<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 10, 1999
DISCOVERY INVESTMENTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 000-26175 88-0409151
--------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
----------------------------------------
(Address of principal executive offices)
(702) 248-1047
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
------------------------------
(Former Address of Registrant)
<PAGE> 2
Item 5. Other Events.
(a) On December 10, 1999, the Registrant, subject to the closing
of the Plan and Agreement of Reorganization referred to in (b) below, issued a
series of 3-Year 10 Percent Convertible Debentures in the aggregate amount of
$1,500,000, dated as of November 1, 1999, the terms and conditions are contained
in the debenture, see Item 7(a) though (f) inclusive, and are summarized as
follows:
(1) All debentures of this issue rank equally and ratably
without priority over one another.
(2) Provided that the Registrant becomes obligated, the
holder or holders of this debenture may at any time prior to the
maturity hereof (except that, if the Registrant has called the
debenture for redemption, the right to convert shall terminate at
the close of business on the second business day prior to the day
fixed as the date for such redemption), convert the principal
amount hereof into the Registrant's common stock at the
conversion ratio of $5.00 of debenture principal for one share of
common stock. To convert the debenture, the holder or holders
hereof must surrender the same at the office of the Registrant,
together with a written instrument of transfer in a form
satisfactory to the Registrant, properly completed and executed
and with a written notice of conversion.
(3) If the Registrant at any time pays to the holders of
its common stock a dividend in common stock, the number of shares
of common stock issuable upon the conversion of the debenture
shall be proportionally increased, effective at the close of
business on the record date for determination of the holders of
the common stock entitled to the dividend.
(4) If the Registrant at any time subdivides or combines
in a larger or smaller number of shares its outstanding shares of
common stock, then the number of shares of common stock issuable
upon the conversion of the debenture shall be proportionally
increased in the case of a subdivision and decrease in the case
of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes
effective.
(5) If the Registrant is recapitalized, consolidated with
or merged into any other corporation, or sells or conveys to any
other corporation all or substantially all of its property as an
entity, provision shall be made as part of the terms of the
recapitalization, consolidation, merger, sale, or
<PAGE> 3
conveyance so that the holder or holders of the debenture may
receive, in lieu of the common stock otherwise issuable to them
upon conversion hereof, at the same conversion ratio, the same
kind and amount of securities or assets as may be distributable
upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
(6) In lieu of issuing any fraction of a share upon the
conversion of the debenture, the Registrant shall pay to the
holder hereof for any fraction of a share otherwise issuable upon
the conversion cash equal to the same fraction of the then
current per share market price of the common stock.
(7) In the event Registrant fails to make any payment of
principal and interest, said failure to pay shall constitute a
default under the terms of the debenture and, subject to the
terms and conditions contained in the debenture, the entire
unpaid principal and interest shall be due and payable. No
debenture holder may institute any suit or proceeding for the
enforcement of the payment of principal or interest unless the
holders of more than 25 percent in amount of all outstanding
debentures of the issue join in the suit or proceeding. In the
event the Registrant and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before
December 31, 1999, an individual debenture holder may institute
any suit or proceeding in the event of default.
(8) Registrant and LLO-Gas, Inc. may at any time prepay in
whole or in part, the principal amount, plus accrued interest to
the date of prepayment, of all outstanding debentures of this
issue, upon 30 days' written notice by certified or registered
mail to the registered owners of all outstanding debentures.
(9) Except for debenture number 1 and 2, for which John
Castellucci is obligated for an amount equal to $150,000, the
debenture is the obligation of Registrant and LLO-Gas, Inc. only,
and no recourse shall be had for the payment of any principal or
interest thereof against any shareholder, officer or director of
Registrant and LLO-Gas, Inc., either directly or through
Registrant and LLO-Gas, Inc., by virtue of any statute for the
enforcement of any assessment or otherwise.
(b) On December 10, 1999, the Registrant entered into a Plan and
Agreement of Reorganization with LLO-Gas, Inc., a Delaware corporation and John
Castellucci. The Plan and Agreement of Reorganization contemplates that the
Registrant will acquire all of the issued and outstanding shares of stock of
LLO-
<PAGE> 4
Gas, Inc. in exchange for 11,900,000 shares of the Registrant. The terms and
conditions set forth in the original letter of intent entered into by and
between the parties were adjusted to reflect the transaction as at December 10,
1999.
As of the date hereof, LLO-Gas, Inc. owns one (1) "card lock"
gasoline and diesel dispensing facility and owns seven (7) ARCO AM/PM gas
station/convenience stores. Six of the franchised facilities were recently
acquired directly from Atlantic Richfield Company, a Delaware corporation, and
one of the franchised facilities was acquired from an independent owner
operator. The acquisition of all eight (8) facilities included the operating
business, assets and real estate. The total purchase price paid by LLO-Gas, Inc.
on or about October 26, 1999 was the approximate sum of $9,467,000. Credit
Suisse/CSFC provided secured financing in the approximate sum of $7,800,000 to
LLO-Gas, Inc. to complete the transaction. The facility acquired from the
independent owner operator required LLO-Gas, Inc. to deliver to the seller
subordinated secured notes for $800,000 payable eight (8) months from the
closing ($200,000) and the balance in 24 months from the closing ($600,000). The
purchase price paid to the independent owner operator, included in the
$9,467,000 referred to above was the total sum of $3,100,000 with the estimated
inventory cost of $80,000. The balance of the funds were provided by unsecured
loans from third parties (see Item 7 (a) through (f) below) or from cash
contributions or loans to LLO-Gas, Inc. by its shareholder. LLO-Gas, Inc.
represents and warrants that it will have proper financial information and such
additional information so that the Registrant can file all applicable documents
to comply with the Securities Exchange Act of 1934, as amended.
The closing will occur on December 20, 1999.
Item 7. Financial Statements and Exhibits.
The following exhibits are filed as a part of this report:
(a) 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000.
(b) 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000.
(c) 3-Year 10 Percent Convertible Note, Number 3 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(d) 3-Year 10 Percent Convertible Note, Number 4 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
<PAGE> 5
(e) 3-Year 10 Percent Convertible Note, Number 5 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(f) 3-Year 10 Percent Convertible Note, Number 6 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(g) Plan and Agreement of Reorganization by and between LLO-Gas, Inc., a
Delaware corporation and John Castellucci, dated December 10, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DISCOVERY INVESTMENTS, INC.
(Registrant)
DATED: December 13, 1999 /s/ Kimberly Lynn Jack
--------------------------
Kimberly Lynn Jack,
President
<PAGE> 1
EXHIBIT 99(a)
Number 1
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to Interlochen Enterprises,
Inc., 6767 West Tropicana Avenue, Suite 207, Las Vegas, Nevada 89103 or
registered assigns or order, the sum of $250,000 on October 31, 2002, and to pay
interest at the rate of 10 percent per annum quarterly on the first day of
January, April, July and October of each year, computed from November 1, 1999
(the "issue date"). Payment of principal and interest shall be made by mailing
to the registered owner or owners hereof in lawful money of the United States of
America at the address appearing on the Corporation's books and records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
<PAGE> 1
EXHIBIT 99(b)
Number 2
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to Meridian Enterprises,
Inc., c/o Ronald J. Stauber, 1880 Century Park East, Suite 300, Los Angeles,
California 90067 or registered assigns or order, the sum of $250,000 on October
31, 2002, and to pay interest at the rate of 10 percent per annum quarterly on
the first day of January, April, July and October of each year, computed from
November 1, 1999 (the "issue date"). Payment of principal and interest shall be
made by mailing to the registered owner or owners hereof in lawful money of the
United States of America at the address appearing on the Corporation's books and
records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
<PAGE> 1
EXHIBIT 99(c)
Number 3
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to CRS Financial Corp.,
Ltd., c/o Milligan-Whyte & Smith, Richmond House, 5th Floor, 12 Par-la- Ville
Road, Hamilton HM 11, Bermuda or registered assigns or order, the sum of
$250,000 on October 31, 2002, and to pay interest at the rate of 10 percent per
annum quarterly on the first day of January, April, July and October of each
year, computed from November 1, 1999 (the "issue date"). Payment of principal
and interest shall be made by mailing to the registered owner or owners hereof
in lawful money of the United States of America at the address appearing on the
Corporation's books and records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
<PAGE> 1
EXHIBIT 99(d)
Number 4
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to CRS Financial Corp.,
Ltd., c/o Milligan-Whyte & Smith, Richmond House, 5th Floor, 12 Par-la- Ville
Road, Hamilton HM 11, Bermuda or registered assigns or order, the sum of
$250,000 on October 31, 2002, and to pay interest at the rate of 10 percent per
annum quarterly on the first day of January, April, July and October of each
year, computed from November 1, 1999 (the "issue date"). Payment of principal
and interest shall be made by mailing to the registered owner or owners hereof
in lawful money of the United States of America at the address appearing on the
Corporation's books and records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
<PAGE> 1
EXHIBIT 99(e)
Number 5
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to CRS Financial Corp.,
Ltd., c/o Milligan-Whyte & Smith, Richmond House, 5th Floor, 12 Par-la- Ville
Road, Hamilton HM 11, Bermuda or registered assigns or order, the sum of
$250,000 on October 31, 2002, and to pay interest at the rate of 10 percent per
annum quarterly on the first day of January, April, July and October of each
year, computed from November 1, 1999 (the "issue date"). Payment of principal
and interest shall be made by mailing to the registered owner or owners hereof
in lawful money of the United States of America at the address appearing on the
Corporation's books and records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
<PAGE> 1
EXHIBIT 99(f)
Number 6
DISCOVERY INVESTMENTS, INC.
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
LLO-GAS, INC.
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
3-Year 10 Percent Convertible Debenture
Due October 31, 2002
Discovery Investments, Inc., a Nevada corporation, subject to the
closing of that certain business combination contemplated with the shareholders
of LLO-Gas, Inc., wherein LLO-Gas, Inc. will become a subsidiary of Discovery
Investments, Inc. and LLO-Gas, Inc., a Delaware corporation, and each of them,
jointly and severally, (individually and collectively referred to as the
"Corporation"), for value received, promises to pay to CRS Financial Corp.,
Ltd., c/o Milligan-Whyte & Smith, Richmond House, 5th Floor, 12 Par-la- Ville
Road, Hamilton HM 11, Bermuda or registered assigns or order, the sum of
$250,000 on October 31, 2002, and to pay interest at the rate of 10 percent per
annum quarterly on the first day of January, April, July and October of each
year, computed from November 1, 1999 (the "issue date"). Payment of principal
and interest shall be made by mailing to the registered owner or owners hereof
in lawful money of the United States of America at the address appearing on the
Corporation's books and records.
This Debenture is one of a duly authorized issue of the Corporation's
debentures in the aggregate amount of $1,500,000, dated as of November 1, 1999,
and issued in denominations of $250,000, all of like tenor and maturity, except
variations necessary to express the number, principal amount and payee of each
debenture.
1. Equal rank. All debentures of this issue rank equally and ratably
without priority over one another.
2. Conversion. Provided that Discovery Investments, Inc., a Nevada
corporation becomes obligated pursuant to the terms and conditions of this
Debenture, the holder or holders of this Debenture may at any time prior to the
maturity hereof (except that, if Discovery Investments, Inc. has called this
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption), convert the principal amount hereof into Discovery
<PAGE> 2
Investments, Inc.'s common stock at the conversion ratio of $5.00 of debenture
principal for one share of common stock. To convert this Debenture, the holder
or holders hereof must surrender the same at the office of Discovery
Investments, Inc., together with a written instrument of transfer in a form
satisfactory to Discovery Investments, Inc., properly completed and executed and
with a written notice of conversion.
3. Adjustments to conversion. If Discovery Investments, Inc. at any time
pays to the holders of its common stock a dividend in common stock, the number
of shares of common stock issuable upon the conversion of this Debenture shall
be proportionally increased, effective at the close of business on the record
date for determination of the holders of the common stock entitled to the
dividend.
If Discovery Investments, Inc. at any time subdivides or combines in a
larger or smaller number of shares its outstanding shares of common stock, then
the number of shares of common stock issuable upon the conversion of this
Debenture shall be proportionally increased in the case of a subdivision and
decrease in the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
If Discovery Investments, Inc. is recapitalized, consolidated with or
merged into any other corporation, or sells or conveys to any other corporation
all or substantially all of its property as an entity, provision shall be made
as part of the terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of this Debenture may receive, in lieu
of the common stock otherwise issuable to them upon conversion hereof, at the
same conversion ratio, the same kind and amount of securities or assets as may
be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the common stock.
4. Fractional shares. In lieu of issuing any fraction of a share upon
the conversion of this Debenture, Discovery Investments, Inc. shall pay to the
holder hereof for any fraction of a share otherwise issuable upon the conversion
cash equal to the same fraction of the then current per share market price of
the common stock.
5. Default and forbearance from suit. In the event the Corporation fails
to make any payment of principal and interest, said failure to pay shall
constitute a default under the terms of this Debenture and, subject to the terms
and conditions contained in this paragraph 5, the entire unpaid principal and
interest shall be due and payable. No debenture holder of this issue may
institute any suit or proceeding for the enforcement of the payment of principal
or interest unless the holders of more than 25 percent in amount of all
outstanding debentures of this issue join in the suit or proceeding.
Notwithstanding anything contained in this paragraph to the contrary, in the
event Discovery Investments, Inc. and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before December 31, 1999,
an individual debenture holder may institute any suit or proceeding in the event
of default.
<PAGE> 3
6. Redemption. The Corporation may at any time prepay in whole or in
part, the principal amount, plus accrued interest to the date of prepayment, of
all outstanding debentures of this issue, upon 30 days' written notice by
certified or registered mail to the registered owners of all outstanding
debentures. Such notice shall be mailed to their addresses appearing on the
Corporation's books.
7. Registered owner. The Corporation may treat the person or person
whose name or names appear on this Debenture as the absolute owner or owners
hereof for the purpose of receiving payment of, or on account of, the principal
and interest due on this Debenture and for all other purposes.
8. Release of shareholders, officers and directors. Except for debenture
number 1 and 2, for which John Castellucci is obligated for an amount equal to
$150,000, this Debenture is the obligation of the Corporation only, and no
recourse shall be had for the payment of any principal or interest hereof
against any shareholder, officers or director of the Corporation, either
directly or through the Corporation, by virtue of any statute for the
enforcement of any assessment or otherwise. The holder or holders of this
Debenture, by the acceptance hereof, and as a part of the consideration for this
Debenture, release all claims and waive all liabilities against the foregoing
persons in connection with this Debenture.
IN WITNESS WHEREOF, the Corporation has signed and sealed this Debenture
as of this 1st day of November, 1999.
DISCOVERY INVESTMENT, INC.
/s/ KIMBERLY LYNN JACK
--------------------------
Kimberly Lynn Jack
President
LLO-GAS, INC.
/s/ JOHN CASTELLUCCI
--------------------------
John Castellucci
President
<PAGE> 1
EXHIBIT 99(g)
PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION (hereinafter referred to as
the "Agreement") is entered into as of this 10th day of December, by and between
LLO-GAS, INC. (hereinafter referred to as "LLO"), DISCOVERY INVESTMENTS, INC.
(hereinafter referred to as "DCIV") and JOHN CASTELLUCCI (hereinafter referred
to as either "Shareholder" or "Castellucci").
WITNESSETH
WHEREAS, LLO-GAS, INC. is a Delaware corporation with authorized capital
stock of 1,500 shares, of which 1,000 shares were issued and outstanding as of
September 30, 1999 (hereinafter "LLO Shares");
WHEREAS, DCIV is a Nevada corporation with authorized capital stock of
25,000,000 shares of $0.001 par value Common Stock, of which 2,100,000 shares
were issued and outstanding as of October 31, 1999.
WHEREAS, DCIV desires to purchase from Shareholder all of the issued and
outstanding shares of LLO owned by Shareholder in exchange, solely for DCIV
shares of common stock ("Stock"); and
WHEREAS, it is the intention of Shareholder to exchange the LLO Shares
held by it for Stock of DCIV, on the terms and conditions set forth herein; and
WHEREAS, it is the intention of DCIV, LLO and Shareholder that the
transactions contemplated hereby constitute a tax-free "reorganization" as
defined in the Internal Revenue Code of 1986, as amended, and that all the terms
and provisions of this Agreement be interpreted, construed and enforced to
effectuate this intent.
NOW THEREFORE in consideration of the foregoing and the mutual
covenants, promises, representations and warranties contained herein, the
parties hereto agree as follows:
-1-
<PAGE> 2
Article I
EXCHANGE
1.1 Exchange of Stock of LLO. At the Closing Date (as defined in Article
VII hereof), in accordance with the provisions of this Agreement and applicable
law, Shareholder shall transfer and DCIV shall acquire all of the LLO Shares
owned by Shareholder.
Article II
CONSIDERATION
2.1 Exchange. Shareholder and DCIV agree that all of the LLO Shares
owned by Shareholder shall be exchanged with DCIV for 11,900,000 shares of
Common Stock. Such Stock shall be issued in certificates of such denominations,
amounts and names as may be requested by Shareholder.
2.2 Investment Intent. Shareholder represents and warrants that it is
acquiring said shares for investment purposes only and not with a view towards
resale or redistribution in violation of state and federal securities laws.
Shareholder agrees to deliver to DCIV at the closing, a letter setting forth an
agreement that said shares are being acquired for investment purposes only and
will not be sold except in compliance with the Securities Act of 1933, as
amended, and the Rules and Regulations promulgated thereunder.
2.3 Delivery. At said closing, Shareholder shall deliver certificates
for the shares of LLO, duly endorsed in negotiable form, with signatures
guaranteed, free and clear from all claims and encumbrances.
Article III
REPRESENTATIONS AND WARRANTIES OF DCIV
DCIV represents and warrants to Shareholder as follows:
3.1 Organization. DCIV is a corporation duly incorporated, validly
existing and, at the closing, in good standing under the laws of the State of
Nevada and has the corporate power and authority to own or lease its properties
and to carry on business as now being conducted.
-2-
<PAGE> 3
3.2 Capitalization. As of the closing date, the authorized capital stock
of DCIV shall consist of 25,000,000 shares of $0.001 par value common stock, of
which 2,100,000 are issued and outstanding. All said shares are validly issued,
fully paid and non-assessable.
3.3 Financial Statements. DCIV has furnished to Shareholder audited
financial statements as of December 31, 1998 and reviewed financial statement as
of September 30, 1999. said financial statements contain the balance sheet of
DCIV. All of said financial statements, (i) are in accordance with DCIV's books
and records, (ii) present fairly and financial position of DCIV as of such
dates, and its results of operations and changes in financial position for the
respective periods indicated, (iii) have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis, and (iv)
consistent with prior business practice, contain adequate reserves for all known
or contingent liabilities, losses and refunds with respect to services or
products already rendered or sold.
3.4 Changes in Financial Condition. Except as it relates to the
transactions contemplated by this Agreement, from the date of the Financial
Statements to the Closing Date, there has been no material change in the
properties, assets, liabilities, financial condition, business, operations,
affairs or prospects of DCIV from that set forth or reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
have been, either in any case or in the aggregate, materially adverse.
3.5 Authorization. DCIV has the power to enter into this Agreement, and
this Agreement, when duly executed and delivered, will constitute the valid and
binding obligation of DCIV. Other than approval by the Board of Directors and/or
shareholders of DCIV, no proceedings are necessary to authorize this Agreement
or the transactions completed hereby. This Agreement constitutes the legal,
valid and binding obligation of DCIV enforceable in accordance with its terms.
3.6 Effect of Agreement. The execution and delivery by DCIV of this
Agreement and the consummation of the transactions herein contemplated, (i) will
not conflict with, or result in a breach of the terms of, or constitute any
default under or violation of, any law or regulation of any governmental
authority, or the Articles of Incorporation or By-Laws of DCIV, or any material
agreement or
-3-
<PAGE> 4
instrument to which DCIV is a party or by which it is bound or is
subject; (ii) nor will it give to others any interest or rights, including
rights of termination, acceleration or cancellation, in or with respect to any
of the properties, assets, agreements, leases, or business of DCIV.
3.7 Minutes Book. The records of meetings and other corporate actions
of DCIV (including any committees of the Board) which are contained in the
Minute books of DCIV contain complete and accurate records of the matters
reflected in such minutes.
3.8 Litigation; Claims. DCIV is not a party to, and there are not any
claims, actions, suits, investigations or proceedings pending or threatened
against DCIV or its business, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, which if determined adversely would have a material effect
on the business or financial condition of DCIV or the ability of DCIV to carry
on its business. The consummation of the transactions herein contemplated will
not conflict with or result in the breach or violation of any judgement, order,
writ, injunction or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
3.9 Taxes and Reports. At the Closing Date, DCIV (i) will have filed all
tax returns required to be filed by any jurisdiction, domestic or foreign, to
which it is or has been subject, (ii) has either paid in full all taxes due and
taxes claimed to be due by each jurisdiction, and any interest and penalties
with respect thereto, and (iii) has adequately reflected as liabilities on its
books, all taxes that have accrued for any period to and including the Closing
Date.
3.10 Compliance with Laws and Regulations. To the best of DCIV's
knowledge DCIV has complied with, and are not in violation of any federal,
state, local or foreign statute, law, rule or regulation with respect to the
conduct of DCIV's businesses.
3.11 Finders. DCIV is not obligated, absolutely or contingently, to any
person for financial advice, a finder's fee, brokerage commission, or other
similar payment in connection with the transactions contemplated by this
Agreement.
3.12 Nature of Representations. DCIV has taken reasonable
-4-
<PAGE> 5
care to ensure that all disclosures and facts are true and accurate, and that
there are no other material facts, the omission of which would make misleading
any statement herein. Further, to the best of DCIV's knowledge, no
representation, warranty or agreement made by DCIV in this agreement or any of
the Schedules or any other Exhibits hereto and no statement made in the
Schedules or any such Exhibit, list, certificate or schedule or other instrument
or disclosure furnished by them in connection with the transactions herein
contemplated contains, or will contain, any untrue statement of a material fact
necessary to make any statement, representation, warranty or agreement not
misleading.
Article IV
REPRESENTATIONS AND WARRANTIES OF LLO AND SHAREHOLDER
LLO, Shareholder and Castellucci, and each of them, represent and
warrant to DCIV as follows:
4.1 Organization. LLO is a corporation duly incorporated, validly
existing and, at the closing, in good standing under the laws of the State of
Delaware has the corporate power and authority to own or lease its properties
and to carry on business as now being conducted.
4.2 Capitalization. The authorized capital stock of LLO consists of one
class of shares of stocks, the total number of shares which LLO is authorized to
issue is 1,500 shares, of which 750 shares are presently issued and outstanding.
All said shares are validly issued, fully paid and non-assessable. There are no
outstanding options, warrants, rights, commitments or agreements of any kind
relating to the issuance of any shares of Common Stock or other equity or
convertible security of LLO to any person. None of the shares of Common Stock of
LLO is reserved for any purpose. LLO is not subject to any obligation
(contingent or otherwise), nor does it have any option to repurchase or
otherwise acquire or retire any shares of its Common Stock.
4.3 Authority. LLO and Shareholder have the full power and authority to
enter into this Agreement and to carry out its obligations hereunder. Other than
approval by the Board of Directors and/or shareholders of Shareholder, no
proceedings on the part of Shareholder are necessary to authorize this Agreement
or the transactions completed hereby. This Agreement constitutes the legal,
valid and binding obligation of LLO and Shareholder
-5-
<PAGE> 6
enforceable in accordance with its terms.
4.4 Financial Statements. LLO has furnished to DCIV unaudited financial
statements as of October 31, 1999 (the "Financial Statements). Said Financial
Statements contain the balance sheet of DCIV. All of said Financial Statements,
(i) are in accordance with DCIV's books and records, (ii) present fairly and
financial position of DCIV as of such dates, and its results of operations and
changes in financial position for the respective periods indicated, (iii) have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, and (iv) consistent with prior business practice,
contain adequate reserves for all known or contingent liabilities, losses and
refunds with respect to services or products already rendered or sold.
4.5 Changes in Financial Condition. Except as it relates to the
transactions contemplated by this Agreement, and the Purchase and Financing
described in 4.19, from the date of the Financial Statements to the Closing
Date, there has been no material change in the properties, assets, liabilities,
financial condition, business, operations, affairs or prospects of LLO from that
set forth or reflected in the Financial Statements, other than changes in the
ordinary course of business, none of which have been, either in any case or in
the aggregate, materially adverse. Except for obligations in the approximate sum
of not to exceed $1,800,000 incurred in connection with the transaction
described in 4.19 below, LLO is not subject to any debt, liability or obligation
(contingent or otherwise).
4.6 Title to Assets. LLO has and on the Closing date will have good
record and marketable title to all its assets. Such assets are subject to no
mortgage, pledge, lien, conditional sales agreement, lease, encumbrance or
charge whatsoever except the secured note to Credit Suisse/CSFC.
4.7 All Patent/License Rights. To the best of its knowledge, LLO owns or
possesses the requisite licenses or other rights to use all licenses, patents,
trademarks, service marks, service names and trade names presently used. There
is no claim or action by any person, or proceeding pending, or threatened which
challenges the exclusive rights of LLO with respect to said rights used, or
contemplated to be used, in LLO's business. Nothing herein contained have or
shall be deemed to constitute a representation or warranty that such licenses,
patents, trademarks, or trade names may not be utilized or challenged in the
future, and that they will
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be upheld if challenged.
4.8 Contracts/Other Rights. Prior to the closing, LLO will furnish DCIV
with a true and complete list and description of all material contracts and
licenses entered into by LLO (the "Contracts") , including any contracts,
licenses by and between LLO and Shareholder, between them and with others. Each
of the agreements, contract, commitments, leases, plans and other instruments,
documents and undertakings to be supplied is valid and enforceable in accordance
with its terms. LLO is not in default of the performance, observance or
fulfillment of any material obligations, covenant or condition contained
therein; and no event has occurred which with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder; furthermore,
except as may be disclosed in writing at the time of delivery, no such
agreement, contract, commitment, lease, plan or other instrument, document or
undertaking, in the reasonable opinion of LLO, contains any contractual
requirement with which there is a likelihood LLO will be unable to comply.
4.9 Competition. Except as set forth in the Contracts described in 4.8
above, neither LLO, nor any officer or director or Shareholder of LLO has any
material direct or indirect financial or economic interest in any related
industry entity or in any competition or customer of LLO, including the proposed
purchase of ARCO Gas Stations, convenience stores and related products and
business.
4.10 Effect of Agreement. The execution and delivery by LLO and
Shareholder of this Agreement and the consummation of the transactions herein
contemplated, (i) will not conflict with, or result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority, or the Articles of Incorporation or By-Laws of LLO, or
any material agreement or instrument to which LLO or Shareholder is give to rise
to any interests or rights, including rights of termination, acceleration or
cancellation, in or with respect to any of the properties, assets, agreements,
leases, or business of LLO.
4.11 Personal Property. All of the property, assets and equipment
owned by or used by LLO is in good repair, well maintained, and in good and
satisfactory operating condition consistent with their age, free from any known
defects, except such minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations and such property,
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assets, and equipment which is owned by LLO is valued on the Financial
Statements at original purchase price less reasonable depreciation consistently
applied in accordance with generally accepted accounting principles.
4.12 Minutes Book. The records of meetings and other corporate actions
of Shareholder and the Board of Directors (including any committees of the
Board) of Shareholder and LLO which are contained in the Minute books of
Shareholder and LLO contain complete and accurate records of the matters
reflected in such minutes.
4.13 Litigation; Claims. Neither Shareholder nor LLO is a party to, and
there are not any claims, actions, suits, investigations or proceedings pending
or threatened against LLO or its business, at law or in equity, or before or by
any governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, which if determined adversely would have a
material effect on the business or financial condition of LLO or the ability of
LLO to carry on its business. The consummation of the transactions herein
contemplated will not conflict with or result in the breach or violation of any
judgement, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
4.14 Taxes and Reports. At the Closing Date, LLO (i) will have filed all
tax returns required to be filed by any jurisdiction, domestic or foreign, to
which it is or has been subject, (ii) has either paid in full all taxes due and
taxes claimed to be due by each jurisdiction, and any interest and penalties
with respect thereto, and (iii) has adequately reflected as liabilities on its
books, all taxes that have accrued for any period to and including the Closing
Date. No state of facts exists or has existed which would constitute grounds for
the assessment of any taxes with respect to the periods which have not been
audited by the Internal Revenue Service or any other taxing authority. There are
no outstanding tax elections, or agreements or waivers extending the statutory
period of limitation, applicable to any federal or state return for taxes of LLO
for any period.
4.15 Personnel. Included in the corporate records described, in part, in
4.12, is a true and correct list of all directors, officers and employees of
LLO. There are no bonuses, commissions or other compensation of any kind due to,
or expected by, present or former employees, except regular compensation for
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the current payroll period; LLO is not aware that any officer or employee has
any intention to terminate his or her employment with LLO; and LLO is not a
party to or bound by any employment agreement, or collective bargaining or other
labor agreement.
4.16 Compliance with Laws and Regulations. To the best of their
knowledge, LLO and Shareholder have complied with, and are not in violation of
any federal, state, local or foreign statute, law, rule or regulation with
respect to the conduct of LLO's businesses, which violation might have a
material adverse effect on the business, financial condition or earnings of LLO.
4.17 Finders. LLO and Shareholder, and each of them, are not obligated,
absolutely or contingently, to any person for financial advice, a finder's fee,
brokerage commission, or other similar payment in connection with the
transactions contemplated by this Agreement.
4.18 Leases. Prior to the closing, LLO will furnish DCIV with true and
complete list and description of all leases of real property and equipment by
and between LLO and the lessees. Each of said leases are valid and enforceable
in accordance with its terms.
4.19 Purchase and Financing. LLO has purchased eight (8) ARCO AM/PM gas
stations and convenience stores (the "Purchase") and has been financed by
Convenience Store Financing Company, LLC (a subsidiary of Credit Suisse/First
Boston) in the approximate sum of $7,750,000 to provide the financing for the
Purchase (the "Financing").
4.20 Nature of Representation. LLO and Shareholder have taken reasonable
care to ensure that all disclosures and facts are true and accurate and that
there are no other material facts, the omission of which would make misleading
any statement herein. Further, no representation, warranty or agreement made by
LLO and Shareholder in this Agreement or any of the Schedules or any other
Exhibits hereto and no statement made in the Schedules or any such Exhibit,
list, certificate or schedule or other instrument or disclosure furnished by
them in connection with the transactions herein contemplated contains, or will
contain, any untrue statement of a material fact necessary to make any
statement, representation, warranty or agreement not misleading.
Article V
ACCESS TO INFORMATION
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5.1 Access to Information. LLO and Shareholder shall afford
representatives of DCIV reasonable access to officers, personnel, and
professional representatives of LLO and such of the financial, contractual and
corporate records of LLO as shall be reasonably necessary for DCIV's
investigations and appraisal of LLO.
5.2 Effect of Investigations. Any such investigation by DCIV of LLO
shall not affect any of the representations and warranties hereunder and shall
not be conducted in such manner as to interfere unreasonably with the operation
of the business of LLO.
Article VI
CONDITIONS TO OBLIGATIONS OF DCIV
The obligations of DCIV under this Agreement are, at the option of DCIV,
subject to the satisfaction, at and prior to the Closing Date, of the following
conditions:
6.1 Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by LLO at or before the Closing
Date shall have been duly complied with and performed.
6.2 Accuracy of Representations and Warranties; Other, Documents. All of
the representations and warranties made by all parties to this Agreement shall
be true as of the Closing Date.
6.3 No Litigation. There shall be no action, proceeding, investigation
or pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon LLO, or any of the
officers or directors thereof, because of this consummation of the transactions
contemplated by this Agreement.
Article VII
CONDITIONS TO OBLIGATIONS OF SHAREHOLDER
The obligations of Shareholder under this Agreement are, at the option
of Shareholder, subject to the satisfaction,, at and prior to the Closing Date,
of the following conditions:
7.1 Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by LLO at or before the Closing
Date shall have been duly complied
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with and performed.
7.2 Accuracy of Representations and Warranties; Other Documents. All of
the representations and warranties made by all parties to this Agreement shall
be true as of the Closing Date.
7.3 No Litigation. There shall be no action, proceeding, investigation
or pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon LLO, or any of the
officers or directors thereof, because of the consummation of the transactions
contemplated by this Agreement.
7.4 DCIV Shareholders' Approval. DCIV shall have obtained the written
consent of the majority of the holders of all outstanding shares of Common Stock
of DCIV entitled to vote thereat, wherein said shareholders shall have voted in
favor of (i) the election of those nominees of LLO to act as the directors of
DCIV, and (ii) approving and ratifying the transactions contemplated by this
Agreement.
Article VIII
NON-COMPETITION AND NON-CIRCUMVENTION
8.1 Non-Competition and Non-Circumvention. Except as discussed by
Castellucci in the related party disclosure furnished to DCIV, DCIV, LLO,
Shareholder agree that they will not either directly or indirectly, circumvent
or compete with DCIV (e.g., the corporation surviving the reorganization
contemplated herein) regarding the purchase, acquisition, construction,
operation, financing, leasing or licensing of gas stations, gas station
convenience stores, and other related activities and shall offer and conduct any
such activity to or through DCIV.
Article IX
CLOSING
9.1 Closing Date. The consummation of the exchange shall take place on
December 20, 1999, 1:45 p.m., at the offices of Ronald J. Stauber, 1880 Century
Park East, Suite 300, Los Angeles, California 90067, or such other time or place
as shall be mutually agreed upon by the parties to this Agreement.
9.2 Actions to be Taken by Parties on the Closing Date. On
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the Closing Date, each party shall deliver to the other all documents or
agreements provided or herein to be delivered on the Closing Date.
9.3 Other. Between the date hereof and the Closing Date, DCIV will take
no actions, other than those reasonably required to consummate a closing,
without the prior written consent of LLO.
Article X
INDEMNIFICATION AND ARBITRATION
10.1 Indemnification. Each of the parties agree to indemnify and hold
harmless the other against any and all damages, claims, losses, expenses,
obligations and liabilities (including reasonable attorney's fees) resulting
from or related to any breach of, or failure by each of the parties to perform
any of their representations, warranties, covenants, conditions or agreements in
this Agreement or in any schedule, certificate,, exhibit or other document
furnished, or to be furnished under this Agreement.
10.2 Claims of Indemnification. Any claim for indemnification pursuant
to this Agreement, unless otherwise received by means of direct negotiation
among the parties upon reasonable oral notification by the party seeking
indemnification to all other parties, shall be made by writing of the nature and
amount of the claim to the other.
Article XI
PAYMENT OF EXPENSES
11.1 Expenses Budget. Each party shall bear its own expenses relating to
this transaction.
Article XII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 Survival. All statements contained in the Schedules, any Exhibit or
other instrument delivered by or on behalf of the parties hereto or in
connection with the transactions contemplated by this Agreement shall be deemed
to be representations made by or on behalf of the parties to this Agreement, all
representations, warranties and agreements made by the parties to this Agreement
or
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pursuant hereto shall survive.
Article XIII
General
13.1 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable" the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each such
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
13.2 Waiver. No waiver of any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed and extension of
the time for performance of any other obligation or act.
13.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by registered or certified
mail, postage prepaid, return receipt requested, and shall be deemed received
upon mailing thereof.
To: LLO-GAS, INC.
23805 Stuart Ranch Road
Suite 265
Malibu, California 90265
To: Discovery Investments, Inc.
6767 West Tropicana Avenue
Suite 207
Las Vegas, Nevada 89103
cc: Ronald J. Stauber, Esq.
1880 Century Park East
Suite 300
Los Angeles, California 90067
Notice of change of address shall be given by written notice in the
manner detailed in this subparagraph 13.3.
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13.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the permitted successors and assigns of the
parties hereto.
13.5 Professional Fees. In the event of the bringing of any action or
suit by a party hereto against another party hereunder by reason of any breach
of any of the covenants, agreements or provisions on the part of the other party
arising out of this Agreement, then in that event the prevailing party shall be
entitled to have and recover of and from the other party all costs and expenses
of the action or suit, including actual attorney's fees, accounting fees, and
other professional fees resulting therefrom.
13.6 Entire Agreement. This Agreement is the final expression of, and
contains the entire agreement between, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
party to be charged or by his agent duly authorized in writing or as otherwise
expressly permitted herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto.
13.7 Time of Essence. The parties hereby acknowledge and agree that time
is strictly of the essence with respect to each and every term, condition,
obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by either party shall
constitute a material breach of and non-curable (but waivable) default under
this Agreement by the party so failing to perform.
13.8 Construction. Headings at the beginning of each paragraph and
subparagraph are solely for the convenience of the parties and are not a part of
the Agreement. Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to paragraphs and subparagraphs are to this Agreement.
In the event the date on which any party is required to take any action under
the terms of this Agreement is not a business day, the action shall be taken on
the next succeeding day.
13.9 Counterparts. This Agreement may be executed in one
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or more counterparts, each of which shall be an original and all of which taken
together shall constitute one instrument.
13.10 Governing Law. The parties hereto expressly agree that this
Agreement shall be governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
California.
DATED: December 10, 1999 DISCOVERY INVESTMENTS, INC.
By: /s/ KIMBERLY LYNN JACK
--------------------------------
Kimberly Lynn Jack, President
DATED: December 10, 1999 LLO-GAS, INC.
By: /s/ JOHN CASTELLUCCI
--------------------------------
John Castellucci, President
DATED: December 10, 1999 /s/ JOHN CASTELLUCCI
------------------------------------
JOHN CASTELLUCCI
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