TRANSFER INSTRUCTIONS. I further understand that stop transfer
instructions will be in effect with respect to the transfer of the Securities
consistent with the above.
(7) ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition, I represent
and warrant:
(i) That I have had the opportunity to ask questions of, and
receive answers from, the Company ( or any person acting on
its behalf) concerning the Company and my proposed acquisition
of the Securities;
(ii) That I have concluded that I have sufficient information
upon which to base my decision to acquire the Securities;
(iii) That I have made my own determination of the value of
the Securities and have not relied upon any statements,
representations or warranties of the Company regarding the
value of the Securities or the business prospects of the
Company;
(iv) That I understand that in acquiring the Securities, I am
making a highly speculative investment with the knowledge that
the Company is in the initial stages of development;
(v) That I am capable of bearing the economic risk and burdens
of the investment, the possibility of complete loss of all of
the investment, and the possible inability to readily
liquidate the investment due to the lack of public market; and
(vi) That I understand that, in selling and transferring the
Securities, the Company had relied upon an exemption from the
registration requirements of the Securities Act and that, in
an attempt to effect compliance with all the conditions of
such exemption, the Company is relying in good faith upon all
of my foregoing representations and warranties.
SIGNATURE OF ACQUIRER Date:
-------------------
--------------------------------------
Carol Fitzgerald
24
