UNITED STATES
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) June 28, 1996
PACIFIC FOREST CORPORATION
(Formerly Zeus Enterprises, Inc.)
(Exact name of registrant as specified in its character)
NEVADA 33-55254-14 87-0438451
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identificiation No.)
1800 E. SAHARA, SUITE 107
LAS VEGAS, NEVADA 89104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 792-7480
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ITEM 2. Acquisition of Assets.
On June 28, 1996 Pacific Forest Corporation ("the Company") in consideration of
the issuance of 100,000 authorised but unissued shares of common stock, acquired
66.7% of the issued capital of Pacific Crown (Fiji) Limited from Chancellor
Investments A.V.V. (a related party).
In addition, in consideration of the issuance of a total of 45,000 authorised
but unissued shares of common stock of the Company, Pacific Forest acquired
debts owing by Pacific Crown (Fiji) Limited totalling $FJD550,000 (US$391,600).
Concurrent with the acquisition, the new subsidiary changed its name to Pacific
Forest (Fiji) Limited. The business of the Company is to become a major timber
resource operation, involved in promoting and developing timber plantations, and
harvesting, milling and exporting timber resources in a market sector where the
product, quality timber, is a rapidly appreciating commodity for which there is
more international demand than supply can sustain. The Company's current
concessions cover an area in Fiji, in the Pacific Basin, of 24,000 acres of
mainly hardwood timbers, with the Company's share of the net present value being
$US13.8 million. The Company is in the process of constructing a hardwood
sawmill capable of producing in excess of 1,300 cubic yards of high value timber
per month.
ITEM 7. Financial Statements and Exhibits
It is impracticable to file the Financial Statements concurrently with the
filing of this report. The Company expects to file the Financial Statements
within the required time.
Exhibits:
Agreement between Pacific Forest Corporation and Chancellor Investments A.V.V.
dated June 28, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorised.
PACIFIC FOREST CORPORATION
By: s\- Neil Alan Green_____________
Neil Alan Green, President
Dated: July 12, 1996
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ACQUISITION / EXCHANGE AGREEMENT
THIS ACQUISITION / EXCHANGE AGREEMENT (this "Agreement"), is entered into this
28th day of June, 1996
BETWEEN:
PACIFIC FOREST CORPORATION, a Nevada corporation of 1800 E. Sahara, Suite 107,
Las Vegas, Nevada 89104 USA ("Pacific")
AND:
CHANCELLOR INVESTMENTS A.V.V., (a shareholder of PACIFIC CROWN (FIJI) LIMITED),
a corporation incorporated in Aruba, of Dominicanessen straat 22, Oranjestad,
Aruba ("Chancellor")
Premises
A. Pacific is a corporation existing under the laws of the state of Nevada,
having been incorporated on December 30, 1993.
B. Pacific Crown (Fiji) Limited is a corporation existing under the laws of
Fiji having been incorporated on April 7, 1995 ("PCFL").
C. Chancellor Investments A.V.V., a shareholder of PCFL owns 67% of the issued
and paid up capital of PCFL.
D. The parties have negotiated a transaction whereby all of the shares of PCFL
owned by Chancellor will be exchanged for similar shares of common stock of
Pacific based on the terms and conditions of this Agreement.
E. The parties have reached agreement as to the business terms of the
transaction and desire to set forth in this Agreement the details thereof.
Agreement
NOW, THEREFORE, on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and
agreements hereinafter set forth, the mutual benefits to the parties to be
derived herefrom, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, it is hereby agreed as
follows:
<PAGE>
ARTICLE 1
Acquisition/Exchange
Section 1.01 The Acquisition/Exchange.
At Closing, as herein defined, and subject to all the terms, covenants, and
conditions set forth in this Agreement, Pacific hereby agrees to issue and
deliver to Chancellor a certificate or certificates representing 100,000 shares
of Pacific Exchanged Stock, and Chancellor agrees to assign, transfer, and
deliver to Pacific, free and clear of any and all liens, pledges, encumbrances,
charges, restrictions, or claims of any kind, nature, or description,
certificates representing shares of the issued and outstanding capital stock of
PCFL held by Chancellor, constituting 67% of the issued and outstanding voting
capital stock of PCFL prior to the Closing, so that 6,000 shares of PCFL shall
be exchanged for 100,000 shares of Pacific Exchanged Stock, as herein defined.
Section 1.02 Adjustments to Exchange Ratio.
For all relevant purposes of the Acquisition/Exchange of PCFL Stock, the number
of shares of Pacific Exchanged Stock to be issued and delivered pursuant to this
Agreement shall be approximately adjusted to take into account any issue of
Pacific Exchanged Stock which may occur between the date of the execution of
this Agreement and the date of delivery of such shares.
Section 1.03 Closing.
The closing ("Closing") of the transactions contemplated by this Agreement shall
be on a date and at such time and place as the parties may agree ("Closing
Date"), within the thirty (30) day period commencing with the last to occur of
the following;
(a) The final date prescribed by any state or federal regulatory agency
pursuant to any state or federal law, rule, or regulation prior to which
the transactions may not be effectuated; and
(b) The satisfaction of all other conditions precedent to Closing.
Section 1.04 Closing Events
(a) Pacific's Deliveries. Subject to fulfilment or waiver of the conditions set
forth in Article VI, Pacific shall deliver to Chancellor at Closing all the
following:
(i) Certificate of good standing from the appropriate authorities, issued
as of a date within sixty days prior to the Closing Date, certifying
that Pacific is in good standing as a corporation in the state of
Nevada;
(ii) Incumbency and specimen signature certificates dated the Closing Date
with respect to the officers of Pacific executing this Agreement and
any other document delivered pursuant hereto on behalf of Pacific;
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(iii)Copies of the resolutions of Pacific's board of directors authorising
the execution and performance of this Agreement and the contemplated
transactions, certified by the respective secretary or an assistant
secretary of Pacific as of the Closing Date;
(iv) The certificate contemplated by Section 5.01, duly executed by a duly
authorised officer of Pacific;
(v) The certificate contemplated by Section 5.02, dated the Closing Date,
signed by the chief executive officer and principal accounting and
financial officer of Pacific; and in addition to the above deliveries,
Pacific shall take all steps and actions as Chancellor may reasonably
request or as may otherwise be necessary to consummate the
transactions contemplated hereby.
(b) Chancellor's Deliveries. Subject to fulfilment or waiver of the
conditions set forth in Article V, Chancellor shall deliver to Pacific
at Closing the certificate contemplated by Section 6-02, executed by a
duly authorised officer of PCFL.
In addition to the above deliveries, Chancellor shall take all steps and actions
as Pacific may reasonably request or as may otherwise be necessary to consummate
the transactions contemplated hereby.
Section 1.05 Termination
(a) This Agreement may be terminated by the board of directors of either
Pacific or Chancellor at any time prior to the Effective Date if:
(i) There shall be any actual or threatened action or proceeding before
any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this
Agreement and which, in the judgement of such board of directors, made
in good faith and based upon the advice of its legal counsel, makes it
inadvisable to proceed with the merger and consolidation contemplated
by this Agreement;
(ii)Any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such
transactions or in the judgement of such board of directors, made in
good faith and based on the advise of counsel, there is substantial
likelihood that any such approval will not be obtained or will be
obtained only on a condition or conditions which would be unduly
burdensome, making it inadvisable to proceed with the merger and
exchange;
In the event of termination pursuant to this paragraph (a) of Section 1.05, no
obligation, right, or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation,
preparation, and execution of this Agreement and the transactions contemplated
hereby.
<PAGE>
(b) This Agreement may be terminated at any time prior to the Closing Date by
action of the board of directors of Chancellor, if Pacific shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of Pacific contained herein shall be inaccurate in any material respect. In
the event of termination pursuant to this paragraph (b) of this Section
1.05, no obligation, right, remedy, or liability shall arise hereunder.
Pacific and Chancellor shall each bear their own costs incurred in
connection with the negotiation, preparation, and execution of this
Agreement and the transactions contemplated hereby.
(c) This Agreement may be terminated at any time prior to the Closing Date by
action of the board of directors of Pacific if Chancellor shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement of if any of the representations or warranties
of Chancellor contained herein shall be inaccurate in any material respect.
In the event of termination pursuant to this paragraph (c) of this Section
1.05, no obligation, right, remedy, or liability shall arise hereunder.
Pacific and Chancellor shall each bear their own costs incurred in
connection with the negotiation, preparation, and execution of this
Agreement and the transactions contemplated hereby.
ARTICLE II
Representations, Covenants, and
Warranties of Pacific
As an inducement to, and to obtain the reliance of, Chancellor, Pacific
represents and warrants as follows:
Section 2.01 Organisation
(a) Pacific is, and will be on the Closing Date, a corporation duly organised,
validly existing, and in good standing under the laws of the state of
Nevada and has the corporate power and is and will be duly authorised,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and order of public authorities to own all of its properties
and assets and to carry on its business in all material respects as it is
now being conducted, and there are no other jurisdictions in which it is
not so qualified in which the character and location of the assets owned by
it or the nature of the material business transacted by it requires
qualification, except where failure to do so would not have a material
adverse effect on its business, operations, properties, assets, or
condition. The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of
Pacific's articles of incorporation or bylaws, or other agreement to which
it is a party or by which it is bound.
<PAGE>
Section 2.02 Approval of Agreements
Pacific has full power, authority, and legal right and has taken, or will take,
all action required by law, its articles of incorporation, bylaws, and otherwise
to execute and deliver this Agreement and to consummate the transactions herein
contemplated. The board of directors of Pacific has authorised and approved the
execution, delivery, and performance of this Agreement and the transactions
contemplated hereby. Included in Schedule 2.02 is a certified copy of a
resolution duly adopted by the board of directors of Pacific evidencing such
approval. No approval of this transaction by the shareholders of Pacific is
required. This Agreement has been duly authorised, executed, and delivered by
Pacific and is the legal, valid and binding obligation of Pacific, enforceable
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, or other laws affecting enforcement or creditors' rights
generally and by general principles of equity.
Section 2.03 Capitalisation
The authorised capitalisation of Pacific consists of 100,000,000 shares of
Common stock, par value $0.001 per share, 1,100,000 shares of which are issued
and outstanding, (collectively referred to as "Pacific Stock"). All issued and
outstanding shares of Pacific are legally issued, fully paid, and non-assessable
and not issued in violation of the pre-emptive or other right of any person.
There are no dividends or other amounts due or payable with respect to any of
the shares of capital stock of Pacific.
Section 2.04 Subsidiaries and Predecessors
Pacific does not own, beneficially or of record, any equity securities in any
other entity. Pacific has no "predecessor," as that term is defined under
generally accepted accounting principles or Regulation S-X promulgated by the
Securities and Exchange commission (the "SEC").
Section 2.05 Financial Statements
(a) Included in the information referred to in Section 2.06 are the audited
balance sheets of Pacific as of December 31, 1995, and 1994, and the
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1995, 1994, and 1993, including the notes thereto and
the accompanying report of Smith and Company, Certified Public Accountants.
(b) All such audited and unaudited financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved as explained in the notes to such
financial statements. The Pacific balance sheets present fairly, in all
material respects, as of their respective dates, the financial position of
Pacific. Pacific did not have, as of the date of any such balance sheets,
except as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto prepared in accordance
with generally accepted accounting principles under which they were
<PAGE>
prepared, and all assets reflected therein present fairly the assets of
Pacific in accordance with generally accepted accounting principals under
which they were prepared.
(c) All such financial statements have been presented in accordance with the
requirements of Regulation S-X promulgated by the SEC regarding the form of
content of and requirements for financial statements to be filed with the
SEC.
(d) The books and records, financial and otherwise, of Pacific are in all
material respects complete and correct and have been maintained in
accordance with sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail, the transactions and
dispositions of the assets of Pacific. Pacific has maintained a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions have been and are executed in accordance with
management's general or specific authorisation; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles or any other
criteria applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorisation; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
(e) Pacific has filed or will have filed as of the Closing Date all tax returns
required to be filed by them from inception to the Closing Date. All such
returns and reports are accurate and correct in all material respects.
Pacific does not have any liabilities with respect to the payment of any
federal, state, county, local, or other taxes (including any deficiencies,
interest, or penalties) accrued for or applicable to the period ended on
the date of the most recent audited balance sheet of Pacific, except to the
extent reflected on such balance sheet and adequately provided for, and all
such dates and years and periods prior thereto and for which Pacific may at
said date have been liable in its own right or as transferee of the assets
of, or as successor to, any other corporation or entity, except for taxes
accrued but not yet due and payable, and no deficiency assessment or
proposed adjustment of any such tax return is pending, proposed or
contemplated. Proper and accurate amounts of taxes have been withheld by or
on behalf of Pacific with respect to all compensation paid to employees of
Pacific for all periods ending on or before the date hereof, and all
deposits required with respect to compensation paid to such employees have
been made, in complete compliance with the provisions of all applicable
federal, state, and local tax and other laws. None of such income tax
returns has been examined or is currently being examined by the Internal
Revenue Service, and no deficiency assessment or proposed adjustment of any
such return is pending, proposed or contemplated. Pacific has not made any
election pursuant to the provisions of any applicable tax laws (other than
elections that relate solely to methods of accounting, depreciation, or
amortisation) that would have a material adverse affect on Pacific, its
financial condition, its business as presently conducted or proposed to be
conducted, or any of its respective properties or
<PAGE>
material assets. There are no tax liens upon any of the assets of Pacific.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of Pacific.
Section 2.06 Information
The information concerning Pacific set forth in this Agreement; in the Schedules
delivered by Pacific pursuant hereto were, as of their respective dates,
complete and accurate in all material respects and did not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading. Pacific shall cause the schedules delivered by it pursuant
hereto and the instruments and data delivered to Chancellor hereunder to be
updated after the date hereof up to and including the Closing Date.
Section 2.07 Absence of Certain Changes or Events
Except as set forth in this Agreement, since the date of the most recent Pacific
balance sheet described in Section 2.05 and included in the information referred
to in Section 2.06:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of Pacific
or (ii) any damage, destruction, or loss to Pacific (whether or not covered
by insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of Pacific;
(b) Pacific has not (i) amended its articles or incorporation or bylaws; (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets or any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Pacific; (iv) made
any material change in the method of management, operation, or accounting;
(v) entered into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to become
payable by it to any of their officers or directors or any of its employees
whose monthly compensation exceeds $1000; or (viii) made any increase in
any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made
to, for, or with their officers, directors, or employees;
(c) Pacific has not (i) granted or agreed to grant any options, warrants, or
other rights for their stocks, bonds, or other corporate securities calling
for the issuance thereof other than those currently outstanding, if any;
(ii) borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid any
material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Pacific
balance sheet and current liabilities incurred since that
<PAGE>
date in the ordinary course of business; (iv) sold or transferred, or
agreed to sell or transfer, any of its assets, properties, or rights
(except assets, properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $5000 or cancelled, or
agreed to cancel, any debts or claims (except debts and claims which in the
aggregate are of a value of less than $5000); (v) made or permitted any
amendment or termination of any contract, agreement, or license to which it
is a party if such amendment or termination is material, considering the
business of Pacific; or (vi) issued, delivered, or agreed to issue or
deliver any stock, bonds, or other corporate securities including
debentures (whether authorised and unissued or held as treasury stock); and
(d) To the best knowledge of Pacific, it has not become subject to any law or
regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of Pacific.
Section 2.08 Title and Related Matters
Except as disclosed in the most recent audited Pacific balance sheet and the
notes thereto, Pacific has good and marketable title to all of its properties,
inventory, interests in properties, and assets, which are reflected in the most
recent Pacific balance sheet or acquired after that date (except those sold or
otherwise disposed of since such date in the ordinary course of business), free
and clear of all mortgages, security interests, royalties, liens, pledges,
charges, or encumbrances, except (i) statutory liens or claims not yet
delinquent; and (ii) such imperfections of title and easements as do not, and
will not, materially detract from, or interfere with, the present or proposed
use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties.
ARTICLE III
Representations, Covenants, and
Warranties of Chancellor on June 28, 1996
As an inducement to, and to obtain the reliance of, Pacific, Chancellor
represents and warrants as follows:
Section 3.01 Organisation
PCFL is and will be on the Closing Date a corporation duly organised, validly
existing, and in good standing under the laws of Australia and has the corporate
power and is and will be duly authorised, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the material business transacted by it
requires qualification, except where failure to do so would not have a material
adverse effect on the business, operations, properties, assets, or condition of
PCFL. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any
<PAGE>
provision of PCFL's articles of incorporation or bylaws or other agreement to
which it is a party or by which it is bound.
Section 3.02 Capitalisation
The authorised capitalisation of PCFL consists of 10,000 shares of common stock,
par value $F1.00 ("PCFL Stock"), of which 9,002 shares are issued and
outstanding. All issued and outstanding shares of PCFL are legally issued, fully
paid, and nonassessable and not issued in violation of the pre-emptive or other
right of any person. There are no dividends or other amounts due or payable with
respect to any of the shares of capital stock of PCFL.
Section 3.03 Subsidiaries or Predecessors
There are no subsidiaries or predecessors as those terms are defined under
generally accepted accounting principles or regulation S-X promulgated by the
SEC.
Section 3.04 Financial Statements
(a) Included in Schedule 3.05 are the audited balance sheets of PCFL as of 31
December, 1995, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended including the notes thereto
and the accompanying report of KPMG Peat Marwick, Chartered Accountants.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved. The balance sheets of PCFL present fairly, as of
their respective dates, the financial position of PCFL. PCFL did not have,
as of the date of any such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet or
the notes thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein present fairly the assets of
PCFL, in accordance with generally accepted accounting principles. The
statements of operations, stockholders' equity, and cash flows present
fairly the financial position and results of operations of PCFL as of their
respective dates and for the respective periods covered thereby. PCFL
maintains and will continue to maintain a standard system of accounting
established and maintained in a manner permitting the preparation of
financial statements in accordance with generally accepted accounting
principles.
(c) All such financial statements have been presented in accordance with the
requirements of Regulation S-X promulgated by the SEC regarding the form
and content of and requirements for financial statements to be filed with
the SEC.
(d) The books and records, financial and otherwise, of PCFL are in all material
respects complete and correct and have been maintained in accordance with
sound business and bookkeeping practices so as to accurately and fairly
reflect, in reasonable detail, the
<PAGE>
transactions and dispositions of the assets of PCFL. PCFL has maintained a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions have been and are executed in accordance
with management's general or specific authorisation; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles or any other
criteria applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorisation; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
(e) PCFL has filed or will have filed as of the Closing Date all tax returns
required to be filed by it from inception to the Closing Date. All such
returns and reports are accurate and correct in all material respects. PCFL
has no liabilities with respect to the payment of any federal, sate,
county, local, or other taxes (including any deficiencies, interest or
penalties) accrued for or applicable to the period ended on the date of the
most recent unaudited balance sheet of PCFL except to the extent reflected
on such balance sheet and adequately provided for, and all such dates and
years and periods prior thereto and for which PCFL may at said date have
been liable in its own right or as transferee of the assets of, or as
successor to, any other corporation or entity, except for taxes accrued but
not yet due and payable, and no deficiency assessment or proposed
adjustment of any such tax return is pending, proposed or contemplated.
Proper and accurate amounts of taxes have been withheld by or on behalf of
PCFL with respect to all compensation paid to employees of PCFL for all
periods ending on or before the date hereof, and all deposits required with
respect to compensation paid to such employees have been made, in complete
compliance with the provisions of all applicable federal, state, and local
tax and other laws. None of such income tax returns has been examined or is
currently being examined by the Fiji Tax Bureau, and no deficiency
assessment or proposed adjustment of any such return is pending, proposed,
or contemplated. PCFL has not made any election pursuant to the provisions
of any applicable tax laws (other than elections that relate solely to
methods of accounting, depreciation, or amortisation) that would have a
material adverse affect on PCFL, its financial condition, its business as
presently conducted or proposed to be conducted, or any of its properties
or material assets. There are no tax liens upon any of the assets of PCFL.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of PCFL.
Section 3.05 Information
The information concerning PCFL set forth in this Agreement and in the schedules
delivered by PCFL pursuant hereto is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. PCFL shall cause the
schedules delivered by PCFL pursuant hereto and the instruments and data
delivered to Pacific hereunder to be updated after the date hereof up to and
including the Closing Date.
<PAGE>
Section 3.06 Options or Warrants
There are no existing options, warrants, calls, or commitments of any character
relating to the authorised and unissued PCFL common stock.
Section 3.07 Absence of Certain Changes or Events
Except as set forth in this Agreement since the date of the most recent 31
December, 1995 balance sheet described in Section 3.04 and included in Schedule
3.05:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of PCFL or
(ii) and damage, destruction, or loss to PCFL (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of PCFL;
(b) PCFL has not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of PCFL; (iv) made any
material change in its method of management, operation, or accounting which
is material to PCFL; (v) entered into any other material transactions; (vi)
made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or former officer or employee; (vii) increased the rate of compensation
payable or to become payable by it to any of its officers or directors or
any of its employees whose monthly compensation exceed $1,000; or (viii)
made any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or employees;
(c) PCFL has not (i) granted or agreed to grant any options, warrants, or other
rights for its stocks, bonds, or other corporate securities calling for the
issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred,
or become subject to, any material obligation or liability (absolute or
contingent) except liabilities incurred in the ordinary course of business;
(iii) paid any material obligation or liability (absolute or contingent)
other than current liabilities reflected in or shown on the most recent
PCFL balance sheet and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except assets,
properties, or rights not used or useful in its business which , in the
aggregate have a value of less than $5,000) or cancelled, or agreed to
cancel, any debts or claims (except debts and claims which in the aggregate
are of a value of less than $5,000); (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party
if such amendment or termination is material, considering the business of
<PAGE>
PCFL; or (vi) issued, delivered, or agreed to issue or deliver any stock,
bonds, or other corporate securities including debentures (whether
authorised and unissued or held as treasury stock); and
(d) To the best knowledge of Chancellor, PCFL has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of PCFL.
Section 3.08 Litigation and Proceedings
There are no actions, suits, or proceedings pending or, to the knowledge of
Chancellor threatened by or against PCFL or affecting domestic or foreign, or
before any arbitrator of any kind. PCFL does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
ARTICLE IV
SPECIAL COVENANTS TO BE SATISFIED PRIOR TO CLOSING
Section 4.01 Activities of Pacific, and PCFL
(a) From and after the date of this Agreement until the Closing Date and except
as set forth in the respective schedules to be delivered by Pacific and
PCFL pursuant hereto or as permitted or contemplated by this Agreement,
Pacific and PCFL will each:
(i) Carry on its business in substantially the same manner as it has
heretofore;
(ii) Maintain in full force and effect insurance comparable in amount and
in scope of coverage to that now maintained by it;
(iii)Perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(iv) Use its best efforts to maintain and preserve its business
organisation intact, to retain its key employees, and to maintain its
relationships with its material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or prior to the
Closing Date all federal, state, county, and local tax returns
required to be filed by or on behalf of such entity or any of its
subsidiaries or for which such entity or any of its subsidiaries may
be held responsible and shall pay, or cause to pay, all taxes required
to be shown as due and payable on such returns, as well as all
instalments of tax due and payable during the period commencing on the
date of this Agreement and ending on the Closing Date. All such tax
returns shall be prepared in a manner consistent with the preparation
of prior years' tax returns except as required by law or as agreed to
by the parties hereto prior to the filing thereof;
<PAGE>
(vi) Withhold from each payment made on or prior to the Closing Date to
each employee of such corporation the amount of all taxes required to
be withheld therefrom and will pay the same, before becoming
delinquent, to the proper tax receiving officers; and
(vii)Fully comply with and perform in all material respects all obligations
and duties imposed on it by all federal, state, county and local laws
and all rules, regulations, and orders imposed by federal, state,
county and local governmental authorities.
(b) From and after the date of this Agreement and except as provided herein
until the Closing Date, Pacific and PCFL will not:
(i) Make any change in its articles of incorporation or bylaws;
(ii) Take any action described in Section 2.07 in the case of Pacific, or
Section 3.07 in the case of PCFL;
(iii)Enter into or amend any contract, agreement, or other instrument of
any of the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or other
instrument in the ordinary course of business; and
(iv) Enter into any agreement, waiver, or other arrangement providing for
an extension of time with respect to payment by, or assessment
against, such entity or any of its subsidiaries of any tax due and
payable with respect to the period commencing on the date of this
Agreement and ending on the Closing Date.
Section 4.02 Stockholder Approval
If required by the jurisdiction of incorporation of PCFL subsequent to the
execution and delivery of this Agreement, PCFL shall, at a meeting of its
stockholders duly called by the board of directors of PCFL to be held as soon as
practicable, present for the authorisation and approval of the stockholders of
PCFL, in accordance with the applicable provisions of the laws of the United
States of America of PCFL and all applicable federal and state securities laws,
this Agreement.
Section 4.03 Access to Properties and Records
PCFL will afford to the officers and authorised representatives of Pacific full
access to the properties, books, and records of PCFL in order that Pacific may
have full opportunity to make such reasonable investigation as it shall desire
to make of the affairs of PCFL and will furnish Pacific with such additional
financial and operating data and other information as to the business and
properties of PCFL as Pacific shall from time to time reasonably request.
<PAGE>
Section 4.04 Additional Financial Statements
In connection with the information to be provided pursuant to this Article IV,
PCFL shall provide additional audited and unaudited financial statements as soon
as reasonably practicable for inclusion by Pacific in any application or
disclosure document required to be prepared in connection with this Agreement
and the transactions contemplated hereby or in connection with a future
registration statement.
(a) All such financial information referred to herein shall be prepared in
accordance with the uniform accounting rules with respect to the form
and content for financial statements filed under the Securities Act or
the Exchange Act of 1934, as amended (the "Exchange Act"), as
contained in Regulation S-X promulgated by the SEC. All financial
statements furnished for an interim period shall be accompanied by a
statement that all adjustments necessary to make it a fair statement
of the results of operations for such interim period or periods have
been included.
(b) To the extent required, Pacific and PCFL shall utilise their best
efforts and cooperate to provide the information necessary to present
the pro forma consolidated and consolidating financial statements and
pro forma consolidated and consolidating summary information,
including a pro forma consolidated and consolidating balance sheet,
pro forma consolidated and consolidating income statements, pro forma
summaries of earnings (with aggregate an per-share earnings), and pro
forma (combined basis) earnings date for all periods required to be
presented and in the form and manner required for use in the form 8-k
and proxy statement or any other document required to be field with
the SEC or state securities agency, including the presentation of
Pacific financial statements under generally accepted accounting
principles.
(c) PCFL represents and warrants to Pacific that the financial statements
delivered or to be delivered pursuant to this section will be, when
delivered, prepared in accordance with the generally accepted
accounting principles consistently applied throughout the periods
involved. The balance sheets included in such financial statements
shall present fairly the financial condition of PCFL as of their
respective dates. As of the date of any such balance sheets, except as
and to the extent reflected or reserved against in such balance
sheets, there will not be any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto prepared in accordance with generally accepted accounting
principles. The income statements included in such financial
statements prepared and delivered pursuant to this section shall
present fairly the results of operations of PCFL for the respective
periods indicated. The statements of changes in financial position or
cash flows prepared and delivered in accordance with this section
shall present fairly the information which should be presented therein
in accordance with generally accepted accounting principles, except as
otherwise indicated in the notes thereto. Such financial statements
shall not be materially and adversely different from the financial
statements of PCFL included in the Schedules.
<PAGE>
Section 4.05 Transactions With Affiliates
Chancellor will prove that PCFL shall provide to Pacific, for possible inclusion
in SEC fillings, a description of every material contract, agreement, or
arrangement between PCFL and any person who is or has ever been an officer of
director of PCFL or person owning of record, or known by PCFL to own
beneficially, 5% or more of the issued and outstanding PCFL Stock and which is
to be performed in whole or in part after the date hereof or was entered into
within three years before the date hereof. PCFL represents and warrants that, in
all of such circumstances, the contract, agreement, or arrangement was for a
bona fide business purpose of PCFL and the amount paid or received, whether in
cash, in services, or in kind, is, has been during the full term thereof, and is
required to be during the unexpired portion of the term there of, no less
favourable to PCFL than terms available from otherwise unrelated parties in
arm's-length transactions. Except as disclosed in such description, no officer
or director of PCFL, or 10% shareholder of PCFL has, or has had during the
preceding three years, any interest, directly or indirectly, in any material
transaction with PCFL. The description shall also include a description of any
commitment by PCFL, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other material transaction with, any such
affiliated person.
Section 4.06 Indemnification by Chancellor.
Chancellor will indemnify and hold harmless Pacific and its directors and
officers, and each person, if any, who controls Pacific within the meaning of
the Securities Act, from and against any and all loses, claims, damages,
expenses, liabilities, or actions to which any of them may become subject under
applicable law (including the Securities Act and the Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions, whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any application or
statement filed with a governmental body or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by
Chancellor expressly for use therein. Chancellor agrees at any time upon the
request of Pacific to furnish to them a written letter or statement confirming
the accuracy of the information with respect to PCFL contained in any report or
other application or statement referred to in this Article IV, or in any draft
of any such documents, and confirming that the information with respect to PCFL
contained in such document or draft was furnished by Chancellor, indicating the
inaccuracies or omissions contained in such document or draft or indicating the
information not furnished by Chancellor expressly for use therein. The indemnity
agreement contained in this Section 4.06 shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of
Pacific and shall survive the consummation of the transactions contemplated by
this Agreement.
<PAGE>
Section 4.07 Indemnification by Pacific
Pacific will indemnify and hold harmless Chancellor, its directors and officers,
and each person, if any, who controls Chancellor within the meaning of the
Securities Act, from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which any of them may become subject under applicable
law (including the Securities Act and the Exchange Act) and will reimburse them
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims, damages, expenses, liabilities, or
actions arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with information furnished
in writing by Pacific expressly for use therein. Pacific agrees at any time upon
the request of Chancellor to furnish to it a written letter or statement
confirming the accuracy of the information with respect to Pacific and its
subsidiaries contained in any information / proxy statement, report, or other
application or statement referred to in this Article IV, or in any draft of any
such document, and confirming that the information with respect to Pacific
contained in such document or draft was furnished by Pacific, indicating the
inaccuracies or omissions contained in such document or draft or indicating the
information not furnished by Pacific expressly for use therein. The indemnity
agreement contained in this Section 4.07 shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of
Chancellor and shall survive the consummation of the transactions contemplated
by this Agreement.
Section 4.08 Sales Under Regulation S
(a) Pacific will use its best efforts to comply with the reporting requirements
of the Exchange Act.
(b) Upon being informed in writing by any Affiliated Pacific Stockholder or
Restricted Transferee that such person intends to sell any acquired Shares
under Regulation S promulgated under the Securities Act (including any rule
adopted in substitution or replacement thereof), Pacific will certify in
writing to such person that it has filed all of the reports required to be
filed by it under the Exchange Act to enable such person to sell such
person's Acquired Shares under Regulation S or will inform such person in
writing that it has not filed any such report or reports.
(c) If any certificate representing any Acquired Shares is presented to
Pacific's transfer agent for registration of transfer in connection with
any sale theretofore made under Regulation S, provided, that such
certificate is duly endorsed for transfer by the appropriate person(s) or
accompanied by a separate stock power duly executed by the appropriate
person(s), in each case accomplished by reasonable assurances that such
endorsements are genuine and effective, and is accompanied by an opinion of
counsel satisfactory to Pacific and its counsel that such transfer has
complied with the requirements of Regulation S, Pacific will promptly
instruct its transfer agent to register such transfer and to issue one or
more new certificates free of any stop-transfer order or restrictive
legend.
<PAGE>
Section 4.09 The Acquisition of Pacific Exchanged Stock
The consummation of this Agreement and the merger contemplated herein, including
the issuance of the Pacific Exchanged Stock to Chancellor in exchange for 6,000
shares of the issued and outstanding PCFL Stock as contemplated hereby,
constitutes the offer and sale of securities under the Securities Act and
applicable state statutes. Such transactions shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements of such
statures which depend, among other items, on the circumstances under which such
securities are acquired.
(a) In order to provide documentation for reliance upon exemptions from the
registration and prospectus delivery requirements for such transactions,
the approval by Chancellor and Pacific of this Agreement and the
transactions contemplated hereby and/or the delivery of appropriate
separate representations shall constitute the parties acceptance of, and
concurrence in, the following representations and warranties:
(i) Chancellor acknowledges that neither the SEC nor the securities
commission of any state or other federal agency has made any
determination as to the merits of acquiring the Pacific Exchanged
Stock, and that this transaction involves certain risks.
(ii) Chancellor has received and read the Agreement and understand the
risks related to the consummation of the transactions herein
contemplated.
(iii)Chancellor has such knowledge and experience in business and financial
matters that it is capable of evaluating Pacific and its business
operations.
(iv) Chancellor has been provided with a copy of this Agreement and the
related disclosure schedules of the parties hereto plus all materials
and information requested by Chancellor or its representative,
including any information requested to verify any information
furnished (to the extent such information is available or can be
obtained without unreasonable effort or expense), and the parties have
been provided the opportunity for direct communication regarding the
transactions contemplated hereby.
(v) All information which Chancellor has provided to Pacific or its agents
or representatives concerning their suitability and intent to hold
shares in Pacific following the transactions contemplated hereby is
complete, accurate, and correct.
(vi) Chancellor has not offered or sold any securities of PCFL or interest
in this Agreement and have no present intention of dividing the
Pacific Exchanged Stock to be received or the rights under this
Agreement with others or of reselling or otherwise disposing of any
portion of such stock or rights, either currently or after the passage
of a fixed or determinable period of time or on the occurrence of
non-occurrence of any predetermined event or circumstance.
<PAGE>
(vii)Chancellor understands that the Pacific Exchanged Stock has not been
registered, but is being acquired by reason of a specific exemption
under the Securities Act as well as under certain state statutes for
transactions by an issuer not involving any public offering and that
any disposition of the subject Pacific Exchanged Stock may, under
certain circumstances, be inconsistent with this exemption and may
make the undersigned an "underwriter" within the meaning of the
Securities Act. It is understood that the definition of "underwriter"
focuses upon the concept of "distribution" and that any subsequent
disposition of the subject Pacific Exchanged Stock can only be
effected in transactions which are not considered distributions.
Generally, the term "distribution" is considered synonymous with
"public offering" or any other offer or sale involving general
solicitation or general advertising. Under present law, in determining
whether a distribution occurs when securities are sold into the public
market, under certain circumstances one must consider the availability
of public information regarding the issuer, a holding period for the
securities sufficient to assure that the persons desiring to sell the
securities without registration first bear the economic risk of their
investment, and a limitation on the number of securities which the
stockholder is permitted to sell and on the manner of sale, thereby
reducing the potential impact of the sale on the trading markets.
These criteria are set forth specifically in Regulation S promulgated
under the Securities Act, which allows sales of securities in reliance
upon Regulation S only in limited amounts in accordance with the terms
and conditions of that rule, after 41 days after the date the Pacific
Exchanged Stock is acquired from Pacific and the Pacific Exchanged
Stock is fully paid for, as calculated in accordance with Regulation
S. After 41 days from the date the securities acquired from Pacific
and are fully paid for, as calculated in accordance with Regulation S,
they can generally be sold without meeting those conditions, provided
the holder is not (and has not been for the preceding three months) an
affiliate of the issuer.
(viii) Chancellor acknowledges that the shares of Pacific Exchanged Stock
must be held and may not be sold, transferred, or otherwise disposed
of for value unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
Pacific is under no obligation to register the Pacific Exchanged Stock
under the Securities Act, except as may be expressly agreed to by it
in writing. If Regulation S is available (and no assurance is given
that it will be except as expressly set forth in this Agreement),
after 41 days following the date the shares are fully paid for, only
routine sales of such Pacific Exchanged Stock in limited amounts can
be made in reliance upon Regulation S in accordance with the terms and
conditions of that rule. Pacific is under no obligation to the parties
to make Regulation S available, except as may be expressly agreed to
by it in writing in this Agreement, and in the event Regulation S is
not available, compliance with regulation A or some other disclosure
exemption may be required before Chancellor can sell, transfer, or
otherwise dispose of such Pacific Exchanged Stock without registration
under the Securities Act. Pacific registrar and transfer agent will
maintain a stop transfer order against the registration or
<PAGE>
transfer of the Pacific Exchanged Stock, and the certificate
representing the Pacific Exchanged Stock will bear a legend in
substantially the following form so restricting the sale of such
securities:
THE SHARES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, A U.S. PERSON: (i) AS PART OF THEIR DISTRIBUTION AT ANY
TIME; OR (ii) OTHERWISE UNTIL FORTY DAYS AFTER THE DATE ("THE
RESTRICTED PERIOD"), EXCEPT IN EITHER CASE IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT. PURCHASER ACKNOWLEDGES THAT THE
SHARES REPRESENTED HEREBY HAVE BEEN SOLD IN COMPLIANCE WITH REGULATION
S.
(ix) Pacific may refuse to register further transfers, or resales of the
Pacific Exchanged Stock in the absence of compliance with Regulation S
unless the undersigned furnishes the issuer with a "no-action" or
interpretive letter from the SEC or an opinion of counsel reasonably
acceptable to Pacific stating that the transfer is proper. Further,
unless such letter or opinion states that the shares of Pacific
Exchanged Stock are free of any restrictions under the Securities Act,
Pacific may refuse to transfer the Pacific Exchanged Stock to any
transferee who does not furnish in writing to it the same
representations and agree to the same conditions with respect to such
Pacific Exchanged Stock as set forth herein. Pacific may also refuse
to transfer the Pacific Exchanged Stock if any circumstances are
present reasonably indicating that the transferee's representations
are not accurate.
(b) In connection with the transaction contemplated by this Agreement,
PCFL and Pacific shall each file, with the assistance of the other and
their respective legal counsel, such notices, applications, reports,
or other instruments as may be deemed by them to be necessary or
appropriate in an effort to document reliance on such exemptions,
including a notice on form D to be filed with the SEC and the
appropriate regulatory authority in the state or country where
Chancellor reside unless an exemption requiring no filing is available
in such jurisdiction, all to the extent and in the manner as may be
deemed by such parties to be appropriate.
(c) In order to more fully document reliance on the exemptions as provided
herein, Chancellor shall execute and deliver to Pacific, at or prior
to the Closing, such further letters of representation,
acknowledgment, suitability or the like as Pacific and its counsel may
reasonably request in connection with reliance on exemptions from
registration under such securities laws.
(d) Pacific and Chancellor acknowledge that the basis for relying on
exemptions from registration or qualifications are factual, depending
on the conduct of the various parties, and that no legal opinion or
other assurance will be required or given to the effect that the
<PAGE>
transactions contemplated hereby are in fact exempt from registration
or qualification.
Section 4.10 Third Party Consents
Pacific and Chancellor agree to cooperate with each other in order to obtain any
third party consents to this Agreement and the transactions herein contemplated
that are required.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF CHANCELLOR
The obligations of Chancellor under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations
The representations and warranties made by Pacific in this Agreement were true
when made and shall be true at the Closing Date with the same force and affect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement ), and Pacific
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by Pacific prior to or at the
Closing. Chancellor shall be furnished with certificates, signed by duly
authorised officers of Pacific and dated the Closing Date, to the foregoing
effect.
Section 5.02 Officer's Certificates
Chancellor shall have been furnished with certificates dated the Closing Date
and signed by the duly authorised chief executive officer and principal
accounting and financial officer of Pacific to the effect that no litigation,
proceeding, investigation or inquiry is pending or, to the best knowledge of
Pacific threatened, which might result in an action to enjoin or prevent the
consummation of the transaction contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Pacific's own documents, the certificate shall represent that:
(a) This Agreement has been duly approved by Pacific's board of Directors and
has been duly executed and delivered in the name and on behalf of Pacific
by its duly authorised officers pursuant to, and in compliance with,
authority granted by the board of directors of Pacific pursuant to a
unanimous consent.
(b) The representations and warranties of Pacific set forth in this Agreement
are true and correct as of the date of the certificate.
(c) There have been no material adverse changes in Pacific up to and including
the date of the certificate.
<PAGE>
(d) All conditions required by this Agreement to have been met, satisfied, or
performed by Pacific have been met.
(e) The consummation of the transactions contemplated by this Agreement does
not violate any law, regulation, order, writ, injunction or decree of any
court or governmental body or result in the creation or imposition of any
mortgage, lien, charge or encumbrance of any nature upon any of the
properties of Pacific pursuant to any mortgage, resolution agreement or
instrument to which Pacific is a party.
(f) All authorisations, consents, approvals, registrations, and/or filings with
any governmental body, agency or court required in connection with the
execution and delivery of the documents by Pacific have been obtained and
are in full force and effect or, if not required to have been obtained,
will be in full force and effect by such time as may be required.
(g) There is no action, suit, proceeding, inquiry or investigation at law or in
equity by any public board or body pending or threatened against Pacific
wherein an unfavourable decision ruling, or finding would have an adverse
affect on the financial condition of Pacific the operation of Pacific, or
the acquisition and reorganisation contemplated herein, or any material
agreement or instrument by which Pacific is bound or would in any way
contest the existence of Pacific.
Section 5.03 No Material Adverse Change
Prior to the Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of Pacific, nor shall
any event have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial condition,
business or operations of Pacific.
Section 5.04 Good Standing
Chancellor shall have received certificates of good standing from the
appropriate authorities, dated as of a date within five days prior to the
Closing Date, certifying that Pacific is in good standing as a corporation in
the state of Nevada.
Section 5.05 Other Items
Chancellor shall have received such further documents , certificates, or
instruments relating to the transaction contemplated hereby as Chancellor may
reasonably request.
<PAGE>
ARTICLE V1
CONDITIONS PRECEDENT TO OBLIGATIONS OF
PACIFIC
The obligations of Pacific under this Agreement are subject to the satisfaction,
at or before the Closing Date, of the following conditions:
Section 6.01 Accuracy of Representations
The representation and warranties made by Chancellor regarding its stock
ownership and PCFL in this Agreement were true when made and shall be true at
the Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement ), and PCFL shall have performed or complied with
all covenants and conditions required by this Agreement to be performed or
complied with by PCFL prior to or at the Closing. Pacific shall be furnished
with a certificate, signed by a duly authorised officer of PCFL and dated the
Closing Date, to the foregoing effect.
Section 6.02 Officer's Certificates
Pacific shall have been furnished with certificates dated the Closing date and
signed by a duly authorised chief executive officer and principal accounting and
financial officer of PCFL or by Chancellor to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
PCFL or Chancellor, threatened which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
Furthermore, based on certificates of good standing, representation of
government agencies, and PCFL's and/or Chancellor's own documents, the
certificate shall represent that:
(a) This Agreement has been duly approved by PCFL's and/or Chancellor's board
of directors and has been duly executed and delivered in the name and on
behalf of PCFL by its duly authorised officers pursuant to , and in
compliance with, authority granted by the board of directors of PCFL.
(b) The representations and warranties of Chancellor set forth in this
Agreement are true and correct as of the date of the certificate:
(c) Except as provided or permitted herein, there have been no material adverse
changes in PCFL up to and including the date of the certificate:
(d) All conditions required by this Agreement to have been met, satisfied or
performed by PCFL and Chancellor have been met.
(e) The consummation of the transactions contemplated by this Agreement does
not violate any law, regulation order, writ injunction or decree of any
court or governmental body or result in the creation or imposition of any
mortgage, lien, charge or encumbrance of any
<PAGE>
nature upon any of the properties of PCFL, pursuant to any mortgage,
resolution, agreement, or instrument to which PCFL or Chancellor is a
party.
(f) All authorisations, consents, approvals, registrations and/or filings with
any governmental body, agency or court required in connection with the
execution and delivery of the documents by PCFL have been obtained and are
in full force and effect or, if not required to have been obtained will be
in full force and effect by such time as may be required; and
(g) There is no action, suit, proceeding, inquiry or investigation at law or in
equity by any public board or body pending or threatened against PCFL
wherein an unfavourable decision, ruling or finding would have an adverse
affect on the financial condition of PCFL, the operation of PCFL or the
acquisition and reorganisation contemplated herein, or any material
agreement or instrument by which PCFL is bound or would in any way contest
the existence of PCFL.
Section 6.03 No Material Adverse Change
Except as provided or permitted herein, prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business or operations of PCFL, nor shall any event have occurred which, with
the lapse of time or the giving of notice may cause or create any material
adverse change in the financial condition, business, or operations of PCFL.
Section 6.04 Other Items
Pacific shall have received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as Pacific may reasonably
request.
ARTICLE V11
MISCELLANEOUS
Section 7.01 No Representation Regarding Tax Treatment
No representation or warranty is being made by any party to any other regarding
the treatment of this transaction for federal or state income taxation. Each
party has relied exclusively on its own legal, accounting and other tax adviser
regarding the treatment of this transaction for federal and stage income taxes
and on no representations, warranty or assurance from any other party or such
other party's legal, accounting or other adviser.
Section 7.02 Governing Law
This Agreement shall be governed by, enforced and construed under and in
accordance with the laws of the United States of America and, with respect to
matters of state law, with the laws of the state of Nevada and with respect to
matters governing corporations organised under the laws of such state.
<PAGE>
Section 7.03 Notices
All notices, demands, requests or other communications required or authorised
hereunder shall be deemed given sufficiently if in writing and if personally
delivered, if sent by facsimile transmission, confirmed with a written copy
thereof sent by overnight express delivery, if sent by registered mail or
certified mail, return receipt requested and postage prepaid; or if sent by
overnight express delivery:
If to Pacific to: 1800 E. Sahara, Suite 107,
Las Vegas Nevada 89104 USA
With Copy to: David S. Stevens
Level 2, 55 Hunter Street,
Sydney NSW 2000 Australia Fax: 612-233 3860
If to Chancellor to: Stanley Looman
Dominicanessen straat 22,
Oranjestad, Aruba Telecopy No: 0011-2978 36546
or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder and any such notice demand, request
or other communication shall be deemed to have been given as of the date so
delivered or sent by facsimile transmission three days after the date so mailed
or one day after the date so sent by overnight delivery.
Section 7.04 Attorney's Fees
In the event that any party institutes any action or suit to enforce this
Agreement or to secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the nonbreaching party or parties for
all costs, including reasonable attorney's fees, incurred in connection
therewith and in enforcing or collecting any judgement rendered therein.
Section 7.05 Schedules: Knowledge
Whenever in any section of this Agreement reference is made to information set
forth in the schedules provided by Pacific, or Chancellor, such reference is to
information specifically set forth in such schedules and clearly marked to
identify the information specifically set forth in such schedules and clearly
marked to identify the section of this Agreement to which the information
relates. Whenever any representation is made to the "knowledge" of any party, it
shall be deemed to be a representation that no officer or director of such
party, after reasonable investigation, has any knowledge of such matters.
<PAGE>
Section 7.06 Third Party Beneficiaries
This contract is solely between Pacific and Chancellor, and, except as
specifically provided, no director, officer, stockholder, employee, agent,
independent contractor, or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 7.07 Entire Agreement
This Agreement represents the entire agreement between the parties relating to
the subject matter hereof. All previous agreements between the parties whether
written or oral, have been merged into this Agreement. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other course of dealing, understandings,
agreements, representations, or warranties, written or oral except as set forth
herein.
Section 7.08 Survival: Termination
The representations, warranties, and covenants of the respective parties shall
service the Closing Date and the consummation of the transactions herein
contemplated.
Section 7.9 Counterparts
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section 7.10 Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every other
right and remedy, whether conferred herein, at law, or in equity and such
remedies may be enforced concurrently and no waiver by any party of the
performance of any obligation by the other shall be construed as a waiver of the
same or any other default then theretofore, or thereafter occurring or existing.
At any time prior to the Closing Date, this Agreement may be amended by a
writing signed by all parties hereto, with respect to any of the terms contained
herein , and any term or condition of this Agreement may be waived or the time
for performance thereof may be extended by a writing signed by the party or
parties for whose benefit the provision is intended.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officer, hereunto duly authorised as of the date first above
written.
For and on behalf of Chancellor:
By: Neil A. Green
Power of Attorney
S\- Neil A. Green
Pacific,
a Nevada Corporation
By: David S. Stevens
S/- David S. Stevens
