1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
OF
ARIZONA MICA PROPERTIES, INC., AN ARIZONA CORPORATION
INTO
▇▇▇▇▇▇▇ MINING, INC., A DELAWARE CORPORATION
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of MARCH 9,
1999, by and among ARIZONA MICA PROPERTIES, INC., an Arizona corporation
("AMPI") and its Shareholders, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇ AND ▇▇▇▇▇ ▇. BLEAK
(herein AMPI Shareholders); and ▇▇▇▇▇▇▇ MINING, INC., a Delaware corporation
("SMI"), a wholly owned subsidiary of AZCO MINING, INC., a Delaware corporation
("AZCO").
WHEREAS, the Board of Directors of AMPI and SMI, deeming the merger of
AMPI with and into SMI (herein the "Surviving Corporation"), in accordance with
the applicable laws of the State of Delaware and the State of Arizona (the
"Merger") to be desirable and in the best interests of their respective
stockholders, and desiring to adopt the Plan of Reorganization resulting in a
tax-free reorganization ("reorganization") within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended;
WHEREAS, all of the issued and outstanding 3,000 shares of AMPI common
stock are owned by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇ AND ▇▇▇▇▇ ▇. BLEAK, each
Shareholder owning 1,000 shares; and
WHEREAS, AMPI will merge into SMI, as the surviving corporation, which
is a wholly owned subsidiary of AZCO, in exchange for the issuance of common
stock of AZCO to the AMPI Shareholders.
NOW, THEREFORE, in consideration of the mutual promises herein made and
in consideration of the representations, warranties and covenants herein
contained, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER. SMI and AMPI shall execute and deliver the Agreement and
Plan of Merger effective as of MARCH 9, 1999. The merger shall be effective,
subject to the terms and conditions of this Agreement and the Plan of Merger as
promptly as possible after Closing, to be held at the offices of ▇▇▇▇▇ ▇▇▇▇,
Esq., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place
as determined by SMI, or on such date as the parties may select (the "Closing
Date"). Subject to Article III, Section 3.3, the merger shall be made effective
by SMI filing the
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Certificate of Merger in accordance with the General Corporation Laws of the
State of Delaware and by SMI filing the Articles of Merger in accordance with
the Arizona Business Corporation Act of the State of Arizona. The latter of the
dates on which the Certificate and Articles of Merger are filed in Delaware and
Arizona shall become the effective date and is herein referred to as the
"Effective Date."
ARTICLE II
DESCRIPTION OF THE TRANSACTION
2.1 DESCRIPTION OF THE TRANSACTION. Pursuant to the terms and
conditions of this Agreement, AMPI will merge with and into SMI on the Effective
Date. Upon the Effective Date of the merger, the following will occur:
(a) CORPORATE EXISTENCE. The separate corporate existence of
AMPI shall cease and SMI shall become the owner without other transfer
of all of the rights and property of the merged corporations, and SMI
shall be subject to the debts and liabilities of AMPI in the same
manner as if SMI had itself incurred them.
(b) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of SMI in effect and as of the effective date will remain
the Certificate of Incorporation of the Surviving Corporation without
any modification or amendment in the Merger.
(c) BYLAWS. The Bylaws of SMI in effect at and as of the
Effective Date will remain the Bylaws of the Surviving Corporation
without any modifications or amendment in the merger.
(d) OFFICERS AND DIRECTORS OF SMI. The Officers and Directors
of SMI in office on the Effective Date will remain as Directors and
Officers of SMI.
(e) DIRECTOR ON AZCO BOARD. The management of AZCO shall make
reasonable best efforts to elect and maintain as a director of AZCO one
individual designated by the AMPI Shareholders. This Director initially
will be ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
2.2 SHARE EXCHANGE. Upon the Effective Date of the Merger:
(a) TRANSFER OF AMPI SHARES. There are 3,000 shares of non par
common stock of AMPI issued and outstanding. Each AMPI share shall be
converted into the right to receive 1,500 shares of common stock of
AZCO, a Delaware corporation (the exchange ratio of shares is referred
to herein as the "Conversion Ratio") at a deemed value of $.65 per
share. A total of 4,500,000 shares of common stock of AZCO will be
issued in exchange for all of the shares of AMPI.
(b) FRACTIONAL INTEREST. No fractional interests will be
issued in exchange for
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shares of AMPI. Cash will be paid for such interests of AMPI, which
would result in receipt of a fractional interest of AZCO.
(c) NO DISSENTING SHARES. The AMPI Shareholders hereby waive
any right to dissent or payment under ARS Section 10-1302.
(d) ADJUSTMENT OF CONVERSION RATIO. The Conversion Ratio shall
be subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split or other change in the number of
AZCO Shares outstanding. No AMPI Share shall be deemed to be
outstanding or to have rights other than those set forth above in this
Agreement.
2.3 PROCEDURE FOR ISSUANCE OF SHARES. Immediately after the Effective
Date of the Merger:
(a) The AMPI Shareholders will surrender the AMPI share
certificates to SMI and SMI will deliver to the AMPI Shareholders in
the manner provided in paragraph 2.3 the certificates evidencing AZCO's
Shares issued in the merger.
(b) AZCO will furnish to each AMPI Shareholder stock
certificates representing that number of AZCO Shares provided
hereinabove equal to the product of (i) the Conversion Ratio times (ii)
the number of outstanding AMPI Shares.
(c) Neither AMPI nor AZCO will pay any dividend or make any
distribution on AMPI or AZCO Shares (with a record date before, at, or
after the Effective Date) to any record holder of outstanding AMPI or
AZCO Shares until after the Effective Date.
(d) AZCO shall pay all charges and expenses incurred in
connection with the issuance of new Shares by AZCO in connection with
this Agreement.
ARTICLE III
CLOSING
3.1 TIME AND PLACE. The exchange of items described in Section 3.2
below ("▇▇▇ ▇▇▇▇▇▇▇") shall be held at the offices of ▇▇▇▇▇ ▇▇▇▇, Esq., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on, MARCH 9, 1999, or at such
other time and place as determined by SMI.
3.2 ACTIONS AT CLOSING. At the Closing (i) AMPI will deliver to SMI the
various certificates, instruments and documents referred to in Paragraph 5.6 of
this Agreement, (ii) SMI will deliver to AMPI the various certificates,
instruments and documents referred to in Paragraph 4.6 below, and (iii) pursuant
to Section 3.3, SMI shall file with the Secretary of State of Delaware, the
Certificate of Merger and with the Secretary of State of Arizona the Articles of
Merger in the forms attached hereto as Exhibit A-1 (the "Certificate of Merger")
and Exhibit A-2 ("the Articles of Merger") on or before the fifth day after the
Closing, and (iv) the AMPI shareholders will surrender their AMPI share
Certificates to SMI and SMI will deliver to the AMPI shareholders in the manner
provided in Paragraph 2.3, the Certificates evidencing AZCO's shares issued in
the merger.
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3.3 VOTING TRUST AGREEMENT. At the Closing, the AMPI shareholders shall
deliver to SMI and AZCO the executed voting trust agreement in the form of
Exhibit B hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SMI
SMI, represents and warrants to AMPI as of the date of the execution of
this Agreement, as of the Closing Date, and as of the Effective Date, as set
forth in this Article IV (all representations and warranties regarding SMI shall
apply to SMI and to any other entity which is a member of the same "control
group of corporations" as SMI under Section 1563 of the Internal Revenue Code):
SMI incorporates by reference the Form 10-K filing with the SEC by AZCO for the
fiscal year ended June 30, 1998, and the AZCO Form 10-Q filing for the fiscal
quarter ended September 30, 1998 ("AZCO SEC Filings") for a Delaware corporation
and agrees at Closing to update and correct said AZCO SEC filings if any
material event has occurred.
The parties acknowledge that the information set forth in the AZCO SEC
filings provide adequate assurance for the Board of Directors of AMPI to rely
upon in entering into this merger. Accordingly, SMI makes no further warranty or
representation other than as set forth in this Article and as set forth in their
SEC filings.
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. AZCO and SMI are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware. AZCO and SMI are duly authorized to conduct
business and are in good standing under the laws of each jurisdiction where such
qualification is required except where the lack of such qualification would not
have a material adverse effect on the financial condition of AZCO and SMI and
any subsidiaries taken as a whole or on the ability of the parties to consummate
the transactions contemplated by this Agreement. SMI has full corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned by it.
4.2 AUTHORIZED AND OUTSTANDING STOCK. AZCO's authorized capital stock
consists of One Hundred Million (100,000,000) shares of $.02 par value Common
Stock, of which 25,252,121 shares are issued and outstanding as of December 31,
1998. All outstanding Shares of AZCO have been duly authorized and validly
issued, fully paid, nonassessable and issued in full compliance with the
preemptive rights of any existing shareholders and in full compliance with all
applicable federal and state securities laws.
No shares of AZCO's capital stock have been reserved for issuance for
any purposes, and there are no outstanding rights, subscriptions, warrants,
options, conversion rights, commitments or agreements of any kind outstanding to
purchase or otherwise acquire from AZCO, or to cause AZCO to issue or purchase,
any shares of its capital stock, or securities or obligations of any kind
convertible into, exchangeable for, or evidencing the right to acquire any
shares of capital stock, other than set forth in Exhibit C, and no additional
shares, rights or warrants of AZCO shall be issued from November 30, 1998 to the
date of Closing.
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4.3 NECESSARY AUTHORITY. AZCO and SMI have all requisite corporate
power and authority to enter into, deliver and perform this Agreement and to
consummate the transactions contemplated herein. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary action on the
part of AZCO's and SMI's Board of Directors and Shareholders. This Agreement has
been duly executed and delivered by AZCO and SMI and constitutes a valid and
legally binding obligation, enforceable against AZCO and SMI in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect, and subject to the availability of
equitable remedies.
4.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement by AZCO and SMI and their consummation of the transactions
contemplated herein, do not and will not (i) require the consent, approval,
authorization, order, filing, registration or qualification of or with any
court, governmental authority or third person, except that which already has
been obtained, (ii) conflict with or result in any violation of or default under
any provision of AZCO and SMI's existing Certificates of Incorporation, as
amended and in effect, or the Bylaws of AZCO and SMI or of any mortgage,
indenture, lease, agreement or other instrument, permit, concession, grant,
franchise or license to which AZCO and SMI are a party or by which it or its
properties are bound, (iii) violate any law, ordinance, rule, regulation,
judgment, order or decree applicable to AZCO and SMI, or (iv) result in the
creation of any security interest, claim, lien, charge or encumbrance upon any
of the Shares, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation or security interests
would not have a material adverse effect on the financial condition of AZCO and
SMI or on the ability of the Parties to consummate the transaction contemplated
herein.
4.5 SUBSIDIARIES. Except for the ownership of all of the issued and
outstanding Common Stock of SMI, a Delaware corporation, and as otherwise
disclosed in the AZCO SEC filings, AZCO has no other subsidiary corporation or
other entity in which it has an ownership interest. Except as disclosed in AZCO
SEC filings, there is no corporation that is a member of the same "controlled
group of corporations" of AZCO and SMI, as determined under Section 1563(a) of
the Code.
4.6 CORPORATE DOCUMENTS. Complete and correct copies of the
Certificates of Incorporation of AZCO and SMI and all amendments thereto,
certified by the Secretary of AZCO, and of the Bylaws of AZCO and SMI, as
amended, certified by the Secretary of AZCO and SMI, have been furnished to
AMPI, and no amendments to the Certificate of Incorporation or the Bylaws have
been adopted subsequent to said furnishing. AZCO and SMI are not in default in
the performance, observation or fulfillment of their Certificates of
Incorporation or Bylaws. The minute books of SMI have been furnished to AMPI to
the extent available. The minute books of SMI accurately reflect all material
transactions and corporate events involving SMI and all material actions taken
by the directors and/or the shareholders of SMI. All material actions taken by
SMI requiring director and/or shareholder approval were duly approved by the
directors and/or the shareholders of SMI in accordance with SMI's Certificates
of Incorporation, Bylaws and applicable law.
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4.7 FINANCIAL STATEMENTS. The audited consolidated balance sheets of
AZCO and SMI as of the end of its latest fiscal year and related statement of
earnings for the twelve-month period then ending as reported by the independent
certified public accountant and the unaudited balance sheets as of September 30,
1998, and the related statement of earnings for the year-to-date period then
ended, are complete and correct and fairly represent the financial condition of
AZCO and SMI as of the dates thereof, and the results of AZCO and SMI for the
periods then ended in conformity with generally accepted accounting principles
applied on a basis consistent with that of preceding periods.
Since the close of the latest fiscal year, there has not been any
material adverse change in the business or financial condition of AZCO or SMI,
taken as a whole from that shown on the unaudited financial statements as of
September 30, 1998.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMPI
AMPI and each AMPI Shareholder represent and warrant to SMI and AZCO as
of the date of the execution of this Agreement, as of the Closing Date, and as
of the Effective Date as set forth in this Article V. AMPI and the AMPI
Shareholders incorporate by reference AMPI's November 30, 1998 Financial
Statement prepared by ▇▇▇▇▇▇▇ ▇▇▇▇, CPA, and agrees at Closing to update and
correct said Financial Statement if any material event has occurred after
November 30, 1998.
The parties acknowledge that the information set forth in the AMPI
Financial Statement provides adequate assurance for the Board of Directors of
AZCO and SMI to rely upon in entering into this merger. Accordingly, AMPI and
the AMPI Shareholders make no further warranty or representation other than as
set forth in this Article and as set forth in the November 30, 1998 Financial
Statement.
5.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. AMPI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arizona and is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required except where the lack of such qualification would not have a material
adverse effect on the financial condition of AMPI. AMPI has full corporate power
and authority to carry on the business in which it is engaged and to own and use
the Properties owned by it.
5.2 AUTHORIZED AND OUTSTANDING STOCK. AMPI's authorized capital stock
consists of 10,000 shares of capital stock of no par value Common Stock, of
which 3,000 shares are issued and outstanding as of the Effective Date. All
outstanding shares of AMPI have been duly authorized and validly issued, fully
paid, nonassessable and issued in full compliance with the preemptive rights of
any existing shareholders and in full compliance with all applicable federal and
state securities laws.
No shares of AMPI's capital stock have been reserved for issuance for
any purposes, and there are no outstanding rights, subscriptions, warrants,
options, conversion rights, commitments or
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agreements of any kind outstanding to purchase or otherwise acquire from AMPI,
or to cause AMPI to issue or purchase, any shares of its capital stock, or
securities or obligations of any kind convertible into, exchangeable for, or
evidencing the right to acquire any shares of capital stock, other than set
forth in Exhibit D, and no additional shares, rights or warrants of AMPI shall
be issued from November 30, 1998 to the date of Closing.
5.3 NECESSARY AUTHORITY. AMPI has all requisite corporate power and
authority to enter into, deliver and perform this Agreement and to consummate
the transactions contemplated herein. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary action on the part of AMPI's Board of
Directors and Shareholders. This Agreement has been duly executed and delivered
by AMPI and constitutes its valid and legally binding obligation, enforceable
against AMPI in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect, and subject to the
availability of equitable remedies.
5.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement by AMPI and its consummation of the transactions contemplated herein,
do not and will not (i) require the consent, approval, authorization, order,
filing, registration or qualification of or with any court, governmental
authority or third person, except that which already has been obtained, (ii)
conflict with or result in any violation of or default under any provision of
AMPI's existing Certificate of Incorporation, as amended and in effect, or the
Bylaws of AMPI or of any mortgage, indenture, lease agreement, or other
instrument, permit, concession, grant, franchise or license to which AMPI is a
party or by which it is bound, (iii) violate any law, ordinance, rule,
regulation, judgment, order or decree applicable to AMPI, or (iv) result in the
creation of any security interest, claim, lien, charge or encumbrance upon any
property or the Shares, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation or security interests
would not have a material adverse effect on the financial condition of AMPI or
on the ability of the Parties to consummate the transaction contemplated herein.
5.5 SUBSIDIARIES. AMPI has no subsidiary corporation or other entity in
which it has an ownership interest. There is no corporation that is a member of
the same "controlled group of corporations" as AMPI, as determined under Section
1563(a) of the Code.
5.6 CORPORATE DOCUMENTS. Complete and correct copies of the Certificate
of Incorporation of AMPI and all amendments thereto, certified by the Secretary
of State of Arizona, and of the Bylaws of AMPI, as amended, certified by the
Secretary of AMPI, are being furnished to SMI, and no amendments to the
Certificate of Incorporation or the Bylaws will be adopted subsequent to said
furnishing. AMPI is not in default in the performance, observation or
fulfillment of its Certificate of Incorporation or Bylaws. The minute books of
AMPI have been furnished to SMI. The minute book accurately reflects all
material transactions and corporate events involving AMPI and all material
actions taken by the directors and/or the shareholders of AMPI. All material
actions taken by AMPI requiring director and/or shareholder approval were duly
approved by the directors and/or the shareholders of AMPI in accordance with
AMPI's Certificate of Incorporation, Bylaws and applicable law.
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5.7 FINANCIAL STATEMENTS. AMPI is newly incorporated and the November
30, 1998 financial statement is accurate. AMPI has no liabilities, commitments
or obligations of any nature, whether absolute, accrued, contingent, known or
unknown, due, or to become due, or otherwise.
5.8 LITIGATION. Except as set forth on Exhibit E, there is no legal,
administrative, arbitration or other proceedings, claim, or action of any nature
or investigation pending or threatened against or involving AMPI, or which
questions or challenges the validity of this Agreement, or any action taken or
to be taken by AMPI pursuant to this Agreement, or in connection with the
transactions contemplated hereby; and AMPI and the AMPI shareholders do not
know, nor have any reason to know, of any valid basis for any such legal,
administrative, arbitration or other proceeding, claim or action of any nature
or investigation. AMPI is not subject to any judgment, order or decree entered
in any lawsuit or proceeding which has had an adverse effect on its business or
on its ability to acquire any property or conduct its business in any area.
5.9 TAX RETURNS. AMPI has duly filed all federal, state, local and
foreign tax reports and returns required to be filed by it and, except as set
forth in Exhibit F, has duly paid all taxes and other charges due or claimed to
be due from it by federal, state, local or foreign taxing authorities; the
reserves for taxes reflected in the AMPI Balance Sheet as of November 30, 1998
are adequate; and there are no tax liens upon any property or assets of AMPI.
5.10 CONTRACTS. Except for the agreements listed in Exhibit G, copies
of which have been furnished or made available to SMI, AMPI is not a party to,
and its property is not bound by, any agreement, indenture, mortgage, deed of
trust, lease, joint venture agreement, partnership agreement, or any other
arrangement of any kind or nature. There is no default or event that with notice
or lapse of time, or both, would constitute a default by any Party to any of the
agreements listed in Exhibit G. Except as listed in Exhibit G, AMPI has not
received notice that any part to any of these agreements intends to cancel,
terminate or modify any of these agreements or to exercise or not to exercise
any options under any of these agreements.
5.11 PERMITS AND OTHER OPERATING RIGHTS. AMPI does not require the
consent of any third person to permit it to operate its business in the manner
in which it presently is being conducted, and possesses all permits and other
authorizations from third persons, including without limitation, federal,
foreign, state and local governmental authorities, presently required by
applicable provisions of law, including statutes, regulations and existing
judicial decisions, and by the property and contract rights of third persons,
necessary to permit it to operate its business in the manner in which it
presently is being conducted.
5.12 COMPLIANCE WITH LAW. AMPI is in compliance with all laws,
regulations and orders applicable to its business, including, without
limitation, applicable environmental, anti-pollution, building, zoning or health
laws, ordinances and regulations in respect of its structures and equipment.
AMPI has not received any notification that it is in violation of any such laws,
regulations or orders and no such violations exist.
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5.13 MINERAL EXPLORATION DATA. AMPI and the AMPI Shareholders have
provided SMI with accurate and complete copies of all drill logs and any other
data relating to the mineral exploration of AMPI's property that is in the
possession of AMPI or any of the AMPI shareholders.
5.14 REAL PROPERTY. Exhibit H sets forth all interests in real property
(the "Properties") held by AMPI. With respect to any Properties AMPI owns in fee
simple, if any, AMPI is in exclusive possession of and owns such Properties free
and clear of all defects, liens and encumbrances except those specifically
identified on Exhibit H.
5.15 INTERESTS IN CONTRACTS. With respect to those Properties in which
AMPI holds an interest under contracts: (i) AMPI is in exclusive possession of
such Properties; (ii) AMPI has not received any notice of default of any of the
terms or provisions of the contracts; (iii) AMPI has the authority under the
contracts to perform fully its obligations under this Agreement; (iv) to the
best of AMPI's knowledge and belief, the contracts are valid and are in good
standing; and (v) to the best of AMPI's knowledge and belief, the Properties
covered thereby are free and clear of all defects, liens and encumbrances except
for those specifically identified on Exhibit H or in such contracts. AMPI has
delivered to SMI all information concerning title to the Properties in AMPI's
possession or control, including, but not limited to, true and correct copies of
all contracts relating to the Properties of which AMPI has knowledge.
5.16 MINING CLAIMS. With respect to unpatented mining claims that are
included within the Properties, whether owned outright or held under lease or
other contractual arrangement, except as provided in Exhibit H and subject to
the paramount title of the United States: (i) the unpatented mining claims were
properly laid out and monumented; (ii) all required location and validation work
was properly performed; (iii) location notices and certificates were properly
recorded and filed with appropriate governmental agencies; (iv) all assessment
work or maintenance fees required to hold the unpatented mining claims has been
performed in a manner consistent with that required of the owner of the claim
through the assessment year ending on or before September 1, 1998; (v) all
affidavits of assessment work, maintenance fees, and other filings to maintain
the claims in good standing have been properly recorded or filed with
appropriate governmental agencies; (vi) the claims are free and clear of
defects, liens and encumbrances arising by, through or under AMPI; and (vii)
AMPI has no knowledge of conflicting unpatented mining claims. Nothing in this
Section 5.16, however, shall be deemed to be a representation or a warranty that
each of the unpatented mining claims has a discovery of minerals within its
respective boundaries. With respect to those unpatented mining claims that were
not located by AMPI or an affiliate of AMPI, but are included within the
properties, AMPI makes the foregoing representations and warranties (with the
foregoing exceptions) to the best of its knowledge and belief.
5.17 PERSONAL PROPERTY. Exhibit I to this Agreement is a complete and
accurate schedule specifying the location of and describing all trucks,
automobiles, machinery, equipment, furniture, and all other items of tangible
personal property having an individual fair market value in excess of $1,000
owned by, and in the possession of, or used by AMPI in connection with its
business. The Property listed in Exhibit I constitutes all such property
necessary for the conduct by AMPI of its business as now conducted, subject to
normal maintenance, repair or replacement of such items in accordance with
AMPI's business practices. Except as stated in Exhibit I, no personal property
listed
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in Exhibit I is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located other
than in the possession of AMPI. All of AMPI's interests in tangible and
intangible personal property are free and clear of restrictions on or conditions
to transfer or assignment, and free and clear of liens, pledges, charges,
encumbrances, equities, claims, conditions, or restrictions, except for (i)
those disclosed in AMPI's balance sheet as of November 30, 1998 that is included
in the AMPI financial statements, or in Exhibit I to this Agreement; (ii) the
lien for current taxes not yet due and payable; and (iii) matters that, in the
aggregate, are not substantial in amount and do not materially detract from or
interfere with the present or intended use of these assets, or materially impair
the business operations of AMPI. All tangible personal property of AMPI is in
good operating condition and repair, ordinary wear and tear excepted. No
officer, director, or employee of AMPI, nor any spouse, child, or other member
of the immediate family of any of these persons, owns, or has an interest,
directly or indirectly, in any of the personal property owned by or leased to
AMPI.
ARTICLE VI
AMPI SHAREHOLDER SECURITIES REPRESENTATIONS
6.1 Each AMPI Shareholder hereby represents and warrants that he is not
acquiring the shares of the common stock of AZCO (the "Securities") in
connection with the Merger with the present intention of selling, offering to
sell or otherwise disposing of or distributing the Securities or any portion
thereof in any transaction other than a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Act"). Each AMPI Shareholder
also represents that the entire legal and beneficial interest of the Securities
the AMPI Shareholder is acquiring is being acquired for, and will be held for
the account of, the AMPI Shareholder only and neither in whole nor in part for
any other person.
6.2 Each AMPI Shareholder represents and warrants that he understand
that:
(a) neither the sale of the Securities which he is acquiring
nor the Securities themselves has been registered under the Act or any
state securities laws, and the Securities must be held indefinitely
unless subsequently registered under the Act or an exemption from such
registration is available; and
(b) the share certificate representing the Securities will be
stamped with the following legend (or substantially equivalent
language) restricting transfer: "The securities represented by this
certificate have not been registered under the Securities Act of 1933
or the laws of any state and have been issued pursuant to an exemption
from registration pertaining to such securities and pursuant to a
representation by the security holder named hereon that said securities
have been acquired for purposes of investment and not for purposes of
distribution. These securities may not be offered, sold, transferred,
pledged or hypothecated in the absence of registration, or the
availability of an exception from such registration. Furthermore, no
offer, sale, transfer, pledge or hypothecation is to take place without
the prior written approval of counsel to the issuer being affixed to
this certificate. The stock transfer agent has been ordered to
effectuate transfers of this certificate only in accordance with the
above instructions."
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6.3 Each AMPI Shareholder represents and warrants that he realizes that
his acquisition of the Securities will be a highly speculative investment and
that he is able, without impairing his financial condition, to hold the
Securities for an indefinite period of time.
6.4 Each AMPI Shareholder hereby acknowledges that, to his
satisfaction, (i) he has either had access to or has been furnished with all of
the information regarding AZCO and the terms of his acquisition of the
Securities to his satisfaction, (ii) he has discussed the entire investment
transaction and the information described in clause (i) above with
representatives of AZCO, (iii) he has been provided the opportunity to ask
questions concerning this transaction and the terms and conditions thereof and
all such questions have been answered to his satisfaction, (iv) he has obtained
all additional information which he deems necessary to verify the accuracy of
the information previously disclosed or provided to him, and (v) he has had
ready access to and an opportunity to review any and all documents which he
deems relevant to this transaction, and no information, oral or written, that he
has requested has been withheld by AZCO.
6.5 Without in any way limiting the representations set forth above,
each AMPI Shareholder further agrees that he shall in no event make any
disposition of all or any portion of the Securities which he is acquiring unless
and until:
(a) there is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(b) (1) he shall have notified AZCO of the proposed
disposition and shall have furnished AZCO with a detailed statement of
the circumstances surrounding the proposed disposition, (2) he shall
have furnished AZCO with an opinion of his own counsel to the effect
that such disposition will not require registration of such shares
under the Act, and (3) such opinion of his counsel shall have been
concurred in by counsel for AZCO and AZCO shall have advised him of
such concurrence.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 COVENANTS. The parties agree as follows with respect to the period
from and after the execution of the Agreement until Closing:
(a) GENERAL. Each of the parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver,
of the closing conditions set forth in Article VIII below).
(b) NOTICES AND CONSENTS. SMI shall give any notices to third
parties, and will use its reasonable best efforts to obtain any third
party consents, that AMPI reasonably may request in connection with the
matters referred to in this Agreement.
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AMPI shall give any notices to third parties, and will use its
reasonable best efforts to obtain any third party consents, that SMI reasonably
may request in connection with the matters referred to in this Agreement.
(c) OPERATION OF BUSINESS. Except as disclosed in the
Exhibits, each Party will not (and will not cause or permit any of its
subsidiaries to) engage in any practice, take any action, or enter into
any transaction outside the ordinary course of business. Without
limiting the generality of the foregoing:
(1) Neither of the parties will authorize or effect
any change in their charters or bylaws;
(2) Neither of the parties will grant any options,
warrants, or other rights to purchase or obtain any of their
capital stock, or issue, sell, or otherwise dispose of any of
its capital stock;
(3) Neither of the parties will declare, set aside,
or pay any dividend or distribution with respect to their
capital stock (whether in cash or in kind), or redeem,
repurchase, or otherwise acquire any of its capital stock;
(4) Neither of the parties will issue any note, bond,
or other debt security or create, incur, assume, or guarantee
any indebtedness for borrowed money or capitalized lease
obligation outside the ordinary course of business;
(5) Neither of the parties will impose any security
interest upon any of its assets outside the ordinary course of
business;
(6) Neither of the parties will make any capital
investment in, make any loan to, or acquire the securities or
assets of any other Person outside the ordinary course of
business;
(7) Neither of the parties will make any change in
employment terms for any of its directors, officers, and
employees outside the ordinary course of business; and
(8) Neither of the parties will commit to any of the
foregoing.
(d) FULL ACCESS. Each Party will permit representatives of the
other Party to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of
the Party being reviewed to all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or
pertaining to each of the parties and their subsidiaries. The parties
will treat and hold as such any confidential information it receives
from the other. The parties will treat and hold as such any
confidential
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information it receives from any of the parties in the course of the
reviews contemplated by this paragraph, will not use any of the
confidential information except in connection with this merger.
(e) NOTICE OF DEVELOPMENTS. Each Party will give prompt
written notice to the other of any material adverse development causing
a breach of any of its own representations and warranties in the
previous two Articles above. No disclosure by any Party pursuant to
this paragraph, however, shall be deemed to amend or supplement the
Exhibits or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
ARTICLE VIII
OBLIGATION TO CLOSE: CONDITIONS
8.1 CONDITIONS TO OBLIGATION OF AMPI TO CLOSE. The obligation of AMPI
and its Shareholders to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) SMI and its subsidiaries shall have procured any third
party consents specified in this Agreement;
(b) The representations and warranties of SMI or AZCO set
forth in Article IV above shall be true and correct in all material
respects at and as of the Closing Date;
(c) SMI shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(d) SMI shall have delivered to AMPI a certificate to the
effect that each of the conditions specified above in Section 8.1(b)
and (c) is satisfied in all respects;
(f) AMPI shall have received from counsel to SMI an opinion in
form and substance as set forth in Exhibit J attached hereto; addressed
to AMPI, and dated as of the Closing Date; and
(g) All actions to be taken by SMI in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to AMPI.
8.2 CONDITIONS TO OBLIGATION OF SMI TO CLOSE. The obligation of SMI to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) This Agreement and the Merger shall have received any
requisite AZCO stockholder approval;
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(b) The representations and warranties of AMPI and the AMPI
Shareholders set forth in Article V above shall be true and correct in
all material respects at and as of the Closing Date unless rejected by
the Board of Directors of SMI;
(c) AMPI and the AMPI Shareholders shall have performed and
complied with all of their covenants hereunder in all material respects
through the Closing;
(d) AMPI and the AMPI Shareholders shall have delivered to SMI
a certificate to the effect that each of the conditions specified above
in Section 8.2(b) and (c) is satisfied in all respects;
(e) SMI shall have received from counsel to AMPI an opinion in
form and substance as set forth in Exhibit K attached hereto, addressed
to SMI, and dated as of the Closing Date;
(f) All actions to be taken by AMPI in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to SMI.
(g) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (a) prevent consummation of any of the
transactions contemplated by this Agreement, (b) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (c) affect adversely the right of the Surviving
Corporation to own the former assets, to operate the former businesses,
or (d) there shall not be any judgment, order, decree, stipulation,
injunction, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(h) AMPI and the AMPI Shareholders shall have procured any
third party consents specified in this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF AZCO, SMI,
AMPI AND AMPI'S SHAREHOLDERS. Except as otherwise specifically provided herein,
the representations, warranties of AZCO, SMI, AMPI and AMPI's Shareholders shall
survive the Effective Date unless the context clearly indicates to the contrary
and shall continue in full force and effect.
9.2 INDEMNITY OF AZCO, SMI, AMPI SHAREHOLDERS AND AMPI. The parties,
jointly and severally and on a pro rata basis, agree to and shall indemnify each
other against any and all loss, damage or expense, resulting from any
misrepresentation made or breach of warranty given or
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15
covenant made in this Agreement or any of the schedules or Exhibits hereto, as
well as from and against all debts, claims and liabilities of the parties which
have arisen or may arise because of, or as a result of, any fact, event or
transaction existing, or claim before or after the Effective Date, regardless of
when the cause of action therefor shall be deemed to arise except for:
(a) Any such debt, claim or liability which may be included as
a liability in the financial statements (including balance sheets) (to
the extent of the amount thereof included); and
(b) Current liabilities incurred by SMI and AMPI in the
ordinary and usual course of business between November 30, 1998 and the
Effective Date (provided that such liabilities in the aggregate do not
exceed Five Thousand Dollars ($5,000); and
AMPI's Shareholders expressly waive any defense under the
applicable Statute of Limitations with respect to the period during which
indemnity of any claim by SMI hereunder if such Statutes of Limitations are
inconsistent with the time periods established in this Agreement.
ARTICLE X
TERMINATION
10.1 TERMINATION OF AGREEMENT. Either of the Parties may terminate this
Agreement with the prior authorization of its Board of Directors (whether before
or after stockholder approval) as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Date;
(b) SMI may terminate this Agreement by giving written notice
to AMPI at any time prior to the Effective Date (a) in the event AMPI
has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, SMI has notified
AMPI of this breach, and the breach has continued without cure for a
period of thirty (30) days after the notice of breach or (b) if the
Closing shall not have occurred on or before March 1, 1999, unless the
failure to close results primarily from SMI or any SMI SHAREHOLDER
breaching any representation, warranty, or covenant contained in this
Agreement; and
(c) AMPI may terminate this Agreement by giving written notice
to SMI at any time prior to the Effective Date (a) in the event SMI has
breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, AMPI has notified SMI of the
Breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach or (b) if the Closing shall
not have occurred on or before March 1, 1999, unless the failure to
close results primarily from AMPI breaching any representation,
warranty, or covenant contained in this Agreement.
10.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to this Article, all rights and obligations of the Parties hereunder
shall terminate without any liability of any
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Party to any other Party (except for any liability of any Party then in breach).
However, AZCO shall have the right, but not the obligation, to own an undivided
twenty percent (20%) of the existing forty-three (43) mining claims included in
the Properties and AMPI and the AMPI Shareholders shall take such actions as are
reasonably required to effect such transfer.
ARTICLE XI
MISCELLANEOUS
11.1 EXECUTION OF COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same document.
11.2 NOTICES. All notices which are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be sufficient in
all respects if delivered personally or by registered or certified mail, postage
prepaid, as follows:
If to SMI: ▇▇▇▇▇▇▇ Mining, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
P. O. Box 1895
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to AZCO: Azco Mining, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
P. O. Box 1895
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and a copy to: ▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to AMPI to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Arizona Mica Properties, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇
Arizona Mica Properties, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. Bleak
Arizona Mica Properties, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇, P.L.C.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as shall be furnished in like manner by any Party to
the others. Any such notice shall be deemed to have been given, received and
become effective for all purposes at the time it shall have been (i) delivered
to the addressee as indicated by the return receipt (if transmitted by mail) or
the affidavit of the messenger (if transmitted by personal delivery), or (ii)
presented for delivery to the addressee as so indicated during normal business
hours, if such delivery shall have been refused for any reason.
11.3 ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and assigns. No Party shall assign any of its rights or obligations
hereunder without the prior written consent of the other parties.
11.4 APPLICABLE LAWS. This Agreement shall be construed and governed by
the internal laws, and not the law of conflicts, of Arizona to agreements made
and to be performed in Arizona.
11.5 ENTIRE AGREEMENT. This Agreement, together with the Schedules and
Exhibits attached hereto, constitutes the entire agreement among the Parties
hereto, and no Party hereto shall be bound by any communications between them on
the subject matter hereof unless such communications are in writing and bear a
date contemporaneous with or subsequent to the date hereof. Any prior written
agreements or letters of intent among the Parties shall, upon the execution of
this Agreement, be null and void.
11.6 HEADINGS. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof or affect
the meaning or interpretation hereof.
11.7 REPRESENTATIONS AS TO COMPLIANCE WITH LAW. Whenever a
representation or warranty is made herein with respect to compliance with any
law, that representation means the applicable subject matter is in compliance
with applicable statutes, regulations and ordinances as in existence on the date
hereof and on the Closing Date and does not extend to any amendments or
revisions of such laws adopted subsequent to such dates.
11.8 WAIVER, DISCHARGE, ETC. This Agreement may not be released,
discharged or modified except by an instrument in writing signed on behalf of
each of the parties hereto. The failure of a Party to enforce any provision of
this Agreement shall not be deemed a waiver by such Party of any other provision
or subsequent breach of the same or any other obligation hereunder.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the 9th day of March, 1999.
ARIZONA MICA PROPERTIES, INC., AZCO MINING, INC., a Delaware corporation
an Arizona corporation
By____________________________ By__________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Its:________________________________
ARIZONA MICA PROPERTIES, INC. ▇▇▇▇▇▇▇ MINING, INC., a Delaware
SHAREHOLDERS: corporation
By____________________________ By___________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as an individual
Its:_________________________________
By____________________________
▇▇▇▇ ▇. ▇▇▇,
as an individual
By____________________________
▇▇▇▇▇ ▇. Bleak,
as an individual
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