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): July 2, 1997
JNS MARKETING, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-13215 84-0940146
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(State or other (Commission File Number) (IRS Employer
jurisdication of incorporation) Identification No.)
1050 17th Street, Suite 1700. Denver, Colorado 80265
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 292-3883
6521 Calhoun Place, Littleton, Colorado 80123
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(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
In July 1997, the Plan and Agreement of Reorganization (the "Plan") entered
into by JNS Marketing, Inc. (the "Company") and Cedar Pacific Golf Properties on
May 12, 1994 was rescinded due to the failure to fulfill certain of the
conditions to which the Plan was subject. The 22,938,593 shares of the no par
value common stock, which previously constituted control of the Company, issued
to Howard and Lacey Arnaiz, Steven and Diane Malcoun, H.D. Arnaiz, Ltd., Omega
Resources, a California Limited Partnership, Blazing Sunsets, a Limited
Partnership and Matt Lucas pursuant to the Plan were returned to the Company and
restored to the status of authorized but unissued shares.
On July 2, 1997, the Company entered into a Stock Purchase Agreement (the
"Agreement") with David J. Gregarek, Frederick R. Huttner, the Frederick R.
Huttner SEP, Henry F. Schlueter and Jerrold D. Burden (the "Purchasers")
pursuant to which the Company issued and sold, and the Purchasers purchased an
aggregate of 22,938,593 shares of the no par value common stock of the Company.
The Purchasers' beneficial ownership of shares is as follows:
Name and Address No. of Shares Percent Consideration
- ---------------- ------------- ------- -------------
Amount Source
------ ------
<S> <C> <C> <C> <C>
David J. Gregarek 5,734,648 22.7% $17,500 Personal
P. O. Box 518 Funds
Littleton, Colorado 80160
Frederick R. Huttner 5,734,648(1) 22.7% $17,500 Personal
13634 Taylor Crest Road Funds
Houston, Texas 77079
Henry F. Schlueter 5,734,649 22.7% $17,500 Personal
1050 17th Street Funds
Suite 1700
Denver, Colorado 80265
Jerrold D. Burden 5,734,648 22.7% $17,500 Personal
Strategic Alliance Co. Funds
680 Franklin Street
Denver, Colorado 80218
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(1) Includes 3,932,330 shares owned of record by the Frederick R. Huttner SEP
The rescinding of the Plan and return of the shares previously issued pursuant
to the Plan, and the issuance of the 22,938,593 shares pursuant to the
Agreement, together, resulted in a change in control of the Company.
Pursuant to the Agreement, the previous directors of the Company resigned
from their positions and Messrs. Gregarek, Delaney and Schlueter were elected to
the Board of Directors. (See Item 6, below.)
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Item 6. Resignations of Registrant's Directors.
By Consent Minutes dated August 6, 1997, David J. Gregarek, Frederick R.
Huttner and Henry F. Schlueter were elected to fill vacancies on the Board of
Directors of the Company and the prior directors of the Company, J.R. Nelson,
Donna K. Nelson and Steven Malcoun, resigned from the Board of Directors
effective August 8, 1997. None of the directors resigned as a result of any
disagreement with the Company.
Item 7. Financial Statements and Exhibits.
(a) No Financial Statements are filed as part of this Report on Form 8-K.
(c) The following Exhibits are filed with this Report on Form 8-K:
99.1 Rescission Agreement effective July 2, 1997, by and between the
Company, Howard and Lacey Arnaiz and H.D. Arnaiz, Ltd., Steven
and Diane Malcoun, Omega Resources, a California Limited
Partnership, Blazing Sunsets, a Limited Partnership, Matt Lucas,
and Cedar Pacific Golf Properties.
99.2 Stock Purchase Agreement effective July 2, 1997 by and among the
Company; J.R. Nelson; and Jerrold D. Burden, David J. Gregarek,
Frederick R. Huttner, the Frederick R. Huttner-SEP, and Henry F.
Schlueter
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.
JNS MARKETING, INC.
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(Registrant)
Date: April 6, 1998 /s/ Henry F. Schlueter
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Henry F. Schlueter, Secretary
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Rescission Agreement
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THIS RESCISSION AGREEMENT is made and entered into effective this 2nd day
of July, 1997, by and between JNS MARKETING, INC., (the Company), a Colorado
corporation, Howard and Lacey Arnaiz and H.D, Arnaiz, Ltd. ( collectively the
"Arnaiz Group"), Steven and Diane Malcoun, Omega Resources, a California Limited
Partnership, Blazing Sunsets, a Limited Partnership, Matt Lucas, and Cedar
Pacific Golf Properties, a Nevada corporation (collectively the CPGP Group).
Each member of the Arnaiz Group and the CPGP Group enters this Agreement
individually and on behalf of the other members of their respective groups.
RECITALS
WHEREAS, the Company, the Arnaiz Group and the CPGP Group previously
entered into certain agreements and reached certain understandings, all of which
were memorialized in a plan for reorganization, which was filed as an exhibit to
a Form 8-K dated May 12, 1994, by the Company with the United States Securities
and Exchange Commission (the "Plan"); and
WHEREAS, the Company, the Arnaiz Group and the CPGP Group never met the
contingencies that would have made the Plan effective and now desire to rescind
their agreements, to convey the shares of the Company's common stock issued to
them under the Plan (the "Shares") to the Company, and to release and discharge
each other from any and all liabilities, claims, or obligations to each other
under the agreements as contained in the Plan; and
WHEREAS, The Arnaiz Group and the CPGP Group took control of the Company on
or about May 14, 1994 ("Effective Date") and initiated a great many changes in
the corporate structure as set forth in the Filing, but the Company has been
dormant for over three years, while the CPGP Group and the Arnaiz Group remained
in control; and
WHEREAS, The CPGP Group and the Arnaiz Group are now willing to relinquish
control of the Company and an agreement for the purchase and sale of the
Companys stock has been entered of even date herewith that will transfer control
of the Company to a new group of investors ( Purchasers or New Investors) and
the Company has negotiated an agreement for the assumption of control of the
Company by Purchasers entitled "Purchase and Sale Agreement" ("New Investor
Agreement") of even date herewith:
TERMS AND CONDITIONS
NOW THEREFORE, in consideration of (i) the mutual promises to release each
other from any and all claims, liabilities or obligations under the Plan, except
as otherwise provided for herein; (ii) certain covenants and agreements
contained in the New Investor Agreement, benefiting the parties hereto,
including specifically, the payment of $70,000.00 by the Purchasers to the
Company, of which approximately $50,000 will be distributed by the Escrow Agent
(as defined hereinafter) to or for the benefit of the Arnaiz Group and the CPGP
Group, and approximately $18,000 will be paid by Escrow Agent directly to
creditors of the Company; and (iii) the promises, covenants and agreements
contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Mutual Release. The Parties, for themselves, affiliates, and respective
officers, directors, employees, attorneys, agents, representatives, successors,
assigns, and trustees hereby release, acquit, and forever discharge each other,
their affiliates, and respective officers, directors, employees, attorneys,
agents, representatives, successors, assigns, and trustees of and from any and
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all claims, demands, damages, judgments, suits, actions, and causes of action of
whatsoever kind, nature, or description, whether arising in law or equity or
upon contract or tort, or under state or federal law or laws, or under common
law, or otherwise, arising from the Plan and related agreements, except for acts
of the Parties not directly related to the Plan or that arise under the terms
and conditions of this Agreement.
2. Company Minutes. The CPGP Group and the Arnaiz Group, or any of them
serving as Directors of the Company, acknowledge and agree to sign, as
appropriate, the attached Unanimous Consent of the Directors ( Exhibit A) in
lieu of a meeting and the Consent of the Stockholders ( Exhibit B) in lieu of a
meeting rescinding the reorganization of the Company, all as set forth in the
Plan, including (i) accepting ownership of that certain corporate, wholly owned
subsidiary of the Company, Cedar Pacific Properties, a Nevada corporation, and
(ii) accepting the terms and conditions of this Agreement.
3. Company Representations.
3.1 The Company represents and confirms to the Arnaiz Group and the
CPGP Group as follows:
3.1.1 That certain obligation due American Stock Transfer
Corporation in the approximate amount of $2,000 (currently $1,820 as listed in
the Settlement Sheet described in 4.2.3) shall be paid in full by the Company
and the Company indemnifies and holds the CPGP Group and the Arnaiz Group
harmless for this obligation, subject only to 3.1.5.
3.1.2 That certain obligation due and owing John Brasher for
attorneys fees in the approximate amount of $3,000.00 shall be paid in full by
the Company and the Company indemnifies and holds the CPGP Group and the Arnaiz
Group harmless for this obligation, subject only to 3.1.5.
3.1.3 Those certain obligations due and owing to (i) Levine,
Hughes & Mithuen, Inc. in the amount of $8,000 and (ii) Jerry Nelson or Nelson's
affiliate in the amount of $5,000, shall be paid in full by the Company and the
Company indemnifies and holds the CPGP Group and the Arnaiz Group harmless for
these obligations, subject only to 3.1.5.
3.1.4. That the Company agrees to pay all of its obligations up
to $18,000.00, including those obligations identified in 3.1.1, 3.1.2, and 3.1.3
above, which were incurred since the Effective Date and before the date of this
Agreement.
3.1.5 The Company also agrees to assume payment of any obligation
created by Purchasers on behalf of the Company or which may be incurred to bring
the Company current with Securities and Exchange Commission reporting
requirements and obligations; including discretionary tax filings identified at
5.1.12. All other corporate liabilities or obligations of any nature or sort in
excess of $18,000.00 (i.e., the amounts identified above in 3.1.1, 3.1.2, and
3.1.3 above) shall be the responsibility of the CPGP Group, and the Arnaiz Group
assumes no responsibility or liability for payment of these excess obligations,
if any.
4. Payment to the CPGP Group , the Arnaiz Group and Escrow Agent. Upon the
return of all Company stock issued to any member of the CPGP Group and the
Arnaiz Group under the Plan or acquired in some other manner by any member of
the CPGP Group and the Arnaiz Group, the following shall occur:
4.1. Companys Obligations. The Company shall:
4.1.1. Subject to adjustment in accordance with the Settlement
Sheet described below, direct the Escrow Agent to pay aggregate consideration of
$49,875.00 to the CPGP Group and the Arnaiz Group, with the CPGP Group receiving
$20,448.75 and the Arnaiz Group receiving $29,426.25. The aggregate
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consideration of $49,875.00 is that amount estimated to be available for
distribution to the CPGP Group and the Arnaiz Group after deduction of various
agreed upon amounts for certain expenses in accordance with the Settlement Sheet
described below in 4.2.3. The consideration shall be held by the Escrow Agent as
hereinafter provided, subject to completion of all other duties provided for
herein.
4.1.2. Transfer all right, title and interest to and for that
certain wholly owned subsidiary, Cedar Pacific Golf Properties, a Nevada
corporation, to members of the CPGP Group and the Arnaiz Group, as the
authorized representative of such groups may direct.
4.2. Escrow Agents Duties. Levine, Hughes & Mithuen, Inc., certified
public accountants agree to act as escrow agents for this transaction. The
parties agree and confirm one to the other that Levine, Hughes & Mithuen, Inc.
Certified Public Accountants, by Raymond Saitta, ( Escrow Agent) is the Escrow
Agent agreed to by both parties to this Agreement. The Parties authorize and
direct the Escrow Agent as follows:
4.2.1. Escrow Agent shall pay the obligations assumed by the
Company as provided hereinabove; and
4.2.2. Escrow Agent shall pay any and all obligations of the CPGP
Group and the Arnaiz Group assumed under the terms of this Agreement before
disbursing any moneys from escrow to the CPGP Group or the Arnaiz Group,
including but not limited to the specific payments referenced in this Agreement
that are not the specific obligations of the Purchasers under this Agreement,
and direct costs of the transfer agent associated with all stock cancellations
and transfers required by this Agreement. Upon payment of the obligations
described in the immediately preceding sentence, Escrow Agent is authorized to
release the moneys provided for in 4.1.1. above to members of the CPGP Group and
the Arnaiz Group, provided that the Escrow Agent receives a written
authorization for disbursement signed by each respective member of the Arnaiz
Group and the CPGP Group.
4.2.3. Escrow Agent shall create a final settlement sheet for
this transaction (the "Settlement Sheet"), which will be attached to and made a
part of this Agreement as Exhibit C. Escrow Agent represents and warrants to the
parties hereto that the Companys books and records reflect that the Companys
financial condition is auditable under the conditions and standards required by
the United States Securities and Exchange Commission; and
4.2.4. Escrow Agent shall transfer all documents, records and
files of the Company, including all stock certificates and letters of
resignation submitted pursuant to this Agreement and being held by Escrow Agent
to such person or persons as the Company may direct, except documents, records
and files of Cedar Pacific Golf Properties, which shall be transferred according
to 4.1.2., above.
4.2.5. Escrow Agent shall perform such duties and tasks as be
required by the New Investor Agreement. Escrow Agent's actions under this
provision shall not have any effect on distribution of funds to the CPGP Group
or the Arnaiz Group under 4.2.2., above.
4.3. Fees and Expenses. It is understood and agreed that any fees or
expenses of Escrow Agent due and owing as a result of acting on behalf of the
Company, the CPGP Group, and the Arnaiz Group are solely the obligations of the
CPGP Group and the Arnaiz Group to be paid according to 4.2.2 and pursuant to
the Settlement Sheet described above in 4.2.3.
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5. Representations and Warranties.
5.1. Each member of the CPGP Group and the Arnaiz Group represents and
warrants to the Company and the Purchasers with respect to the Shares owned by
such person or entity and issued under the Plan:
5.1.1. Ownership of Shares and Right to Transfer. That their
Shares are free and clear of any and all security interests, agreements,
restrictions, claims, liens, pledges and encumbrances of any nature or kind, and
that they each have the absolute and unconditional right to sell, assign,
transfer and deliver their Shares to the Company in accordance with the terms of
this Agreement.
5.1.2. Validity of Agreement. They have the legal capacity and
authority to enter into this Agreement. This Agreement is a valid and legally
binding obligation and is fully enforceable against them in accordance with its
terms, except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors' rights generally.
5.1.3. Agreement Not in Conflict with Other Instruments; Required
Approvals Obtained. The execution, acknowledgment, sealing, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement will not (a) violate or require any registration,
qualification, consent, approval, or filing under, (i) any law, statute,
ordinance, rule or regulation (hereinafter collectively referred to as "Laws")
of any federal, state or local government (hereinafter collectively referred to
as "Governments") or any agency, bureau, commission or instrumentality of any
Governments ("hereinafter collectively referred to as "Governmental Agencies"),
or (ii) any judgment, injunction, order, writ or decree of any court,
arbitrator, Government or Governmental Agency by which the Company or any of its
assets or Properties is bound; (b) conflict with, require any consent, approval,
or filing under, result in the breach or termination of any provision of,
constitute a default under, result in the acceleration of the performance of the
Company's obligations under, or result in the creation of any claim, security
interest, lien, charge, or encumbrance upon any of the Company's properties,
assets, or businesses pursuant to, (i) the Company's Charter or Bylaws, (ii) any
indenture, mortgage, deed of trust, license, permit, approval, consent,
franchise, lease, contract, or other instrument or agreement to which the
Company is a party or by which the Company or any of the Company's assets or
properties is bound, or (iii) any judgment, injunction, order, writ or decree of
any court, arbitrator, Government or Governmental Agency by which the Company or
any of its assets or properties is bound.
5.1.4. Indemnification of Third Party Beneficiaries. Each member
of the CPGP Group and the Arnaiz Group agrees to indemnify and hold harmless the
New Investors and their agents, attorneys, successors and assigns against any
losses, claims, damages, or liabilities (or actions in respect thereof) arising
from any breach of their respective representations and warranties contained in
5.1.1, 5.1.2, and 5.1.3 above.
5.2. Each member of the CPGP Group (but not any members of the Arnaiz
Group) represents and warrants to the Company and the Purchasers as follows:
5.2.1. Due Organization; Good Standing; Authority of the Company.
The Company is a corporation duly organized, validly existing as a stock
corporation, and in good standing under the laws of the State of Colorado. The
Company has full right, power, and authority to own its properties and assets,
and to carry on its business. The Company is duly licensed, qualified and
authorized to do business as a foreign corporation, and is in good standing, in
each jurisdiction in which the properties and assets owned by it or the nature
of the business conducted by it makes such licensing, qualification and
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authorization legally necessary. A complete and correct copy of each of the
Companys Articles of Incorporation, as amended to the date of this Agreement,
(the "Charter") certified by the Secretary of State of the State of Colorado
(the "Department") and bylaws, as amended to the date of this Agreement, and
incorporated by reference herein. The Charter and the Bylaws are in full force
and effect, and the Company is not in breach or violation of any of the
provisions thereof. The minute books of the Company containing the minutes of
the meetings of the stockholders of the Company and the board of directors of
the Company, are complete, correct and accurate as to all proceedings involving
or required of the stockholders and/or the board of directors of the Company.
5.2.2. Validity of Agreement. The CPGP Group has the legal
capacity and authority to enter into this Agreement. This Agreement is a valid
and legally binding obligation of the CPGP Group and is fully enforceable
against the CPGP Group in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights generally.
5.2.3. Capitalization; the Companys Stock; Related Matters. The
Company's authorized capital stock consists of 50,000,000 shares of common
stock. Of the authorized shares outstanding, the CPGP Group represents there are
a total of 25,207,245 shares outstanding, of which 22,938,593 shares are shares
which were issued under the Plan and which for purposes of this Agreement are
subject to cancellation. Delivery of the Shares by the CPGP Group and the Arnaiz
Group to the Company pursuant to this Agreement will transfer all legal and
equitable title to more than 90% of the issued and outstanding common stock of
the Company.
5.2.4. Options, Warrants and Other Rights and Agreements
Affecting The Companys Capital Stock. The Company has no authorized or
outstanding preferred stock, options, warrants, calls, subscriptions, rights,
convertible securities or other securities [as defined in the federal Securities
Act of 1933 (hereinafter "Securities")] or any commitments, agreements,
arrangements or understandings of any kind or nature obligating the Company in
any such case, to issue shares of the Companys capital stock or other Securities
or securities convertible into or evidencing the right to purchase shares of the
Companys capital stock or other Securities. Neither the CPGP Group, nor the
Company, is a party to any agreement, understanding, arrangement or commitment,
or bound by any Articles of Incorporation or bylaw provision which creates any
rights in any Person with respect to the authorization, issuance, voting, sale
or transfer of any shares of the Company's capital stock or other Securities. No
shareholder of the Company has any right of first refusal, nor any preemptive
rights in connection with the issuance of securities of common stock of the
Company.
5.2.5. No Subsidiaries. The Company does not have any
subsidiaries and does not, directly or indirectly, own any interest in or
control any corporation, partnership, joint venture, or other business entity,
except Cedar Pacific Golf Properties, a Nevada corporation, which is represented
as a wholly-owned subsidiary of the Company. All representations made by the
CPGP Group regarding the Company are construed to also include Cedar Pacific
Golf Properties.
5.2.6. Agreement Not in Conflict with Other Instruments; Required
Approvals Obtained. The execution, acknowledgment, sealing, delivery, and
performance of this Agreement by the CPGP Group and the consummation of the
transactions contemplated by this Agreement will not (a) violate or require any
registration, qualification, consent, approval, or filing under, (i) any law,
statute, ordinance, rule or regulation (hereinafter collectively referred to as
"Laws") of any federal, state or local government (hereinafter collectively
referred to as "Governments") or any agency, bureau, commission or
instrumentality of any Governments ("hereinafter collectively referred to as
"Governmental Agencies"), or (ii) any judgment, injunction, order, writ or
decree of any court, arbitrator, Government or Governmental Agency by which the
Company or any of its assets or Properties is bound; (b) conflict with, require
any consent, approval, or filing under, result in the breach or termination of
any provision of, constitute a default under, result in the acceleration of the
performance of the Company's obligations under, or result in the creation of any
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claim, security interest, lien, charge, or encumbrance upon any of the Company's
properties, assets, or businesses pursuant to, (i) the Company's Charter or
Bylaws, (ii) any indenture, mortgage, deed of trust, license, permit, approval,
consent, franchise, lease, contract, or other instrument or agreement to which
the Company is a party or by which the Company or any of the Company's assets or
properties is bound, or (iii) any judgment, injunction, order, writ or decree of
any court, arbitrator, Government or Governmental Agency by which the Company or
any of its assets or properties is bound.
5.2.7. Conduct of Business in Compliance with Regulatory and
Contractual Requirements. The Company has conducted and is conducting its
business in compliance with all applicable Laws of all Governments and
Governmental Agencies. Neither the real or personal properties owned, leased,
operated or occupied by the Company, nor the use, operation or maintenance
thereof, (i) violates any Laws of any Government or Governmental Agency, or (ii)
violates any restrictive or similar covenant, agreement, commitment,
understanding or arrangement.
5.2.8. Licenses; Permits; Related Approvals. The Company
possesses all licenses, permits, consents, approvals, authorizations,
qualifications, and orders ("hereinafter collectively referred to as "Permits")
of all Governments and Governmental Agencies lawfully required to enable the
Company to conduct its business in Colorado. All of the Permits are in full
force and effect, and no suspension, modification or cancellation of any of the
Permits is pending or threatened.
5.2.9. Legal Proceedings. There is no action, suit, proceeding,
claim, arbitration, or investigation by any Government, Governmental Agency or
other Person (i) pending to which the Company is a party, (ii) threatened
against or relating to the Company or any of the Company's assets or businesses,
(iii) challenging the Company's right to execute, acknowledge, seal, deliver,
perform under or consummate the transactions contemplated by this Agreement, or
(iv) asserting any right with respect to any of the CPGP Group Shares, and there
is no basis for any such action, suit, proceeding, claim, arbitration or
investigation.
5.2.10. Financial Statements; Undisclosed Liabilities. Attached
hereto as Exhibit D and incorporated by reference herein are copies of certain
unaudited balance sheets, Statements of Operations and Retained Earnings and
Statements of Changes in Financial Position prepared by Escrow Agent as of the
dates and for the periods ending on such dates as are stated
thereon,(hereinafter collectively referred to as the "Financial Statements").
The Financial Statements are in accordance with the books and records of the
Company, are true, correct and complete and accurately present the Company's
financial position as of the dates set forth therein and the results of the
Company's operations and changes in the Company's financial position for the
periods then ended, all in conformity with generally accepted accounting
principles applied on a consistent basis during each period and on a basis
consistent with that of prior periods. Specifically, the Financial Statements
are represented to be auditable and nothing contained in the Financial
Statements or the information relied on to create said Statements would prevent
an audit of the Company based on standards of the United States Securities and
Exchange Commission; except (i) as disclosed in the Financial Statements and
(ii) as disclosed in this Agreement. There are no claims, liabilities (of any
nature or sort, whether absolute, accrued, unaccrued, liquidated, unliquidated,
contingent or otherwise) or obligations not fully disclosed in the Company's
Financial Statements. All prepaid items set forth in the Company's Financial
Statements have been properly accrued.
5.2.11. Tax Matters. Because of the inactive nature of the
Company as represented in 5.2.16., below, the Company has not filed, with any
appropriate Governmental Agencies, any tax returns, information returns, and
reports. Further, the Company was not required make any such filings. The
Company has no liabilities for taxes (including taxes withheld from employees'
salaries and other withholding taxes and obligations), interest, penalties,
assessments or deficiencies owed to any taxing authorities. There are and have
not been any claims by the Internal Revenue Service ("IRS"), or any state taxing
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authorities, for taxes due and payable by the Company. There are and have not
been any deficiencies or assessments claimed, made or settled against the
Company. Any and all tax related matters are contained in and are fully provided
for in the Financial Statements (see 5.2.10., above). The Company has not
adopted a plan of complete liquidation under the Internal Revenue Code of 1986,
as amended (the "Code"), or filed a consent pursuant to Section 341(f) of the
Code. The Company is not a party to, and is not aware of, any pending or
threatened action, suit, proceeding, or assessment against it for the collection
of taxes by any Governmental Agency. Neither the Company nor the CPGP Group make
any representations or warranties with respect to tax loss carry-forwards.
5.2.12 Reliance on Representations. The CPGP Group represents and
confirms they understand the significance of these representations to the
Purchasers who are acquiring the Companys stock and relying on representations
contained within this Agreement in connection with entering into the New
Investor Agreement.
5.2.13 Indemnification of Third Party Beneficiaries. The
undersigned members of the CPGP Group agree to indemnify and hold harmless the
New Investors and their agents, attorneys, successors and assigns against any
losses, claims, damages, or liabilities (or actions in respect thereof) arising
from (i) any breach of this Agreement, including but not limited to the
representations and warranties contained in this Agreement, and (ii) any actual
or alleged misrepresentation or misstatement of facts or omission to represent
or state facts as represented in 5.2.17 below, either by way of this Agreement,
or in the documentation of the Companys books and records as compiled and held
by the Escrow Agent and relied on by the New Investors.
5.2.14 Representation of Financial Responsibility. The CPGP Group
represents and confirms they assume full responsibility for all financial
obligations incurred by the corporation prior to the date of this Agreement,
except as set forth in paragraph 4 above; the CPGP Group shall indemnify and
hold the Company harmless for any and all other and further obligations in
excess of $18,000.00 (see 3.1.5, above), which are solely the responsibility of
the CPGP Group.
5.2.15. Controlled Group. The Company is not a member of a
commonly controlled group of trades or businesses, an affiliated service group,
or an employee leasing arrangement under Section 414 of the Code.
5.2.16. Inactive Nature of Company. On the Effective Date, the
Company was not actively engaged in any business operations and had no material
tangible assets, real or personal, had no employees other than a President and
Secretary and was not a party to any contracts, leases, security agreements,
employment agreements, collective bargaining agreements, employee benefit plans,
licenses, permits, promissory notes, loan agreements, security agreements,
mortgages or other contracts or agreements except for the contracts and
agreements relating to the Plan and had no liabilities (contingent or
otherwise). The CPGP Group represents and affirms the inactive status of the
Company has remained consistently the same from the Effective Date to the date
of this Agreement.
5.2.17. Full Disclosure. This Agreement (including the Exhibits
hereto) does not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained herein not
misleading. There is no fact known to the CPGP Group, regarding the Company's
financial condition, results of operations, business, or prospects, which has
not been disclosed in this Agreement; or which materially adversely affects the
accuracy of the representations and warranties contained in this Agreement.
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5.2.18. No Brokerage. Sellers have not incurred any obligation or
liability, contingent or otherwise, for brokerage fees, finder's fees, agent's
commissions, or the like in connection with this Agreement or the transactions
contemplated hereby.
5.3. Stock Cancellation. The CPGP Group shall return for cancellation,
at no expense to the Company (i.e., transfer agents fees and costs), any and all
stock acquired for themselves or for others who may have acquired stock, in any
form, kind, or nature ( Sellers Stock) all in accordance with the Articles and
Bylaws of the Company and subject to and approved by the Company. All
certificates submitted for cancellation shall be given to the Escrow Agent.
6. Resignation from the Company. Any member of the CPGP Group holding
office, in either an elected or appointed position, agrees to submit a letter of
resignation upon signing this Agreement, which will be effective no later than
the closing of the transaction contemplated by this Agreement in conjunction
with the Agreement for Purchase and Sale of Stock with the Purchasers referred
to in 5.1.13 and 5.1.14, above.
6.1. Disposition. Said letter of resignation is subject to approval by
the Company and is to be made part of the corporate records.
6.2. Content. Each letter submitted shall state the name of the person
resigning, the position or positions held by that person, a statement of
resignation and a statement absolving the Company of any liability whatsoever.
7. Miscellaneous.
7.1. Survival of Representations, Warranties, and Agreements. All of
the representations, warranties, covenants, promises and agreements of the
parties contained in this Agreement (or in any document delivered or to be
delivered pursuant to this Agreement or in connection with the Closing) shall
survive the execution, acknowledgment, sealing and delivery of this Agreement
and the consummation of the transactions contemplated hereby for a period of
thirty-six (36) months following the Closing.
7.2. Certain Definitions. As used throughout this Agreement, the
following terms have the following meanings:
7.2.1. "Affiliate" has the meaning ascribed to such term in Rule
405 promulgated under the Securities Act, as such rule is in effect on the date
hereof.
7.2.2. "Person" means an individual, partnership, corporation,
trust, unincorporated organization, government, or agency or political
subdivision of a government.
7.2.3. "Securities Act" means the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect at the relevant time.
7.3. Notices. All notices, requests, demands, consents, and other
communications which are required or may be given under this Agreement
(collectively, the "Notices") shall be in writing and shall be given either (a)
by personal delivery against a receipted copy, or (b) by certified or registered
U.S. mail, return receipt requested, postage prepaid, to the following
addresses:
(i) If to the CPGP Group:
C/O Steven Malcoun
2453 Grand Canal Blvd.
Stockton, CA 95207-8253
8
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(i) If to the Arnaiz Group:
C/O Russell. L. Ray
3158 Auto Center Circle, Suite "E"
Stockton, CA 95221
(iii) If to the Company:
C/O Henry F. Schlueter, Esq.
Schlueter & Associates, P.C.
1050 17th Street, Suite 1700
Denver, Colorado 80265
(iv) If to the Escrow Agent:
Levine Hughes & Mithuen, Inc.
Attn: Ray Saitta
6025 South Quebec Street, Suite 325
Englewood, CO 80111
or to such other address of which written notice in accordance with this ss. 7.3
shall have been provided by such party. Notices may only be given in the manner
hereinabove described in this ss. 7.3 and shall be deemed received when given in
such manner.
7.4. Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the full, entire and integrated agreement between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, correspondence, understandings and agreements among the parties
hereto respecting the subject matter hereof.
7.5. Assignability. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto;
provided, however, that the Purchaser may, without the prior written consent of
any other party, assign its interest in this Agreement to any affiliate of the
Purchaser if such affiliate undertakes to perform the Purchaser's obligations
hereunder that shall have been so assigned, and upon, from and after such
assignment the Purchaser shall have no further liabilities, obligations or
duties in respect of the rights, obligations and duties so assigned.
7.6. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, each other person who is
indemnified under any provision of this Agreement, and their respective heirs,
personal and legal representatives, guardians, successors and, in the case of
Purchaser, its permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights, remedies, obligations,
or liabilities.
7.7. Severability. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability, without
invalidating or rendering unenforceable the remaining provisions of this
Agreement.
7.8. Amendment; Waiver. No provision of this Agreement may be amended,
waived, or otherwise modified without the prior written consent of all of the
parties hereto. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement herein contained. The waiver by any party hereto
of a breach of any provision or condition contained in this Agreement shall not
operate or be construed as a waiver of any subsequent breach or of any other
conditions hereof.
9
<PAGE>
7.9. Section Headings. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
7.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.11. Applicable Law. This Agreement is made and entered into, and
shall be governed by and construed in accordance with, the laws of the State of
Colorado.
7.12. Remedies. The parties hereto acknowledge that the Sellers Shares
are unique; that any claim for monetary damages may not constitute an adequate
remedy; and that it may therefore be necessary for the protection of the parties
and to carry out the terms of this Agreement to apply for the specific
performance of the provisions hereof. It is accordingly hereby agreed by all
parties that no objection to the form of the action or the relief prayed for in
any proceeding for specific performance of this Agreement shall be raised by any
party, in order that such relief may be expeditiously obtained by an aggrieved
party. All parties may proceed to protect and enforce their rights hereunder by
a suit in equity, transaction at law or other appropriate proceeding, whether
for specific performance or for an injunction against a violation of the terms
hereof or in aid of the exercise of any right, power or remedy granted hereunder
or by law, equity or statute or otherwise. No course of dealing and no delay on
the part of any party hereto in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice its rights, powers or
remedies, and no right, power or remedy conferred hereby shall be exclusive of
any other right, power or remedy referred to herein or now or hereafter
available at law, in equity, by statute or otherwise.
7.13. Further Assurances. The CPGP Group jointly and severally agree
to execute, acknowledge, seal and deliver, after the date hereof, without
additional consideration, such further assurances, instruments and documents,
and to take such further actions, as the Company may request in order to fulfill
the intent of this Agreement and the transactions contemplated hereby.
7.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8. Right to Legal Counsel. Each of the Parties specifically represents and
warrants he/she/it will not raise or use their failure to obtain counsel as a
defense or claim against any other party, or as a defense to enforcement of the
specific provisions of documents prepared with or associated with this
Rescission Agreement or the Rescission Agreement itself. Further, each of the
Parties represents and warrants to each of the other Parties that they have read
this Rescission Agreement and they fully know, understand, and appreciate its
contents and that they execute it and make and covenant as provided for herein
voluntarily and of their own free will.
10
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Rescission Agreement
consisting of twelve (12) pages, including the signature pages, effective as of
the date first set forth above.
The Company The CPGP Group
- ----------- --------------
JNS Marketing, Inc. Cedar Pacific Golf Corporation
a Colorado corporation (formerly JNS Marketing, Inc.)
By:___________________________ By:___________________________________
Jerald R. Nelson, President Steven Malcoun, President
Attest: ______________________ Attest:_______________________________
Donna K. Nelson Diane Malcoun
The Arnaiz Group
- ----------------
______________________________ ______________________________________
Howard Arnaiz, an individual Lacey Arnaiz, an individual
H.D. Arnaiz, Ltd.
By:_______________________
Howard Arnaiz
Escrow Agent
- ------------
Levine, Hughes & Mithuen, Inc.
6025 South Quebec Street, Suite 325
Englewood, CO 80111
By:_______________________
Raymond Saitta
Other CPGP Group Members
- ------------------------
Omega Resources, a Limited Partnership
By:_______________________
General Partner
Blazing Sunsets, a Limited Partnership
By:_______________________
General Partner
11
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Individual Signatures
- ---------------------
NOTARY PUBLIC
Subscribed and sworn to before me this _____ day of July, 1997.
My commission expires:
___________________________
Notary Public
__________________________________
Howard D. Arnaiz, an individual
NOTARY PUBLIC
Subscribed and sworn to before me this _____ day of July, 1997.
My commission expires:
___________________________
Notary Public
__________________________________
Lacey Arnaiz, an individual
NOTARY PUBLIC
Subscribed and sworn to before me this _____ day of July, 1997.
My commission expires:
____________________________
Notary Public
___________________________________
Steven Malcoun, an individual
NOTARY PUBLIC
Subscribed and sworn to before me this _____ day of July, 1997.
My commission expires:
____________________________
Notary Public
___________________________________
Diane Malcoun, an individual
12
<PAGE>
NOTARY PUBLIC
Subscribed and sworn to before me this _____ day of July, 1997.
My commission expires:
____________________________
Notary Public
_________________________________
Matt Lucas, an individual
13
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
effective this 2nd day of July, 1997, by, between and among JNS Marketing, Inc.,
a Colorado corporation (sometimes referred to herein as the "Seller" and
sometimes referred to herein as the "Company"); J.R.(Jerry) Nelson (sometimes
referred to herein as "Nelson"); and Jerrold D. Burden, David Gregarek,
Frederick R. Huttner, the Frederick R. Huttner-SEP, and Henry F. Schlueter
(sometimes individually referred to as a "Purchaser" and hereinafter
collectively, jointly and severally referred to as the "Purchasers").
EXPLANATORY STATEMENT
A. The Company previously entered into certain agreements with Howard and
Lacey Arnaiz, Steven and Diane Malcoun, H.D. Arnaiz, Ltd., Omega Resources, a
California Limited Partnership, Blazing Sunsets, a Limited Partnership, Matt
Lucas, and Cedar Pacific Golf Properties, a Nevada corporation (collectively,
the "CPGP Group"), including a Plan and Agreement of Reorganization dated May
14, 1994 whereby each shareholder of Cedar Pacific Golf Properties collectively
agreed to transfer all the issued and outstanding shares of common stock in that
company to Company in exchange for 22,938,593 shares of common stock, no par
value, of the Company to be issued in connection with the Plan and Agreement of
Reorganization, subject to the terms, conditions and contingencies set forth in
the Plan and Agreement of Reorganization.
B. Certain contingencies set forth in the Plan and Agreement of
Reorganization were not satisfied and, as a result, the Company and the CPGP
Group have agreed to rescind the transactions contemplated by the Plan And
Agreement of Reorganization as evidenced by that certain Rescission Agreement
between the Company and the CPGP Group of even date herewith. Pursuant to the
Rescission Agreement, all shares of common stock of the Company issued to the
CPGP Group will be returned to the Company and canceled.
C. The Seller desires to sell, assign, transfer and deliver to the
Purchasers newly issued shares of common stock of the Company in amount equal to
22,938,593 shares of common stock which is equal to the number of shares of
common stock returned to the Company and canceled by the CPGP Group; and the
Purchasers desire to purchase 22,938,593 shares (the "Seller's Shares") from the
Company on the terms and conditions hereinafter set forth.
TERMS AND CONDITIONS
NOW THEREFORE, in consideration of the Explanatory Statement that shall be
deemed to be a substantive part of this Agreement, the mutual covenants,
promises, agreements, representations and warranties contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
covenant, promise, agree, represent and warrant as follows:
1. Purchase and Sale of the Seller's Shares.
1.1 Purchase and Sale. On the terms and subject to the conditions set
forth in this Agreement, at the Closing on the Closing Date, the Seller shall
sell, assign, transfer and deliver to the Purchasers and the Purchasers shall
purchase from the Seller, 22,938,593 Seller's Shar es, allocated among the
individual Purchasers as follows:
<PAGE>
NUMBER OF
PURCHASERS SHARES PURCHASED
---------- ----------------
Henry F. Schlueter 5,734,649
David Gregarek 5,734,648
Frederick R. Huttner 1,802,318
Frederick R. Huttner-SEP 3,932,330
Jerrold D. Burden 5,734,648
Total 22,938,593
1.2 Purchase Price; Transfer of Securities.
1.2.1 The full, entire and aggregate purchase price that shall be
paid at the Closing on the Closing Date by the Purchaser to the Seller for the
Seller's Shares shall be Sixty-five Thousand Dollars ($65,000) (the "Purchase
Price"). A deposit in the amount of $70,000 has been previously delivered in
escrow by Purchasers and shall be applied to the Purchase Price and the
liabilities assumed under Section 1.2.2 below at Closing.
1.2.2 In addition to payment of the Purchase price, Purchasers
agree to assume those liabilities specifically identified in Section 3.1.13, but
only in an amount not to exceed $5,000.
1.2.3 The Seller shall deliver to the Purchasers at the Closing
on the Closing Date, an aggregate of 22,938,593 shares of common stock, which
shares shall be validly issued, full paid and non-assessable upon issuance in
accordance with the terms of this Agreement.
1.2.4 Purchasers shall not acquire any interest whatsoever in and
to that certain wholly owned subsidiary of the Company, Cedar Pacific Golf
Properties, a Nevada corporation, because the transaction in which the Company
was to acquire that subsidiary is being rescind ed concurrently. The CPGP Group
shall assume all ownership in said corporation pursuant to the terms of the
Rescission Agreement and shall hold Purchasers harmless, indemnifying them
against any liability or claim arising from said corporation. Representations
made by Seller under paragraph 3 below, concerning the Company are made
inclusive of said corporation.
2. Closing. The closing of the purchase and sale of the Seller's Shares
provided for by this Agreement (referred to throughout this Agreement as the
"Closing") shall take place at the offices of Levine Hughes & Mithuen, Inc.,
6025 South Quebec Street, Suite 325, Englewood, CO 80111 on August 7, 1997, at
ten o'clock a.m., or at such other date and time as the parties may mutually
agree. The time, place and date of Closing are referred to throughout this
Agreement as the "Closing Date."
3. Representations and Warranties.
3.1 Representations and Warranties of Nelson and the Company. Nelson
and the Company represent and warrant to the Purchasers that:
3.1.1 Ownership of Seller's Shares. The Seller's Shares are free
and clear of any and all security interests, agreements, restrictions, claims,
liens claims, pledges and encumbrances of any nature or kind. The Company has
the absolute and unconditional right to issue , sell, assign, and transfer
2
<PAGE>
Seller's Shares in accordance with the terms and conditions of this Agreement.
Further, Seller has the absolute right to cancel the shares being returned to
the Company under the Rescission Agreement by the CPGP Group. Both the Company
and the Purchasers have relied on the representations of the CPGP Group in
entering into this Agreement.
3.1.2 Due Organization; Good Standing; Authority of the Company.
The Company is a corporation duly organized, validly existing as a corporation,
and in good standing under the laws of the State of Colorado. The Company has
full right, power, and authority to own its properties and assets, and to carry
on its business. The Company is duly licensed, qualified and authorized to do
business as a foreign corporation, and is in good standing, in each jurisdiction
in which the properties and assets owned by it or the nature of the business
conducted by it makes such licensing, qualification and authorization legally
necessary. A complete and correct copy of each of the Company's Articles of
Incorporation, as amended to the date of this Agreement, (the "Charter")
certified by the Secretary of State of the State of Colorado (the "Department"),
bylaws, as amended to the date of this Agreement, (the "Bylaws"), and a list of
the shareholders of the Company, certified by the Company' transfer agent, are
attached to this Agreement as Exhibits 1, 2 and 3, respectively, and are
incorporated by reference herein. The Charter and the Bylaws are in full force
and effect, and the Company is not in breach or violation of any of the
provisions thereof. The minute books of the Company containing the minutes of
the meetings of the stockholders of the Company and the board of directors of
the Company, which were heretofore made available to the Purchaser for
examination, are complete and correct and accurately reflect all proceedings of
the stockholders of the Company and the board of directors of the Company.
3.1.3 Validity of Agreement. The Company has the legal capacity
and authority to enter into this Agreement. This Agreement is a valid and
legally binding obligation of the Company and is fully enforceable against the
Company in accordance with its terms, except as su ch enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors' rights generally.
3.1.4 Capitalization; the Company's Stock; Related Matters. The
Company's authorized capital stock consists of 50,000,000 shares of common
stock, no par value of which 2,268,652 shares are issued and outstanding
(exclusive of the shares cancelled under the Rescission Agreement and the shares
to be issued under this Agreement). There are no other authorized classes of
capital stock of the Company. The outstanding shares have been duly, legally and
validly issued, and are fully-paid and non-assessable. Upon payment therefor in
accordance with this Agreement, the Seller's shares being issued to Purchasers
will be duly, legally and validly issued shares of the Company's common stock,
and will be fully paid and non-assessable. Shares issued by the Company to
Purchaser s at the Closing on the Closing Date pursuant to this Agreement will
transfer full legal and equitable title to not less than 90% of the issued and
outstanding common stock of the Company.
3.1.5 Options, Warrants and Other Rights and Agreements Affecting
The Company's Capital Stock. The Company has no authorized preferred or
outstanding options, warrants, calls, subscriptions, rights, convertible
securities or other securities [as defined in the federa l Securities Act of
1933 (hereinafter "Securities")] or any commitments, agreements, arrangements or
understandings of any kind or nature obligating the Company in any such case, to
issue shares of the Company's capital stock or other Securities or securities
convertible into or evidencing the right to purchase shares of the Company's
capital stock or other Securities. Neither the Seller nor the Company is a party
to any agreement, understanding, arrangement or commitment, or bound by any
Articles of Incorporation or bylaw provision which creates any rights in any
Person with respect to the authorization, issuance, voting, sale or transfer of
any shares of the Company's capital stock or other Securities. No shareholder of
the Company has any right of the first refusal, nor any preemptive rights, in
connection with the issuance of securities of common stock of the Company.
3
<PAGE>
3.1.6 No Subsidiaries. The Company does not have any subsidiaries
and does not, directly or indirectly, own any interest in or control any
corporation, partnership, joint venture, or other business entity, except Cedar
Pacific Golf Properties, a Nevada corporation, r epresented as a wholly-owned
subsidiary of the Company, and which shall cease to have any ownership or
interest in said subsidiary pursuant to the aforementioned Rescission Agreement.
3.1.7 Agreement Not in Conflict with Other Instruments; Required
Approvals Obtained. The execution, acknowledgment, sealing, delivery, and
performance of this Agreement by the Seller and the consummation of the
transactions contemplated by this Agreement will not (a) violate or require any
registration, qualification, consent, approval, or filing under, (i) any law,
statute, ordinance, rule or regulation (hereinafter collectively referred to as
"Laws") of any federal, state or local government (hereinafter collectively
referred to as "Governments") or any agency, bureau, commission or
instrumentality of any Governments ("hereinafter collectively referred to as
"Governmental Agencies"), or (ii) any judgment, injunction, order, writ or
decree of any court, arbitrator, Government or Governmental Agency by which the
Company or any of its assets or Properties is bound; (b) conflict with, require
any consent, approval, or filing under, result in the breach or termination of
any provision of, constitute a default under, result in the acceleration of the
performance of the Company's obligations under, or result in the creation of any
claim, security interest, lien, charge, or encumbrance upon any of the Company's
properties, assets, or businesses pursuant to, (i) the Company's Charter or
Bylaws, (ii) any indenture, mortgage, deed of trust, license, permit, approval,
consent, franchise, lease, contract, or other instrument or agreement to which
the Company is a party or by which the Company or any of the Company's assets or
properties is bound, or (iii) any judgment, injunction, order, writ or decree of
any court, arbitrator, Government or Governmental Agency by which the Company or
any of its assets or properties is bound.
3.1.8 Licenses; Permits; Related Approvals. The Company possesses
all licenses, permits, consents, approvals, authorizations, qualifications, and
orders ("hereinafter collectively referred to as "Permits") of all Governments
and Governmental Agencies lawfully require d to enable the Company to conduct
its business in all jurisdictions. All of the Permits are in full force and
effect, and no suspension, modification or cancellation of any of the Permits is
pending or threatened.
3.1.9 Legal Proceedings. There is no action, suit, proceeding,
claim, arbitration, or investigation by any Government, Governmental Agency or
other Person (i) pending to which the Company is a party, (ii) threatened
against or relating to the Company or any of the Co mpany's assets or
businesses, (iii) challenging the Company's right to execute, acknowledge, seal,
deliver, perform under or consummate the transactions contemplated by this
Agreement, or (iv) asserting any right with respect to any of the Seller's
Shares, and there is no basis for any such action, suit, proceeding, claim,
arbitration or investigation.
3.1.10 Financial Statements; Undisclosed Liabilities. Attached
hereto as Exhibit 4 and incorporated by reference herein is a financial
statement in a form subject to approval by Purchasers and prepared by Levine,
Hughes & Mithuen, Certified Public Accountants, with an ending date of May 31,
1997 (hereinafter referred to as the "Financial Statement"). The Financial
Statement is prepared in accordance with the books and records of the Company,
is true, correct and complete, accurately presenting the Company's financial
position, all in conformity with generally accepted accounting principles and
practices applied on a consistent basis during each period and on a basis
consistent with that of prior periods. Specifically, the finances of the Company
4
<PAGE>
are represented to be auditable; nothing contained in the Financial Statement or
the information relied on to create the Financial Statement prevents an audit of
the Company to standards acceptable to the United States Securities and Exchange
Commission, except (i) as disclosed in the Financial Statement and (ii) as
disclosed in this Agreement. There is no basis for assertion against the Company
of any claim, liability or obligation not fully disclosed in the Financial
Statement. All prepaid items set forth in the Company's Financial Statement have
been properly accrued.
3.1.11 Tax Matters. Because of the inactive nature of the Company
as represented inss.3.1.13 below, the Company has not filed, with any
appropriate Governmental Agencies, any tax returns, information returns, and
reports. Further, the Company was not required to make any such filings. The
Company has no liabilities for taxes (including taxes withheld from employees'
salaries and other withholding taxes and obligations), interest, penalties,
assessments or deficiencies owed to any taxing authorities. There are and have
not been any claims by the Internal Revenue Service ("IRS"), or any state taxing
authorities, for taxes due and payable by the Company. There are and have not
been any deficiencies or assessments claimed, made or settled against the
Company. Any and all tax related matters are contained in and are fully provided
for in the Financial Statement (seess.3.1.10 above). The Company has not adopted
a plan of complete liquidation under the Internal Revenue Code of 1986, as
amended (the "Code"), or filed a consent pursuant to Section 341(f) of the Code.
The Company is not a party to, and is not aware of, any pending or threatened
action, suit, proceeding, or assessment against it for the collection of taxes
by any Governmental Agency. Neither the Company nor Nelson make any
representations or warranties with respect to tax loss carry-forwards.
3.1.12 Controlled Group. The Company is not a member of a
commonly controlled group of trades or businesses, an affiliated service group,
or an employee leasing arrangement under Section 414 of the Code.
3.1.13 Inactive Nature of Company. The Company is not actively
engaged in any business operations and has no material tangible assets, real or
personal, has no employees other than a President and Secretary and is not a
party to any agreements, contracts, leases, secu rity agreements, employment
agreements, collective bargaining agreements, employee benefit plans, pension
plans, profit sharing agreements, stock option agreements, licenses, permits,
promissory notes, loan agreements, security agreements, mortgages or other
contracts or agreements, except for the contracts and agreements relating to the
Plan and Agreement of Reorganization and has no liabilities or obligations of
any nature or kind, known or unknown, whether absolute, contingent, or otherwise
except as follows:
Levine Hughes & Mithuen, CPAs $ 8,000
John Brasher, Attorney at Law $ 3,000
American Securities Transfer and Trust, Inc. $ 2,000*
Nelson Billing $ 5,000
*$1,820 as of the last billing statement
3.1.14 Full Disclosure. This Agreement (including the Exhibits
hereto) does not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained herein not
misleading. There is no fact known to the Company n ot disclosed in this
Agreement which materially, adversely, affects the accuracy of the
representations and warranties contained in this Agreement, including, but not
limited to, the Company's financial condition, results of operations, business,
and prospects.
5
<PAGE>
3.1.15 No Brokerage. Seller has not incurred any obligation or
liability, contingent or otherwise, for brokerage fees, finder's fees, agent's
commissions, or the like in connection with this Agreement or the transactions
contemplated hereby.
3.1.16 Conduct of Business in Compliance with Regulatory and
Contractual Requirements. The Company has conducted and is conducting its
business in compliance with all applicable laws of all governments and
governmental agencies. Neither the real or personal properties owned, leased,
operated or occupied by the Company, nor the use, operation or maintenance
thereof, (i) violates any law or regulation of any government or governmental
agency, including the Securities Act, or (ii) violates any restrictive or
similar covenant, agreement, commitment, understanding or arrangement.
3.1.17 Reliance on Representations. The Company represents and
confirms it understands the significance of these representations made herein to
Purchasers, individually and as a group, who are acquiring the Seller's Shares
and relying on said representations as contai ned within this Agreement.
3.1.18 Other Representations and Obligations Arising Therefrom.
By separate agreement entitled "Rescission Agreement" the Company received
representations from a previous control group of the Company. The Company's
representations and warranties as expressed herein ar e without limitation. As
further consideration for the Purchasers, acquisition of the Seller's shares
under this Agreement, and to induce Purchasers to enter into this Agreement,
Nelson agrees to escrow 400,000 shares of the Company's stock (which represents
approximately forty percent of all stock of the Company held by him or in which
he has an interest), for a period of fifteen months from the date of this
Agreement subject to forfeiture to Purchasers for breach of the representations
and warranties of the Company contained in this Agreement or for other breaches
of this Agreement by the Company, as described in Section 5 below.
3.2 Representations and Warranties of the Purchasers. Each of the
Purchasers severally (and not jointly) represents and warrants to Seller as
follows:
3.2.1 Power. Each Purchaser has all requisite power to enter into
this Agreement and to perform his respective obligations hereunder.
3.2.2 Authorization and Validity of Documents. The execution,
acknowledgment, sealing, delivery, and performance of this Agreement by each
Purchaser, and the consummation by each Purchaser of the transactions
contemplated hereby, have been duly and validly authorized by each Purchaser.
This Agreement has been duly executed, acknowledged, sealed and delivered by
each Purchaser and is a legal, valid, and binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights generally.
3.2.3 Investment Intent. Each Purchaser is acquiring the Seller's
Shares for investment only, for the Purchaser's own account, and not with a view
to, offer for sale or to sell in connection with, the distribution or transfer
thereof. Seller's Shares are not being pu rchased for subdivision or
fractionalization thereof; and the Purchasers have no contract, undertaking,
agreement or arrangement with any Person to sell, hypothecate, pledge, donate or
otherwise transfer (with or without consideration) to any such Person any of the
Seller's Shares which each Purchaser is acquiring hereunder, and each Purchaser
has no present plans or intention to enter into any such contract, undertaking,
agreement or arrangement.
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3.2.4 No Brokerage. The Purchasers have not incurred any
obligation or liability, contingent or otherwise, for brokerage fees, finder's
fees, agent's commissions, or the like in connection with this Agreement or the
transactions contemplated hereby.
4. Additional Covenants of the Parties. At the Closing on the Closing Date:
4.1 Resignations of Officers and Directors of the Company. The
resignation of each of the Company's officers and directors effective no later
than the Closing on the Closing Date in a form acceptable to Purchasers shall
have been executed and delivered to Purchasers by each s uch officer and
director, and Messrs. Gregarek, Huttner and Schlueter shall have been duly
elected to the Board of Directors of the Company.
4.2 Rescission of Plan and Agreement of Reorganization. Prior to or
simultaneously with the Closing, the Company and the CPGP Group shall have
entered into a Rescission Agreement to rescind the Plan and Agreement of
Reorganization under which all shares of common stock issue d to the CPGP Group
will have been returned to the Company for cancellation. The Rescission
Agreement shall be satisfactory to the Purchasers in all respects, and if it is
not satisfactory, the Purchasers in their sole and absolute discretion may elect
to terminate this Agreement and receive a full and complete refund of all moneys
paid to the Company, without any further liability or obligation of the
Purchasers to Seller.
5. Indemnification.
5.1 Nelson and the Seller shall defend, indemnify and hold harmless
the Purchasers, their agents, servants and employees, and their respective
heirs, personal and legal representatives, guardians, successors and assigns,
from and against any and all claims, threats, liabilities, taxes, interest,
fines, penalties, suits, actions, proceedings, demands, damages, losses, costs
and expenses (including attorneys' and experts' fees and court costs), excluding
the liabilities assumed by Purchasers pursuant to Section 1.2.3, of every kind
and nature arising out of, resulting from, or in connection with:
5.1.1 Any misrepresentation or breach by Seller or any member of
the CPGP Group of any representation or warranty contained in this Agreement or
in the Rescission Agreement;
5.1.2 Any nonfulfillment, failure to comply or breach by Seller
of or with any covenant, promise or agreement of the Seller contained in this
Agreement or of any number of the CPGP Group in the Rescission Agreement; and
5.1.3 Any act, failure to act or omission prior to the Closing
Date by the Seller or by any member of the CPGP Group.
5.1.4 Any act, matter or thing prior to the Closing Date.
Neither Nelson nor the Seller shall have any obligation to indemnify Purchasers
from and against any adverse consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any representation or
warranty of the Company or Nelson contained in this Agreement or made by the
CPGP Group in the Rescission Agreement until Purchasers have suffered adverse
consequences in excess of $5,000 in the aggregate without regard to whether such
adverse consequence involves a single breach or incident or multiple breaches or
incidents (after which point Nelson and the Company will be obligated jointly
and severally to indemnify Purchasers from and against all such further Adverse
Consequences in excess of the $5,000 minimum set forth herein).
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5.2 Escrowed Stock. Purchasers agree to accept the forfeiture of the
Company's Stock owned by Nelson and escrowed pursuant to Section 3.1.18 above,
at a value equal to the greater of $0.25 per share (subject to a proportionate
adjustment for any reverse or forward stock-splits) or its fair market value
before pursuing any other or further remedies resulting from imposition of this
indemnification provision. For purposes of this Section, the fair market value
of the stock shall be the average of the closing bid price for the thirty days
immediately preceding the breach (if any).
5.3 Indemnification by Purchasers. Purchasers shall defend, indemnify
and hold harmless the Seller, its officers, directors, agents and its successors
and assigns, from and against any and all claims, threats, liabilities, taxes,
interest, fines, penalties, suits, actions, pr oceedings, demands, damages,
losses, costs and expenses (including attorneys' and experts' fees and court
costs) of every kind and nature arising out of, resulting from, or in connection
with:
5.3.1 Any misrepresentation, omission or breach by Purchasers of
any representation or warranty contained in this Agreement, provided that
indemnity of the Purchasers with respect hereto shall be several and not joint
and shall relate only to representations and warr anties made by and relating to
each individual Purchaser; and
5.3.2 Any nonfulfillment, failure to comply or breach by the
Purchaser of or with any covenant, promise or agreement of the Purchasers
contained in this Agreement.
6. Miscellaneous.
6.1 Survival of Representations, Warranties, and Agreements. All of
the representations, warranties, covenants, promises and agreements of the
parties contained in this Agreement (or in any document delivered or to be
delivered pursuant to this Agreement or in connection with the Closing) shall
survive the execution, acknowledgment, sealing and delivery of this Agreement
and the consummation of the transactions contemplated hereby. Return of the
stock escrowed pursuant to Section 3.1.18., above, has no relation to this
provision and is to have no legal or equitable consequence to the rights and
liabilities arising herefrom.
6.2 Certain Definitions. As used throughout this Agreement, the
following terms have the following meanings:
"Affiliate" has the meaning ascribed to such term in Rule 405
promulgated under the Securities Act, as such rule is in effect on the date
hereof.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, government, or agency or political subdivision of a
government.
"Securities Act" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect at the relevant time.
6.3 Notices. All notices, requests, demands, consents, and other
communications which are required or may be given under this Agreement
(collectively, the "Notices") shall be in writing and shall be given either (a)
by personal delivery against a receipted copy, or (b) by cer tified or
registered U.S. mail, return receipt requested, postage prepaid, to the
following addresses:
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(i) If to Seller:
JNS Marketing , Inc.
6521 West Calhoun Place
Littleton, CO 80123
(ii) If to the Purchasers:
c/o Henry F. Schlueter, Esq.
Schlueter & Associates, P.C.
1050 17th Street, Suite 1700
Denver, Colorado 80265
(iii) If to the Escrow Agent:
Levine Hughes & Mithuen, Inc.
Attn: Raymond Saitta
6025 South Quebec Street, Suite 325
Englewood, CO 80111
(iv) If to J.R.(Jerry) Nelson:
J.R. (Jerry) Nelson
c/o Nordstrom, Forbes & Lincoln, Incorporated
6521 W. Calhoun Place
Littleton, Colorado 80123
or to such other address of which written notice in accordance with this Section
6.3 shall have been provided by such party. Notices may only be given in the
manner hereinabove described in this Section 6.3 and shall be deemed received
when given in such manner.
6.4 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the full, entire and integrated agreement between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, correspondence, understandings and agreement s among the parties
hereto respecting the subject matter hereof.
6.5 Assignability. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties hereto; provided,
however, that the Purchaser may, without the prior written consent of any other
party, assign its interest in this Agreement to any Affiliate of the Purchaser
if such Affiliate undertakes to perform the Purchaser's obligations hereunder
that shall have been so assigned, and upon, from and after such assignment the
Purchaser shall have no further liabilities, obligations or duties in respect of
the rights, obligations and duties so assigned.
6.6 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, each other Person who is indemnified
under any provision of this Agreement, and their respective heirs, personal and
legal representatives, guardians, successors and, in the case of Purchaser, its
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights, remedies, obligations, or liabilities.
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6.7 Severability. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability, without
invalidating or rendering unenforceable the remaining pro visions of this
Agreement.
6.8 Amendment; Waiver. No provision of this Agreement may be amended,
waived, or otherwise modified without the prior written consent of all of the
parties hereto. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement herein contained. The waiver by any party hereto
of a breach of any provision or condition contained in this Agreement shall not
operate or be construed as a waiver of any subsequent breach or of any other
conditions hereof.
6.9 Section Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
6.11 Applicable Law. This Agreement is made and entered into, and
shall be governed by and construed in accordance with, the laws of the State of
Colorado.
6.12 Remedies. The parties hereto acknowledge that the Seller's Shares
are unique; that any claim for monetary damages may not constitute an adequate
remedy; and that it may therefore be necessary for the protection of the parties
and to carry out the terms of this Agreement to apply for the specific
performance of the provisions hereof. It is accordingly hereby agreed by all
parties that no objection to the form of the action or the relief prayed for in
any proceeding for specific performance of this Agreement shall be raised by any
party, in order that such relief may be expeditiously obtained by an aggrieved
party. All parties may proceed to protect and enforce their rights hereunder by
a suit in equity, transaction at law or other appropriate proceeding, whether
for specific performance or for an injunction against a violation of the terms
hereof or in aid of the exercise of any right, power or remedy granted hereunder
or by law, equity or statute or otherwise. No course of dealing and no delay on
the part of any party hereto in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice its rights, powers or
remedies, and no right, power or remedy conferred hereby shall be exclusive of
any other right, power or remedy referred to herein or now or hereafter
available at law, in equity, by statute or otherwise.
6.13 Further Assurances. Seller, by its officers and directors,
jointly and severally agree to execute, acknowledge, seal and deliver, after the
date hereof, without additional consideration, such further assurances,
instruments and documents, and to take such further actions, as the Purchaser
may request in order to fulfill the intent of this Agreement and the
transactions contemplated hereby.
6.14 Lock-Up Agreement. Concurrently with the execution of this
Agreement, Nelson is entering into a lock-up agreement in the form attached
hereto as Exhibit 5.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal, with the intention of making it a sealed instrument, on
the date first above written.
JNS Marketing, Inc. Purchasers:
By:
-------------------------------- -----------------------------------
J.R.(Jerry) Nelson, President Jerrold D. Burden
ATTEST: -----------------------------------
David Gregarek
- ------------------------------ -----------------------------------
Frederick R. Huttner
- ------------------------------
(Print Name and Title of -----------------------------------
Party Attesting) Frederick R. Huttner-SEP
-----------------------------------
Henry F. Schlueter
J.R.(Jerry) Nelson
- ---------------------------------
J.R.(Jerry) Nelson, an Individual
