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): April 7, 2000
North Lily Mining Company
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(Exact name of registrant as specified in its charter)
Utah 0-16740 87-0159350
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1800 Glenarm Place, Suite 210, Denver Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 294-0427
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Item 2. Acquisition or Disposition of Assets.
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On April 7, 2000 the Company completed performance of closing requirements
for its acquisition of privately held Loan Mining. Com ("LMC") by issuance of
5.83 million shares (the "Shares") of the Company's common stock. The Shares are
restricted Securities pursuant to Rule 144, are to be included in a Registration
Statement by the Company after it updates its audits and reports to the
Securities and Exchange Commission, and are to be subject to monthly sale
restrictions for holdings in excess of 200,000 shares. The recipients of the
Shares were the several stockholders of LMC, including its majority stockholder
(Regina Mitchell) who received over 4 million of the Shares. Five hundred
thousand of Mitchell's shares were understood to be owed for prior consideration
to the account or designees of W. Gene Webb, the Executive Vice President and a
Director of the Company.
In consideration for the Shares, the Company acquired rights to the names
LoanMining.Com and Mortgage Partners Funding Corporation; rights to a team of
mortgage brokers, telemarketers, processing and closing staff represented to be
capable of promptly equaling and then growing the $1.4 million annual revenue
rate produced at LMC in 1999 on a brick & mortar basis; and rights to the LMC
internet web site development, the related business plan for home improvement
financing, and the business model/implementation plan for LMC as both a brick &
mortar as well as a highly automated internet mortgage banker focussed on the
sub-prime mortgage niche. Substantial equity financings will be required to
compete for mortgage lending business on the Internet.
In connection with this acquisition, the Company has closed on initial
private placement financing of $220,000 in exchange for 7% Convertible Notes and
Warrants. The Notes are repayable in or convertible for six months into Common
Stock of the Company at $0.20 per share, and the Warrants are exercisable at $5
and $7.50 during years one and two, respectively. The Company utilized $53,000
of the above to finance stock redemption and releases from dissident
stockholders of LoanMining.Com
Item 5. Other Events.
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The Company has signed an agreement with Coldwell Banker West Realty for
listing and marketing of the company's 8000 acres of rural undeveloped real
estate parcels, located 70 miles south of Salt Lake City, Utah. The properties
are held in a Colorado Limited Liability Company, which is managed by the
Company, which is entitled to 95-96.5% of the net proceeds of sales. Separately,
the Company is negotiating with Utah State environmental regulatory authorities
concerning requirements for achieving legal compliance and bonded reclamation
and shut down of its small former heap leach facility on a portion of its Utah
properties.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements of Business Acquired.
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The required financial statements will be filed by amendment.
(b) Exhibits.
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4.1 Form of 7% Convertible Note
4.2 Form of Warrant.
10.1 Purchase Exchange Agreement dated March 8, 2000 concerning acquisition
of LoanMining.Com (previously known as HomeLoan.Com Inc.).
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SIGNATURE
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.
Date: April 24, 2000 NORTH LILY MINING COMPANY
By: /s/ Stephen E. Flechner
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Stephen E. Flechner
Chief Executive Officer and President
By: /s/ W. Gene Webb
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W. Gene Webb
Executive Vice President & Secretary
SEVEN PERCENT (7%) CONVERTIBLE NOTE
DATED March 8, 2000
THIS Note (this "Note") is one of the duly authorized issue of convertible Notes
of North Lily Mining Company, (the "Company") its successors and or its assigns.
This Note is offered, issued and sold pursuant to and in accordance with the
rules applying to "piggyback registration" promulgated under the Securities Act
of 1933, as amended, and the Securities Act of 1934, with the understanding that
the Company is now completing the neccessary audit and filings required to
update its SEC filings as a fully reporting issuer and to file an SB-2
registration statement including the shares hereunder and those issuable
pursuant to the attached Stock Warrant Agreement; such filings to be completed
by the Company as soon as feasible within 120 days from its acquisition of or
merger with Loan Mining. Com, Inc..
For value received, the Company promises to pay to ______________their
successors and or assigns, or the permitted registered Holder hereof (the
"Holder"), the principal sum of US $ __________ (______thousand) (the "Initial
Principal Amount") or such lesser principal amount following the conversion or
conversions of this Note in accordance with paragraph 4 (the "Outstanding
Principal Amount") on October 31, 2000 (the "Maturity Date"), and to pay
interest of the outstanding principal amount from time to time, semiannually in
arrears on the first business day of June (the "Interest Payment Date"), at the
rate of seven percent 7% per annum occurring from the date of issuance.
Accrual of interest shall commence on the first day to occur after the date
hereof until repayment in full of the principal sum has been made or duly
provided for. Accrued and unpaid interest shall bear interest at the same rate
until paid. The interest so payable will be paid in shares ("Interest Shares")
of the Company's common stock, ("Common Stock") at the then applicable
conversion price (computed as described in paragraph 4 below) on the interest
payment dates to the Holder on the interest payment date. The principal of this
Note is payable in such coin or currency of the United States as at the time of
payment is legal tender for payment of public and private debts, at the address
last appearing on the Note register of the Company as designated in writing by
the Holder from time to time.
The Company will pay the principal of this Note on the due date, free of
any withholding or deduction of any kind (subject to the provision of paragraph
2 below), to the Holder as of the due date and addressed to the Holder at the
address appearing on the Note register.
The following of such check and/or interest shares shall constitute a
payment of principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Note to the extent of the sum
represented by such check and/or interest shares.
This Note is subject to the following additional provisions:
1. These Notes are originally issuable in amount of not less that
US$_____________.
2. All payments on account of the principal of this Note and all other amounts
payable under this Note (whether made by the Company or any other person)
to or for the account of the Holder hereunder shall be made free and clear
of and without reduction by reason of any present and future income, stamp,
registration and other taxes, levies, duties, cost, and charges whatsoever
imposed, assessed, levied or collected by the United States or any
political subdivision or taxing authority thereof or therein, together with
interest thereon and penalties charges being herein collectively called "US
Taxes").
3. If at any time there occurs a transaction in which in excess of 50% of the
Company's voting power is transferred (excluding any public or private
offering of Company equity securities) on any consolidation or merger of
the Company into any other or other entity or person (whether of not the
Company is the surviving corporation), or any other corporate
reorganization or transaction or series of related transactions, the Holder
of this Note then outstanding may participate in any such transaction as a
class with common stock Holder on the same basis as if this Note had been
converted one day prior to the effective date of such transaction;
provided, however, that at the option of the Holder of this Note, such
Holder may treat the effective date of any transaction that occurs prior to
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June 1, 2000, as a redemption date and shall be entitled to have the
Company redeem this Note at a price equal to 100% of the outstanding
principal amount of this Note. The Holder shall be entitled to make such
election at any time up to ten (10) day prior to the effective date of the
transaction. The Company shall not affect any stock split, subdivision or
combination with an effective date within three (3) trading days preceding
the effective date of a merger or consolidation. Notwithstanding the above
Holder, shall not redeem this Note upon the Company acquiring the assets of
or merging or reorganizing with LoanMining.com,Inc..
Notwithstanding the transfer of 50% of the Company's voting power, the
Company shall have the unequivocal right to redeem this Note at any time
prior to the maturity date at a price equal to 100% of the outstanding
principal amount of this Note, provided that the Company shall give to the
Holder five (5) days written notice of its intention to do so and the
Holder has not faxed a notice of conversion with respect to the Note (or
portion thereof) sought to be redeemed. Upon notice of its right and
intention to redeem the Note, by the Holder shall have two business days to
convert the Note, otherwise the Company shall immediately transfer the full
redemption price to the Holder.
4. The Holder of this Note is entitled, at its option, at any time after the
issuance of this Note, to convert all or any lesser portion of the initial
principal amount into common stock at a conversion price (the "Conversion
Price") of twenty cents ($0.20). In the event of any stock split, dividend,
combination or similar event occurring after a conversion date and prior to
the issuance of the respective stock certificates, the conversion price
will be subject to appropriate adjustment. Conversion of this Note into
common stock shall be effectuated by surrendering the Note to be converted
to the Company, with the form of conversion notice attached to the Note as
Exhibit A, executed by the Holder of the Note evidencing such Holder's
intention to convert the Note. Interest accrued or accruing from the date
if issuance to the conversion date (but not previously paid in cash or
interest shares) on the amounts so converted shall be paid in interest
shares, calculated at the same conversion price (as determined above) as
would apply on the conversion date for the principal amount being converted
but using the discount percentage applicable as of such date and shall
constitute payment in full of any such interest on the same terms as would
otherwise apply to the conversion of the principal amount thereof.
No fractional shares or scrip representing fractions of shares of common
stock will be issued on conversion, but the number of shares of common
stock issuable shall be rounded to the nearest whole share. The date on
which a notice of conversion is given shall be deemed to be the date on
which the Holder notifies the Company of its intention to so convert by
delivery, by facsimile transmission or otherwise, of a copy of the notice
of conversion. Notice of conversion may be given by facsimile to the
Company at 303-293-2235. This Note, together with original executed copy of
the notice of conversion, shall be delivered to the Company within three
(3) business days following the date on which notice of conversion is given
as described above. At the maturity date, any unconverted principal amount
and accrued interest thereon shall at the maturity date be paid, at the
option of the Company, in either (a) cash (b) common stock valued at a
price equal to the conversion price determined as if the Note was converted
in accordance with its terms into common stock on the maturity date.
Upon the surrender of this Note, accompanied by a notice of conversion in
the form attached hereto as Exhibit A, properly completed and duly executed
by the Holder, the Company shall issue and, within ten (10) business days
after actual delivery to the Company of this note with the notice of
conversion (the "deadline"), deliver to or upon the order of the Holder (1)
on or more certificates (the "certificates"), representing that number of
shares of common stock into which the portion of the Note converted is
convertible, as shall be determined in accordance herewith ( which shares
shall be free trading upon the effectiveness of the Company's SB-2
registration statement referred above, subject to the Holder not
constituting an affiliate or other such restricted party), and (2) this
Note with appropriate notation by an authorized officer of the Company to
account for the remaining balance of principal amount hereof following
conversion, if any. Without in any way limiting the Holder's right to
pursue other remedies, including actual damages and/or equitable relief,
the parties agree that if delivery of the certificates (without restrictive
legend of any kind or stop transfer order affecting the common stock
represented by the certificates except as provided) issuable upon
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conversion of this note is more than five (5) days after the deadline, the
Company shall pay to the Holder $100.00 per each $50,000.00 in principal
amount per day in cash, for the first day beyond the deadline and $100.00
per each day thereafter that the Company fails to deliver the certificates.
Such cash amount shall be paid to the Holder upon Holder's written demand
therefore.
The number of shares of common stock to be issued upon each conversion of
this Note shall be determined by dividing that portion of the principal
amount of the Note to be converted at such time, plus the dollar amount of
all interest that has accrued on that portion of the Note then being
converted but which has not previously been paid, by the $0.20 conversion
price in effect on the date the notice of conversion is delivered via
facsimile to the Company by the Holder. The number of interest shares shall
be determined utilizing the following equation: [(the principal amount of
the Note to be converted, multiplied by a fraction (A) the numerator of
which is the number of days elapsed since the date of issuance of this Note
and (b) the denominator of is 365) multiplied by (7%), the resulting number
shall be divided by the conversion price then in effect to determine the
number of interest shares.
5. No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to the payment of the
principal of this Note at the time, place and rate, and in the coin or
currency herein prescribed. This Note and all other Notes now or hereafter
issued on similar terms are direct obligations of the Company. This Note
ranks equally with or superior to all other Notes now or hereafter issued
under the terms set forth herein. In the event of any liquidation,
reorganization, winding up or dissolution, repayment of this Note shall not
be subordinate in any respect to any other indebtedness of the Company
outstanding as of the date of this Note or hereafter incurred by the
Company.
Such non-subordination shall extend without limiting the generality of the
foregoing, to all indebtedness of the Company to banks, financial
institutions, and other secured lenders, equipment lessors and equipment
finance companies, but shall exclude trade debts; and any warrants, options
or other securities convertible into stock of the Company shall rank pari
passu with the Notes in all respects, so long as issued prior to the date
hereof.
6. The Company hereby expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of dishonor, notice of acceleration
or intent to accelerate, bringing of suit and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
7. If the Company at any time or from time to time after the date of this Note
makes a dividend or other distribution to Holders of common stock payable
in securities of the Company other than the interest shares, then in each
such event provision shall be made so that the Holder shall receive upon
conversion of this Note pursuant to paragraph 4 hereof, in addition to the
numbers of interest shares receivable thereupon, the amount of such other
securities of the Company to which the Holder on the relevant record of
payment date, as applicable, of the number of interest shares so receivable
upon conversion would have been entitled, plus any dividends or other
distributions would have been received with respect to such securities had
the Holder thereafter, during the period from the date of such event to and
including the conversion date retained such securities, subject to all
other adjustments called for during such period under this Note with
respect to the rights of the Holder.
8. If at any time or from time to time after the date of this Note, the common
stock issuable upon the conversion of the Note is changed into the same or
different numbers of shares of any class or classes of stock; whether by
recapitalization or otherwise (other than subdivision or combination of
shares of common stock or stock dividend or reorganization provided for
elsewhere in this Note or a merger or consolidation, provided for in
paragraph 3), then in each such event the Holder shall have the right
thereafter to convert the Note into the kind of security receivable in such
recapitalization, reclassification or other change by Holders of common
<PAGE>
stock, all subject to further adjustment as provided herein. In such event,
the formula set forth herein for conversion and redemption shall be
equitably adjusted to reflect such change in number of shares or, if shares
of a new class of stock are issued; to reflect the market price of the
class of the classes of stock issued in connection with the above described
transaction.
9. If at any time or from time to time after the date of this Note there is a
capital reorganization of the common stock (other than a recapitalization,
subdivision, combination, reclassification, or exchange of shares provided
for elsewhere in this Note) then, as a part of such reorganization,
provision shall be made so that the Holder shall thereafter to be entitled
to receive upon conversion of this Note the number of shares of stock or
other securities or property to which a Holder of the number of shares
deliverable upon conversion would have been entitled on such capital
reorganization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Note with respect to the rights
of the Holder after the reorganization to the end that the provisions of
this Note shall be applicable after that event and be as nearly equivalent
as may be practicable, including, by way of illustration and not
limitation, by equitably adjusting the formulae set forth herein for
conversion and redemption to reflect the market price of the securities or
property issued in connection with the above described transaction.
10. If one or more of the "events of default" as described in paragraph 11
shall occur, the Company agrees to pay all costs and expenses, including
reasonable attorney's fees, which may be incurred by the Holder in
collecting any amount due under, or enforcing any terms of, this Note.
11. If more than one of the following described "events of default" shall
occur:
a. The Company shall default in the timely payment of principal or
interest; or
b. Any of the representations or warranties made by the Company herein or
in the Note purchase agreement between the Company and Holder with
respect to this Note, or in any certificate or financial or other
document heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Note,
shall be false or misleading any material respect at the time made; or
c. The Company shall fail to perform or observe any other covenant,
provision, condition, agreement or obligation of the Company under
this Note and such failure shall continue uncured for a period of
thirty (30) days after notice from the Holder of such failure (except
that no cure period other than that described in paragraph 4 above
shall be had for any violation or breach of paragraph 4 by the
Company); or
d. The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts as they mature; (3) make an assignment for
the benefit of creditors or commence proceedings for its dissolution;
or (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for it or for a substantial part of its
property or business; or
e. A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f. Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
<PAGE>
g. Any money judgment, writ or warrant of attachment, lien or similar
process in excess of fifty thousand ($50,000) dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unsatisfied, unvacated, unbounded or
unstayed for a period of sixty (60) days (unless such order provided
for delayed payment) or in any event later than five (5) days prior to
the date of any proposed sale thereunder; or
h. Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for
the relief of debtors shall be instituted by or against the Company
and if instituted against the Company, shall not be dismissed, stayed
or bonded within sixty (60) days after such institution or the Company
shall by any action or answer approve of, consent to, or acquiesce in
any such proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding; or
i. The Company shall have its common stock de-listed from a securities
market.
Then, or at any time thereafter, and in each and in every such case,
unless such event of default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any
subsequent default), the Holder may consider this not immediately due
or payable, without presentment, demand, protest or notice of any
kind, all of which are expressly waived, anything herein or in any
Note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately demand without expiration of any period
of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law. In
such event, this Note shall be redeemed by the Company at a redemption
price per Note equal to 100% of the outstanding principal amount due
hereunder. Notwithstanding the above, Holder understands that the
Company is scheduled to be moved to the Pink Sheets from the OTC BB
effective February 25, 2000, and Holder agrees that it shall not be an
event of default hereunder provided that the Company regains its OTC
BB listing status by June 1, 2000.
12. Subject to the last sentence in the preceeding paragraph, if at any time on
or after the date hereof and prior to conversion of all of this Note into
common stock, and the common stock of the Company has been listed on a
United States securities market, as described in paragraph 4 above, trading
of the common stock is suspended and actually ceases trading on the
principal market or exchange for such shares for a period of thirty (30)
consecutive trading days, other than as a result of the suspension or
trading of securities in general, or if the common stock at any time
becomes ineligible for trading, then, at the Holder's option, the Company
shall redeem the Note at a redemption date designated by the Holder, and
for the redemption price provided in paragraph 11.
13. Notwithstanding anything to the contrary contained herein, each notice of
conversion shall contain representations to the effect that the Holder is
an "accredited investor" as such term is defined in rule 501(a) of
regulation D promulgated by the SEC under the 1933 Act, and (II) the
conversion shares are being acquired for the Holder's own account and not
as a nominee for any other party, and other normal provisions reasonably
requested by Company's securities consel for such purpose.
14. The Holder may, subject to compliance with any Note purchase agreement
pursuant to which this Note was purchased, and the provisions under the
Securities Act of 1933, as amended (the 1933) act), without notice,
transfer, assign, mortgage or encumber this Note, any interest herein or
any part hereof in integral multiples of $10,000 or the entire outstanding
balance to an "accredited investor" as defined in the 1933 Act that will be
acquiring the Note or interest herein for its account for the purpose of
investment and not with a view to or for sale in connection with any
distribution hereof and, each assignee, transferee and mortgagee shall have
all of the rights of the Holder under this Note. The Company may condition
registrations of transfers on the receipt of a certificate from the
<PAGE>
assignee, transferee of mortgagee in a form acceptable to the Company that
contains representations and warranties similar to those of the Holder
contained in section 2 of said note purchase agreement, and IRS forms W-9
or an equivalent certification under penalty of perjury in compliance with
the Internal Revenue Code of 1986, as amended from time to time, and other
nornal provisions reasonably requested by the Company's securities consel
for such purpose.
15. The Company covenants that until all amounts due under this Note have been
paid in full, by conversion or otherwise, unless the Holder or subsequent
Holder waives compliance in writing, the Company shall:
a. Give prompt written notice to the Holder of any event of default or of
any other matter which has resulted in, or could reasonably be
expected to result in a materially adverse change in its financial
condition or operations;
b. Give prompt notice to the Holder of any claim, action or proceeding
which, in the event of any unfavorable out come, would or could
reasonably be expected to have a material adverse effect (as defined
in the Note purchase agreement) on the financial condition of the
Company;
c. At all times reserve and keep available out of its authorized but
un-issued common stock, for the purpose of effecting the conversion of
this Note into common stock, such number of its duly authorized shares
of common stock as shall from time to time be sufficient to effect the
conversion of the outstanding principal balance of this Note into
common stock. If the Company does not have a sufficient number of
shares of common stock available to satisfy the Company's obligations
to the Holder upon receipt of a notice of conversion or is otherwise
unable to issue such shares in accordance with the terms of this Note
(a "conversion default"), from and after the tenth day following a
conversion default (which for all purposes shall be deemed to have
occurred upon the Company's facsimile receipt of the applicable
conversion notice), the Holder shall have the right to demand from the
Company the immediate redemption of this Note in cash at a redemption
price equal to 125% of the then outstanding principal amount;
provided, however, that no redemption notice may be delivered by the
Holder subsequent to the Holder's receipt of notice from the Company
(sent by overnight or 2-day courier with a copy sent by facsimile) of
availability of sufficient shares to permit conversion (a
"post-default conversion") of the Note; provided further that such
right shall be reinstated if the Company shall thereafter fail to
perfect such post-default conversion by delivery of common stock in
accordance with applicable provision of paragraph 4 hereof with
respect thereto within five (5) business days of delivery of the
notice of post-default conversion. In additions to the foregoing, upon
the conversion default, the rate of interest on the Note shall to the
maximum extent permitted by law be increased by two percent (2%)
commencing on the first day of the thirty (30) day period (or part
thereof) following a conversion default; an additional two percent
(2%) commencing on the first day of each second such thirty (30) day
periods (or part thereof); and additional one percent (1%) on the
first day of each consecutive thirty (30) day period (or part
thereof); thereafter until such securities have been duly converted or
redeemed as herein provided. Any such interest which is not paid when
due shall, to the maximum extent permitted by law, accrue interest
until paid at the rate from time to time applicable to interest on the
Note as to which the conversion default has occurred.
d. Upon receipt by the Company of evidence from the Holder reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note,
I. In the case of loss, theft or destruction, upon provision of
indemnity reasonably satisfactory to it and/or its transfer
agent, or
II. In the case of mutilation, upon surrender and cancellation of
this Note, then Company at its expense will execute and deliver
to the Holder a New Note, dated the date of the lost, stolen,
destroyed or mutilated Note, and evidencing the outstanding and
unpaid principal amount of the lost, stolen, destroyed or
mutilated Note.
<PAGE>
16. The Holder, by acceptance hereof, acknowledges he is an accredited, fully
informed, sophisticated investor, and that this Note is being acquired for
investment and that the Holder will not offer, sell or otherwise dispose of
this Note or the common stock issuable upon conversion hereof except under
circumstances which will not result in a violation of the 1933 act or any
applicable state securities laws.
17. In the case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if
possible, so that its enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Note will
not in any way be affected impaired thereby.
18. The Note between the Company and the Holder (including all exhibits
thereto) constitute the full and entire understanding and agreement between
the Company and the Holder with respect to the subject hereof. Neither this
Note nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and the Holder.
In witness whereof, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized.
BY:____________________________ BY:___________________________
North Lily Mining Company. Holder
<PAGE>
EXHIBIT A
REDEMPTION NOTICE
Date: _________________
Amount of Redemption: $___________________
Price of Redemption: $________________
Type of Redemption: Cash __________or Shares __________
If shares please specify amount of shares: __________________
________________________________
Holder
THE SECURITIES IN THIS DOCUMENT HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED ( THE "ACT" "), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED
IN OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE
ACT.
NORTH LILY MINING COMPANY
THIS STOCK WARRANT AGREEMENT (the "Agreement") is made and entered into,
effective as of 8 March 2000 by and between North Lily Mining Company, a Utah
corporation (the Company), and ____________________ ("Holder").
WITNESSETH:
WHEREAS, the Board Of Directors of the Company agree to Issue to the Holder
a warrant to purchase shares of the common stock of the Company, said warrant to
be for the number of shares, at the price per share and on the terms set forth
in this Agreement; and
WHEREAS, Holder desires to receive a warrant on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, The parties agree as follows:
1. Grant of Warrant. The Company hereby grants to the Holder, the warrant,
right and option (the "Warrant") to purchase all or any part of shares of the
authorized and unissued $.10 par value common stock of the Company (the "Warrant
Shares") pursuant to the terms and conditions set forth in this Agreement.
Notwithstanding anything to the contrary herein and in the attached Agreement to
Exercise, it is understood that the Company is now completing the necessary and
filings required to update its SEC filings as a full reporting issuer and to
file an SB-2 registration statement including the Warrant Shares hereunder, such
that they will be free trading, subject to the Holder not constituting an
affiliate or other restricted party.
2. Exercise Price. On or before 8 March 2001 (one year from the date
hereof), the purchase (the "Exercise Price") for each Warrant Share shall be
$5.00. Subsequent to 9 March 2001 and prior to 8 March 2002, the Exercise Price
for each Warrant Share shall be $7.50.
3. Exercise Period. The Warrant exercise period shall terminate on 8 March
2002 (two years from the date hereof) at 5:00 p.m., local time of the address
for delivery of notices to the Company specified in Paragraph 11, unless
terminated earlier as provided in Paragraph 8 of this Agreement.
4. Exercise Warrant.
(a) The Warrant may be exercised by delivering to the Treasuer of the
Company (i) an Irrevocable Notice And Agreement Of Exercise Of Warrant, in the
form attached hereto as Exhibit A, specifying the number of Warrant Shares with
respect to which Warrant is exercised, and (ii) full payment of the Exercised
Price for such shares.
(b) Promptly upon receipt of the Notice Of Agreement And Exercise and
the full payment of the Exercise Price, the Company shall deliver to the Holder
a properly executed certificate or certificates representing the Warrant Shares
being Purchased.
<PAGE>
5. Securities Laws Requirements. No Warrant Shares shall be issued unless
and until, in the opinion of the Company, any applicable registration
requirements of the Securities Act of 1933, as amended ( the "Act" ), any
applicable listing requirements of any securities exchange on which the stock of
the same class has been listed, and any other requirements of law or any
regulatory bodies having jurisdiction over such issuance and delivery have been
fully complied with or exemptions therefrom have been fully complied with.
Pursuant to the following:
(a) All Warrant Shares shall be acquired solely for the account of the
Holder for investment purposes only and with no view to their resale or other
distribution of any kind; and
(b) No Warrant Shares shall be sold or otherwise distributed in
violation of the Act or any other applicable federal or state securities laws.
The foregoing restrictions or notice thereof shall be placed on the
certificates representing the Warrant Shares purchased pursuant to the Warrant,
and the Company may refuse to issue the certificates or to transfer the shares
on its books unless it is satisfied that no violation of such restrictions will
occur.
6. Transferability of Warrant. This Warrant and the Warrant Shares or any
other security issued or issuable upon exercise of this Warrant may not be sold
or otherwise disposed of exempt as follows:
(a) to a person who, in the reasonable opinion of the Company, is a
person to whom this Warrant or Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus under the Act with
respect thereto and then only against receipt of a letter from such person in
which such person represents that he is acquiring the Warrant or Warrant Shares
for his own account for investment purposes and not with the view to
distribution, and in which such person agrees to comply with the provisions of
this Section 6 with respect to any resale or other disposition of such
securities; or
(b) to any person upon delivery of a prospectus then meeting the
requirement of the Act relating to such securities and the offering thereof for
such sale or disposition.
7. Adjustment By Stock Split, Stock Dividend, Etc. If at any time the
Company increases or decreases the number of its outstanding shares of Common
Stock, or changes in any way the rights and privileges of such shares, by means
of the payment of a stock dividend or the making of any other distribution on
such shares payable in its Common Stock, or through a stock split or subdivision
of shares, or consolidation or combination of shares, or through
reclassification or recapitalization involving its Common Stock, the numbers,
rights and privileges of the shares of common Stock included in the Warrant
shall be increased, decreased or changed in the like manner as if such shares
had been issued and outstanding, fully paid and nonassessable at the time of
such occurrence.
8. Merger Or Consolidation.
(a) Effect of Transaction. Upon the occurrence of any of the following
events, if the notice required by Paragraph 8(b) has been given, the Warrant
shall automatically terminate and be of no further force or effect whatever: (i)
<PAGE>
the merger or consolidation of the Company with one or more other corporations,
regardless of which entity survives the transaction: (ii) the dissolution or
liquidation of the company; (iii) the appointment of a receiver for all, or
substantially all, of the company's reorganization under applicable statutes; or
(v) the sale, lease or exchange of all or substantially all, of the Company's
assets and business.
(b) Notice of Such Occurrence. At lease 30 days prior written notice
of any event described in Paragraph 3(a), except the transactions described in
Subparagraphs 3(a)(iii) and (iv) as to which no notice shall be required, shall,
at the Company's option, be given by the Company to Holder. After receipt of
such notice, Holder may at any time before the occurrence of the event requiring
the giving of notice exercise the unexercised portion of the Warrant as to all
the shares covered thereby. Such notice shall be deemed to have been given when
delivered personally to Holder or pursuant to the provisions of Paragraph II of
this Agreement. If no such notice shall be given with respect to a transaction
described in Subparagraphs, 3(a)(i),(ii) or (v), the provisions of Paragraph
3(a) shall not apply and the Warrant shall not terminate upon the occurrence of
such transactions of a transaction described in subparagraph 8(a)(i),(ii) or
(v), and the Warrant shall terminate, unless previously exercised, at the close
of business 30 days after the written notice has been given.
9. Common Stock to Be Received Upon Exercise. Holder understands the
Company is under no obligation to register the Warrant Shares under the Act, and
that in the absence of any such registration, the Warrant Shares cannot be sold
unless they are sold pursuant to an exemption from registration under the Act.
The Company is under no obligation to comply, or to assist Holder in complying,
with any exemption from such registration requirement including supplying Holder
with any information necessary to permit routine sales of the Warrant Shares
under Rule 144 of the Securities And Exchange Commission. Holder also
understands that with respect to Rule 144, routine sales of securities made in
reliance upon such Rule can be made only in limited amounts in accordance with
the terms and conditions of the Rule, and that in cases in which the Rule
inapplicable, compliance with either Regulation A or another exemption under the
Act will be required. Thus, the Warrant Shares will have to be held indefinitely
in the absence of registration under the Act or an exemption from registration.
Furthermore, Holder fully understands that the Warrant Shares have not been
registered under the Act and that they will be issued in reliance upon an
exemption which is available only if Holder acquires such shares for investment
and not with a view to distribution. Holder is familiar with the phrase
"acquired for investment and not with a view to distribution" as it relates to
the Act and the special meaning given to such term in various releases of the
Securities And Exchange Commission.
10. Privilege of Ownership. Holder shall not have any of the rights of a
stockholder with respect to the shares covered by the Warrant except to the
extent that one or more certificates for such shares shall be delivered to him
upon exercise of the Warrant.
11. Notices. All notices, request, demands, directions and other
communications ("Notices") provided for in this Agreement shall be in writing
and shall be mailed or delivered personally or sent by telecopier or facsimile
to the applicable party at the address of such party set forth below in this
Section II. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the third business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective party set forth in this Section 11.
When sent by telecopier or facsimile, each such Notice shall be effective on the
first business day on which or after which it is sent.
<PAGE>
Company: North Lily Mining Company
1800 Glenarm Place, Suite 210
Denver, Colorado 80202
Attention: President
Facsimile No. (303) 293-2235
Holder:
Either party may change his or its respective address for purposes of this
section 11 by giving the other party Notice of the new address in the manner set
forth above.
12. General Provisions. This instrument (a) contains the entire agreement
between the Parties, (b) may not be amended nor may any rights hereunder be
waived except by an instrument in writing signed by the party sought to be
charged with such amendment or waiver (c) shall be construed in accordance with,
and governed by, the laws of Colorado, and (d) shall be binding upon and shall
inure to the benefit of the parties and their respective personal
representatives and assigns, except as above set forth. All pronouns contained
herein and any variations thereof shall be deemed to refer to the masculine,
feminine or neutral, singular or plural as the identity of the parties hereto
may require.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
NORTH LILY MINING COMPANY
Date: ____________________ By: _______________________
HOLDER
Date: _____________________ ___________________________
Signature
___________________________
Printed Name
___________________________
Address
Facsimile No. _____________
<PAGE>
EXHIBIT A
---------
(To North Lily Mining Company Stock Warrant Agreement)
NORTH LILY MINING COMPANY
IRREVOCABLE NOTICE AND AGREEMENT OF EXERCISE OF WARRANT
I hereby exercise my North Lily Mining Company Stock Warrant dated
effective as of 8, March, 2000 as to 550,000 (five hundred fifty thousand)
shares of the $0.10 par value Common Stock (the "Warrant Shares") of North Lily
Mining Company (the "Company").
I understand that this Irrevocable Notice And Agreement Of Exercise Of
Warrant is irrevocable and agree to pay to the Company the full amount of the
Exercise Price for the Warrant Shares purchased within three days after the
receipt from the Company of notice of the amount of the Exercise Price
determined in accordance with Section 2 of the Warrant Agreement.
I understand that no Warrant Shares will be issued unless and until, in the
opinion of the Company, any applicable registration requirements of the
Securities Act of 1933, as amended, any applicable listing requirements of any
securities exchange on which stock of the same class is then listed, and any
other requirements of law or any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with or exemptions
therefrom have been fully complied with. I hereby acknowledge, represent,
warrant and agree, to and with the Company as follows;
a. The Warrant Shares I am purchasing are being acquired for my own
account for investment purposes only and with no view to their
distribution of any kind, and no other person (except, if I am
married, my spouse) will own any interest therein.
b. I will not sell or dispose of my Warrant Shares in violation of the
Securities Act Of 1933, as amended, or any other applicable federal or
state securities laws.
c. I agree that the Company may, without liability for its good faith
actions, place legend restrictions upon my Warrant Shares and issue
"stop transfer" instructions requiring compliance with applicable
securities laws and the terms of my Warrant.
The number of Warrant Shares specified above are to be issued in the name
or names set forth below in the left-hand column.
- ----------------------- ---------------------------
(Print Your Name) Signature
- ----------------------- ---------------------------
(Print Name of Spouse if you Address
wish joint registration)
EXCHANGE AGREEMENT
This Agreement is dated March 8, 2000, between North Lilly Mining Company,
a Utah corporation ("NLMC") and Regina Mitchell, Scott Simpkins, Arnold P.
Guttenberg, Erin Dominick, John Dominick, Kimberly A. Pavlin, Chris Springer,
Gregg Weeder, Dena Weeder and Martha J. White, collectively the shareholders
(the "Shareholders") of Home Loan.Com, Inc., a Colorado corporation ("Loan").
Whenever both parties are collectively referred to in this Agreement, they shall
be designated as the "parties".
The parties wish to provide for the Shareholders's exchange of all of the
issued and outstanding shares of Loan which consist of 1,006 shares in exchange
for shares of NLMC according to the terms and conditions of this Agreement.
The parties agree as follows:
1. The Acquisition.
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing to be held as provided in Section 1.3,
NLMC shall acquire all of the issued and outstanding shares of
Loan and as of the Closing, Loan shall own the Assets listed in
Exhibit A ("Assets") free and clear of all encumbrances except as
disclosed on Exhibit B ("Encumbrances").
1.2 Purchase Price. Shareholders will exchange their 1,006 shares in
Loan for 5,633,600 shares of common stock of NLMC ("Shares")
which shall be taken as restricted investment stock pursuant to
investment representations and restrictive legends under the
federal securities laws. Each share of Loan shall be exchanged
for 5,600 Shares of NLMC.
NLMC shall hold in escrow one million (1,000,000) of Regina
Mitchell's portion of the Shares which shall be deemed nonvoting
Shares until released. These shall be released not later than
September 30, 2000, provided that (a) NLMC has received at least
$250,000 in financing since signing this agreement at not less
than $0.40 per share, and (b) Loan's business has produced sales
for the two months ended August 31, 2000 averaging at least
$200,000 per month, with no less than break-even operating cash
flow after deduction of operating expenses (including all general
and administrative overhead expenses, but excluding outside costs
of advertising, expansion, acquisitions and web-site
development). It is understood that the parties will seek to
finance such outside costs of advertising, expansion,
acquisitions and web-site development primarily out of additional
equity funding. NLMC shall exert good faith best efforts to
achieve the above results with Loan, but shall cancel the one
million (1,000,000) Shares if said results are not achieved.
1.3 The Closing; Place and Time. The closing of the sale and purchase
of the Shares (the "Closing") shall take place at the offices of
Arnold P. Guttenberg, Esq., Denver, Colorado, no later than the
close of business on March 10, 2000, or at such other place, date
and time as the parties may agree in writing.
<PAGE>
1.4 Deliveries by Shareholders. At the Closing, the Shareholders
shall deliver the following to NLMC:
(a) The 1,006 common shares to be transferred hereunder, along
with any instruments required to be executed by the
Shareholders, so that the shares can be cancelled by NLMC.
(b) All other documents, instruments and writings required by
this Agreement to be delivered by Shareholders at the
Closing and any other documents or records relating to
Loan's business reasonably requested by NLMC in connection
with this Agreement.
1.5 Deliveries by NLMC. At the Closing, NLMC shall deliver the
following to Shareholders:
(a) The Shares as contemplated by Section 1.2 shall be issued
among the Shareholders as set forth in Exhibit C (or
irrevocable instructions shall be provided to NLMC's
transfer agent to issue said Shares).
(b) All other documents, instruments and writings required by
this Agreement to be delivered by NLMC at the Closing.
2. Conditions to NLMC's Obligations.
The obligations of NLMC to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by NLMC:
2.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Shareholders set forth
in this Agreement shall be true and complete in all material
respects as of the Closing Date as though made at such time.
(b) Shareholders shall have performed and complied in all
material respects with the covenants contained in this
Agreement required to be performed and complied with by it
at or prior to the Closing.
(c) Shareholders shall have put in place an improved team of
mortgage brokers, telemarketing, processing and closing
staff capable of at least equaling the production in the
financials statements within thirty (30) days, and then
growing same in the offices and on the internet.
(d) Shareholders shall deliver the contemplated stock redemption
agreements, releases and waivers satisfactory to NLMC and
duly executed by Michael Bonn, Greg Bonn, David Shirley and
Louis Scotti.
2
<PAGE>
(e) Shareholders shall also deliver satisfactory releases from
its investors, and also from the investors affiliated with
Messrs. Bonn and Scotti, in exchange for which NLMC shall
issue up to 26,000 additional shares of its stock to the
investors of Messrs. Bonn and Scotti.
3. Conditions to Shareholders' Obligations.
The obligations of Shareholders to effect the Closing shall be subject to
the satisfaction at or prior to the Closing of the following conditions, any one
or more of which may be waived by Shareholders:
3.1 Representations, Warranties and Agreements.
(a) The representations and warranties of NLMC set forth in this
Agreement shall be true and complete in all material
respects as of the Closing Date as though made at such time.
(b) NLMC shall have performed and complied in all material
respects with the covenants contained in this Agreement
required to be performed and complied with by it prior to or
at the Closing.
4. Representations and Warranties of Shareholders.
Shareholders represent and warrant to NLMC as follows:
4.1 Organization of Loan; Authorization. Loan is a corporation duly
organized, validly existing and in good standing under the laws
of Colorado with full corporate power and authority to execute
and deliver this Agreement as it pertains to any representations
or undertakings of Loan. The execution, delivery and performance
of this Agreement has been duly authorized by all of the
Shareholders and constitutes a valid and binding obligation of
Shareholders, enforceable against each of them in accordance with
its terms.
4.2 Conflict as to Loan. Neither the execution and delivery of this
Agreement nor the performance of NLMC's obligations hereunder
will (a) violate any provision of any agreement or the
certificate of incorporation or by-laws of Loan or (b) violate
any statute or law or any judgement, decree, order, regulation or
rule of any court or other Governmental Body applicable to Loan.
4.3 Ownership of Assets. The delivery of certificates to Shareholders
in exchange for Shares in NLMC will result in NLMC's immediate
acquisition of 100% of Loan which has record and beneficial
ownership of the Assets, free and clear of all encumbrances
except as listed on Exhibit B. Loan's leases listed on Exhibit E
are in full force and effect and in good standing.
3
<PAGE>
Loan has the rights to the names Home Loan.Com, Inc. and Loan
Mining.Com. Loan also owns the non-exclusive benefit of the Loan
Mining.Com web site development, the business plan for home
improvement financing, and the business model/implementation plan
for Loan Mining.Com.
4.4 Financial Statements and Ledgers. Shareholders have delivered to
NLMC consolidated balance sheets and income statements of
Shareholders through September 30, 1999 and ledgers thru January
31, 2000, which shall be reviewed in detail with NLMC prior to
Closing which shall be reviewed in detail with NLMC prior to
Closing. Attached as Exhibit G is a consolidated statement of
income and expenses through January 31, 2000. The above
financials fairly and accurately represent Loan's business,
operations and assets as of the date thereof and there has not
been any material adverse changes in the business, operations and
assets since the date thereof.
4.5 Equipment. The material items of equipment and other personal
property owned or leased by Loan or its subsidiaries are in good
operating condition and repair (ordinary wear and tear excepted)
and are adequate in all such respects for the purpose for which
they are being used.
4.6 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court of governmental body pending
or threatened in writing against or involving Loan or any of its
subsidiaries which is likely to have a material adverse effect on
the business or financial condition of Loan and its subsidiaries,
taken as a whole, or which would require a payment by
Shareholders or its subsidiaries in excess of $5,000 in the
aggregate or which questions or challenges the validity of this
Agreement. Neither Loan nor any of its subsidiaries is subject to
any judgment, order or decree that is likely to have a material
adverse effect on the business or financial condition of Loan and
its subsidiaries, taken as a whole, or which would require a
payment by Loan or its subsidiaries in excess of $5,000 in the
aggregate. Exhibit D contains the only action, suit, inquiry,
proceeding or investigation pending or threatened against or in
relation to Loan or any of its subsidiaries.
4.7 Agreements of Loan. Loan has no obligations, employment or
consulting arrangement or other agreements except as reflected on
Exhibit E attached hereto and incorporated herein.
4.8 Absence of Certain Changes. Since the date of the balance sheet,
neither Loan nor any of its subsidiaries has:
(a) Suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of
Loan and its subsidiaries, taken as a whole, or made any
disposition of any of its material properties or assets
other than in the ordinary course of business.
4
<PAGE>
(b) Made any change or amendment in its certificate of
incorporation or by-laws or other governing instruments.
(c) Issued or sold any equity securities or other securities
acquired, directly or indirectly, by redemption or
otherwise, any sch equity securities, reclassified, split-up
or otherwise changed any such equity security, or granted or
entered into any options, warrants, calls or commitments of
any kind with respect thereto.
(d) Borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise,
any obligation or liability with respect to any such
indebtedness for borrowed money.
(e) Other than the ordinary course of business, incurred any
liability required by generally accepted accounting
principles to be reflected on a balance sheet and material
to the business or financial condition of Loan and its
subsidiaries taken as a whole.
(f) Incurred any obligation other than as clearly reflected and
identified between the parties hereto in the financial
statement and ledgers.
4.9 No Material Adverse Change. Since the date of the balance sheet,
there has not been any material adverse change in the business or
financial condition of Loan and its subsidiaries taken as whole,
other than changes resulting from economic conditions prevailing
in the United States.
4.10 Brokers or Finders. Shareholders have not employed any broker or
finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the
exchange of the Shares with NLMC.
4.11 Transactions with Directors and Officers. Loan and its
subsidiaries do not engage in business with any person in which
any of Loan's directors or officers has a material equity
interest. No director or officer of Loan owns any property, asset
or right which is material to the business of Loan and its
subsidiaries, taken as a whole.
4.12 Borrowing and Guarantees. Except for items in the ordinary course
of its business, Loan and its subsidiaries (a) do not have any
indebtedness for borrowed money, (b) are not lending or committed
to lend any money (except for advances to employees in the
ordinary course of business), and (c) are not guarantors or
sureties with respect to the obligations of any person.
4.13 Shareholdings of Loan. Attached as Exhibit C is a list of all
shareholders of Loan and their shareholdings in Loan.
5
<PAGE>
4.14 Business Team. Shareholders have put in place an improved team of
mortgage brokers, telemarketing, processing and closing staff
capable of at least equaling the production in the financials
statements within thirty (30) days, and then expanding same in
the offices and on the internet.
4.15 Restricted Securities.
(a) (i) each Shareholder can bear the economic risk of losing each
Shareholder's entire investment in the Shares;
(ii) each Shareholder is acquiring the Shares for investment
purposes only and the Shares each Shareholder is acquiring
will be held by each Shareholder without sale, transfer or
other disposition for an indefinite period unless the
transfer of the Shares subsequently is registered under the
U.S. federal securities laws or unless exemptions from
registration are available;
(iii) each Shareholder's overall commitments to investments that
are not readily marketable is not disproportionate to each
Shareholder's net worth and each Shareholder's investment in
the Shares will not cause such overall commitments to become
excessive;
(iv) each Shareholder's financial condition is such that each
Shareholder is under no present or contemplated future need
to dispose of any portion of the Shares to satisfy any
existing or contemplated undertaking, need or indebtedness;
(v) each Shareholder has adequate means of providing for each
Shareholder's current needs and personal contingencies and
has no need for liquidity in each Shareholder's investment
in the Shares; and
(vi) each Shareholder has sufficient knowledge and experience in
business and financial matters to evaluate and has evaluated
the merits and risks of an investment in the Shares.
(b) Each Shareholder confirms that all documents, records and books
pertaining to an investment in the Shares that have been
requested by each Shareholder have been made available or
delivered to each Shareholder. As a result of its review of NLMC,
including the review of the materials provided to each
Shareholder, each Shareholder understands, among other things,
the following: NLMC has limited financial resources, has incurred
negative cash flow, and recently has not operated at a profit;
and NLMC has not concurrently, and may not in the future, receive
additional investment funds.
6
<PAGE>
Each Shareholder further represents that each Shareholder is
aware of the operations, financial condition and capitalization
of NLMC and has available full information concerning NLMC's
affairs to evaluate the merits and risks of the investment in the
Shares.
(c) Each Shareholder has had the opportunity to ask questions of, and
receive answers from, NLMC concerning the terms of an investment
in the Shares and to receive additional information necessary to
verify the accuracy of the information delivered to each
Shareholders.
(d) Each Shareholder understands that the issuance of the Shares has
not been registered under the U.S. Securities Act of 1933, as
amended (the "Act"), or any state securities laws in reliance on
an exemption for private offerings and no U.S. federal or state
agency has made any finding or determination as to the fairness
of this investment or any recommendation or endorsement of the
offering of the Shares.
(e) The Shares for which each Shareholder hereby subscribes are being
or will be acquired solely for each Shareholder's own account,
for investment, and is not being purchased with a view to or for
the resale, distribution, subdivision or fractionalization
thereof; each Shareholder has no agreement or arrangement for any
such resale, distribution, subdivision or fractionalization
thereof.
(f) Each Shareholder acknowledges that, in making the decision to
purchase the Shares, it has relied solely upon independent
investigations made by it.
(g) Each Shareholder represents that an investment in the Shares is a
suitable investment for each Shareholder.
(h) Each Shareholder acknowledges and is aware that the following
legend will be imprinted on the Shares subscribed to by each
Shareholder:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), AND ARE "RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE 1933 ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, OR
PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT."
7
<PAGE>
(i) Each Shareholder acknowledges and is aware of the following, in
addition to other information included in the information
provided to each Shareholder:
(i) The Shares are a speculative investment and involve a high
degree of risk of loss by each Shareholder of each
Shareholder's total investment.
(ii) There are substantial restrictions on the transferability of
the Securities. The Shares can not be transferred, pledged,
hypothecated, sold or otherwise disposed of unless they are
registered under the Act of an exemption from such
registration is available and established to the
satisfaction of NLMC; except as provided in Section 5.5
below, the Shareholders have no rights to require that any
transfer of the Shares be registered under the Act; there
will be a limited public market for NLMC's Common Stock; and
accordingly, each Shareholder may have to hold the Shares
indefinitely; and it may not be possible for each
Shareholder to liquidate each Shareholder's investment in
NLMC.
5. Representations and Warranties of NLMC:
NLMC represents and warrants to Shareholders as follows:
5.1 Organization of NLMC; Authorization. NLMC is a corporation duly
organized, validly existing and in good standing under the laws
of Utah with full corporate power and authority to execute and
deliver this Agreement as it pertains to any representations or
undertakings of Shareholders. The execution, delivery and
performance of this Agreement has been duly authorized by all
necessary corporate actions of Loan and this Agreement
constitutes a valid and binding obligation of Loan, enforceable
against it in accordance with its terms.
5.2 NLMC Review of Records. NLMC is a sophisticated business entity
and an accredited investor and has been given an opportunity to
review provided corporate records and accountings for Loan and is
acquiring such assets of Loan after satisfaction of its own due
diligence standards.
5.3 Brokers and Finders. NLMC has not employed any broker or finder
or incurred any liability for any brokerage or finder's fees or
commission or similar payments in connection with any of the
transactions contemplated hereby.
8
<PAGE>
5.4 Conflict as to NLMC. Neither the execution and delivery of this
Agreement nor the performance of NLMC's obligations hereunder
will (a) violate any provision of the certificate of
incorporation or by-laws of NLMC or (b) violate any statute or
law or any judgment, decree, order regulation or rule of any
court or other governmental body applicable to NLMC.
5.5 Registration of Shares. NLMC shall file a Registration Statement
including the 5,633,600 Shares acquired by the Shareholders under
this Agreement (and the additional shares in 2.1 (e) above) as
soon as reasonably feasible within sixty (60) to one hundred
twenty (120) days from the date of Closing. Said Registration
Statement shall require the audited financials of Loan, the
completion of NLMC's Form 10K and 10Q filings with the Securities
and Exchange Commission, and legends on the certificates for the
5,633,600 Shares restricting sale of more than 5% per month per
Shareholder (for a period ending June 1, 2002) after
effectiveness of the Registration Statement for all owners of
more than 200,000 Shares of NLMC including current owners of said
Shares (said 5% per month based on the number of shares held at
Closing shall apply to each month and shall not be increased by
aggregation with months in which such sales do not occur).
5.6 Filings. Promptly after this Closing, NLMC shall cause to be
filed with the United States Securities and Exchange Commission,
if necessary, the event report on Form 8-K, which report shall
provide information relative to the consummation of the
transaction provided for in this Agreement.
5.7 Outstanding Shares. NLMC expects that certain existing debts,
described hereto on Exhibit F will be settled in exchange for
Shares and upon extinguishment (or partial extinguishment) of
said debts and subsequent to the issuance of the 5,633,600 Shares
to Shareholders, NLMC will have no more than 12,133,600 issued
and outstanding Shares, except for Shares issued pursuant to cash
financing received subsequent to February 1, 2000.
6. Conduct of Loan's Business Prior to the Closing.
6.1 Operation in Ordinary Course. Between February 1, 2000 and the
Closing date, Loan and its subsidiaries have and shall conduct
their businesses in all material respects in the ordinary course.
6.2 Business Organization. Between the date of this Agreement and the
Closing date, Shareholders shall use their reasonable efforts,
and shall cause Loan and each of its subsidiaries to use its
respective reasonable efforts, to (a) preserve substantially
intact the business organization of Loan and each of its
subsidiaries and keep available the services of the present
officers and employees of Loan and each of its subsidiaries, and
(b) preserve in all material respects the present business
relationships and good will of Loan and each of its subsidiaries.
9
<PAGE>
6.3 Corporate Organization. Between the date of this Agreement and
the Closing date, Shareholders shall not cause or permit Loan of
its subsidiaries to sell, lease, license or otherwise dispose of
any of its properties or assets (including, but not limited to,
rights with respect to patents and registered trademarks and
copyrights or other proprietary rights), in an amount which is
material to the business or financial condition of Loan and its
subsidiaries, taken as a whole, except in the ordinary course of
business.
7. Survival of Representations and Warranties; Indemnification.
7.1 Survival. Each representation, warranty and covenant contained in
this Agreement or in any certificate or document delivered
pursuant hereto shall survive the Closing (the Surviving
Representations, Warranties and Covenants").
7.2 Indemnification by Shareholders. Shareholders shall indemnify and
hold harmless NLMC, and shall reimburse NLMC for, any loss,
liability, damage or expense (including reasonable attorney's
fees) (collectively, "Damages") arising from or in connection
with (a) any inaccuracy in any of the Surviving Representations,
Warranties and Covenants of Shareholders in this Agreement or (b)
any failure by Shareholders to perform or comply with any
agreement in this Agreement.
7.3 NLMC shall indemnify and hold harmless Shareholders, and shall
reimburse Shareholders for, any damages arising from or in
connection with (a) any inaccuracy in any of the Surviving
Representations, Warranties and Covenants of NLMC in this
Agreement, (b) any failure by NLMC to perform or comply with any
agreement in this Agreement.
8. Termination.
8.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
(i) By written agreement of all of the Shareholders and NLMC at
any time prior to Closing.
(ii) By Shareholders, by notice to NLMC at any time, if one or
more of the conditions specified in Section 3 is not
satisfied at the time at which the Closing (as it may be
deferred pursuant to Section 1.3) would otherwise occur or
if satisfaction of such a condition is or becomes
impossible.
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(iii) By NLMC, by notice to Shareholders at any time, if one or
more of the conditions specified in Section 2 is not
satisfied at the time at which the Closing (as it may be
deferred pursuant to Section 1.3), would otherwise occur of
if satisfaction of such a condition is or becomes
impossible.
8.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, this Agreement shall terminate without any
liability or further obligation of any party to another.
9. Notices.
All notices, consents, assignments and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) received by the delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers and telecopier numbers set forth below (or
to such other addresses, telex numbers and telecopier numbers as a party may
designate as to itself by notice to the other parties):
NLMC: Shareholders:
c/o Stephen Flechner c/o Arnold P. Guttenberg, P.C.
1800 Glenarm Place 1777 S. Harrison St.
Suite 210 Suite 1110
Denver, CO 80202 Denver, CO 80210
(303) 294-0427 (303) 758-0073
(303) 293-2235 - fax (303) 782-8107 - fax
10. Miscellaneous.
10.1 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this
Agreement and the performance of its obligations hereunder.
10.2 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the
interpretation of this Agreement.
10.3 No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing.
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<PAGE>
10.4 Exclusive Agreement; Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject
matter and is intended (with the documents referred to herein) as
a complete and exclusive statement of the terms of the agreement
among the parties with respect thereto and cannot be changed or
terminated orally.
10.5 Type B Reorganization. The parties intend that the transaction
described in this Agreement will qualify as a reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the "Code") and that the result in exchange of Shares
will not result in recognition of any gain or loss to NLMC under
Section 1032(a) of the Code or to the Shareholders under Section
354(a)(1) of the Code and the provisions of this Agreement shall
be interpreted consistent with that purpose and any provision
inconsistent thereto shall be deemed null and void.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but
all of which together shall be the complete and binding
Agreement, provided however, initially, NLMC is prepared to sign
the Agreement with Regina Mitchell and Arnold P. Guttenberg, with
the remaining Shareholders to sign at or prior to Closing.
10.7 Governing Law. This Agreement and (unless otherwise provided) all
amendments hereof and waiver and consents hereunder shall be
governed by the internal law of the State of Colorado, without
regard to the conflicts of law principles thereof.
10.8 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective
successors and assigns.
NORTH LILLY MINING COMPANY
/s/ Stephen E. Flechner
-----------------------------------
Stephen E. Flechner
President
/s/ W. Gene Webb
- ----------------------------
W. Gene Webb
Executive Vice President/Secretary
12
<PAGE>
SHAREHOLDERS:
/s/ Regina Mitchell
-----------------------------------
Regina Mitchell
/s/ Scott Simpkins
-----------------------------------
Scott Simpkins
/s/ Arnold P. Guttenberg
-----------------------------------
Arnold P. Guttenberg
/s/ Erin Dominick and /s/ John Dominick
---------------------------------------
Erin Dominick and John Dominick as Joint
Tenants with Rights of Survivorship
/s/ Kimberly A. Pavlin
-----------------------------------
Kimberly A. Pavlin
/s/ Chris Springer
-----------------------------------
Chris Springer
/s/ Gregg Weeder
-----------------------------------
Gregg Weeder
/s/ Dena Weeder
-----------------------------------
Dena Weeder
/s/ Martha J. White
-----------------------------------
Martha J. White
13
<PAGE>
Index of Exchange Agreement Exhibits
Exhibit A- Assets
Exhibit B- Encumbrances
Exhibit C- Shareholding's
Exhibit D- Litigation
Exhibit E- Obligations
Exhibit F- NLMC Payables
Exhibit G- Statement of Income & Expenses
<PAGE>
AGREEMENT
This Agreement dated March 8, 2000 is by and among North Lilly Mining
Company, a Utah corporation ("NLMC"), Regina Mitchell and Home Loan.Com, Inc., a
Colorado corporation ("Loan"). Whenever all three parties are collectively
referred to in this Agreement, they shall be designated as the "parties".
WHEREAS, concurrent with the execution of this Agreement, an Exchange
Agreement was entered into by and between NLMC and Regina Mitchell, Scott
Simpkins, Arnold P. Guttenberg, Erin Dominick, John Dominick, Kimberly A.
Pavlin, Chris Springer, Gregg Weeder, Dena Weeder and Martha J. White
(collectively the "Shareholders"); and
WHEREAS, the Exchange Agreement provided that the Shareholders Loan
exchanged all of the outstanding and issued shares of Loan in exchange for
5,633,600 shares of NLMC; and
WHEREAS, as a result of the Exchange Agreement, Loan became a wholly owned
subsidiary of NLMC; and
WHEREAS, Regina Mitchell has advanced funds and provided other
consideration to Loan and is therefore a creditor of Loan; and
WHEREAS, the parties to this Agreement believe that it is in the best
interests of the parties that any and all amounts that are owed to Regina
Mitchell should be extinguished, canceled and terminated; and
WHEREAS, Regina Mitchell has agreed to accept shares of NLMC in exchange
for all amounts owed to her and NLMC is willing to satisfy the debt of its
wholly owned subsidiary in exchange for its shares.
THE PARTIES THEREFORE AGREE AS FOLLOWS:
1. NLMC shall cause to be issued 199,000 shares to Regina Mitchell in
exchange for any and all advances and other consideration provided by
her to Loan.
2. Upon receipt of the 199,000 shares of NLMC, Regina Mitchell hereby
agrees for herself and all persons or entities that could or might act
on her behalf to release and forever discharge Loan and NLMC from any
and all claims, causes of actions, demands, obligations, of every kind
and nature whatsoever, in law or equity, which she now has or may have
against Loan or NLMC.
3. This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and is intended (with the documents
referred to herein) as a complete and exclusive statement of the terms
of the agreement among the parties with respect thereto and cannot be
changed or terminated orally.
<PAGE>
4. This Agreement shall be governed by the internal law of the State of
Colorado, without regard to the conflicts of law principles thereof.
5. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
NORTH LILLY MINING COMPANY
/s/ Stephen E. Flechner
---------------------------
Stephen E. Flechner
President
/s/ W. Gene Webb
- ----------------------------
W. Gene Webb
Executive Vice President/Secretary
/s/ Regina Mitchell
---------------------------
Regina Mitchell
HOME LOAN.COM, INC.
/s/ Regina Mitchell
---------------------------
Regina Mitchell, President
/s/ Stephanie Mitchell
- ----------------------------
Stephanie Mitchell
2
