AGREEMENT AND PLAN OF SHARE EXCHANGE
AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement")dated this
27th day of February 1998, by and between Classic Restaurants
International, Inc., a Colorado corporation ("Classic"), ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ("▇▇▇▇"), A.A. Corp., a Delaware corporation ("AAC"), and the
▇▇▇▇▇▇▇ Family Trust (the "Shareholders").
WHEREAS, the Shareholders own all of the issued and outstanding
common stock of AAC;
WHEREAS, Classic, AAC and the Shareholders deem it advisable and
in the best interests of each that Classic acquire all of the issued
and outstanding common stock of AAC on the terms set forth herein (the
"Share Exchange"); and
WHEREAS, Classic, AAC and the Shareholders have approved and
adopted this Agreement as a "plan of reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions, and conditions contained herein, and for other
good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree that Classic shall
acquire all of the issued and outstanding common stock of AAC, upon and
subject to the following terms and conditions:
ARTICLE I DEFINITIONS
Section 1.01 As used in this Agreement, the following terms shall
have the following meanings, unless the context shall otherwise
require:
(a) "Classic Common Stock" shall collectively mean the Classic
Class A Common Stock and the Classic Class B Common Stock of Classic.
(b) "Classic Class A Common Stock" shall mean the Class A Common
Stock, no par value, of Classic, as more fully described in the
Articles of Incorporation of Classic.
(c) "Classic Class B Common Stock" shall mean the Class B Common
Stock, no par value, of Classic, as more fully described in the
Articles of Incorporation of Classic.
(d) "Classic Preferred Stock" shall mean the Series D Convertible
Preferred Stock of Classic, each of which is convertible into two
hundred (200) shares of Classic Class A Common Stock, is not entitled
to any dividends, and is entitled to a liquidation preference of $2.50
per share over any share of Classic Common Stock or any junior class of
preferred stock. The Classic Preferred Stock shall have the rights and
terms set forth in the document attached hereto as Exhibit D.
(e) "AAC Stock" shall mean the Common Stock, no par value, of AAC,
as more fully described in the Articles of Incorporation of AAC.
(f) "Florida Classic" shall mean Classic Restaurants
International, Inc., a Florida corporation, a wholly owned subsidiary
of Classic.
(g) "Effective Date" shall mean the date on which Articles of
Share Exchange are filed with the Secretaries of State of the States of
Delaware and Colorado, or such other date as is designated therein.
(h) "Exceptions Schedule" shall mean Exhibit A in the case of
Classic and Exhibit B in the case of AAC and the Shareholders, both of
which are attached hereto as exhibits.
(i) "Escrow Agreement" shall mean the Escrow Agreement in the form
attached hereto as Exhibit C.
(j) "OSIP" shall mean that Officers and Directors Stock Incentive
Plan to be implemented by Classic on the Effective Date and shall be
substantially in the form attached hereto as Exhibit E.
(k) "Property Rights" refers to any patent, copyright, trademark
or other intellectual property rights (or any right to obtain a patent,
copyright or trademark) which ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any of the Shareholders
have in and to the business plan to recycle used tires using
microwaves.
ARTICLE II GENERAL TERMS AND PROVISIONS
Section 2.01 Transactions on Date of Agreement. Upon execution
of this Agreement, the following shall take place:
(a) The Board of Directors of Classic shall be increased from
three members to five members, the existing members of the Board of
Directors of Classic shall resign, and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and June Cuba shall be
appointed as replacement directors to fill the vacant Board seats of
Classic until the next annual meeting of the Board of Directors of
Classic, with ▇▇. ▇▇▇▇▇▇▇ appointed as chairman of the Board of
Directors. Until the Effective Date, ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ will act
as co-Presidents of Classic, and ▇▇. ▇▇▇▇ will have primary
responsibility for restaurant operations, and ▇▇. ▇▇▇▇▇▇▇ will have
primary responsibility for funding and implementing the tire recycling
operations.
(b) The parties hereto shall deposit the following items with the
Escrow Agent under the Escrow Agreement: Classic shall deposit 500,000
shares of Classic Preferred Stock each share of which will be
convertible into ten shares of Class A Common Stock (after giving
effect to the reverse split described in Section 2.01(d)); ▇▇▇▇ shall
deposit 200,000 shares of Classic Class B Common Stock (pre-split); the
Shareholders shall deposit AAC Stock consisting of all of the issued
and outstanding common stock of AAC. The items held under the Escrow
Agreement shall be disbursed in accordance with Section 2.02 herein.
(c) Classic's board shall authorize an annual or special meeting
of shareholders to be held at the earliest possible time to change
Classic's state of incorporation to Delaware or Georgia.
(d) Classic's board shall authorize a 1 for 20 reverse split of
its Class A and Class B Common Stock (all share numbers used herein
shall be pre-split shares unless specifically stated otherwise).
(e) Classic's board shall authorize a change in its name to
Creative Recycling Technologies, Inc.
(f) Classic's board shall authorize Classic to raise at least
$1,500,000 net to Classic in an offering under Regulation D or S of the
Securities and Exchange Commission by issuing up to 4,000,000 shares of
Classic Class A Common Stock (after giving effect to the reverse split
described in Section 2.01(d)), or a new issue of preferred stock
convertible into said number of shares of Class A Common Stock. The
exact terms of the offering will be negotiated by ▇▇. ▇▇▇▇▇▇▇ on behalf
of Classic, but will be subject to subsequent board approval. Classic
agrees to expand its board of directors by two members to be filled by
designees of persons who assist in raising said capital.
(g) The Property Rights will be assigned and conveyed to AAC to
the extent not already owned by AAC.
(h) Classic's board shall authorize the issuance and registration
on Form S-8 of 75,000 shares Class A Common Stock to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and 25,000 shares of Class A Common Stock to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as payment
for legal services rendered and a retainer for future legal services
(all such share amounts are after giving effect to the reverse split
described in Section 2.01(d)).
Section 2.02 Transactions on Effective Date. On the Effective
Date, the following transactions shall take place:
(a) The Escrow Agent shall disburse all of the AAC Stock held by
it to Classic, whereupon AAC shall become a wholly-owned subsidiary of
Classic.
(b) The Escrow Agent shall disburse 380,000 shares of Classic
Preferred Stock to the Shareholders, and 120,000 shares of Classic
Preferred Stock to ▇▇▇▇.
(c) The Escrow Agent shall disburse 200,000 shares of Classic
Class B Common Stock (pre-split) to ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(d) Classic shall assume the employment agreement between ▇▇▇▇▇
▇▇▇▇▇▇▇ and AAC, and shall enter into an employment agreement with
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
(e) Classic shall issue 3,800,000 shares of Classic Class B Common
Stock (before giving effect to the reverse split described in Section
2.01(d)) to ▇▇▇▇▇ ▇▇▇▇▇▇▇ as a signing bonus, in addition to a cash
bonus of $19,000.
(f) Classic's board shall approve the OSIP.
Section 2.03 Transactions if no Effective Date. In the event
this Agreement is terminated, then the following will take place:
(a) The Escrow Agent shall return all items held by it to the
person(s) who originally conveyed such items to the Escrow Agent as set
forth in Section 2.01 herein.
(b) Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ will resign from the board of
directors of Classic.
Section 2.04 Florida Classic. Following the Effective Date, the
board of directors of Classic shall consider whether Florida Classic
should be spun off to the common shareholders of Classic. The
Shareholders hereby agree to waive any right to receive, on account of
any shares of capital stock held by them in Classic (including Classic
Preferred Stock or Classic Class A or Class B Common Stock), shares of
Florida Classic in connection with any spinoff of Florida Classic to
the shareholders of Classic which occurs at any time within three years
of the Effective Date.
Section 2.05 Taking of Necessary Action. AAC and Classic shall
take all such actions as may be necessary or appropriate in order to
effectuate the transactions contemplated by this Agreement. If, at any
time after the Effective Date, any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest
Classic with title to any or all of the stock, properties, assets,
rights, approvals, immunities, and franchises of AAC, the officers and
directors of AAC and its subsidiaries, at the expense of the
Shareholders, shall take such necessary or desirable action.
ARTICLE III EXCHANGE RATIO
Section 3.01 Exchange Ratio. On the Effective Date, Classic shall
issue 500,000 shares of Classic Preferred Stock to the Shareholders in
exchange for all of the issued and outstanding AAC Stock. Each share
of AAC Stock shall be entitled to receive that number of shares of
Classic Preferred Stock equal to (a) 500,000 divided by (b) the total
number of shares of AAC issued and outstanding as of the Effective
Date. There shall be no fractional shares issued. The number of shares
of Classic Preferred Stock to be issued in the exchange shall be
rounded up to the nearest whole. The shares of common stock, if any,
held in the treasury of AAC ("Treasury Shares") shall be cancelled and
shall not be exchanged or combined in accordance with the provisions of
this Section 3.01.
Section 3.02 Certificates in Other Names. If any certificate
representing shares of Classic Preferred Stock is to be issued in a
name other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition precedent to the
issuance thereof that the certificate so surrendered be properly
endorsed and otherwise in proper form for transfer, that the person
requesting the exchange pay to Classic any transfer or other taxes
required by reason of such issuance, and that counsel to Classic
approve such transfer.
Section 3.03 Stock Legends. Certificates representing shares of
Classic Preferred Stock shall bear a legend restricting transfer of the
shares of the Common Stock represented by such certificate in
substantially the form set forth below:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or applicable
state law, and are "restricted securities" as that term in defined in
Rule 144 under the Act. The securities may not be offered for sale,
sold, or otherwise transferred except pursuant to an effective
registration statement under the Act and applicable state law, the
availability of which is to be established to the satisfaction of the
Company."
Section 3.04 Classic shall, from time to time, make stop transfer
notations in its records to ensure compliance in connection with any
proposed transfer of the shares with the Act, and all applicable state
securities laws.
Section 3.05 Because all shareholders of AAC consent to the
transactions described herein, no such shareholders have the right to
dissent from transactions described herein.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
The following representations and warranties are hereby made (i)
by AAC and the Shareholders to Classic and ▇▇▇▇ with respect to AAC and
(ii) by Classic and ▇▇▇▇ to AAC and the Shareholders with respect to
Classic:
Section 4.01 Organization; Authorization. It is a corporation
duly organized, validly existing, and in good standing under the laws
of the state of its incorporation and has full power and authority to
carry on its business as it now is being conducted and to own the
properties and assets it now owns. It is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction
in which the conduct of its business or ownership of its property
requires such qualification; and, subject to the requisite approval of
and authorization by the holders of its capital stock, it has full
power and authority to enter into this Agreement and to carry out the
transactions contemplated herein.
Section 4.02 No Defaults. It is not a party to or bound by any
contract or agreement, or subject to any charter provision or other
legal restriction (other than restrictions applicable to corporations
or businesses generally), which adversely affects its business,
operations, properties, assets, or condition, financial or otherwise.
It is not in default under any material contract, lease, Agreement, or
other undertaking to which it is a party or by which it is bound.
Subject to the requisite approval of and authorization by the holders
of its capital stock, neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby,
nor compliance with the terms and conditions hereof will conflict with,
result in a breach of the unwaived terms and conditions of, or
constitute a default under its articles of incorporation or bylaws or
any contract, agreement, commitment, or other undertaking to which it
is a party or by which it is bound.
Section 4.03 Governmental Consents. Except for the requirements
of the Securities Act of 1933, as amended (the "1933 Act"), and any
applicable state securities laws, and the filing and recording of the
appropriate documents as required by the laws of the State of Delaware,
no consent or approval of, or filing or registration with, any
governmental or regulatory authority is required in connection with the
performance of the terms of this Agreement.
Section 4.04 Examination of Documents. All original documents and
other information relating to its affairs will be made available, and
copies of any such documents will be furnished, upon request to the
other party and its counsel. Included among the documents to be made
available are all articles of incorporation and amendments, bylaws and
amendments, minutes of all incorporators, directors and shareholders
meetings or consent minutes with respect to actions taken by
incorporators, directors, or shareholders, all financial statements,
and all material contracts, leases, and agreements to which it is a
party or an intended beneficiary.
Section 4.05 Title to Assets. It has good and marketable title to
all of its properties and assets, both real and personal, free and
clear of all security interest liens, claims, equities of others, and
restrictions on the right to transfer, except as disclosed in the
Exceptions Schedule, none of which exceptions impairs in any material
respect the normal conduct of its business.
Section 4.06 Tax Returns and Payments. All of its tax returns and
reports required by law to be filed have been duly filed, and all
taxes, assessments, fees, and other governmental charges (other than
those presently payable without interest or penalty or those which are
being contested in good faith by appropriate proceedings diligently
conducted and which are disclosed in the Exceptions Schedule) upon it
or upon any of its properties, assets, interest, or income which are
due or are to become due have been paid or adequately reserved against.
None of its federal income tax returns is currently under examination
by the Internal Revenue Service.
Section 4.07 No Litigation. Except as disclosed in the Exceptions
Schedule:
(a) there is no action, proceeding, claim, or investigation
pending or threatened against it or to which any of its assets or
properties are subject before any court or any governmental department,
commission, board, bureau, agency, or instrumentality which involves
the possibility of any judgment or liability or which might adversely
affect its assets, business, or goodwill and, after investigations it
knows of no basis or grounds for any such action, proceeding, claim, or
investigation; and
(b) there is no outstanding order, writ, injunction, or decree of
any court, government department, commission, board, bureau, government
agency, or instrumentality, or any arbitration award, against it.
Section 4.08 No Adverse Changes. Between the date of this
Agreement and the Effective Date, as a condition precedent to the
obligations hereunder, it will not, without the other party's prior
written consent, take any of the following actions: it will not engage
in any material transaction not in the ordinary course of its business,
make or declare any dividends or distributions of its capital, surplus,
or profits, or redeem or issue any shares of its Common Stock or other
securities. There will be no changes in its assets, properties,
liabilities, or financial condition from those shown in its financial
statements or in its condition, other than changes which do not
materially affect, singly or in the aggregate, its business, assets,
properties, or financial condition. Other than as set forth in the
Exceptions Schedule, it will not borrow any amounts or incur any
liabilities other than pursuant to contracts entered into in the
ordinary course of business; discharge any lien or encumbrance or
satisfy any liabilities other than current liabilities incurred in the
ordinary course of business; mortgage, pledge, or subject to lien or
charge or any other encumbrance any of its assets or properties; sell,
assign, or transfer any of its assets except in the ordinary course of
business; waive any rights of substantial value; or loan money to any
of its directors, officers, or shareholders.
Section 4.09 No Adverse Claims. Except as set forth in the
Exceptions Schedule, none of its officers or employees has any claim
against it except for salaries or other ordinary expenses, and it is
not obligated to any of such persons in any way or for any amount
except for salaries, wages, or ordinary expenses.
Section 4.10 Books and Records Complete. Its books and records
are accurate and complete and there are no matters for which proper
entry has not been made in such books and records.
Section 4.11 Insurance. It is adequately insured with respect to
risks usually insured against by companies owning properties and
conducting business similar to those owned and conducted by it. All
policies are presently in force and paid in full and will continue to
be so without interruption until the Effective Date.
Section 4.12 No Brokerage Fees. No agent, broker, investment
banker, person, or firm acting on its behalf, to the best of its
knowledge, is or will be entitled to any broker's or finder's fee or
any other commission or fee, directly or indirectly, in connection with
any of the transactions contemplated hereby.
Section 4.13 Compliance with Certain Laws. It is in full
compliance with: (i) all federal, state, and local laws regulating
atmospheric, water, and other pollution or damage to the environment,
and (ii) all federal, state, and local laws prohibiting discrimination
based on race, creed, color, sex, age, disability, or national origin.
Section 4.14 Authorization of Board of Directors. Its Board of
Directors has duly authorized the execution and delivery of this
Agreement and all documents and transactions called for hereunder, and,
subject to the requisite approval and authorization by the holders of
its capital stock, this Agreement constitutes a valid and binding
obligation of the corporation in accordance with the Agreement's terms.
Each shall deliver to the other a certified copy of resolutions of its
Board of Directors pertaining to the foregoing. It has taken or will
exert its best efforts to take, prior to the Effective Date, all action
required by law, its Articles of Incorporation and Bylaws, and
otherwise to authorize the execution, delivery, and performance of this
Agreement.
Section 4.15 Contracts. Other than as set forth in the Exceptions
Schedule, it is not a party to any (i) labor agreements, (ii) contracts
of employment, (iii) contracts for the purchase, sale, or lease (as
lessor or lessee) of real estate or personal property, (iv) contracts
for services to be rendered to it, (v) employee insurance, hospital, or
medical expense programs, or (vi) pension or profit-sharing plans,
retirement plans, bonus or incentive agreements or plans, or stock
purchase or stock option plans, formal or informal.
Section 4.16 Accounts and Notes Receivable. The accounts and
notes receivable as shown in its most recent consolidated balance sheet
and the accounts and notes receivable acquired by it subsequent to said
date have been collected or are believed by it to be collectible at the
aggregate recorded amounts thereof, less applicable reserves shown on
such balance sheet.
Section 4.17 Property and Equipment. It has valid leases with
respect to the real and personal property purported to be leased by it
under leases providing for rentals in excess of $5,000 per year and
none of the parties to any such lease is in material default
thereunder. The property and equipment as shown on its most recent
consolidated balance sheet are in good operating condition and in a
state of good maintenance and repair. The use of its real property
conforms in all material respects with applicable ordinances,
regulations, zoning, or building codes, and other applicable laws.
Section 4.18 Capitalization. Except as set forth in the
Exceptions Schedule, it has no obligation under any agreement with any
person to register any of its securities under the 1933 Act or any
applicable state securities laws and, during the three years preceding
the date of this Agreement, it has not sold or issued any of its
securities in a transaction which was not registered under the 1933 Act
or any applicable state securities law. There are no preemptive rights
with respect to any of its securities.
Section 4.19 Classic. Classic represents and warrants that its
authorized capital stock consists of 100,000,000 shares of preferred
stock, no par value per share, none of which are issued or outstanding;
1,800,000,000 shares of Class A common stock, no par value per share,
of which approximately 9,900,000 shares were issued and outstanding as
of February 9 1998; and 200,000,000 shares of Class B common stock, no
par value per share, of which 200,000 shares were issued and
outstanding as of February 9, 1998. All of the issued and outstanding
shares of Classic are validly issued, fully paid, and nonassessable.
Section 4.20 AAC. AAC and the Shareholders represent and warrant
that its authorized capital stock consists of 3,500,000 shares of
common stock, no par value per share, of which 3,500,000 shares were
issued and outstanding as of February 9, 1998, all of which shares were
held by the ▇▇▇▇▇▇▇ Family Trust.
Section 4.21 Principal Shareholders. No person owns of record
or, to the best of its knowledge, owns beneficially five percent or
more of any class of the issued and outstanding shares of its voting
securities, except as set forth on the Exceptions Schedule. and as
follows:
(a) AAC: ▇▇▇▇▇▇▇ Family Trust owns all of the issued and
outstanding common stock of AAC.
(b) Classic: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ owns more than 5% of the
outstanding shares of the Classic Class B Common Stock.
Section 4.22 No Subsidiaries. It has no subsidiaries, except that
Classic owns Musicana-Clearwater, Inc., a Florida corporation, and
Florida Classic.
Section 4.23 Information Furnished. It has furnished to the other
party copies of all reports filed with the Securities and Exchange
Commission pursuant to Section 13(a)and 15(d)of the Securities Exchange
act of 1934 and, to the best of its knowledge, such reports do not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein not
misleading. Such reports contain all of the material and relevant
information concerning its business and financial condition as of their
respective dates.
Section 4.24 Options and Other Rights. Except as set forth on the
Exception Schedule, there are no outstanding options, warrants, or
rights to subscribe for, purchase, or receive shares of its common
stock or any other securities convertible into common stock:
Section 4.25 Representations True. No representation or warranty
contained herein, nor any statement or certificate furnished hereunder
or in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE V COVENANTS
Section 5.01 Shareholder Meetings. AAC and Classic covenant and
agree with each other that each shall submit this Agreement to its
shareholders for approval, to the extent required by their Articles of
Incorporation and Bylaws or applicable law, at a special or annual
meeting of shareholders (the "Shareholder Meeting") to be held on the
earliest practicable date.
Section 5.02 Preservation of Business; Access to Documents. From
and after the date of this Agreement and until the Effective Date, AAC
and Classic covenant and agree with each other that each corporation
shall:
(a) use its best efforts to preserve its business organization,
goodwill, and business relationships intact and to retain the services
of its officers and key employees;
(b) provided the same does not violate any statute, order, decree,
rule, regulation, or contract, give each other and its authorized
agents full access, during normal business hours, upon reasonable
notice, to all of its assets, properties, books, records, agreements,
and commitments and furnish such representatives during such period
with all such information concerning its affairs as the other may
reasonably request; provided. however that each party and its
authorized agents shall hold in confidence all documents and
information thus acquired or learned concerning the parties and, if the
transactions contemplated by this Agreement are not consummated, all
such documents shall immediately thereafter be returned to the
appropriate parties;
(c) take all necessary corporate and any other action, and use its
best efforts to obtain all consents, approvals, and agreements required
to carry out the transactions contemplated in this Agreement and to
satisfy, or cause to be satisfied, the conditions specified herein; and
(d) maintain in full force and effect insurance policies providing
coverages and amount of coverage as now provided.
Section 5.03 Business in Ordinary Course. AAC and Classic further
covenant and agree with each other that each of the representations and
warranties set forth in Article IV will be true and correct on the
Effective Date. Except as set forth on the Exceptions Schedule and
elsewhere herein, until the Effective Date, neither AAC nor Classic
shall do any of the following except with the prior written consent of
the other party:
(a) effect any general salary increase except in line with its
past practices;
(b) enter into any written employment agreement;
(c) increase the base compensation or other benefits of any
employee by more than 10%;
(d) make any contribution to any trust or plan for the benefit of
employees not required by the present terns thereof or in accordance
with its past practices;
(e) make any change in any employee benefit plan which would
materially increase the cost thereof or adopt any new employee benefit
plan;
(f) issue or commit to issue any capital stock or other ownership
interests, except for the sale of shares of Classic Common Stock in a
private placement or under Regulation S, or the conversion of notes or
preferred stock of Classic into Classic Class A Common Stock;
(g) grant or omit to grant any options, warrants, or other rights
to subscribe for or purchase or otherwise acquire any shares of capital
stock or other ownership interests or issue or commit to issue any
securities convertible into or exchangeable for shares of its common
stock or other ownership interests;
(h) declare, set aside, or pay any dividend or distribution with
respect to its common stock or other ownership interests;
(i) directly or indirectly redeem, purchase, or otherwise acquire
or commit to acquire any of its common stock or other ownership
interest or directly or indirectly terminate or reduce or commit to
terminate or reduce any bank line of credit or the availability of any
funds under any loan or financing agreement;
(j) effect a split or reclassification of any capital stock or
recapitalization;
(k) change its articles of incorporation, bylaws, or other
governing instruments, except to effectuate the transactions
contemplated by this Agreement;
(l) borrow or agree to borrow any funds except pursuant to
existing bank lines of credit or other existing loan agreements or
financing arrangements; or
(m) waive or commit to waive any right of substantial value.
Section 5.04 Notwithstanding the foregoing, AAC and the
Shareholders acknowledge and agree that Classic may restructure certain
debt and preferred stock obligations on terms which have not been
determined, but which may involve a pledge of Classic's Musicana
Clearwater operations, and further acknowledge and agree that Classic
may sell its Musicana Clearwater operations in a transaction in which
part or all of the consideration consists of the assumption of certain
debt or preferred stock obligations of Classic.
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER
AND TERMINATION
Section 6.01 The obligations of the parties under this Agreement
are subject to the satisfaction of the following express conditions
precedent at or before the Effective Date:
(a) Classic shall have obtained approval to change its name to
Creative Recycling Technologies, Inc.
(b) Classic shall have conducted a 1 for 20 reverse split of its
Class A and Class B Common Stock.
(c) Classic shall have filed all reports which it is required to
file with the Securities and Exchange Commission pursuant to Sections
13 and 15 of the Securities Exchange Act of 1934.
(d) AAC and Classic shall raise enough funds to successfully build
a tire cracker prototype as defined in AAC's business plan within one
year after the effective date of the reverse stock split described in
Section 2.01(d) herein.
(e) Classic shall have settled or exchanged, or obtained binding
commitments to settle or exchange, all of its existing liabilities
(exclusive of liabilities of its subsidiaries) and Series A, B and C
preferred stock on such terms that Classic may negotiate (including
involving a sale of its Musicana Clearwater operations pursuant to
Section 5.04 herein), provided that no more than 1,000,000 shares of
Classic Class A Common Stock (after giving effect to the reverse split
described in Section 2.01(d)) are outstanding on the Effective Date
(plus any shares which are issued pursuant to Section 2.01(h) herein).
(f) The Shareholders shall have executed such documents that
counsel for Classic may reasonable request to insure that the issuance
of Classic Preferred Stock to the Shareholders complies with Regulation
D of the Securities and Exchange Commission and any applicable state
securities law.
(g) All statutory requirements for the valid consummation by
Classic and AAC of the transactions contemplated by this Agreement
shall have been fulfilled.
(h) All corporate and other proceedings in connection with the
transactions contemplated herein and all documents incident thereto
shall be reasonably satisfactory in form and substance to it and its
counsel.
(i) Unless waived in writing by the parties prior to the Effective
Date, Classic and AAC shall have caused its counsel to prepare and
deliver to the other an opinion, dated as of the Effective Date, in
form and substance satisfactory to the other, to the effect that:
(i) It has been duly incorporated and is a validly existing
corporation in good standing under the laws of its state of
incorporation, with full corporate power and authority to own and
operate its properties and to carry on its business as presently being
conducted.
(ii) This Agreement has been duly authorized and executed by it,
and all corporate action by it required to authorize the Share Exchange
has been taken.
In rendering such opinion, counsel may rely on certificates of its
officers as to matters of fact and, as to matters of law, may rely on
opinions of local counsel chosen by it provided that copies of such
opinions of such other counsel accompany the opinion delivered by
counsel.
(j) Each corporation shall have furnished to the other a
certificate of the President or Vice President and the Secretary of the
respective company, dated as of the Effective Date, to the effect that
the representations and warranties of the respective company in this
Agreement are true and correct at and as of the Effective Date, that no
error, misstatement, or omission has been discovered or is known with
respect to such representations and warranties, and that the respective
company has complied with all the agreements and has satisfied all the
covenants on its part to be performed at or prior to the Effective
Date.
(k) Between the date of execution of this Agreement and the
Effective Date, AAC and Classic (a) except in the ordinary course of
its business, shall not have incurred any liabilities or obligations
(direct or contingent) or disposed of any of its assets, or entered
into any material transaction or suffered or experienced any materially
adverse change in its condition, financial or otherwise, and (b) shall
not have increased its issued and outstanding shares of common stock or
any other securities, except to the extent permitted herein.
ARTICLE VII MISCELLANEOUS
Section 7.01 Survival. All agreements, representations, and
warranties made hereunder or in connection with the transactions
contemplated hereby shall survive the Effective Date and remain
effective in accordance with the terms hereof regardless of any
investigation at any time made by or on behalf of AAC or Classic.
Section 7.02 Expenses. In the event that this Agreement shall be
terminated pursuant to hereinabove, all further obligations of AAC and
Classic under this Agreement shall terminate without further liability
of either corporation to the other, and each corporation shall bear any
expenses incurred by them in connection with this Agreement.
Section 7.03 Assignment. This Agreement may not be assigned nor
any of the performances hereunder delegated by operation of law or
otherwise by any party hereto, and any purported assignment or
delegation shall be void.
Section 7.04 Headings. The article and section headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
Section 7.05 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
heirs, successors, legal representatives, assigns, and transferors.
Section 7.06 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof. There are no representations, warranties, conditions, or
other obligations except as herein specifically provided. Any waiver,
amendment, or modification hereof must be in writing. A waiver in one
instance shall not be deemed to be a continuing waiver or waiver in any
other instance.
Section 7.07 Counterparts. This Agreement may be executed in
counterparts and each counterpart hereof shall be deemed to be an
original, but all such counterparts together shall constitute but one
agreement an original, but all such counterparts together shall
constitute but one agreement.
Section 7.08 Notices. All notices, requests, instructions, or
other documents to be given hereunder shall be deemed given if in
writing, sent registered mail, as follows:
If to AAC or the Shareholders:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P.O. Box ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Classic or ▇▇▇▇:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Classic Restaurants International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
\s\ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
(SEAL) By: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, President
\s\ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
A.A. CORP.
(SEAL) By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its:_________________________
▇▇▇▇▇▇▇ FAMILY TRUST
\s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
EXHIBIT A
EXCEPTIONS SCHEDULE FOR CLASSIC
Section 4.02: Classic is in default on notes, and has not paid
dividends on preferred stock to the extent required thereunder.
Section 4.07: Shoom v. Classic and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ - suit to
recover $80,000 promissory note plus interest and attorneys; motion for
default judgment scheduled for March 4, 1998.
▇▇▇▇▇ v. Classic and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ - Judgment for $46,376.31
entered on August 20, 1997; Consent Stipulation entered on or about
December 19, 1997 requiring monthly payments of $5,000; balance owing
of approximately $21,000.
As to all representations and warranties: all matters disclosed
in Classic's Form 10-KSB for the year ended June 30, 1997 and its
audited financial statements included therewith.
EXHIBIT B
EXCEPTIONS SCHEDULE FOR AAC
employment agreement between the company and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
EXHIBIT C
ESCROW AGREEMENT
THIS AGREEMENT is made and entered into as of the 27th day of
February, 1998, by and among Classic Restaurants International, Inc.
("Classic"), ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇"), A.A. Corp. ("AAC"), ▇▇▇▇▇▇▇
Family Trust ("▇▇▇▇▇▇▇" and with Classic, ▇▇▇▇ and AAC, the "Parties"),
and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C. (the "Escrow Agent").
WITNESSETH
WHEREAS, on or about February 27th, 1998, Classic, ▇▇▇▇, AAC
and ▇▇▇▇▇▇▇ entered into an Agreement and Plan of Share Exchange (the
"Agreement"), under which Classic agreed to acquire all of the issued
and outstanding common stock of AAC Corp. from ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇
agreed to acquire all of the issued and outstanding Class B Common
Stock from ▇▇▇▇;
WHEREAS, pending Final Closing, as defined in the Agreement,
the parties have agreed to deposit certain consideration and documents
deliverable under the Agreement with the Escrow Agent under this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. The parties hereby designate, constitute and appoint Escrow
Agent as the "Escrow Agent" under this Agreement.
2. The Escrow Agent hereby acknowledges receipt of the following
documents (the "Documents") from the Parties:
a) From Classic, 500,000 shares of Series D Convertible Preferred
Stock.
b) From ▇▇▇▇, 200,000 shares of Class B Common Stock of Classic.
c) From ▇▇▇▇▇▇▇, 3,500,000 shares of common stock of AAC.
3. The Documents are to be held by Escrow Agent in escrow and
disposed of pursuant to and strictly in accordance with the terms and
conditions of this Agreement. Escrow Agent shall hold the Documents in
a safe place, provided that Escrow Agent shall not be obligated to
obtain insurance covering the loss and/or destruction of the Documents
unless the Parties so request and advance the Escrow Agent sufficient
funds to pay for said insurance. The Escrow Agent undertakes to perform
only such duties as are expressly set forth in this Agreement, and no
implied duties or obligations of the Escrow Agent shall be read into
this Agreement.
4. The Escrow Agent shall at all times be authorized to deliver
the Documents in accordance with the terms of the Purchase Agreement or
with written instructions executed by the Parties. In the event the
Escrow Agent shall receive a written claim of default under the
Agreement by any of the Parties, then the Escrow Agent shall not
release the Documents from escrow unless and until the Escrow Agent
shall have received joint written instructions from the Parties as the
proper deliver of the Documents or Escrow Agent has received direction
from a court of competent jurisdiction (after expiration of any
applicable appeal period) as to the proper party entitled to receipt
of the Documents. Escrow Agent shall be authorized to file an action
in interpleader to determine the proper party entitled to the
Documents; and the defaulting party, as determined in such proceeding,
shall indemnify and hold harmless the Escrow Agent from all costs and
expenses, including reasonable attorney's fees associated with the
proceeding. Escrow Agent may act in reliance upon any writing or
instrument or signature which it in good faith believes to be genuine
and may assume that any person purporting to give any writing, notice,
advice, or instruction in connection with the provisions hereof has
been duly authorized to do so. Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of
execution or validity of any instrument deposited in this escrow nor as
to the identity, authority or right of any persons executing the same;
and its duties hereunder shall be limited to the safekeeping of the
Documents and for the disposition of same in accordance with this
Agreement. Escrow Agent hereby executes this Agreement for the sole
and exclusive purpose of evidencing its Agreement of the provisions
hereof.
5. The Parties hereby agree to indemnify and hold the Escrow Agent
harmless from any and all claims, liabilities, losses, actions, suits
or proceedings at law or in equity, or any other expense, fees, or
charges of any character or nature, which it may incur or with which it
may be threatened by reason of its acting as Escrow Agent under this
Agreement; and in connection therewith, to indemnify the Escrow Agent
against any and all expenses, including reasonable attorney's fees and
the cost of defending any action, suit or proceeding or resisting any
claim.
6. The Escrow Agent may consult with counsel of its own choice and
shall have full and complete authorization and protection for any
action taken or suffered by it and hereunder in good faith and in
accordance with the opinion of such counsel. The Escrow Agent shall
otherwise not be liable for any mistakes of fact or error in judgment,
or for any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence.
7. All reasonable out-of-pocket expenses of Escrow Agent in
connection with the services rendered under this Agreement shall be
paid by Classic.
8. Upon release and delivery of the Documents in accordance with
the terms of the Agreement and this Agreement, this Agreement shall
terminate and the parties shall be released hereunder except with
respect to the indemnification obligations of Classic in favor of the
Escrow Agent.
9. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by
the party as to whom enforcement of any such amendment, modification,
supplement or waiver is sought and making specific reference to this
Agreement.
10. All notices required or permitted hereunder, and under any
instrument delivered pursuant hereto, shall be given in writing, and
shall be deemed to have been given and received upon the earlier to
occur of: (a) the actual receipt of any such notice by the intended
recipient; and (b) the third business day following deposit of any such
notice enclosed in a wrapper with postage prepaid, properly addressed
to the intended recipient at its address set forth below, as a
certified item, return receipt requested, in an official depository of
and under the care and custody of the United States Postal Service.
The parties' address for notice shall be as follows:
If to AAC or ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Classic or ▇▇▇▇:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Classic Restaurants International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Agent:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address for notice set forth
herein by giving the other parties at least 10 days advance written
notice of such change of address.
11. Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein. Escrow Agent shall not be
liable for any action taken or omitted by it, or any action suffered by
it, except for gross negligence or willful misconduct. The Escrow
Agent shall not be bound by any notice or demand unless evidenced by a
writing delivered to Escrow Agent signed by the proper party or
parties.
12. This Agreement contains the entire understanding between and
among the parties hereto with respect to the subject matter hereof, and
shall be binding upon and inure to the benefit of such parties, and
their respective heirs, successors in interest and legal
representatives.
13. This Agreement is governed by, and is to be construed in
accordance with, the laws of the State of Georgia.
This Agreement may be executed in counterpart.
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
_______________________________
(SEAL) By:____________________________
Its:____________________________
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
A.A. CORP.
_______________________________
(SEAL) By:____________________________
Its:____________________________
▇▇▇▇▇▇▇ FAMILY TRUST
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
___________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
EXHIBIT D
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION OF
CLASSIC RESTAURANTS INTERNATIONAL, INC.
Pursuant to the provisions of Colorado Business Corporation
Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Classic Restaurants
International, Inc.
SECOND: The amendment to the Articles of Incorporation set
forth on Exhibit A was adopted on February __, 1998, in the manner
prescribed by the Colorado Business Corporation Act. Such amendment
was adopted by the board of directors without shareholder action;
shareholder action was not required.
THIRD: This amendment is to be effective upon filing.
Dated this ___ day of February, 1998.
Attest: CLASSIC RESTAURANTS
INTERNATIONAL, INC.
____________________________ BY:_____________________________
June Cuba, Secretary ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, President
EXHIBIT A
Classic Restaurants International, Inc. (the "Corporation")
adds to Article II of its Articles of Incorporation the following:
Series D Convertible Preferred Stock
A series of Preferred Stock is hereby established which shall be
referred to as Class D Convertible Preferred Stock (the "Class D
Preferred Stock"), and the preferences and relative, participating,
optional or other special rights of the Class D Preferred Stock, and
the qualifications, limitations or restrictions thereof shall be as
follows:
(1) Number. The corporation shall have the authority to
issue not more than 500,000 shares of Class D Preferred Stock at the
discretion of the Board of Directors.
(2) Dividends. Shares of Class D Preferred Stock shall
not be entitled to receive any dividends.
(3) Liquidation Rights. The Class D Preferred Stock
shall be entitled to $2.50 per share upon the liquidation, dissolution,
or winding-up of the affairs of the Company in preference to all
classes of Class A Common Stock and any junior class of preferred
stock, but is not entitled to participate in the assets or profits of
the Company beyond its liquidation preference. The Company may not
create a class of Preferred Stock which has a preference in liquidation
which is senior in priority to the Class D Preferred Stock without the
prior consent of the holders of the Class D Preferred Stock.
(4) Optional Redemption. The Company may redeem the
Class D Preferred Stock at any time, in whole or in part, at the option
of the Company for cash at the redemption price of $2.50 per share. In
the event the Company shall redeem shares of Class D Preferred Stock
for cash, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to
the redemption date, to each holder of record of the shares to be
redeemed, at such holder's address as the same appears on the stock
register of the Company. Each such notice shall state: (1) the
redemption date; (2) the number of shares of Class D Preferred Stock to
be redeemed and, if less than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such holder;
(3) the redemption price; and (4) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price. Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the Company
in providing money for the payment of the redemption price) said shares
shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Company (except the right to
receive from the Company the redemption price, as the case may be)
shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state), such shares shall be redeemed by the
Company at the redemption price as aforesaid. If less than all the
outstanding shares of the Class D Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Company from outstanding
shares of Class D Preferred Stock not previously called for redemption
by lot or pro rata or in such other manner as the Board of Directors of
the Company may determine. A new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
No failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for such
redemption except as to the holder to whom the Company has failed to
mail such notice or except as to the holder whose notice was defective.
(5) Mandatory Redemption. The Company will not
consolidate or merge into or transfer all or substantially all of its
assets to any person unless all outstanding shares of Class D
Preferred Stock shall have been called for redemption for cash in
accordance with the provisions hereof or unless: (i) the person is a
corporation organized under the laws of the United States of America,
any State or the District of Columbia, and (ii) the successor
corporation assumes all of the Company's obligations in respect of the
Class D Preferred Stock.
(6) Conversion. The shares of Class D Preferred Stock
shall be convertible at the principle office of the Company, and at
such other place or places, if any, as the Board of Directors of the
Company may designate, into fully paid and non-assessable shares
(calculated as to each conversion to the nearest l/100th of a share) of
Class A Common Stock. The number of shares of common stock issuable
upon conversion of each share of the Class D Preferred Stock shall be
equal to $2.50 divided by the conversion price in effect at the time of
conversion determined as hereinafter provided. The price at which
shares of Common Stock shall be delivered upon conversion (the
"Conversion Price") shall be initially $0.0125 per share of Common
Stock; provided, however, that such Conversion Price shall be subject
to adjustment from time to time in certain instances as hereinafter
provided. No payment or adjustment shall be made in respect of
dividends on the Class A Common Stock upon conversion of shares of the
Class D Preferred Stock. If the Company calls any shares of the Class D
Preferred Stock for redemption, such right of conversion shall cease
and terminate, as to the shares designated for redemption, at the close
of business on the redemption date, unless the Company defaults in the
payment of the redemption price. No fractional shares of Class A Common
Stock will be issued, and instead the number of shares of Class A
Common Stock to be issued on conversion of Class D Preferred Stock
will, to the extent necessary, be rounded up to the nearest whole
number of shares.
Before any holder of shares of the Class D Preferred Stock
shall be entitled to convert the same into Class A Common Stock, the
holder shall surrender the certificate or certificates therefor, duly
endorsed to the Company or in blank, at the principle office of the
Company or at such other place or places, if any, as the Board of
Directors of the Company has designated, and shall give written notice
to the Company at said office or place that it elects to convey the
same and shall state in writing therein the name or names (with
addresses) in which it wishes the certificate or certificates for Class
A Common Stock to be issued. The Company will, as soon as practicable
thereafter, issue and deliver at said office or place to such holder of
shares of the Class D Preferred Stock, or to its nominee or nominees,
certificates for the number of full shares of Class A Common Stock to
which it shall be entitled as aforesaid. Shares of the Class D
Preferred Stock shall be deemed to have been converted as of the close
of business on the date of the surrender of such shares for conversion
as provided above, and the person or persons entitled to receive the
Class A Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Class A Common Stock
as of the close of business on such date.
The Conversion Price in effect at any time shall be subject
to adjustment as follows:
(i) In case the Company shall (A) declare a dividend on its
Class A Common Stock in shares of Class A Common Stock, (B) subdivide
its outstanding shares of Class A Common Stock, (C) combine its
outstanding shares of Class A Common Stock into a smaller number of
shares, or (D) issue by reclassification of its Class A Common Stock
(including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation) any
shares of its capital stock, the Conversion Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be proportionately
adjusted so that the holder of any share of the Class D Preferred Stock
surrendered for conversion after such time shall be entitled to receive
the kind and amount of shares which it would have owned or have been
entitled to receive had such share of the Class D Preferred Stock been
converted immediately prior to such time. Such adjustment shall be
made successively whenever any event listed above shall occur.
(ii) In case the Company shall distribute to all holders of
its Class A Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness or assets
(excluding dividends or other distributions paid out of earned
surplus), the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such distribution
by a fraction of which the numerator shall be the Current Market Price
per share of the Class A Common Stock on the date fixed for such
determination less the fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive and
described in a Board Resolution of the Company filed with the Company)
of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Class A Common Stock and the
denominator shall be such Current Market Price per share of the Class A
Common Stock on the date fixed for such determination, such adjustment
to become effective immediately prior to the opening of business of the
day following the date fixed for the determination of stockholders
entitled to receive such distribution.
(iii) For the purpose of any computation under paragraph (ii)
above, the "Current Market Price" on any date shall be deemed to be the
average of the daily closing prices per share of Class A Common Stock
for 20 consecutive business days selected by the Company commencing 35
business days before such date. The closing price for each day shall be
the last sale price or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, in either case on the
New York Stock Exchange, or, if the Class A Common Stock is not listed
or admitted to trading on such Exchange, on the principal national
securities exchange on which the Class A Common Stock is listed or
admitted to trading or, if it is not listed or admitted to trading on
any national securities exchange, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Sealers, Inc., selected from time to time by the Company for
that purpose.
(iv) All calculations under this paragraph (6) shall be made
to the nearest cent or the nearest l/100th of a share, as the case may
be.
(v) In case of any consolidation or merger of the Company
with or into any other corporation (other than a consolidation or
merger in which the Company is the continuing corporation), or in case
of any sale or transfer of all or substantially all of the assets of
the Company, the holder of each share of Class D Preferred Stock shall
after such consolidation, merger, sale or transfer have the right to
convert such share of the Class D Preferred Stock into the kind and
amount of shares of stock and other securities and property which such
holder would have been entitled to receive upon such consolidation,
merger, sale or transfer if he had held the Class A Common Stock
issuable upon the conversion of such share of the Class D Preferred
Stock immediately prior to such consolidation, merger, sale or
transfer.
(vi) In the event that at any time, as a result of an
adjustment made pursuant to paragraph (i) above, the holder of any
share of Class D Preferred Stock surrendered for conversion shall
become entitled to receive any securities other than shares of Class A
Common Stock, thereafter the amount of such other securities so
receivable upon conversion of any share of the Class D Preferred Stock
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Class A Common Stock contained in paragraphs (i) to (v),
inclusive, above, and the provisions of this paragraph (6) with respect
to the Class A Common Stock shall apply on like terms to any such other
securities.
(vii) No adjustment in the Conversion Price shall be
required unless such adjustment would require a change of at least l %
in such price; provided, however, that any adjustments which by reason
of this paragraph (vii) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
Whenever the Conversion Price is adjustable as herein
provided:
(i) the Company shall promptly file with corporate books of
the Company a certificate of the treasurer of the Company setting forth
the adjusted Conversion Price and showing in reasonable detail the
facts upon which such adjustment is based, including a statement of the
consideration received or to be received by the Company for any shares
of Class A Common Stock issued or deemed to have been issued; and
(ii) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price, and within
ten (10) business days after it is required, said notice shall be
mailed to all holders of Class D Preferred Stock determined as of the
date the notice was first required, and upon the mailing of such notice
no other notice need be given of that adjustment in the Conversion
Price.
The Company will at all times reserve, keep available and be
prepared to issue, free from any preemptive rights, out of its
authorized but unissued Class A Common Stock, solely for the purpose of
effecting conversion of the Class D Preferred Stock, the full number of
shares of Class A Common Stock then issuable upon the conversion of all
outstanding Class D Preferred Stock. The Company shall from time to
time, in accordance with the laws of the State of Georgia, endeavor to
amend its Articles of Incorporation to increase the authorized amount
of its Class A Common Stock if at any time the authorized amount of its
Class A Common Stock remaining unissued shall be not sufficient to
permit the conversion of all Class D Preferred Stock. The Company
shall, if any shares of Class A Common Stock required to be reserved
for issuance upon conversion of Class D Preferred Stock pursuant to
this paragraph (6) require registration with or approval of any
governmental authority under any Federal or state law before such
shares may be issued upon such conversion, endeavor to cause such
shares to be so registered or approved as expeditiously as possible.
The Company will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Class A Common Stock
on conversion of shares of the Class D Preferred Stock pursuant hereto.
The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue or transfer
and delivery of shares of Class A Common Stock in a name other than
that in which the shares of the Class D Preferred Stock so converted
were registered, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Company the
amount of any such tax or has established to the satisfaction of the
Company that such tax has been paid.
(7) Voting Rights. The holders of Class D Preferred Stock
shall be entitled to elect two directors at all annual meetings of the
shareholders of the Company.
EXHIBIT E
OFFICER AND DIRECTOR STOCK INCENTIVE PLAN OF
CLASSIC HOLDINGS, INC.
1. Purpose. The purpose of this Officer and Director Stock
Incentive Plan ("Plan") is to secure for the corporation and its
stockholders the benefits which flow from providing certain corporate
officers and directors with the incentive inherent in common stock
ownership. It is generally recognized that stock option plans aid in
retaining competent executives and furnish a device to attract
executives of exceptional ability to the Corporation because of the
opportunity offered to acquire a proprietary interest in the business.
2. Amount of Stock. The total number of shares of Common
Stock to be subject to options granted pursuant to the Plan shall not
exceed 2,500,000 shares of the Corporation's Class A Common Stock.
This total number of shares shall be subject to appropriate increase or
decrease in the event of a stock dividend on, or a subdivision, split-
up, combination or reclassification of, the shares purchasable under
such options. In the event that options granted under this Plan shall
lapse without being exercised in whole or in part, other options may be
granted covering the shares not purchased under such lapsed options.
3. Eligibility and Participation. Options may be granted
pursuant to the Plan to officers and directors of the corporation at
the discretion of the Board of Directors (hereinafter, the "Officers").
4. Option Agreement. The terms and provisions of options
granted pursuant to the Plan shall be set forth in an agreement, herein
called an Option Agreement, between the Corporation and the Officer
receiving the same. The Option Agreement shall be in substantially the
same form as the Option Agreement which is attached hereto as Exhibit
"A."
5. Issuance, Amount and Exercise Price of Options. The
exercise price under the options shall be equal to 25% of the average
closing bid price for the Corporation's Class A Common Stock for the
twenty (20) business days preceding the grant of the option. The full
purchase price of shares purchased shall be paid upon exercise of the
option. Under certain circumstances such purchase price per share
shall be subject to adjustment as referred to in Section 9 of this
Plan.
6. Option period. No option granted pursuant to the Plan
shall be exercisable after the expiration of three years from the date
the option is first granted. The expiration date stated in the Option
Agreement is hereinafter called the Expiration Date.
7. Death of Officer. The Option Agreement shall provide
that if prior to the Expiration Date the grantee shall die, the legal
representatives of his estate or a legatee or legatees of the option
shall have the privilege, for a period of six months after his death,
of exercising all or any part of the then unexercised portion of the
option; provided that nothing herein shall extend the time for
exercising any option granted pursuant to the Plan beyond the
Expiration Date.
8. Assignability. The Option Agreement shall provide that
the option granted thereby shall not be transferable or assignable by
the employee otherwise than by will or by the laws of descent and
distribution and during the lifetime of the employee shall be
exercisable only by him.
9. Adjustment in Case of Stock Splits, Stock Dividends, etc.
The Option Agreement may contain such provisions as the Board of
Directors may approve as equitable concerning the effect upon the
option granted thereby and upon the per share or per unit option price,
of (a) stock dividends upon, or subdivisions, split-ups, combinations
or reclassification of, the securities purchasable under the option, or
(b) proposals to merge or consolidate the Corporation or to sell all or
substantially all of its assets, or to liquidate or dissolve the
Corporation.
10. Stock for Investment. In the event the common stock
underlying the option has not been registered with the Securities and
Exchange Commission, then the Option Agreement shall provide that the
grantee shall upon each exercise of a part or all of the option granted
represent and warrant that his purchase of stock pursuant to such
option is for investment only, and not with a view to distribution
involving a public offering. Stock issued under the Option Agreement
may contain an appropriate legend indicating that the stock has not
been registered under applicable state or federal securities laws, and
therefore may not be sold prior to compliance with such laws.
11. Amendment of the Plan. The Board of Directors of the
Corporation may from time to time alter, amend, suspend or discontinue
the Plan and make rules for its administration.
STOCK OPTION
OPTION AGREEMENT made this ___ day of _______________, 199__,
between Classic Holdings, hereinafter called the "Corporation," and
_________________________, an officer or director of the Corporation,
hereinafter called the "Optionholder."
The Corporation has implemented an Officer and Director Stock
Incentive Plan by a resolution dated __________, 1998.
The Corporation has agreed to grant the Optionholder an
option to purchase certain shares of the Corporation's Class A Common
Stock (the "Common Shares") pursuant to the above-referenced Plan.
Now, therefore, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:
1. Grant of Option. The Corporation hereby irrevocably
grants to the Optionholder the right and option, hereinafter called the
Option, to purchase all or any part of an aggregate of
______________________ Common Shares (such number being subject to
adjustment as provided in Paragraph 6 hereof) on the terms and
conditions herein set forth.
2. Purchase Price. The purchase price of the Common
Shares covered by the Option shall be $_______ per share flat or ex-
dividend.
3. Term of Option. The Option may be exercised at any
time from time to time as to any part of or all the shares covered
thereby until a date three (3) years after the date of this Option;
provided, however, that the Option may not be exercised as to less than
100 shares at any one time (or the remaining shares then purchasable
under the Option, if less than 100 shares). The purchase price of the
shares as to which the Option shall be exercised shall be paid in full
in cash at the time of exercise. The holder of the Option shall not
have any rights of a shareholder with respect to the shares covered by
the Option except to the extent that one or more certificates for such
shares shall be delivered to him upon the due exercise of the Option.
4. Nontransferability. The Option shall not be
transferable otherwise than by will or the laws of descent and
distribution, and the Option may be exercised, during the lifetime of
the Optionholder, only by him. More particularly (but without limiting
the generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law, and shall not be
subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provisions hereof, and the levy of any
execution, attachment, or similar process upon the Option, shall be
null and void and without effect.
5. Death of Optionholder. If the Optionholder shall
die before the term of this Option has expired, the Option may be
exercised (to the extent that the Optionholder shall have been entitled
to do so at the date of his death) by a legatee or legatees of the
Optionholder under his last will, or by his personal representatives or
distributes, at any time within the earlier of six months after his
death or the expiration date of this Option.
6. Changes in Capital Structure. If all or any portion
of the Option shall be exercised subsequent to any share dividend,
split-up, recapitalization, merger, consolidation, combination or
exchange of shares, separation, reorganization, or liquidation
occurring after the date hereof, as a result of which shares of any
class shall be issued in respect of outstanding Common Stares or Common
Shares shall be changed into the same or a different number of shares
of the same or another class or classes, the person or persons so
exercising the Option shall receive, for the aggregate price paid upon
such exercise, the aggregate number and class of shares which, if
Common Shares (as authorized at the date hereof) had been purchased at
the date hereof for the same aggregate price (on the basis of the price
per share set forth in Paragraph 2 hereof) and had not been disposed
of, such person or persons would be holding, at the time of such
exercise, as a result of such purchase and all such share dividends,
split-ups, recapitalization, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, or liquidations;
provided, however, that no factional share shall be issued upon any
such exercise, and the aggregate price paid shall be appropriately
reduced on account of any fractional share not issued. No adjustment
shall be made in the minimum number of shares which may be purchased at
any one time, as fixed by paragraph 3 hereof.
7. Method of Exercising Option. Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by
written notice to the Corporation, at its Stock Transfer Department or
its President. Such notice shall state the election to exercise the
Option and the number of shares in respect of which it is being
exercised, and shall be signed by the person or persons so exercising
the Option. Such notice shall be accompanied by payment of the full
purchase price of such shares, in which event the Corporation shall
deliver a certificate or certificates representing such shares as soon
as practicable after the notice shall be received. Payment of such
purchase price shall, in either case, be made by check payable to the
order of the Corporation. The certificate or certificate for the
shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the
Option (or, if the Option shall be exercised by the Optionholder and if
the Optionholder shall so request in the notice exercising the Option,
shall be registered in the name of the Optionholder and another person
jointly, with right of survivorship) and shall be delivered as provided
above to or upon the written order of the person or persons exercising
the Option. In the event the Option shall be exercised, pursuant to
paragraph 5 hereof, by any person or persons other then the
Optionholder, such notice shall be accompanied by appropriate proof of
the right of such person or persons to exercise the Option. All shares
that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
8. Restrictive Legend. Any shares issued as a
consequence of the exercise of this Option shall carry a restrictive
legend substantially in the form set forth below, unless such shares
are registered under the Securities Act of 1933 and under any
applicable state law:
"The shares evidenced by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred, nor will
any assignee or endorsee hereof be recognized as an owner hereof by the
issuer for any purpose, unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares shall
then be in effect or unless the availability of an exemption from
registration with respect to any proposed transfer or disposition of
such shares shall be established to the satisfaction of counsel for the
issuer."
9. General. The Corporation shall at all times during the term
of the Option reserve and keep available such number of Common Shares
as will be sufficient to satisfy the requirements of this Option
Agreement, shall pay all original issue and transfer taxes with respect
to the issue and transfer of shares pursuant hereto and all other fees
and expenses necessarily incurred by the Corporation in connection
therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto.
In witness whereof the Corporation has caused this Option
Agreement to be duly executed by its officers thereunto duly
authorized, and the Optionholder has hereunto set his hand and seal,
all on the day and year first above written.
CLASSIC HOLDINGS, INC.
__________________________________
BY: __________________, President
__________________________________
