U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: May 9, 1997
(Amending Report Dated April 15, 1997)
IRON HOLDINGS CORP.
(f/k/a Comstock Tailings Company, Inc.)
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
0-24590 84-1275559
(Commission File No.) (IRS Employer
Identification No.)
88-90 103rd Ave.
Ozone Park, N.Y. 11417
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(718) 323-4537
<PAGE>
Item 1(a). Change in Control of Registrant.
Effective March 31, 1997, pursuant to a definitive agreement
(attached hereto and incorporated herein as Exhibit 2.0) (the
"Agreement") Comstock Tailings Company, Inc. (the "Company")
acquired all of the issued and outstanding securities of Iron
Holdings Corp., ("IHC"), a New York corporation. The terms of the
transaction involved the Company issuing an aggregate of 4,500,000
shares of its "restricted" common stock to the former shareholders
of IHC in exchange for all of the issued and outstanding stock of
IHC. IHC did not survive the transaction. The Company also
changed its name to "Iron Holdings Corp."
Pursuant to the terms of the Agreement the Company's officers
and directors, Joel Feinberg, Suzanne Maisch and Paul Abbondante,
resigned their respective positions in the Company and the
following persons were appointed as new officers and/or directors
of the Company:
NAME OFFICE
Anthony E. Gurino Chief Executive Officer,
President and Corporate
Secretary, Director
Angelo Gurino Vice President, Treasurer
and Director
Dennis Sommeso Assistant Secretary and
Director
Johanna Stanziale Director
The percentage of voting securities of the Company now
beneficially owned directly or indirectly by the entity who
acquired control and the identity of the entities who acquired
control are as follows:
Percent
Name of Amount and Nature of of
Beneficial Owner Beneficial Ownership Class
Anthony E. Gurino 2,000,000 40%
86-20 164th Avenue
Queens, NY 11414
Angelo Gurino, Sr. 2,000,000 40%
164-53 85th
Howard Beach, NY 11414
Dennis Sommeso 490,000 9.8%
2 Bushwick Street
Melville, NY 11747
2
<PAGE>
Johanna Stanziale 10,000 *
149-35 80th Street
Howard Beach, NY 11414
All Proposed Directors 4,500,000 90%
and Officers as a
Group (4 persons)
* Less than 1%
Item 2. Acquisition or Disposition of Assets.
Effective March 31, 1997, the Company acquired all of the
issued and outstanding securities of IHC, consisting of 4,500,000
shares of common stock, par value $.001 per share. The nature and
amount of consideration given in connection with the agreement was
the issuance of 4,500,000 shares of "restricted" common stock of
the Company to the former IHC shareholders. The consideration
given and received was determined by arms-length negotiations
between the principals of the Company and principals of IHC. No
material relationship existed or presently exists between
management of the companies.
The Company is now a holding company for Iron Eagle
Contracting and Mechanical, Inc., a New York corporation ("IECM"),
which was acquired in January 1997. IECM is engaged in the
development and construction of projects in the New York
Metropolitan area and is presently involved in various real estate
projects and utility and mechanical projects with the New York City
Department of Transportation ("NYCDOT"), the New York City
Department of Environmental Protection ("NYCDEP"), the New York
State Office of General Services ("NYSOGS"), Nassau County, and
other city, county and local municipalities in the New York area,
ranging in scope from basic water main installations to the
replacement of sludge cake belts to the reconstruction of sluice
gate operators and telemetry systems to construction of pre-
engineered buildings and remodeling of existing buildings.
In addition to continuing to submit competitive bids on
NYCDOT, NYCDEP, New York City Department of Parks and Recreation,
and New York and New Jersey Port Authority contracts as well as
other projects in the New York area on a sub-contract basis, the
Company intends to purchase and invest in commercial real estate in
the New York area.
The Company will continue to bid on NYCDOT, NYCDEP, New York
City Department of Parks and Recreation, and New York and New
Jersey Port Authority contracts as well as bid on jobs as a
subcontractor in specific fields.
In addition, the Company intends to purchase real estate. The
Company is currently negotiating to purchase the Lindenwood
3
<PAGE>
Shopping Center located in Lindenwood, Queens. The contract is
presently under review for signing. The proposed purchase price is
Eight Million Dollars ($8,000,000). The Lindenwood property is
improved with a one and partial two-story, free standing, retail
neighborhood center. The neighborhood center contains a gross
building area of 56,560 square feet and a net rentable area of
55,720 square feet and was constructed circa 1961. The
improvements are situated on approximately 138,000 square feet of
R-5 (CI-2 Commercial) zoned land located in the Howard Beach are of
Queens, New York. The Lindenwood Shopping Center's current use as
a retail neighborhood center is the preferred use for the property.
This conclusion is based on the historical and current economic
trends and the demand for retail space in the Howard Beach area as
well as the conformity of the property to neighborhood buildings.
The property does not have any natural, cultural, recreational or
scientific use.
The Company is also in negotiations to purchase a shopping
center in Westchester County. Further, the Company intends to
develop 46 rental apartments in Ozone Park, New York. These rental
income properties are anticipated to be under contract by April
1997, and closed by August 1997, with construction commencing in
the Fall of 1997. No assurances are made that either of these
transactions will be consummated.
Item 4. Changes in Registrant's Certifying Accountant.
On March 31, 1997, Kish, Leake & Associates, P.C., the
Registrant's independent accountant for the Registrant's two most
recent fiscal years, resigned. The Registrant's financial
statements for the last two years prepared by Kish, Leake &
Associates, P.C., contained no adverse opinion or disclaimer of
opinion, or was qualified as to uncertainty, audit scope, or
accounting principles.
Also on March 31, 1997, the Registrant engaged the accounting
firm of Horton & Co., L.L.C., independent public accountants to
audit the Registrant's fiscal year ended December 31, 1997, as well
as future financial statements, to replace the firm of Kish, Leake
& Associates, P.C., which was the principal independent public
accountant as reported in the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1996, as filed with the Securities
& Exchange Commission. This change in independent accountants was
approved by the Board of Directors of the Registrant.
There were no disagreements within the last two fiscal years
and subsequent periods with Kish, Leake & Associates, P.C., on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreement(s),
if not resolved to the satisfaction of Kish, Leake & Associates,
P.C., would have caused that firm to make reference in connection
with its reports to the subject matter of the disagreement(s) or
4
<PAGE>
any reportable events.
The Registrant has requested that Kish, Leake & Associates,
P.C., furnish it with a letter addressed to the Commission stating
whether it agrees with the above statements. A copy of such
letter, dated April 15, 1997, is filed as Exhibit 16 to this Form
8-K.
Item 6. Resignation of Registrant's Directors.
Joel Feinberg, Suzanne Maisch and Joel Feinberg resigned as
officers and directors of the Company, as applicable, effective
March 31, 1997, all of whom constituted the complete Board of
Directors of the Company as of said date.
Item 7(a) and 7(b). Financial Statements and Pro Forma Financial
Statements
The financial statements and pro forma financial statements of
IHC are attached hereto.
Item 7(c). Exhibits.
Number Exhibit
2.0 Agreement and Plan of Share Exchange between
the Company and Iron Holdings Corp.
16.0 Letter of Resignation of Registrant's
independent certified accountant, Kish, Leake
& Associates, P.C.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this amended report to be
signed on its behalf by the undersigned hereunto duly authorized.
IRON HOLDINGS CORP.
By:/s/ Anthony Gurino
Anthony Gurino,
President
Dated: May 9, 1997
6
<PAGE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
FINANCIAL STATEMENTS
with
ADDITIONAL INFORMATION
and
INDEPENDENT AUDITOR'S REPORT
FOR THE PERIOD DECEMBER 7, 1995 (DATE OF INCORPORATION)
THROUGH JUNE 30, 1996
<PAGE>
CONTENTS
Page
Independent Auditors' Report 1
Financial statements:
Balance sheet 2
Statement of operations and accumulated deficit 3
Statement of cash flows 4
Notes to financial statements 5
Additional information:
Summary of contracts 10
Schedule of contract in progress 11
Schedule of completed contracts 12
<PAGE>
HORTON & COMPANY Edward Charles Horton, CPA
Certified Public Accountants and Raymond Del Vecchio Jr., CPA
Business Consultants, L.L.C. Seymour Grossman, CPA
Martin Goldstein, CPA
David Horn, CPA
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Iron Eagle Contracting and Mechanical, Inc.
Ozone Park, New York
We have audited the accompanying balance sheet of Iron Eagle
Contracting and Mechanical, Inc. as of June 30, 1996, and the
related statements of operations and accumulated deficit and
cash flows for the period December 7, 1995 (date of
incorporation) through June 30, 1996. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Iron Eagle Contracting and Mechanical, Inc. as of June 30,
1996, and the results of its operations for the period December
7, 1995 (date of incorporation) through June 30, 1996 in
conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The additional
information provided on pages 10 through 12 is presented for
purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial
statements taken as a whole.
HORTON & COMPANY, L.L.C.
July 18, 1996
1
<PAGE>
Page 2
BALANCE SHEET
June 30, 1996
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
BALANCE SHEET
June 30, 1996
<CAPTION>
ASSETS
<S> <C>
Current asset:
Cash $ 195,668
Contract receivables (Note 3) 278,500
Costs and estimated earnings in excess
of billings on uncompleted contracts 41,000
Prepaid expenses and other receivables 41,819
Real estate under development 388,980
___________
Total current assets 945,967
___________
Property and equipment, at cost
(Notes 2, 4 and 5):
Construction equipment 270,363
Office furniture and equipment 34,794
___________
305,157
Less accumulated depreciation 22,587
___________
282,570
___________
Other assets:
Restrictive covenants, net of
accumulated amortization of $20,000 (Note 2) 260,000
Organizational costs, net of
accumulated amortization of $28 252
Customer lists, net of accumulated
amortization of $5,804 (Note 2) 52,234
Deposits 1,200
___________
313,686
___________
$ 1,542,223
===========
<FN>
See notes to financial statements
2
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt (Note 5) $ 24,713
Accounts payable and accrued expenses 193,731
___________
Total current liabilities 218,444
Note payable (Note 4) 450,000
Long-term debt, net of current portion (Note 5) 41,711
___________
710,155
___________
Stockholder's equity:
Common stock, no par value
200 shares authorized
100 shares issued and outstanding 500,000
Additional paid-in-capital 500,000
Accumulated deficit (167,932)
___________
832,068
___________
$ 1,542,223
===========
</TABLE>
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
<CAPTION>
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
<S> <C>
Contract revenues earned $ 384,500
Cost of revenues 308,553
__________
Gross profit 75,947
Operating expenses 237,190
__________
Loss from operations (161,243)
Interest expense 6,689
__________
Net loss (167,932)
Accumulated deficit, beginning of period 0
__________
Accumulated deficit, end of period $ (167,932)
==========
<FN>
See notes to financial statements
</TABLE>
3
<PAGE>
Page 4
STATEMENT OF CASH FLOWS
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
<CAPTION>
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
<S> <C>
Cash flows from operating activities:
Cash received from customers $ 65,000
Cash paid to suppliers and employees (329,454)
Expenditures for real estate under development (388,980)
Interest paid (6,969)
___________
Net cash used in operating activities (660,403)
___________
Cash flows from investing activities:
Capital expenditures (71,662)
___________
Net cash used in investing activities (71,662)
___________
Cash flows from financing activities:
Principal payments under loan agreements (5,159)
Proceeds from loan agreement 432,892
Capital contributions from parent company 500,000
___________
Net cash provided by financing activities 927,733
___________
Net increase in cash 195,668
Cash, beginning of period 0
___________
Cash, end of period $ 195,668
===========
<FN>
See notes to financial statements
4
<PAGE>
Reconciliation of net loss to
net cash used in operating activities:
Net loss $(167,932)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization 42,940
Depreciation 22,587
Changes in assets and liabilities:
Increase in contract receivables (278,500)
Increase in costs and estimated
earnings in excess of billings
on uncompleted contracts (41,000)
Increase in prepaid expenses
and other expenses (42,049)
Increase in real estate under development (388,980)
Increase in deposits (1,200)
Increase in accounts payable
and accrued expenses 193,731
_________
Total adjustments (492,471)
_________
Net cash used in operating activities $(660,403)
=========
Supplemental disclosures of non-cash
investing and financing activities:
During the period ended June 30, 1996, the Company purchased
property and equipment totaling $71,662. These purchases were
financed as follows:
Property and equipment purchased $ 305,157
Long-term debt financing (45,145)
Equipment acquired through
issuance of stock and assumption of debt (188,350)
_________
Capital expenditures $ 71,662
=========
During the period ended June 30, 1996, the Company acquired
certain assets of Iron Eagle Contracting Corp. in exchange for
250,000 shares of the Company's common stock as follows:
Fair value of non-cash assets acquired $ 876,438
Liabilities assumed 376,438
_________
Common stock issued in asset acquisition $ 500,000
=========
</TABLE>
<PAGE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENT
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
1. Summary of significant accounting policies
This summary of significant accounting policies of Iron Eagle
Contracting and Mechanical, Inc. (a wholly-owned subsidiary of JJFN
Holdings, Inc.) (hereinafter "Iron Eagle" or the "Company") is presented
to assist in understanding the financial statements. The financial
statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent assets and liabilities at the date of
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
History and business activity
Iron Eagle Contracting and Mechanical, Inc. was incorporated on December
7, 1995. On December 29, 1995, the Company became a wholly-owned
subsidiary of JJFN Holdings, Inc. On December 29, 1995, Iron Eagle
acquired certain assets of a construction company as described in Note
2. Effective May 15, 1996, JJFN Holdings, Inc. became a wholly-owned
subsidiary of JJFN Services, Inc. a publicly-held company.
Iron Eagle is a construction contractor engaged in pipe work including
gas and water mains as well as steel installation. The Company operates
in the New York City metropolitan area. The Company is also developing
a tract of real estate in Ozone Park, New York, on which it will build
five two-family homes.
Construction revenue and cost recognition
Revenue from construction contracts is recognized on the percentage-of-
completion method measured by the percentage of costs incurred to date
to estimated total costs for each contract.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs, and depreciation costs. Provisions for
estimated losses on uncompleted contracts are made in the period in
which such losses are determined. Changes in job performance, job
conditions, and estimated profitability, including those arising from
contract penalty provisions, and final contract settlements may result
in revisions to costs and income and are recognized in the period in
which the revisions are determined. Profit incentives are included in
revenues when their realization is reasonably assured. An amount equal
to contract costs attributable to claims is included in revenues when
realization is probable and the amount can be reliably estimated.
General and administrative costs are charged to expense as incurred.
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of
amounts billed.
5
<PAGE>
1. Summary of significant accounting policies (continued)
Concentration of credit risk and major contracts
Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of cash and contract
receivables.
At June 30, 1996, the Company had cash balances with a bank which were
$95,668 in excess of the $100,000 limit insured by the Federal Deposit
Insurance Corporation. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit
risk on cash.
The Company's policies generally do not require collateral to support
contract receivables. At June 30, 1996, all of the Company's contract
receivables and costs and estimated earnings in excess of billings on
uncompleted contracts were from two contracts. For the period December
7, 1995 through June 30, 1996, Iron Eagle derived all of its revenues
from two contracts.
An officer of Iron Eagle is also an officer of another company which
awarded a $226,000 contract to Iron Eagle. That contract was completed
during the period ended June 30, 1996. Contract receivables includes a
$161,000 receivable under that contract at June 30, 1996.
Real estate under development
The Company is developing a tract of real estate in Ozone Park, New
York, on which it will build five two-family homes. During the period
ended June 30, 1996, development activity consisted of site work to
demolish existing structures and to ready the property for construction
of the individual homes. It is anticipated that construction will be
completed in the autumn of 1996 and that all residences will be sold
within one year of the balance sheet date. Proceeds from the future
sales and total costs to develop the property are estimated to be
$1,600,000 and $1,200,000 respectively. During the period ended June
30, 1996, real estate development costs included $21,688 of capitalized
interest.
Property and equipment
Property and equipment are carried at cost. Depreciation of property
and equipment is provided on the straight-line methods over the
following estimated useful lives:
Years
_____
Construction equipment 5
Office furniture and equipment 5
Total depreciation expense was $22,587 for the period December 7, 1995
(date of incorporation) through June 30, 1996.
Maintenance, repairs and renewals which neither materially add to the
value of the equipment nor appreciably prolong its life are charged to
expense as incurred. Gains or losses on dispositions of equipment are
included in income.
Customer lists and restrictive covenants
Customer lists and restrictive covenants are carried at cost and were
acquired in the business combination described in Note 2. Customer
lists and restrictive covenants are being amortized on the straight-line
method over five-year and seven-year periods, respectively.
6
<PAGE>
1. Summary of significant accounting policies (continued)
Organizational costs
Organizational costs are being amortized on the straight line method
over a 60-month period.
2. Asset acquisition
On December 29, 1995, the Company acquired certain assets of Iron Eagle
Contracting Corp. ("IECC") in exchange for 250,000 shares of common
stock of its parent company, JJFN Holdings, Inc., and the assumption of
$376,438 in liabilities. The acquisition also included customer
contacts and the agreement of certain shareholders not to compete with
the business. The acquisition was accounted for as a purchase.
Since the acquisition was accounted for as a purchase, assets were
recorded at their fair market value as of the date of the acquisition as
follows:
Cash $339,900
Construction equipment 188,350
Prepaid expenses 50
Deferred financing costs 9,500
Deposits 600
Customer contacts 58,038
Restrictive covenants 280,000
________
$876,438
========
The value of the consideration paid was as follows:
Common stock $500,000
Debt assumed 376,438
________
Purchase cost $876,438
========
3. Contract receivables
Contract receivables consist of the following:
Completed contracts $178,500
Contract in progress 100,000
________
$278,500
4. Note payable
On December 29, 1995, Iron Eagle entered into a loan agreement which
provides for up to $600,000 of financing to be used for working capital
and asset acquisitions. The loan bears interest at 12% with interest
only payable monthly and the principal balance due on October 31, 1997.
The note is secured by substantially all assets of Iron Eagle. In
conjunction therewith, the Company entered into consulting agreements
(Note 7).
7
<PAGE>
5. Long-term debt
Long-term debt consists of the following:
10% note payable to a bank, due April 1998,
payable in monthly installments of $1,063,
including interest. The note is secured by
construction equipment. $21,279
9.92% note payable to a financing corporation,
due June 1999, payable in monthly installments
of $1,455, including interest. The note is
secured by construction equipment. 45,145
_______
66,424
Less current portion of long-term debt 24,713
_______
$41,711
=======
Maturities of long-term debt are as follows:
Year ending June 30, 1997 $24,713
Year ending June 30, 1998 25,154
Year ending June 30, 1999 16,557
_______
$66,424
=======
6. Income taxes
The Company has a net operating loss available for carryforward to
offset future years' taxable income. The net operating loss expires in
the year ending June 30, 2011.
Deferred income taxes arise from temporary differences in reporting
assets and liabilities for income tax and financial accounting purposes
primarily resulting from net operating losses. The components of the
deferred tax asset and the related tax effects of the temporary
differences are as follows:
Non-current deferred income tax asset
arising from net operating loss carryforward $ 25,200
Valuation allowance (25,200)
________
Net deferred income tax asset $ 0
========
8
<PAGE>
7. Commitments
Lease agreement
Iron Eagle leases office space under an operating lease which ends
December 31, 1996. The annual rental is $13,500. For the period ended
June 30, 1996, rent expense was $6,750. The lessee has an option to
extend the lease for a four-year term at an annual rental of $18,000.
Future minimum lease payments for the year ending June 30, 1997 total
$6,750.
Consulting agreements
In conjunction with the loan agreement described in Note 4, Iron Eagle
entered into two consulting agreements. Each agreement is for a six-
month period commencing January 1996. Combined payments under the two
agreements are $1,000 per month. In addition, the agreements provide
for a total of 1,200,000 warrants to purchase shares of the parent
company's common stock. Such warrants are convertible into 1,200,000
shares of the common stock of JJFN Services, Inc. at $.001 per share.
Employment agreements
In connection with the asset acquisition described in Note 2, Iron Eagle
entered into employment agreements with two individuals. Each agreement
is for a five-year period commencing January 1996 and calls for base
compensation of $75,000 with annual increases equal to the increase in
the cost of living for the New York metropolitan area plus 1%. In
addition, each individual is entitled to a performance bonus equal to
7.5% of pre-tax profit of Iron Eagle.
8. Backlog
Iron Eagle has nine signed construction contracts totaling $5,770,584.
In addition, Iron Eagle has been awarded one construction job totaling
$419,000 and is awaiting finalization of the contract.
9. Subsequent event
On July 3, 1996, Iron Eagle's parent company contributed an additional
$250,000 in additional paid-in capital.
9
<PAGE>
ADDITIONAL INFORMATION
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
SUMMARY OF CONTRACTS
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
<CAPTION>
Cost of
Revenues revenues Gross
earned earned profit
________ ________ _______
<S> <C> <C> <C>
Contract in progress $141,000 $ 98,700 $42,300
Completed contracts 243,500 209,853 33,647
________ ________ _______
$384,500 $308,553 $75,947
======== ======== =======
</TABLE>
10
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
SCHEDULE OF CONTRACT IN PROGRESS
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
<CAPTION>
Total contract From inception through June 30, 1996
___________________ __________________________________________________
Estimated Estimated
Contract gross Revenues Cost of Gross Billed cost to
number Revenues profit earned revenues profit to date complete
________ ________ _______ ________ _______ _______ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C>
96-02 $305,000 $91,500 $141,000 $98,700 $42,300 $100,000 $114,800
======== ======= ======== ======= ======= ======== ========
</TABLE>
11
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
SCHEDULE OF COMPLETED CONTRACTS
For the period December 7, 1995 (date of incorporation)
through June 30, 1996
Total contract and from inception through June 30, 1996
<CAPTION>
Control Revenues Cost of Gross
number earned revenues profit
_______ ________ ________ _______
<S> <C> <C> <C>
96-01 $226,000 $197,603 $28,397
96-02A 17,500 12,250 5,250
________ ________ _______
$243,500 $209,853 $33,647
======== ======== =======
</TABLE>
12
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
BALANCE SHEET
September 30, 1996
<CAPTION>
ASSETS
<S> <C>
Current asset:
Cash $ 56,641
Contract receivables 601,976
Prepaid expense 38,267
Real estate under deveopment 556,826
___________
Total current assets 1,253,710
___________
Property and equipment, at cost:
Construction equipment 280,448
Office furniture and equipment 34,794
___________
315,242
Less accumulated depreciation 38,289
___________
276,953
___________
Other assets:
Restrictive covenants, net of
accumulated amortization of $30,000 250,000
Organizational costs, net of
accumulated amortization of $42 238
Customer lists, net of accumulated
amortization of $8,706 49,332
Deposits 1,200
___________
300,770
___________
$ 1,831,433
1
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 25,332
Accounts payable and accrued expenses 293,334
Notes payable 450,000
_____________
Total current liabilities 768,666
Long-term debt, net of current portion 35,143
_____________
803,809
_____________
Stockholder's equity:
Common stock, no par value
200 shares authorized
100 shares issued and outstanding 500,000
Additional paid-in-capital 750,000
Accumulated deficit (222,376)
_____________
1,027,624
_____________
$ 1,831,433
=============
</TABLE>
<PAGE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
<CAPTION>
Three-month period ended September 30, 1996
<S> <C>
Contract revenues earned $ 596,730
Cost of revenues 472,506
____________
Gross profit 124,224
Operating expenses 176,992
____________
Loss from operations (52,768)
Interest expense 1,676
____________
Net loss (54,444)
Accumulated deficit, beginning of period (167,932)
____________
Accumulated deficit, end of period $ (222,376)
============
2
<PAGE>
</TABLE>
<TABLE>
IRON EAGLE CONTRACTING AND MECHANICAL, INC.
(a wholly-owned subsidiary of JJFN HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
<CAPTION>
Three-month period ended September 30, 1996
<S> <C>
Cash flows from operating activities:
Cash received from customers $ 314,254
Cash paid to suppliers and employees (517,725)
Expenditures for real estate under development (167,846)
Interest paid (1,676)
____________
Net cash used in operating activities (372,993)
____________
Cash flows from investing activities:
Capital expenditures (10,085)
____________
Net cash used in investing activities (10,085)
____________
Cash flows from financing activities:
Principal payments under loan agreements (5,949)
Capital contribution from parent company 250,000
____________
Net cash provided by financing activities 244,051
____________
Net decrease in cash (139,027)
Cash, beginning of period 195,668
____________
Cash, end of period $ 56,641
============
3
<PAGE>
Reconciliation of net loss to
net cash used in operating activities:
Net loss $ (54,444)
___________
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization 12,916
Depreciation 15,702
Changes in assets and liabilities:
Increase in contract receivables (323,476)
Decrease in costs and estimated
earnings in excess of billings
on uncompleted contracts 41,000
Increase in prepaid expenses (23,948)
Increase in real estate under development (167,846)
Decrease in deposits 27,500
Increase in accounts payable
and accrued expenses 99,603
___________
Total adjustments (318,549)
___________
Net cash used in operating activities $ (372,993)
===========
</TABLE>
<PAGE>
IRON HOLDINGS CORP. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
and
ACCOUNTANTS' COMPILATION REPORT
FOR THE PERIOD OCTOBER 3, 1996 (date of incorporation)
THROUGH DECEMBER 31, 1996
<PAGE>
CONTENTS
Page
Accountants' Compilation Report 1
Financial statements:
Consolidated balance sheet 2
Consolidated statement of operations
and accumulated deficit 3
Consolidated statement of cash flows 4
Notes to consolidated financial statements 5
<PAGE>
HORTON & COMPANY Edward Charles Horton, CPA
Certified Public Accountants and Raymond Del Vecchio Jr., CPA
Business Consultants, L.L.C. Seymour Grossman, CPA
Martin Goldstein, CPA
David Horn, CPA
ACCOUNTANTS' COMPILATION REPORT
The Board of Directors
Iron Holdings Corp. and Subsidiary
Ozone Park, New York
We have compiled the accompanying consolidated balance sheet of
Iron Holdings Corp. and Subsidiary as of December 31, 1996, and
the related consolidated statements of operations and
accumulated deficit, and cash flows for the period October 3,
1996 (date of incorporation) through December 31, 1996, in
accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
We have not audited or reviewed the accompanying financial
statements and, accordingly, do not express an opinion or any
other form of assurance on them.
HORTON & COMPANY, L.L.C.
February 18, 1997
1
<PAGE>
Page 2
CONSOLIDATED BALANCE SHEET
December 31, 1996
<PAGE>
<TABLE>
IRON HOLDINGS CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
December 31, 1996
<CAPTION>
ASSETS
<S> <C>
Current asset:
Cash $ 16,187
Contract receivables 594,566
Costs and estimated earnings in excess
of billings on uncompleted contracts 204,291
Prepaid expenses 38,267
Real estate under development 931,318
Current portion of deferred income taxes 71,000
_____________
Total current assets 1,855,629
_____________
Property and equipment, at cost:
Construction equipment 280,448
Office furniture and equipment 34,794
_____________
315,242
Less accumulated depreciation 54,051
_____________
261,191
_____________
Other assets:
Restrictive covenants, net of
accumulated amortization of $40,000 240,000
Organizational costs, net of
accumulated amortization of $56 224
Customer lists, net of accumulated
amortization of $11,608 46,430
Deposits 5,600
Deferred income taxes, net of current portion 52,500
Goodwill, net of accumulated
amortization of $5,989 233,587
_____________
587,341
_____________
$ 2,695,161
=============
<FN>
See Accountants' Compilation Report
and notes to consolidated financial statements
2
<PAGE>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 25,969
Accounts payable and accrued expenses 505,842
Notes payable 857,800
____________
Total current liabilities 1,389,611
____________
Note payable from business combination 1,312,500
Long-term debt, net of current portion 28,406
____________
2,730,517
____________
Stockholders' deficit:
Common stock, no par value
200 shares authorized
35 shares issued and outstanding 3,500
Accumulated deficit (38,856)
____________
(35,356)
____________
$ 2,695,161
============
</TABLE>
<PAGE>
<TABLE>
IRON HOLDINGS CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
<CAPTION>
For the period October 3, 1996 (date of incorporation)
through December 31, 1996
<S> <C>
Contract revenues earned $ 462,153
Cost of revenues 415,697
___________
Gross profit 46,456
Operating expenses 162,420
___________
Loss from operations (115,964)
Interest expense 1,092
___________
Loss before income taxes (117,056)
Deferred income tax benefit 78,200
___________
Net loss (38,856)
Accumulated deficit, beginning of period 0
___________
Accumulated deficit, end of period $ (38,856)
===========
<FN>
See Accountants' Compilation Report
and notes to consolidated financial statements
</TABLE>
3
<PAGE>
Page 4
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period October 3, 1996 (date of incorporation)
through December 31, 1996
<PAGE>
<TABLE>
IRON HOLDINGS CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
For the period October 3, 1996 (date of incorporation)
through December 31, 1996
<S> <C>
Cash flows from operating activities:
Cash received from customers $ 321,913
Cash paid to suppliers and employees (335,343)
Expenditures for real estate under development (374,492)
Interest paid (1,092)
__________
Net cash used in operating activities (389,014)
__________
Cash flows from financing activities:
Principal payments under loan agreements (6,099)
Proceeds from notes payable 407,800
Proceeds from issuance of common stock 3,500
__________
Net cash provided by financing activities 405,201
__________
Net increase in cash 16,187
Cash, beginning of period 0
__________
Cash, end of period $ 16,187
==========
<FN>
See Accountants' Compilation Report
and notes to consolidated financial statements
4
<PAGE>
Reconciliation of net loss to
net cash used in operating activities:
Net loss $ (38,856)
___________
Adjustments to reconcile net loss
to net cash used in operating activities:
Amortization 18,905
Depreciation 15,762
Changes in assets and liabilities, net of
effects from business combination:
Decrease in contract receivables 64,051
Increase in costs and estimated
earnings in excess of billings
on uncompleted contracts (204,291)
Increase in real estate under development (374,492)
Increase in deferred income taxes (78,200)
Increase in deposits (4,400)
Increase in accounts payable
and accrued expenses 212,507
___________
Total adjustments (350,158)
___________
Net cash used in operating activities $ (389,014)
===========
</TABLE>
Supplemental schedule of non-cash investing and financing
activities:
The Company acquired all the shares of Iron Eagle as described
in Note 2, in exchange for issuance of a note payable as
follows:
<TABLE>
<S> <C>
Assets acquired $ 1,312,500
Note payable (1,312,500)
____________
Acquisition costs $ 0
============
</TABLE>
<PAGE>
IRON HOLDINGS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period October 3, 1996 (date of incorporation)
through December 31, 1996
1. Summary of significant accounting policies
This summary of significant accounting policies of Iron Holdings Corp.
and subsidiary (the "Company") is presented to assist in understanding
the financial statements. The consolidated financial statements and
notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial
statements.
Use of estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Principles of consolidation
The accompanying consolidated financial statements include the accounts
of Iron Holdings Corp. and of its wholly-owned subsidiary, Iron Eagle
Contracting and Mechanical, Inc. ("Iron Eagle") intercompany
transactions and balances have been eliminated in consolidation.
History and business activity
Iron Holdings Corp. was incorporated in the state of New York on October
3, 1996. Effective October 3, 1996, the Company acquired all the shares
of Iron Eagle in a business combination as described in Note 2. Iron
Eagle Contracting and Mechanical, Inc. was incorporated on December 7,
1995 and begun operations on December 29, 1995. Effective October 3,
1996, the Company became a wholly-owned subsidiary of Iron Holdings
Corp.
Iron Eagle is a construction contractor engaged in pipe work including
gas and water mains as well as steel installation. The Company operates
in the New York City metropolitan area. The Company has also developed
a tract of real estate in Ozone Park, New York, on which it has built
five two-family homes.
5
<PAGE>
1. Summary of significant accounting policies (continued)
Construction revenue and cost recognition
Revenue from construction contracts is recognized on the percentage-of-
completion method measured by the percentage of costs incurred to date
to estimated total costs for each contract.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs, and depreciation costs. Provisions for
estimated losses on uncompleted contracts are made in the period in
which such losses are determined. Changes in job performance, job
conditions, and estimated profitability, including those arising from
contract penalty provisions, and final contract settlements may result
in revisions to costs and income and are recognized in the period in
which the revisions are determined. Profit incentives are included in
revenues when their realization is reasonably assured. An amount equal
to contract costs attributable to claims is included in revenues when
realization is probable and the amount can be reliably estimated.
General and administrative costs are charged to expense as incurred.
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of
amounts billed.
Concentration of credit risk and major contracts
Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of contract
receivables.
The Company's policies generally do not require collateral to support
contract receivables. At December 31, 1996, two contract receivables
represent approximately 42% and 36% of the Company's contract
receivables. For the period ended December 31, 1996, Iron Eagle derived
revenues from four contracts that individually represented approximately
32%, 19%, 16% and 11% of total contract revenue.
An officer of Iron Eagle is also an officer of another company which
awarded a $287,315 contract to Iron Eagle. That contract was completed
during the period ended December 31, 1996. Contract receivables
includes a $214,749 receivable under that contract at December 31, 1996.
Real estate under development
Iron Eagle has developed a tract of real estate in Ozone Park, New York,
on which it has built five two-family homes. Construction was completed
in January 1997 and all houses are under contracts of sale with closings
anticipated to take place in February and March 1997. Proceeds from the
future sales and total costs to develop the property are estimated to be
$1,625,000 and $1,200,000 respectively. During the period ended
December 31, 1996, real estate development costs included $23,186 of
capitalized interest.
6
<PAGE>
1. Summary of significant accounting policies (continued)
Property and equipment
Property and equipment are carried at cost. Depreciation of property
and equipment is provided on the straight-line methods over the
following estimated useful lives:
Years
_____
Construction equipment 5
Office furniture and equipment 5
Total depreciation expense was $15,762 for the period ended December 31,
1996.
Maintenance, repairs and renewals which neither materially add to the
value of the equipment nor appreciably prolong its life are charged to
expense as incurred. Gains or losses on dispositions of equipment are
included in income.
Customer lists and restrictive covenants
Customer lists and restrictive covenants are carried at cost and are
being amortized on the straight-line method over five-year and seven-
year periods, respectively. Amortization expense of customer lists and
restrictive covenants was $12,902 for the period ended December 31,
1996.
Organizational costs
Organizational costs are being amortized on the straight line method
over a 60-month period. Amortization expense of organizational costs
was $14 for the period ended December 31, 1996.
Goodwill
Goodwill represents the excess of the purchase price over the fair
market value of net assets acquired in the Iron Eagle business
combination described in Note 2. Goodwill is being amortized on the
straight-line method over a ten-year period. Accumulated amortization
at December 31, 1996 and amortization expense for the period then ended
was $5,989.
2. Business combination
Effective October 3, 1996, the Company acquired Iron Eagle Contracting
and Mechanical, Inc. ("Iron Eagle") in a business combination accounted
for as a purchase. The results of operations of Iron Eagle is included
in the accompanying financial statements since the date of acquisition.
The total cost of the acquisition was $1,312,500, which exceeded the
fair value of the net assets of Iron Eagle by $239,576. The excess is
being amortized on the straight-line method over ten years.
3. Contract receivables
Contract receivables consist of the following:
Completed contracts $ 490,272
Contracts in progress 91,166
Retainage 13,128
_________
$ 594,566
=========
7
<PAGE>
4. Note payable from business combination
Note payable from business combination arose from the acquisition of the
stock of Iron Eagle (Note 2). The note bears interest at the prime rate
plus 1%. Interest is payable in monthly installments beginning in
August 1997 through January 2002. Interest accrued through July 1997
shall be payable in six equal monthly installments commencing August
1997. Principal is payable in five equal consecutive annual
installments commencing January 1998 and ending January 2002.
In the event the Company completes a securities offering, it shall be
obligated to prepay the lesser of $500,000 or the then remaining unpaid
amount of principal and interest. Upon completion of a second offering,
the Company shall be obligated to prepay the then remaining unpaid
amount of principal and interest.
The note is secured by all of the issued and outstanding shares of Iron
Eagle and by 150,000 shares of post-recapitalization common stock of
Iron Holdings Corp. (Note 11).
5. Notes payable
At December 31, 1996, notes payable consist of the following:
12% note payable to a corporation under a loan
agreement which provides for up to $600,000 of
financing to be used for working capital and
asset acquisitions. Interest only is payable
monthly and the principal balance is due on
October 31, 1997. The note is secured by
substantially all assets of Iron Eagle. In
conjunction therewith, the Company entered into
consulting agreements (Note 9). $450,000
12% note payable to an individual, due March 4,
1997. The note is unsecured but is personally
guaranteed by an officer of the Company. 100,000
6% note payable to an individual, with interest
only payable in monthly installments until June 1,
1997, when the entire unpaid balance plus interest
shall be due. The note is secured by one of the
two-family homes that the Company has developed. 300,000
Non-interest bearing, unsecured demand loan from
a corporation which is owned by an officer of
the Company. 7,800
________
$857,800
6. Long-term debt
Long-term debt consists of the following:
10% note payable to a bank, due April 1998,
payable in monthly installments of $1,063,
including interest. The note is secured by
construction equipment. $ 15,856
9.92% note payable to a financing corporation,
due June 1999, payable in monthly installments
of $1,455, including interest. The note is
secured by construction equipment. 38,519
________
54,375
Less current portion of long-term debt 38,519
________
54,375
25,969
________
$ 28,406
========
8
<PAGE>
6. Long-term debt
Maturities of long-term debt are as follows:
Twelve-month period ending December 31,
_______________________________________
1997 $ 25,969
1998 19,923
1999 8,483
________
$ 54,375
========
7. Stockholder's equity
On July 3, 1996, Iron Eagle's former parent company contributed an
additional $250,000 in additional paid-in capital.
8. Income taxes
The Company has net operating losses available for carryforward to
offset future years' taxable income. The net operating losses of
$167,932 and $165,511 expire in the years ending June 30, 2011 and 2012,
respectively.
Deferred income taxes arise from temporary differences in reporting
assets and liabilities for income tax and financial accounting purposes
primarily resulting from net operating losses. The components of the
deferred tax asset and the related tax effects of the temporary
differences are as follows:
Deferred income tax asset resulting
from net operating loss carryforward arising
during the six-month period ended December 31, 1996 $ 98,300
Reduction in valuation allowance on deferred income
tax asset resulting from net operating loss carryforward
arising through June 30, 1996 25,200
_________
Deferred income tax asset 123,500
Less current portion 71,000
_________
$ 52,500
=========
9
<PAGE>
9. Commitments
Lease agreements
Iron Eagle leases office space on a month to month basis. The monthly
rental amount is $750. For the period ended December 31, 1996, rent
expense was $2,250.
Iron Eagle leases several automobiles under operating leases expiring in
various years through 2000. The following is a schedule of future
minimum lease payments under noncancellable operating leases having
remaining terms in excess of one year as of December 31, 1996:
Twelve-month period ending December 31,
_______________________________________
1997 $ 20,647
1998 21,303
1999 18,860
2000 2,625
________
Total minimum lease payments $ 63,435
========
Consulting agreements
In conjunction with the loan agreement described in Note 5, Iron Eagle
entered into two consulting agreements. Each agreement is for a six-
month period commencing January 1996. Combined payments under the two
agreements are $1,000 per month. In addition, the agreements provide
for a total of 1,200,000 warrants to purchase shares of the parent
company's common stock. Such warrants are convertible into 1,200,000
shares of the common stock of JJFN Services, Inc. at $.001 per share.
Employment agreements
Iron Eagle has entered into employment agreements with two of its
officers. Each agreement is for a five-year period commencing January
1996 and calls for base compensation of $75,000 with annual increases
equal to the increase in the cost of living for the New York
metropolitan area plus 1%. In addition, each individual is entitled to
a performance bonus equal to 7.5% of pre-tax profit of Iron Eagle.
Effective January 1, 1997, the Company entered into employment contracts
with two of its stockholders. Annual combined compensation under the
contracts total $150,000 in 1997 and gradually increase to $375,000 in
2006.
Purchase of shopping center
The Company is negotiating the purchase of a shopping center located in
Queens, New York and designated as the "Lindenwood Shopping Center".
Although the Company has not executed a Contract of Sale with the owner
of such shopping center, it has agreed in principal to a purchase price
of $8,000,000 which includes a $400,000 down payment upon signing and
the balance of $7,600,000 payable at closing.
10
<PAGE>
10. Backlog
As of December 31, 1996, Iron Eagle has seven signed construction
contracts totaling $5,672,738.
11. Subsequent events
Recapitalization
On February 14, 1997, the corporate charter was amended to effect a
recapitalization of the Company. After the recapitalization, the
Company is authorized to issue 50,000,000 shares of $.001 par value
common and 5,000,000 of $.01 par value preferred.
The existing shareholders received a total of 3,500,000 common shares
after the recapitalization.
11
<PAGE>
IRON HOLDINGS CORP.
EXHIBIT 2.0 TO FORM 8-K
AGREEMENT AND PLAN OF SHARE EXCHANGE
BETWEEN THE COMPANY AND
IRON HOLDINGS CORP.
<PAGE>
AGREEMENT AND PLAN OF SHARE EXCHANGE
by and among
COMSTOCK TAILINGS COMPANY, INCORPORATED
a Nevada corporation
and
IRON HOLDINGS CORP.
a New York corporation
effective as of March 31, 1997
<PAGE>
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE, made and entered
into this 31 day of March 1997, by and between COMSTOCK TAILINGS
COMPANY, INCORPORATED, a Nevada corporation with its principal
place of business located at 2692 Juniper, Boulder, Colorado 80304
("Comstock"), IRON HOLDINGS CORP., a New York corporation with its
principal place of business located at 88-09 103rd Avenue, Ozone
Park, NY 11417 ("IHC") and the individuals listed on Exhibit "A"
attached hereto and specifically incorporated herein by this
reference (the "IHC Shareholders"), (IHC and the IHC Shareholders
hereinafter jointly referred to as the "IHC Parties").
Premises
A. This Agreement provides for the reorganization of IHC
with and into Comstock and in connection therewith, the conversion
of the outstanding common stock of IHC into shares of common voting
stock of Comstock, all for the purpose of effecting a tax-free
reorganization pursuant to sections 354 and 368(a) of the Internal
Revenue Code of 1986, as amended.
B. The boards of directors of IHC and Comstock have
determined, subject to the terms and conditions set forth in this
Agreement, that the exchange contemplated hereby is desirable and
in the best interests of their stockholders. This Agreement is
being entered into for the purpose of setting forth the terms and
conditions of the proposed exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
IHC
As an inducement to and to obtain the reliance of Comstock, IHC
represents and warrants as follows:
Section 1.1 Organization. IHC is a corporation duly
organized, validly existing, and in good standing under the laws of
New York and has the corporate power and is duly authorized,
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, including
qualification to do business as a foreign corporation in the
1
<PAGE>
jurisdiction in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. Included in the IHC Schedules (as hereinafter
defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of IHC as in effect on
the date hereof. 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
provision of IHC's articles of incorporation or bylaws. IHC has
full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this
Agreement.
Section 1.2 Capitalization. The authorized capitalization of
IHC consists of 50,000,000 Common Shares, $0.01 par value per
share, and 5,000,000 Preferred Shares, $0.01 par value per share.
As of the Closing date hereof, IHC will have no more than 4,500,000
common shares issued and outstanding. As of the Closing Date
hereof, no shares of Preferred Stock will be issued or outstanding.
All issued and outstanding shares are legally issued, fully paid
and nonassessable and are not issued in violation of the preemptive
or other rights of any person. IHC has no other securities,
warrants or options authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except
as otherwise set forth in the IHC Schedules or as previously
provided to Comstock, IHC does not have any other subsidiaries and
does not own, beneficially or of record, any shares of any other
corporation.
Section 1.4 Financial Statements. Included in the IHC
Schedules is an audited financial statement, including a balance
sheet, statement of operations, shareholder equity and cash flows
and notes thereto, dated as of June 30, 1996 and IHC's unaudited
balance sheet, statement of operations, shareholder equity and cash
flows and notes thereto dated December 31, 1996. Relevant thereto:
(a) the IHC balance sheet presents fairly as of its
date the financial condition of IHC. IHC does not have,
as of the date of such balance sheet, except as noted 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 and all assets reflected therein are properly
reported and present fairly the value of the assets of
IHC, in accordance with generally accepted accounting
principles;
(b) IHC has no liabilities with respect to the
payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or
2
<PAGE>
penalties), except for taxes accrued but not yet due and
payable;
(c) IHC has filed all state, federal and local
income tax returns required to be filed by it from
inception to the date hereof, if any;
(d) The books and records, financial and others, of
IHC are in all material respects complete and correct and
have been maintained in accordance with good business
accounting practices; and
(e) except as and to the extent disclosed in the
most recent IHC balance sheet and the IHC Schedules, IHC
has no material contingent liabilities, direct or
indirect, matured or unmatured.
Section 1.5 Information. The information concerning IHC set
forth in this Agreement and in the IHC Schedules 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.
Section 1.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which
IHC is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as
set forth in this Agreement, the IHC Schedules, or as otherwise
disclosed to Comstock, since December 31, 1996:
(a) there has not been: (i) any material adverse
change in the business, operations, properties, assets or
condition of IHC; or (ii) any damage, destruction or loss
to IHC (whether or not covered by insurance) materially
and adversely affecting the business, operations,
properties, assets or condition of IHC;
(b) IHC 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; (iii) waived
any rights of value which in the aggregate are
extraordinary or material considering the business of
IHC; (iv) made any material change in its method of
management, operation or accounting; (v) entered into any
other material transaction; (vi) made any accrual or
arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination
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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 exceeds $5,000; 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) IHC 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 IHC 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 $10,000); (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 IHC;
or (vi) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities, including
debentures (whether authorized and unissued or held as
treasury stock); and
(d) to the best knowledge of IHC, 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 IHC.
Section 1.8 Title and Related Matters. IHC has good and
marketable title to and is the sole and exclusive owner of all of
its properties, inventory, interests in properties and assets, real
and personal (collectively, the "Assets") which are reflected in
the most recent IHC unaudited balance sheet and the IHC Schedules
or acquired after that date (except properties, interests in
properties and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens,
pledges, charges or encumbrances except: (a) statutory liens or
claims not yet delinquent; (b) 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
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subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as
described in the IHC Schedules. Except as set forth in the IHC
Schedules, IHC owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever and all procedures,
techniques, marketing plans, business plans, methods of management
or other information utilized in connection with IHC's business.
Except as set forth in the IHC Schedules, no third party has any
right to, and IHC has not received any notice of infringement of or
conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse affect
on the business, operations, financial conditions or income of IHC
or any material portion of its properties, assets or rights.
Section 1.9 Litigation and Proceedings. To the best of IHC's
knowledge and belief, there are no actions, suits, proceedings or
investigations pending or threatened by or against IHC or affecting
IHC or its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign
or before any arbitrator of any kind that would have a material
adverse affect on the business, operations, financial condition or
income of IHC. IHC 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 or of any circumstances
which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the IHC
Schedules, there are no material contracts, agreements,
franchises, license agreements or other commitments to
which IHC is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) Except as included or described in the IHC
Schedules or reflected in the most recent IHC balance
sheet, IHC is not a party to any oral or written: (i)
contract for the employment of any officer or employee
which is not terminable on thirty (30) days or less
notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension
benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv)
guaranty of any obligation, other than one on which IHC
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is a primary obligor, for collection and other guaranties
of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar
contracts with an unexpired term of more than one year or
providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director
of IHC; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the
aggregate; and
(c) To IHC's knowledge, all contracts, agreements,
franchises, license agreements and other commitments to
which IHC is a party or by which its properties are bound
and which are material to the operations of IHC taken as
a whole, are valid and enforceable by IHC in all
respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally.
Section 1.11 Material Contract Defaults. Except as set forth
in the IHC Schedules, to the best of IHC's knowledge and belief,
IHC is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment
which is material to the business, operations, properties, assets
or condition of IHC, and there is no event of default in any
material respect under any such contract, agreement, lease or other
commitment in respect of which IHC has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which IHC is a
party or to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. To the best of
IHC's knowledge, IHC has all licenses, franchises, permits or other
governmental authorizations legally required to enable IHC to
conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body is
required in connection with the execution and delivery by IHC of
this Agreement and the consummation by IHC of the transactions
contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the
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best of IHC's knowledge, except as disclosed in the IHC Schedules,
IHC has complied with all applicable statutes and regulations of
any federal, state or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or
condition of IHC or would not result in IHC's incurring any
material liability.
Section 1.15 Insurance. All of the insurable properties of
IHC are insured for IHC's benefit in accordance with the insurance
policies disclosed in the IHC Schedules under valid and enforceable
policies issued by insurers of recognized responsibility. Such
policy or policies containing substantially equivalent coverage
will be outstanding and in full force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors
of IHC has authorized the execution and delivery of this Agreement
by IHC, has approved the transactions contemplated hereby and
approved the submission of this Agreement and the transactions
contemplated hereby to the stockholders of IHC for their unanimous
approval with the recommendation that the reorganization be
accepted.
Section 1.17 Material Transactions or Affiliations. Except
as disclosed herein and in the IHC Schedules, there exists no
material contract, agreement or arrangement between IHC and any
predecessor and any person who was at the time of such contract,
agreement or arrangement an officer, director or person owning of
record, or known by IHC to own beneficially, ten percent (10%) or
more of the issued and outstanding IHC Common Shares and which is
to be performed in whole or in part after the date hereof. In all
of such transactions, the amount paid or received, whether in cash,
in services or in kind, has been during the full term thereof, and
is required to be during the unexpired portion of the term thereof,
no less favorable to IHC than terms available from otherwise
unrelated parties in arms length transactions. There are no
commitments by IHC, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions
with, any such affiliated person.
Section 1.18 Labor Relations. IHC has never had a work
stoppage resulting from labor problems. To the best knowledge of
IHC, no union or other collective bargaining organization is
organizing or attempting to organize any employee of IHC.
Section 1.19 Previous Sales of Securities. Since inception,
IHC has sold IHC Common Shares to investors in reliance upon
applicable exemptions from the registration requirements under the
laws of the jurisdiction of New York and all such sales (the
"Sales") were made in accordance with the laws of said
jurisdiction.
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Section 1.20 IHC Schedules. Upon execution hereof, IHC will
deliver to Comstock the following schedules, which are collectively
referred to as the "IHC Schedules" and which consist of separate
schedules dated as of the date of this Agreement and instruments
and data as of such date, all certified by the chief executive
officer of IHC as complete, true and correct in all material
respects:
(a) copies of the articles of incorporation, bylaws
and all minutes of shareholders' and directors' meetings
of IHC;
(b) the financial statements of IHC referenced
hereinabove in Section 1.4;
(c) a list indicating the name and address of the
stockholders of IHC, together with the number of shares
owned by them;
(d) copies of all licenses, permits and other
governmental authorizations, requests or applications
therefor, pursuant to which IHC carries on or proposes to
carry on its business (except those which in the
aggregate, are immaterial to the present or proposed
business of IHC);
(e) a list of every debt, mortgage, security
interest, pledge, lien, encumbrance or claim of any
nature whatsoever in excess of $10,000 as may affect IHC,
its properties or assets;
(f) a list of all executive employees of IHC,
including current compensation, with notation as to job
description and whether or not such employee is subject
to a written contract;
(g) a description of all real and personal property
owned by IHC, together with a description of every
mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
(h) copies of all material contracts, leases,
agreements or other instruments to which IHC is a party
or by which it or its properties are bound;
(i) the name and location of each bank or other
institution with which IHC has an account or safety
deposit box and the names of all persons authorized to
draw thereon or having access thereto;
(j) a list of all patent applications, copyrights,
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trademarks, service marks and trade names that are
pertinent in any manner whatsoever to the development,
testing, registration, assembly, manufacture, use or sale
of any products or services used in the business of IHC
and in which either IHC or IHC's stockholders has or
previously had any direct or indirect, equitable or legal
right or interest;
(k) a copy of all material documentation relating
to the sale of IHC Common Shares by IHC to its present
stockholders;
(l) a list of insurance policies referred to in
Section 1.15;
(m) a description of any material adverse change in
the business operations, property, inventory, assets or
condition of IHC since the most recent IHC balance sheet
required to be provided pursuant to Section 1.7;
(n) any other information, together with any
required copies of documents required to be disclosed in
the IHC Schedules by Sections 1.1 through 1.19.
IHC shall cause the IHC Schedules and the instruments and data
delivered to Comstock hereunder to be updated after the date hereof
up to and including the Closing Date, as hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF COMSTOCK
As an inducement to, and to obtain the reliance of IHC,
Comstock represents and warrants as follows:
Section 2.1 Organization. Comstock is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Nevada and has the corporate power and is duly
authorized, 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 are now being conducted, including
qualification to do business as a foreign corporation in the states
in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification.
Included in the Comstock Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation,
amended articles of incorporation (collectively, hereinafter
referred to as the "articles of incorporation") and bylaws of
Comstock as in effect on the date hereof. The execution and
delivery of this Agreement does not and the consummation of the
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transactions contemplated by this Agreement in accordance with the
terms hereof will not, violate any provision of Comstock's articles
of incorporation or bylaws. Comstock has taken all action required
by law, its articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement. Comstock
has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, bylaws or otherwise
to consummate the transactions herein contemplate.
Section 2.2 Capitalization. The authorized capitalization of
Comstock consists of 500,000,000 shares of Common Stock, par value
$0.001 per share. No Preferred Shares are authorized. As of the
date hereof there are 500,000 common shares of Comstock issued and
outstanding. As of the Closing Date, as defined herein, there will
be no more than 500,000 common shares issued and outstanding and
reserved for issuance (the "Comstock Common Shares") held by the
then existing securities holders of Comstock. All issued and
outstanding Comstock Common Shares have been legally issued, fully
paid and are nonassessable.
Section 2.3 Subsidiaries. Comstock has no subsidiary
companies.
Section 2.4 Financial Statements.
(a) Included in the Comstock Schedules are the
audited consolidated balance sheet of Comstock for the
years ended December 31, 1996 and 1995 and the related
statements of operations, stockholders' equity and cash
flows for the year then ended, which are included in the
schedules identified in Section 2.18(c).
(b) All such financial statements have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved. The Comstock balance sheets presents fairly as
of their respective dates the financial condition of
Comstock. Comstock did not have as of the date of any
of such Comstock balance sheets, 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 are properly
reported and present fairly the value of the assets of
Comstock, in accordance with generally accepted
accounting principles. The statements of operations,
stockholders' equity and changes in financial position
reflect fairly the information required to be set forth
therein by generally accepted accounting principles;
(c) The books and records, financial and others, of
Comstock are in all material respects complete and
correct and have been maintained in accordance with good
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business accounting practices;
(d) Comstock has no liabilities with respect to the
payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or
penalties);
(e) As of the Closing Date, as defined herein the
Comstock balance sheet and the notes thereto, shall
reflect that Comstock has: (i) no receivables; (ii) no
accounts payable; and (iii) no contingent liabilities,
direct or indirect, matured or unmatured.
Section 2.5 Information. The information concerning Comstock
as set forth in this Agreement and in the Comstock Schedules 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.
Section 2.6 Absence of Certain Changes or Events. Except as
described herein or in the Comstock Schedules, since December 31,
1996:
(a) Comstock has not: (i) amended its articles of
incorporation or bylaws; (ii) waived any rights of value
which in the aggregate are extraordinary or material
considering the business of Comstock; (iii) made any
material change in its method of management, operation or
accounting; or (iv) 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;
(b) Comstock 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, which option, warrant or other
right has not been cancelled as of the Closing Date; (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; and
(c) to the best knowledge of Comstock, 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 Comstock.
Section 2.7 Title and Related Matters. As of the Closing
Date, Comstock will own no real, personal or intangible property.
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Section 2.8 Litigation and Proceedings. There are no actions,
suits or proceedings pending or, to the best of Comstock's
knowledge and belief, threatened by or against or affecting
Comstock, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind that would have a material
adverse effect on the business, operations, financial condition,
income or business prospects of Comstock. Comstock 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.
Section 2.9 Contracts. On the Closing Date:
(a) There are no material contracts, agreements,
franchises, license agreements, or other commitments to
which Comstock is a party or by which it or any of its
properties are bound;
(b) Comstock is not a party to any contract,
agreement, commitment or instrument or subject to any
charter or other corporate restriction or any judgment,
order, writ, injunction, decree or award which materially
and adversely affects, or in the future may (as far as
Comstock can now foresee) materially and adversely
affect, the business, operations, properties, assets or
conditions of Comstock; and
(c) Comstock is not a party to any material oral or
written: (i) contract for the employment of any officer
or employee; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension,
benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv)
guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and
other guaranties of obligations, which, in the aggregate
exceeds $1,000; (v) consulting or other similar contract
with an unexpired term of more than one year or providing
for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreement; (vii) agreement with any
present or former officer or director of Comstock; or
(viii) contract, agreement, or other commitment involving
payments by it of more than $10,000 in the aggregate.
Section 2.10 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
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default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which Comstock
is a party or to which any of its properties or operations are
subject.
Section 2.11 Material Contract Defaults. To the best of
Comstock's knowledge and belief, Comstock is not in default in any
material respect under the terms of any outstanding contract,
agreement, lease or other commitment which is material to the
business, operations, properties, assets or condition of Comstock,
and there is no event of default in any material respect under any
such contract, agreement, lease or other commitment in respect of
which Comstock has not taken adequate steps to prevent such a
default from occurring.
Section 2.12 Governmental Authorizations. To the best of
Comstock's knowledge, Comstock has all licenses, franchises,
permits and other governmental authorizations that are legally
required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws,
no authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by
Comstock of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the
best of Comstock's knowledge and belief, Comstock has complied with
all applicable statutes and regulations of any federal, state or
other governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of Comstock
or would not result in Comstock's incurring any material liability.
Section 2.14 Insurance. Comstock has no insurable properties
and no insurance policies will be in effect at the Closing Date, as
hereinafter defined.
Section 2.15 Approval of Agreement. The board of directors
of Comstock and the holders of a majority of the issued and
outstanding common shares of Comstock have authorized the execution
and delivery of this Agreement by Comstock and has approved the
transactions contemplated hereby.
Section 2.16 Material Transactions or Affiliations. As of the
Closing Date there will exist no material contract, agreement or
arrangement between Comstock and any person who was at the time of
such contract, agreement or arrangement an officer, director or
person owning of record, or known by Comstock to own beneficially,
ten percent (10%) or more of the issued and outstanding common
stock of Comstock and which is to be performed in whole or in part
after the date hereof. Comstock has no commitment, whether written
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or oral, to lend any funds to, borrow any money from or enter into
any other material transactions with, any such affiliated person.
Section 2.17 Labor Relations. Comstock has never had a work
stoppage resulting from labor problems. Comstock has no employees
other than its officers and directors.
Section 2.18 Comstock Schedules. Upon execution hereof,
Comstock shall deliver to IHC the following schedules, which are
collectively referred to as the "Comstock Schedules" which are
dated the date of this Agreement, all certified by an officer of
Comstock to be complete, true and accurate:
(a) complete and correct copies of the articles of
incorporation and bylaws of Comstock as in effect as of
the date of this Agreement;
(b) copies of all financial statements of Comstock
identified in Section 2.4(a);
(c) the description of any material adverse change
in the business, operations, property, assets, or
condition of Comstock since June 30, 1996 required to be
provided pursuant to Section 2.6; and
(d) any other information, together with any
required copies of documents, required to be disclosed in
the Comstock Schedules by Sections 2.1 through 2.17.
Comstock shall cause the Comstock Schedules and the
instruments to be delivered to IHC hereunder to be updated after
the date hereof up to and including the Closing Date.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Share Exchange/Delivery of IHC Securities. On the
Closing Date, the holders of the IHC Common Shares shall deliver to
Comstock (i) certificates or other documents evidencing all of the
issued and outstanding IHC Common Shares, duly endorsed in blank or
with executed stock power attached thereto in transferrable form
and (ii) investment letters, the form of which is attached hereto
as Exhibit "B". On the Closing Date, all previously issued and
outstanding shares of common stock of IHC shall be canceled and all
rights in respect thereof shall cease and IHC, the New York
corporation, shall cease to exist.
Section 3.2 Issuance of Comstock Common Shares. (a) In
exchange for all of the IHC Common Share tendered pursuant to
Section 3.1, Comstock shall issue an aggregate of 4,500,000
"restricted" Comstock Common Shares to the IHC shareholders on a
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one for one basis.
(b) No fractional Comstock Common Shares shall be issued
pursuant to this Section 3.2. In lieu of such fractional shares,
all shares to be issued shall be rounded up or down to the nearest
whole share.
Section 3.3 Events Prior to Closing. Upon execution hereof
or as soon thereafter as practical, management of Comstock and IHC
shall execute, acknowledge and deliver (or shall cause to be
executed, acknowledged and delivered) any and all certificates,
opinions, financial statements, schedules, agreements, resolutions,
rulings or other instruments required by this Agreement to be so
delivered, together with such other items as may be reasonably
requested by the parties hereto and their respective legal counsel
in order to effectuate or evidence the transactions contemplated
hereby, subject only to the conditions to Closing referenced
hereinbelow.
Section 3.4 Closing. The closing ("Closing") of the
transactions contemplated by this Agreement shall be as of the date
in which all of the shareholders of Comstock and IHC have approved
the terms of this Agreement ("Closing Date"), all conditions to
Closing referenced hereinabove, as well as in Section 6.6 below,
have been satisfied or waived by IHC and all documentation
referenced herein is delivered to the respective party herein,
unless a different date is mutually agreed to in writing by the
parties hereto.
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of
directors of either Comstock or IHC at any time prior to the
Closing Date if:
(i) there shall be any 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 judgment
of such board of directors, made in good faith and based
on the advice of its legal counsel, makes it inadvisable
to proceed with the exchange contemplated by this
Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Section 6.6 below
have not been satisfied in full.
In the event of termination pursuant to this paragraph (a) of
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this Section 3.5, 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, drafting and
execution of this Agreement and the transactions herein
contemplated;
(b) This Agreement may be terminated at any time prior
to the Closing Date by action of the board of directors of
Comstock if IHC 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 IHC
contained herein shall be inaccurate in any material respect,
which noncompliance or inaccuracy is not cured after 20 days'
written notice thereof is given to IHC. If this Agreement is
terminated pursuant to this paragraph (b) of this Section 3.5,
this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder; and
(c) This Agreement may be terminated at any time prior
to the Closing Date by action of the board of directors of IHC
if Comstock 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 Comstock
contained herein shall be inaccurate in any material respect,
which noncompliance or inaccuracy is not cured after 20 days
written notice thereof is given to Comstock. If this Agreement
is terminated pursuant to this paragraph (c) of Section 3.5,
this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder.
Section 3.6 Directors of Comstock. Upon the Closing, the
present members of Comstock's Board of Directors shall tender their
resignations seriatim so that the following persons are appointed
directors of Comstock in accordance with procedures set forth in
the Comstock bylaws: Anthony E. Gurino, Dennis Sommeso, Johanna
Stanziale and Angelo Gurino, Sr.. Each director shall hold office
until his successor shall have been duly elected and shall have
qualified or until his or her earlier death, resignation or
removal.
Section 3.7 Officers of Comstock. Upon the Closing, the
present officers of Comstock shall tender their resignations and
simultaneous therewith, the following persons shall be elected as
officers of Comstock in accordance with procedures set forth in the
Comstock bylaws:
NAME OFFICE
Anthony E. Gurino Chief Executive Officer,
President and Corporate
Secretary
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Angelo Gurino Vice President and Treasurer
Dennis Sommeso Assistant Secretary
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Comstock and
IHC will each afford to the officers and authorized representatives
of the other full access to the properties, books and records of
Comstock and IHC, as the case may be, in order that each may have
full opportunity to make such reasonable investigation as it shall
desire to make of the affairs of the other and each will furnish
the other with such additional financial and operating data and
other information as to the business and properties of Comstock and
IHC, as the case may be, as the other shall from time to time
reasonably request.
Section 4.2 Availability of Rule 144. Each of the parties
acknowledge that the stock of Comstock to be issued pursuant to
this Agreement will be "restricted securities," as that term is
defined in Rule 144 promulgated pursuant to the Securities Act.
Comstock is under no obligation to register such shares under the
Securities Act, or otherwise. Notwithstanding the foregoing,
however, following the Closing Date, Comstock will use its best
efforts to: (a) make publicly available on a regular basis not less
than semi-annually, business and financial information regarding
Comstock so as to make available to the shareholders of Comstock
the provisions of Rule 144 pursuant to subparagraph (c)(2) thereof;
and (b) within ten (10) days of any written request of any
stockholder of Comstock, Comstock will provide to such stockholder
written confirmation of compliance with such of the foregoing
subparagraph as may then be applicable. The stockholders of
Comstock holding restricted securities of Comstock as of the date
of this Agreement and their respective heirs, administrators,
personal representatives, successors and assigns, are intended
third party beneficiaries of the provisions set forth herein. The
covenants set forth in this Section 4.2 shall survive the Closing
and the consummation of the transactions herein contemplated.
Section 4.3 Information for Comstock Public Reports. IHC will
furnish Comstock with all information concerning IHC and the IHC
Stockholders, including all financial statements, required for
inclusion in any registration statement or public report intended
to be filed by Comstock pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. IHC
covenants that all information so furnished for either such
registration statement or other public release by Comstock,
including the financial statements described in Section 1.4, shall
be true and correct in all material respects without omission of
any material fact required to make the information stated not
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misleading.
Section 4.4 Special Covenants and Representations Regarding
the Comstock Common Shares to be Issued in the Exchange. The
consummation of this Agreement, including the issuance of the
Comstock Common Shares to the stockholders of IHC as contemplated
hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction
shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes
which depend, inter alia, upon the circumstances under which the
IHC stockholders acquire such securities. In connection with
reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, IHC
shall cause to be delivered, and the IHC stockholders shall deliver
to Comstock, the investment letter referenced in Section 3.1.
Section 4.5 Third Party Consents. Comstock and IHC agree to
cooperate with each other in order to obtain any required third
party consents to this Agreement and the transactions herein
contemplated.
Section 4.6 Actions Prior to Closing.
(a) From and after the date of this Agreement until
the Closing Date and except as set forth in the Comstock
or IHC Schedules or as permitted or contemplated by this
Agreement, IHC will each use its best efforts to:
(i) carry on its business in substantially the
same manner as it has heretofore;
(ii) maintain and keep its properties in
states of good repair and condition as at present,
except for depreciation due to ordinary wear and
tear and damage due to casualty;
(iii) maintain in full force and effect
insurance comparable in amount and in scope of
coverage to that now maintained by it;
(iv) perform in all material respects all of
its obligations under material contracts, leases
and instruments relating to or affecting its
assets, properties and business;
(v) maintain and preserve its business
organization intact, to retain its key employees
and to maintain its relationship with its material
suppliers and customers; and
(vi) fully comply with and perform in all
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material respects all obligations and duties imposed on
it by all federal and state laws and all rules,
regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until
the Closing Date, neither Comstock nor IHC will, without
the prior consent of the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective
certificates or articles of incorporation or
bylaws;
(ii) declare or pay any dividend on its
outstanding shares of capital stock, except as may
otherwise be required by law, or effect any stock
split or otherwise change its capitalization,
except as provided herein;
(iii) enter into or amend any employment,
severance or similar agreements or arrangements
with any directors or officers;
(iv) grant, confer or award any options,
warrants, conversion rights or other rights not
existing on the date hereof to acquire any shares
of its capital stock; or
(v) purchase or redeem any shares of its
capital stock, except as disclosed herein.
Section 4.9 Indemnification.
(a) IHC hereby agrees to indemnify Comstock and
each of the officers, agents and directors of Comstock as
of the date of execution of this Agreement against any
loss, liability, claim, damage or expense (including, but
not limited to, any and all expense whatsoever reasonably
incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement. The
indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for
a period of 18 months; and
(b) Comstock and its officers and directors hereby
agrees to indemnify IHC and each of the officers, agents,
directors and current shareholders of IHC as of the
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Closing Date against any loss, liability, claim, damage
or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced
or threatened or any claim whatsoever), to which it or
they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made in this
Agreement and particularly the representation regarding
no liabilities referred to in Section 2.4(b). The
indemnification provided for in this Section shall
survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for
a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF COMSTOCK
The obligations of Comstock under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 5.1 Accuracy of Representations. The representations
and warranties made by IHC in this Agreement were true when made
and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at the
Closing Date (except for changes therein permitted by this
Agreement), and IHC shall have performed or complied with all
covenants and conditions required by this Agreement to be performed
or complied with by IHC prior to or at the Closing. Comstock shall
be furnished with a certificate, signed by a duly authorized
officer of IHC and dated the Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of IHC
shall have unanimously approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
Section 5.3 Officer's Certificate. Comstock shall have been
furnished with a certificate dated the Closing Date and signed by
a duly authorized officer of IHC to the effect that: (a) the
representations and warranties of IHC set forth in the Agreement
and in all Exhibits, Schedules and other documents furnished in
connection herewith are in all material respects true and correct
as if made on the Effective Date; (b) IHC has performed all
covenants, satisfied all conditions, and complied with all other
terms and provisions of this Agreement to be performed, satisfied
or complied with by it as of the Effective Date; (c) since the
date of IHC's unaudited Balance Sheet of December 31, 1996, there
has not been any materially adverse change in the business,
prospects, properties or financial condition of IHC; (d) since such
date and other than as previously disclosed to Comstock, IHC has
20
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not entered into any material transaction other than transactions
which are usual and in the ordinary course of its business; and (e)
no litigation, proceeding, investigation or inquiry is pending or,
to the best knowledge of IHC, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in
the IHC Schedules, by or against IHC which might result in any
material adverse change in any of the assets, properties, business
or operations of IHC.
Section 5.4 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 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 IHC.
Section 5.5 Opinion of Counsel to IHC. Comstock shall receive
an opinion dated the Closing Date of the Law Offices of Richard I.
Anslow, counsel to IHC, in substantially the following form:
(a) IHC is a corporation duly organized, validly
existing, and in good standing under the laws of New York
and has the corporate power and is duly authorized,
qualified, franchised and licensed under all material
applicable laws, regulations, ordinances and orders of
public authorities to own all of its properties and
assets and to conduct its business as now conducted,
including qualification to do business as a foreign
corporation in the states in which the character and
location of the assets owned by it or the nature of the
business transacted by it requires qualification;
(b) To the best knowledge of such legal counsel,
the execution and delivery by IHC of this Agreement and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
conflict with or result in the breach of any term or
provision of IHC's articles of incorporation or bylaws or
violate any court order, writ, injunction or decree
applicable to IHC, or its properties or assets;
(c) The authorized capitalization of IHC consists
of 50,000,000 Common Shares, $0.01 par value per share,
and 5,000,000 Preferred Shares, $0.01 par value per
share. As of the Closing Date, all of the authorized
common shares will be issued and outstanding. All issued
and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemp-
tive rights of any person. Except as set forth in the
IHC Schedules, to the best knowledge of such legal
21
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counsel, there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other
agreements or commitments obligating IHC to issue any
additional shares of any class of its capital stock.
(d) This Agreement has been duly and validly
authorized, executed and delivered by IHC;
(e) To the best knowledge of such legal counsel,
except as set forth in the IHC Schedules, there are no
actions, suits or proceedings pending or threatened by or
against or affecting IHC or its properties, at law or in
equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any
arbitrator of any kind;
(f) IHC has taken all actions required by the
applicable laws of New York to permit the transfer of the
IHC Common Shares to Comstock.
Section 5.6 Other Items. Comstock shall have received such
further documents, certificates or instruments relating to the
transactions contemplated hereby as Comstock may reasonably
request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF IHC
The obligations of IHC under this Agreement are subject
to the satisfaction, at or before the Closing Date (unless
otherwise indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The representations
and warranties made by Comstock in this Agreement were true when
made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect
as if such representations and warranties were made at and as of
the Closing Date, and Comstock shall have performed and complied
with all covenants and conditions required by this Agreement to be
performed or complied with by Comstock prior to or at the Closing.
IHC shall have been furnished with a certificate, signed by a duly
authorized executive officer of Comstock and dated the Closing
Date, to the foregoing effect.
Section 6.2 Officer's Certificate. IHC shall be furnished
with a certificate dated the Closing Date and signed by a duly
authorized officer of Comstock to the effect that: (a) the
representations and warranties of Comstock set forth in the
Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true
and correct as if made on the Effective Date; (b) Comstock has
22
<PAGE>
performed all covenants, satisfied all conditions, and complied
with all other terms and provisions of the Agreement to be
performed, satisfied or complied with by it as of the Effective
Date; (c) since the date of Comstock's audited Balance Sheet of
December 31, 1996, there has not been any materially adverse change
in the business, prospects, properties or financial condition of
Comstock; (d) since such date, Comstock has not entered into any
material transaction other than transactions which are usual and in
the ordinary course of its business; and (e) no litigation,
proceeding, investigation or inquiry is pending or, to the best
knowledge of Comstock, threatened, which might result in an action
to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in
the Comstock Schedules, by or against Comstock which might result
in any material adverse change in any of the assets, properties,
business or operations of Comstock.
Section 6.3 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 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 Comstock.
Section 6.5 Opinion of Counsel to Comstock. IHC shall receive
an opinion dated the Closing Date of Andrew I. Telsey, P.C.,
counsel to Comstock, in substantially the following form:
(a) Comstock is a corporation duly organized,
validly existing, and in good standing under the laws of
the state of Nevada and has the corporate power and is
duly authorized, 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, including qualifi-
cation to do business as a foreign corporation in the
states in which the character and location of the assets
owned by it or the nature of the business transacted by
it requires qualification;
(b) To the best knowledge of such legal counsel,
the execution and delivery by Comstock of this Agreement
and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will
not conflict with or result in the breach of any term or
provision of Comstock's articles of incorporation or
bylaws or constitute a default or give rise to a right of
termination, cancellation or acceleration under any
material mortgage, indenture, deed of trust, license
agreement or other obligation or violate any court order,
writ, injunction or decree applicable to Comstock or its
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properties or assets;
(c) The authorized capitalization of Comstock
consists of 500,000,000 shares of Common Stock, par value
$0.001 per share. As of the Closing Date, there will be
no more than 500,000 common shares issued and outstanding
and reserved for issuance held by the then existing
securities holders of Comstock. All issued and
outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemp-
tive rights of any person.
(d) The Comstock Common Shares to be issued to the
IHC stockholders pursuant to the terms of this Agreement
will be, when issued in accordance with the terms hereof,
legally issued, fully paid and non-assessable;
(e) This Agreement has been duly and validly
authorized, executed, and delivered and constitutes the
legal and binding obligation of Comstock, except as
limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally;
(f) To the best knowledge of such counsel, except
as set forth in the Comstock Schedules, there are no
actions, suits or proceedings pending or threatened by or
against Comstock or affecting Comstock's properties, at
law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign or before
any arbitrator of any kind; and
(g) Comstock has taken all actions required by the
applicable laws of the state of Nevada to permit the
issuance of the Comstock Common Shares to the IHC stock-
holders.
Section 6.6 Additional Conditions to Closing. In addition to
the obligations contained herein, a majority of Comstock's
shareholders shall adopt and approve amendments to the Comstock
Articles of Incorporation, changing the name of Comstock to "Iron
Holdings, Inc." (or such other name as may be available and
acceptable to management of IHC) and further authorizing 10,000,000
shares of Preferred Stock, par value $0.10 per share, for issuance
in the future.
Section 6.7 Compliance with Reporting Requirements. As of the
Closing Date, Comstock shall be current in and in compliance with
all requirements of all filings required to be tendered to the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
Section 6.8 Other Items. IHC shall have received such
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<PAGE>
further documents, certificates, or instruments relating to the
transactions contemplated hereby as IHC may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Each party hereto hereby
represents and warrants that it is under no obligation, express or
implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation
of this Agreement. The parties each agree to indemnify the other
against any claim by any third person not listed in Schedule 7.1
for any commission, brokerage or finder's fee or other payment with
respect to this Agreement or the transactions contemplated hereby
based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or
implied from the actions of the indemnifying party.
Section 7.2 Law. Forum and Jurisdiction. This Agreement shall
be construed and interpreted in accordance with the laws of the
State of Nevada, except as the corporate law of New York applies to
IHC and as US federal law may be applicable.
Section 7.3 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or certified
mail, postage prepaid, or by prepaid telegram addressed as follows:
If to Comstock: Andrew I. Telsey, Esq.
2851 S. Parker Rd., Su. 720
Aurora, CO 80014
If to IHC: Board of Directors
Iron Holdings Corp.
88-09 103rd Avenue
Ozone Park, NY 11417
Attention: Anthony E. Gurino,
President
or such other addresses as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed, or telegraphed.
Section 7.4 Attorneys' 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 non-breaching party
or parties for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
25
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Section 7.5 Confidentiality. Each party hereto agrees with
the other parties that, unless and until the reorganization contem-
plated by this Agreement has been consummated, they and their
representatives will hold in strict confidence all data and
information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or
disclose the same to others, except: (i) to the extent such data is
a matter of public knowledge or is required by law to be published;
and (ii) to the extent that such data or information must be used
or disclosed in order to consummate the transactions contemplated
by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to
have full knowledge of all information set forth in the other
party's schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is
solely among Comstock and the IHC Parties and, except as specifi-
cally 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 7.8 Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter
hereof. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by
a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive
the Closing Date and the consummation of the transactions herein
contemplated for 18 months.
Section 7.10 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 7.11 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 may be
enforced concurrently herewith, 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
26
<PAGE>
time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals
hereof are incorporated by this reference and are made a part
hereof as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all of
their respective costs and expenses incurred in connection with the
negotiation of this Agreement and in the consummation of the
transactions provided for herein and the preparation therefor.
Section 7.14 Headings; Context. The headings of the sections
and paragraphs contained in this Agreement are for convenience of
reference only and do not form a part hereof and in no way modify,
interpret or construe the meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon
and shall insure only to the benefit of the parties hereto, and
their permitted assigns hereunder. This Agreement shall not be
assigned by any party without the prior written consent of the
other party.
Section 7.16 Public Announcements. Except as may be required
by law, neither party shall make any public announcement or filing
with respect to the transactions provided for herein without the
prior consent of the other party hereto.
Section 7.17 Severability. In the event that any particular
provision or provisions of this Agreement or the other agreements
contained herein shall for any reason hereafter be determined to be
unenforceable, or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not affect the
remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties
hereto.
Section 7.18 Failure of Conditions; Termination. In the event
any of the conditions specified in this Agreement shall not be
fulfilled on or before the Closing Date, either of the parties have
the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement without liability to
any other party. The election to proceed shall not affect the
right of such electing party reasonably to require the other party
to continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair
meaning and intendment, and not strictly for or against either
party hereto, regardless of who drafted or was principally
responsible for drafting the Agreement or terms or conditions
27
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hereof.
Section 7.20 Execution Knowing and Voluntary. In executing
this Agreement, the parties severally acknowledge and represent
that each: (a) has fully and carefully read and considered this
Agreement; (b) has been or has had the opportunity to be fully
apprised of its attorneys of the legal effect and meaning of this
document and all terms and conditions hereof; and (c) is executing
this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first
above written.
COMSTOCK TAILINGS COMPANY,
INCORPORATED
ATTEST:
s/Suzanne Maish By: s/Joel Feinberg
Secretary Joel Feinberg, President
ATTEST: IRON HOLDINGS CORP.
s/Dennis Sommeso By: s/Anthony E. Gurino
Secretary or Anthony E. Gurino, President
Assistant Secretary
IHC SHAREHOLDERS
s/Anthony Gurino
Anthony Gurino
s/Angelo Gurino
Angelo Gurino
s/Dennis Sommeso
Dennis Sommeso
s/Johanna Stanziale
Johanna Stanziale
28
<PAGE>
EXHIBIT "A"
LIST OF IHC SHAREHOLDERS
Name # of Shares
Anthony Gurino 2,000,000
Angelo Gurino 2,000,000
Dennis Sommeso 490,000
Johanna Stanziale 10,000
TOTAL 4,500,000
29
<PAGE>
EXHIBIT "B"
FORM OF INVESTMENT LETTER
<PAGE>
INVESTMENT LETTER
March 31, 1997
Comstock Tailings Company, Incorporated
2692 Juniper
Boulder, Colorado 80304
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of
common stock of Iron Holdings Corp., a New York corporation,
("IHC"), as described below (endorsed, or having executed stock
powers attached) in acceptance of and subject to the terms and
conditions of that certain Agreement and Plan of Share Exchange
(the "Agreement"), between Comstock Tailings Company, Incorporated
and IHC, dated March 31, 1997, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of Comstock
(the "Exchange Shares"). If any condition precedent to the
Agreement is not satisfied within the relevant time parameters
established in the Agreement (or any extension thereof), the
certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees
with you that, in connection with the undersigned's acceptance of
the Exchange Shares and as of the date of this letter:
1. The undersigned is aware that his, her or its acceptance
of the Exchange Shares is irrevocable, absent an extension of the
Expiration Date of any material change to any of the terms and
conditions of the Agreement.
2. The undersigned warrants full authority to deposit all
shares refereed to above and Comstock will acquire a good and
unencumbered title thereto.
3. The undersigned has full power and authority to enter into
this Agreement and that this Agreement constitutes a valid and
legally binding obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that
the IHC common stock to be received in exchange for Comstock common
stock (the "Securities"), will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and that
the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. By execution
hereof, the undersigned further represents the undersigned does not
have any contract, undertaking, agreement or arrangement with any
third party, with respect to any of the Securities.
5. The undersigned understands that the Securities are being
<PAGE>
Comstock Tailings Company, Incorporated
March ___, 1997
Page 32
issued pursuant to available exemption thereto and have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under any state securities laws. The undersigned
understands that no registration statement has been filed with the
United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial
review of such a registration statement by the Securities and
Exchange Commission or other regulatory authority will not be
forthcoming. The undersigned understands that he/she/it cannot
sell the Securities unless such sale is registered under the 1933
Act and applicable state securities laws or exemptions from such
registration become available. In this connection the undersigned
understands that the Company has advised the Transfer Agent for the
Common Shares that the Securities are "restricted securities" under
the 1933 Act and that they may not be transferred by the
undersigned to any person without the prior consent of the Company,
which consent of the Company will require an opinion of counsel to
the effect that, in the event the Securities are not registered
under the 1933 Act, any transfer as may be proposed by the
undersigned must be entitled to an exemption from the registration
provisions of the 1933 Act. To this end, the undersigned
acknowledges that a legend to the following effect will be placed
upon the certificate representing the Securities and that the
Transfer Agent has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO
THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAIL-
ABILITY OF WHICH MUST BE ESTABLISHED TO THE SATIS-
FACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on
his/her its certificate for the Common Shares limits their value,
including their value as collateral.
6. The undersigned represents that he/she/it is experienced
in evaluation and investing in securities of companies in the
development stage and acknowledges that he/she it is able to fend
for itself, can bear the economic risk of this investment and has
such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the
investment in the Securities.
32
<PAGE>
Comstock Tailings Company, Incorporated
March __, 1997
Page 33
In Witness Whereof, the undersigned has duly executed this
Investment Letter as of the date indicated hereon.
Dated: March 31, 1997
Very truly yours,
____________________________
(signature)
____________________________
(print name in full)
____________________________
(street address)
____________________________
(city, state, zip)
____________________________
(social security number or
employer identification no.)
33
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IRON HOLDINGS CORP.
EXHIBIT 16.0 TO FORM 8-K
LETTER OF RESIGNATION
OF REGISTRANT'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
<PAGE>
KISH, LEAKE & ASSOCIATES, P.C.
Certified Public Accountants
J.D. Kish, C.P.A., M.B.A. 7901 E. Belleview Ave., Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
____________________________ Telephone (303) 779-5006
Arleen R. Brogan, C.P.A. Facsimile (303) 779-5724
April 15, 1997
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
We would like to inform you that we have read the disclosures provided by Iron
HOldings Corp., f/k/a Comstock Tailings Company, Inc. in its filing of Form 8-K
dated April 15, 1997 and that there are no disagreements regarding the
statements made under Item 4 - Changes in Registrant's Certifying Accountant.
Sincerely,
Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
