AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this 15th day
of December 2000, between ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
(hereafter "POCO"); Computer Assisted Learning and Instruction, Inc., a Utah
corporation (hereafter "CALI"); and the Shareholders of Computer Assisted
Learning and Instruction (hereafter "Shareholders").
POCO wishes to acquire one hundred percent (100%) of CALI's issued and
outstanding stock for and in exchange for POCO stock, in a stock for stock
transaction intending to qualify as a tax- free exchange pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. The
parties intend for this Plan to represent the terms and conditions of such
tax-free reorganization, which Plan the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section One
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the Shareholders
agree to, and to cause CALI to assign, transfer, and deliver to POCO, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known
claims of any kind, nature or description, all of their CALI shares, and POCO
agrees to acquire said shares on the date thereof, or as soon as practicable
thereafter, by issuing and delivering in exchange therefore solely common
shares of POCO's stock, par value $0.00001, in the aggregate 11,550,000
shares, of the then issued and outstanding shares of POCO, subject to the
provisions of this Plan. Such shares will represent approximately
seventy-seven percent (77%) of POCO's issued and outstanding shares. Upon the
consummation of the transaction contemplated herein, CALI shall merge with and
into POCO, and POCO will be the surviving corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the
number of POCO shares to be issued and delivered pursuant to this Plan shall
be appropriately adjusted to take into account any stock split, stock
dividend, reverse stock split, re-capitalization or similar change in POCO
common stock that may occur between the date of the execution of this Plan and
the date of the delivery of certificates representing shares of POCO common
stock in accordance with Section 1.3 hereof.
1.3 Delivery of Certificates. At the closing provided for in
Section 2 (the "Closing"), the Shareholders shall transfer to POCO the shares
of CALI common stock listed opposite their respective names on Exhibit A
hereto (the "CALI Shares") in exchange for shares of the common stock of POCO
as outlined above in Section 1.1 hereof (the "POCO Stock"). All of such shares
of POCO Stock shall be issued at the closing to the Shareholders, in the
numbers shown opposite their respective names in Exhibit A. The transfer of
CALI Shares by the Shareholders shall be effected by the delivery to POCO at
the Closing of such documents as counsel for POCO deems reasonably necessary
and appropriate.
1.4 Further Assurances. Subsequent to the execution hereof and
from time to time thereafter, the parties hereto shall execute such additional
instruments and take such other action as any of the patties may request in
order to more effectively effect the transactions described herein.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held
at the offices of Carriage House Capital, LLC, on or before the 31st day of
January 2001, or at such other time or place as may be mutually agreed upon in
writing by the parties (the "Closing Date"). The Closing may also be
accomplished by wire, express mail or other courier service, conference
telephone communications or as otherwise agreed by the respective parties or
their duly authorized representatives. In any event, the closing of the
transactions contemplated by this Plan shall be effected as soon as
practicable after all of the conditions contained herein have been satisfied.
2.2 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence
the transaction contemplated hereby. At the Closing, the following events will
take place:
(a) The Board of Directors and the owners of a majority of the
issued and outstanding stock of POCO will adopt a resolution to change the
name of POCO to "English Language Learning and Instruction System, Inc."
(b) The current members of the Board of Directors of POCO shall
resign and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇ shall comprise the Board of Directors of the surviving corporation.
(c) The current officers of POCO shall submit their resignations
and the Board will appoint the following officers: President/Chief Executive
Officer; Vice-President/Chief Operations Officer; Director of Sales, Chief
Financial Officer; and Director of Marketing.
Section 3
Representations, Warranties and Covenants of POCO
POCO represents and warrants to, and covenants with both CALI and each
of its Shareholders as follows:
3.1 Corporate Status. POCO is a corporation duly organized,
validly existing and in good standing in the State of Delaware. POCO has full
corporate power and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, and there is
no jurisdiction in which the character and location of the assets owned by it,
or the nature of the business transacted by it, requires qualification.
Included in the POCO schedules (defined below) are complete and correct copies
of its Certificate of Incorporation and Bylaws as in effect on the date
hereof. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of POCO's Certificate of Incorporation or Bylaws. POCO has taken all
action required by law, its Certificate of Incorporation, its Bylaws or
otherwise, to authorize the execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of POCO as of the
date hereof consists of 20,000,000 common shares, par value $0.00001, and
50,000,000 preferred shares, par value $0.00001. The common shares of POCO
issued and outstanding are fully paid, non-assessable shares. There are no
outstanding options, warrants, obligations convertible into shares of stock,
or calls or any understanding, agreements, commitments, contracts or promises
with respect to the issuance of POCO's common stock or with regard to any
options, warrants or other contractual rights to acquire any of POCO's
authorized but unissued common shares. As of the date hereof, there are
11,049,045 common shares of POCO issued and outstanding. There are 11,550,000
shares held in escrow in contemplation of the execution of this Plan.
3.3 Financial Statements.
(a) POCO hereby warrants and covenants to CALI that the financial
statements through September 30, 2000 fairly and accurately represent the
financial condition of POCO and that no material change has occurred in POCO's
financial condition since the issuance of such financial statements, except as
otherwise set forth herein.
(b) POCO hereby warrants and represents that the financial
statements for the periods set forth in subparagraph (a), supra, fairly and
accurately represent the financial condition of POCO as submitted heretofore
to CALI for examination and review.
3.4 Conduct of Business. POCO is a holding company that owns all
of the outstanding and issued common stock of New ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
(hereafter "New Politics"), a Nevada corporation engaged in the business of
owning, maintaining and operating the website "▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇."
POCO will use its best efforts to maintain and preserve its business
organization, employee relationships and goodwill, and will not, without
CALI's prior written consent, enter into any material commitments except as
set forth below or in the ordinary course of business.
POCO will conduct itself in the following manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. The Company will
amend its Certificate of Incorporation to provide that its Board of Directors
shall have four (4) members, and to further provide that its name shall be
changed to "English Language Learning and Instruction System, Inc."
(b) Capitalization, etc. Except as set forth in Section
3.4(c), POCO will not make any change in its authorized or issued shares of
any class, declare or pay any dividend or other distribution, or issue,
encumber, purchase or otherwise acquire any of its shares of any class of
stock.
(c) Spin Off. POCO will distribute its ownership interest in
New Politics to the shareholders of POCO on or before the Closing Date.
3.5 Options, Warrants and Rights. POCO has no options, warrants or
stock appreciation rights related to the authorized but unissued POCO common
stock. There are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued POCO common stock, except
options, warrants, calls, or commitments, if any, to which POCO is not a party
and by which it is not bound.
3.6 Title to Property. POCO has good and marketable title to all
of its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of POCO, and the properties and assets
of POCO are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements.
3.7 Litigation. Other than as set forth under Schedule 3.7 hereto,
there are no material actions, suits, or proceedings, pending, or, to the best
knowledge of POCO, threatened by or against or affecting POCO at law or in
equity, or before any governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. POCO does not have any
knowledge of any default on its part with respect to any judgment, order,
writ, injunction, decree, warrant, rule, or regulation of any court,
arbitrator, or governmental agency or instrumentality.
3.8 Books and Records. From the date hereof and for any reasonable
period subsequent hereto, POCO and its present management will (i) give to the
Shareholders and CALI, or their duly authorized representatives, full access,
during normal business hours, to all of its books, records, contracts and
other corporate documents and properties so that the Shareholders and CALI, or
their duly authorized representatives, may inspect them; and, (ii) furnish
such information concerning the properties and affairs of POCO as the
Shareholders and CALI, or their duly authorized representatives, may
reasonably request. Any such request to inspect POCO books shall be directed
to ▇▇▇▇▇▇ ▇▇▇▇, at the address set forth herein under Section 9.4 (Notices).
3.9 Confidentiality. Until the Closing (and thereafter if there is
no Closing), POCO and its representatives will keep confidential any
information which they obtain from the Shareholders or from CALI concerning
its properties, assets and the proposed business operations of CALI. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on January 31, 2001, or are otherwise
waived or extended in writing to a date mutually agreeable to the parties
hereto, POCO will return to CALI all written matter relating to CALI obtained
in connection with the negotiations or consummation of this Plan.
3.10 Conflict with Other Instruments. The consummation of the
transactions contemplated by this Plan will not result in the breach of any
term or provision of, or constitute a default under any indenture, mortgage,
deed of trust, or other material agreements or instrument to which POCO was or
is a party, or to which any of its assets or operations are subject, and will
not conflict with any provision of the Certificate of Incorporation or Bylaws
of POCO.
3.11 Corporate Authority. POCO has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder,
and will deliver to CALI or its representatives at the Closing, a certified
copy of resolutions of its Board of Directors authorizing execution of this
Plan by its officers.
3.12 Consent of Shareholders. POCO hereby warrants and represents
that it has received the approval of the holders of not less than sixty-seven
percent (67%) of its issued and outstanding common stock to execute this Plan.
3.13 Special Covenants and Representations Regarding the Issuance
of POCO Stock. The consummation of this Plan and the transactions herein
contemplated include the issuance of POCO shares to the Shareholders, which
constitutes an offer and sale of securities under the Securities Act of 1933,
as amended, and applicable state securities laws. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
requirements of such statutes that depend interlace on the circumstances under
which the Shareholders acquire such securities. In connection with the
reliance on exemptions from the registration and prospectus delivery
requirements for such transactions, at the Closing, each Shareholder shall
cause to be delivered to POCO a Letter(s) of Investment Intent in the form
attached hereto as Exhibit B and incorporated herein by reference.
3.14 Undisclosed or Contingent Liabilities. POCO hereby represents
and warrants that it has no undisclosed or contingent liabilities which have
not been previously disclosed to CALI in writing or in this Agreement or in
any Exhibit attached hereto.
3.15 Information. The information concerning POCO set forth in
this Plan, and the POCO schedules attached hereto, are complete and accurate
in all material respects and do not contain, and will not contain, when
delivered, any inaccurate statement(s) of material fact, or omit any material
fact whose omission would be misleading to CALI in connection with this Plan.
3.16 Contracts or Agreements. POCO is not bound by any material
contracts, agreements or obligations that it has not previously disclosed to
CALI in writing or in this Agreement or in any Exhibit attached hereto.
3.17 Governmental Authorizations. POCO has all licenses,
franchises, permits and other government authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof.
3.18 Compliance with Laws and Regulations. POCO has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of POCO or except to the extent
that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to CALI.
3.19 Approval of Plan. The Board of Directors of POCO has
authorized the execution and delivery of this Plan by POCO and has approved
the Plan and the transactions contemplated hereby. POCO has full power,
authority, and legal right to enter into this Plan and to consummate the
transactions contemplated hereby.
3.20 Obligations. POCO is not aware of any outstanding obligations
to any of its employees or consultants as of the Closing.
3.21 POCO Schedules. POCO has delivered to CALI the following
items listed below, hereafter referred to as the "POCO Schedules," which is
hereby incorporated by reference and made a part hereof. A certification
executed by a duly authorized officer of POCO is executed concurrently with
this Plan to certify that the POCO Schedules are true and correct.
(a) Copies of Certificate of Incorporation, including any
amendments, and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) Officers' Certificate as required under Section 6.2 of
Plan;
(g) Opinion of counsel as required under Section 6.4 of Plan;
(h) Certificate of Good Standing.
Section 4
Representations, Warranties and Covenants of CALI and the Shareholders
CALI and the Shareholders represent and warrant to, and covenant with
POCO, as follows:
4.1 Corporate Status. CALI is a corporation duly organized,
validly existing under the laws of The State of Utah, incorporated on April
11, 1994. CALI has full corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances
and orders of public authorities to own all of its properties and assets and
to carry on its business in all material respects as it is now being
conducted, and there is no jurisdiction in which the character and location of
the assets owned by CALI, or the nature of the business it transacts, requires
qualification. Included in the CALI schedules (defined below) are complete and
correct copies of its Articles of Incorporation and Bylaws in effect on the
date hereof. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of CALI's Articles of Incorporation or Bylaws. CALI has taken all
action required by law, its Articles of Incorporation, its Bylaws, or
otherwise, to authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of CALI as of the
date hereof consists of twenty million (20,000,000) common shares, no par
value. As of the date hereof there are 11,550,000 common shares of CALI
issued and outstanding. There are no preferred shares issued and outstanding.
The foregoing shares are fully paid, non-assessable shares. There are no
outstanding options, warrants, obligations convertible into shares of stock,
or calls or any understanding, agreements, commitments, contracts or promises
with respect to the issuance of CALI's common stock or with regard to any
options, warrants or other contractual rights to acquire any of CALI's
authorized but unissued common shares.
4.3 Financial Statements.
(a) CALI hereby warrants and covenants to POCO that the audited
financial statements through September 30, 2000 fairly and accurately
represent the financial condition of CALI and that no material change has
occurred in CALI's financial condition.
(b) CALI hereby warrants and represents that the audited
financial statements for the periods set forth in subparagraph (a), supra,
fairly and accurately represent the financial condition of CALI as submitted
heretofore to POCO for examination and review.
4.4 Conduct of Business. CALI is engaged in the business of
developing, marketing and distributing, domestically and internationally, a
series of computer software programs and supporting products to teach English
as a Second Language. CALI will use its best efforts to maintain and preserve
its business organization, employee relationships and goodwill intact and will
not, without POCO's prior written consent, enter into any material commitments
except in the ordinary course of business. CALI agrees that CALI will conduct
itself in the following manner pending the Closing:
(a) Articles of Incorporation and Bylaws. No change will be
made in CALI's Articles of Incorporation or Bylaws.
(b) Capitalization, etc. CALI will not make any change in
its authorized or issued shares of any class of stock, declare or pay any
dividend or other distribution, or issue, encumber, purchase or otherwise
acquire any of its shares of any class of stock.
4.5 Options, Warrants and Rights. CALI has no options, warrants or
stock appreciation rights related to the authorized but unissued CALI common
stock. There are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued CALI common stock, except
for 296,500 of the 11,550,000 CALI shares being exchanged pursuant to this
Plan, which shares are held in treasury by CALI for issuance to employees
pursuant to employee stock option plans.
4.6 Title to Property. CALI has good and marketable title to all
of its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of CALI, and the properties and assets
of CALI are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements.
4.7 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of CALI, threatened by or
against or affecting CALI at law or in equity, or before any governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind. CALI does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, warrant, rule or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
4.8 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, CALI and its present management will (i) give to
POCO, or its duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other corporate
document and properties so that POCO, or their duly authorized
representatives, may inspect them; and, (ii) furnish such information
concerning the properties and affairs of CALI as POCO or its duly authorized
representatives may reasonably request. Any such request to inspect CALI's
books shall be directed to CALI's representative, at the address set forth
herein under Section 9.4 (Notices).
4.9 Confidentiality. Until the Closing (and thereafter if there is
no Closing), CALI and its representatives will keep confidential any
information that they obtain from the Shareholders or from CALI concerning its
properties, assets and the proposed business operations of CALI. If the terms
and conditions of this Plan imposed on the parties hereto are not consummated
on or before 5:00 p.m. MST on January 31, 2001 or otherwise waived or extended
in writing to a date mutually agreeable to the parties hereto, CALI will
return to POCO all written matter relating to POCO obtained in connection with
the negotiations or consummation of this Plan.
4.10 Conflict with Other Instruments. The consummation of the
transactions contemplated under this Plan will not result in the breach of any
term or provision of, or constitute a default under any, indenture, mortgage,
deed of trust, or other material agreement or instrument to which CALI was or
is a party, or to which any of its assets or operations are subject, and will
not conflict with any provision of the Articles of Incorporation or Bylaws of
CALI.
4.11 Corporate Authority. CALI and the Shareholders have full
corporate power and authority to enter into this Plan and to carry out their
obligations hereunder, and will deliver to POCO or its representatives at the
Closing, a certified copy of resolutions of its Board of Directors and
Shareholders authorizing execution of this Plan by its officers.
4.12 Consent of Shareholders. CALI hereby warrants and represents
that the owners of a majority of its issued and outstanding stock consented in
writing to the authorization to execute this Plan.
4.13 Unregistered Shares and Access to Information. CALI and the
Shareholders understand that the offer and sale of POCO shares to be exchanged
for the CALI shares has not been registered with or reviewed by the Securities
and Exchange Commission under the Securities Act of 1933, as amended, or with
or by any state securities law administrator, and no federal or state
securities law administrator has reviewed or approved any disclosure or other
material facts concerning POCO or POCO stock. CALI and the Shareholders have
been provided with and reviewed all information concerning POCO and POCO
stock, to be exchanged for the CALI shares as they have considered necessary
or appropriate as prudent and knowledgeable investors to enable them to make
informed investment decisions concerning the POCO stock, to be exchanged for
the CALI shares. CALI and the Shareholders have made an investigation as to
the merits and risks of their acquisition of the POCO stock to be exchanged
for the CALI shares and have had the opportunity to ask questions of, and have
received satisfactory answers from, the officers and directors of POCO
concerning the POCO stock to be exchanged for the CALI shares and related
matters, and have had an opportunity to obtain additional information
necessary to verify the accuracy of such information and to evaluate the
merits and risks of the proposed acquisition of the POCO stock to be exchanged
for the CALI shares.
4.14 Ownership of Shares. The Shareholders are the beneficial and
record owners, free and clear of any liens and encumbrances, of whatever kind
or nature, of all the shares of CALI of whatever class or series, that the
Shareholders have contracted to exchange.
4.15 Investment Intent. The Shareholders represent and covenant
that they are acquiring the common shares of POCO to be delivered to them
under this Plan for investment purposes, and not with a view to their
subsequent sale or distribution, and as agreed supra, the Shareholders, their
successors and assigns agree to execute and deliver to POCO on the Closing
Date, or, no later than the date on which the restricted shares are issued and
delivered to the Shareholders, their assigns, or designees, an Investment
Letter similar in form to that attached hereto as Exhibit B.
4.16 Undisclosed or Contingent Liabilities. CALI hereby represents
and warrants that it has no undisclosed or contingent liabilities that have
not been previously disclosed to POCO in writing or in this Agreement or in
any Exhibit attached hereto.
4.17 Information. The information concerning CALI set forth in
this Plan, and the CALI schedules attached hereto, are complete and accurate
in all material respects and do not contain, and will not contain, when
delivered, any inaccurate statement(s) of material fact, or omit any material
fact whose omission would be misleading to POCO in connection with this Plan.
4.18 Contracts or Agreements.
(a) Set forth in the CALI Schedules are descriptions of all
material contracts, whether written or oral, agreements, franchises, licenses,
or other commitments to which CALI is a party or by which CALI or its
properties are bound.
(b) Except as may be set forth in the CALI Schedules, CALI is
not a party to any contract, agreement, corporate restriction, or subject to
any judgment, order, writ, injunction, decree, or award, which materially and
adversely affect CALI's business, operations, properties, assets, or
conditions.
(c) Except as set forth in the CALI Schedules, CALI is not a
party to any material oral or written (i) profit sharing, bonus, deferred
compensation, stock option, severance, or any other retirement plan of
arrangement covered by Title IV of the Employee Retirement Income Security
Act, as amended or otherwise covered; (ii) agreement providing for the sale,
assignment or transfer of any of its rights, assets or properties, whether
tangible or intangible; or, (iii) waiver of any right of any value which in
the aggregate is extraordinary or material concerning the assets or properties
scheduled by CALI, except for adequate value and pursuant to contract. CALI
has not entered into any material transaction that is not listed in the CALI
Schedules or reflected in the CALI financial statements.
4.19 Material Contract Defaults. CALI is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business, operations, properties or
assets, or condition of CALI, and there is no event of default or event that,
with notice of lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other
commitment in respect to which CALI has not taken adequate steps to prevent
such default from occurring, or otherwise compromised, reached a satisfaction
of, or provided for extensions of time in which to perform under any one or
more contract obligations, among others.
4.20 Governmental Authorizations. CALI is in good standing in the
State of Utah. Except for compliance with federal and state securities laws,
no authorization, approval, consent or order of, or registration, declaration,
or filing with any court or other governmental body is required in connection
with the execution and delivery by CALI of this Plan and the consummation by
CALI of the transactions contemplated hereby.
4.21 Compliance with Laws and Regulations. CALI has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of CALI, or except to the extent
that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to POCO.
4.22 Approval of Plan. The Board of Directors of CALI and the
Shareholders have authorized the execution and delivery of this Plan by CALI
and have approved the Plan and the transactions contemplated hereby. CALI and
the Shareholders have full power, authority, and legal right to enter into
this Plan and to consummate the transactions contemplated hereby.
4.23 Obligations. CALI is not aware of any outstanding obligations
to any of its employees or consultants as of the Closing.
4.24 CALI Schedules. CALI has delivered to POCO the following
items listed below, hereafter referred to as the "CALI Schedules," which is
hereby incorporated by reference and made a part hereof. A duly authorized
officer of CALI shall execute, contemporaneously with CALI's execution of this
Plan, a certification that the CALI Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws, including any
and all amendments thereto;
(b) Financial statements;
(c) A schedule setting forth the shareholder, together with the
number of shares owned beneficially or of record by each (also attached as
Exhibit A);
(d) Resolutions of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) Officers' Certificate as required by Section 7.2 of the Plan;
(g) A list of key employees, including current compensation, with
notations as to job description and whether or not such employee is subject to
a written contract, and if subject to a contract or employment agreement, a
copy of the same;
(h) A schedule showing the name and location of each bank or
other institution with which CALI has an account and the names of the
authorized persons to draw thereon or having access thereto;
(i) A schedule setting forth all material contracts; and,
(j) Certificate of Good Standing.
Section 5
Special Covenants
5.1 CALI Information Incorporated in POCO's Reports. CALI
represents and warrants to POCO that all the information furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. CALI agrees to indemnify and hold POCO and its officers and
directors harmless against any and all losses, claims, damages, expenses or
liabilities to which any of them may become subject under applicable law, or
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such actions, whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based on any untrue statement,
alleged untrue statement, or omission of a material fact contained in such
information delivered hereunder.
5.2 POCO Information Incorporated into CALI's Reports. POCO
represents and warrants to CALI that all the information furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. POCO agrees to indemnify and hold CALI and its officers and
directors harmless against any and all losses, claims, damages, expenses or
liabilities to which any of them may become subject under applicable law, or
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such actions, whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based on any untrue statement,
alleged untrue statement, or omission of a material fact contained in such
information delivered hereunder.
5.3 Special Covenants and Representations Regarding the Exchanged
POCO Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the shares of POCO common stock in
exchange for all the issued and outstanding stock of CALI and the subsequent
transfer of 11,550,000 shares of POCO common stock to the Shareholders,
constitutes the offer and sale of securities under the Securities Act and the
applicable state statutes, which depend, inter alia, on the circumstances
under which the Shareholders acquire such securities. Each Shareholder, upon
receipt of the Shares exchanged for CALI's shares, shall execute and deliver
to POCO a Letter of Investment Intent to indicate, among other
representations, that the Shareholder is receiving the shares for the CALI
stock for investment purposes and not with a view to the subsequent
distribution thereof. A proposed Investment Letter is attached hereto as
Exhibit B and incorporated herein by reference for the general use by the
Shareholders, as they may determine.
5.4 Action Prior to Closing. Upon the execution hereof until the
Closing, and the completion of the consolidated audited financials:
(a) CALI and POCO will (i) perform all of their obligations
under material contracts, leases, insurance policies and/or document relating
to their assets and business; (ii) use their best efforts to maintain and
preserve their business organization intact, to retain their key employees,
and to maintain their relationship with existing potential customers and
clients; and, (iii) fully comply with and perform in all material respects ail
duties and obligations imposed on them by all federal and state laws and all
rules, regulations1 and orders imposed by all federal or state governmental
authorities.
(b) Other than as set forth in Section 3.4(c) hereof, neither
CALI nor POCO will (i) make any change in its Articles of Incorporation or
Bylaws; (ii) enter into or amend any contract, agreement, or other instrument
of the types described in the respective parties' Schedules, except that a
party may enter into or amend any contract or other instrument in the ordinary
course of business involving the sale of goods or services.
(c) POCO shall have distributed its ownership interest in New
Politics to the shareholders of POCO.
Section 6
Conditions Precedent to Obligations of
CALI and the Shareholders
All obligations of CALI and the Shareholders under this Plan are subject
to the satisfaction, at or before the Closing, except as otherwise provided
for herein, or waived or extended in writing by the parties hereto, of each of
the following conditions:
6.1 Accuracy of Representations. The representations and
warranties made by POCO in this Plan were true when made and shall be true as
of the Closing date (except for changes therein permitted by this Plan) with
the same force and effect as if such representations and warranties were made
at and as of the Closing; and POCO shall have performed and complied with all
aspects of this Agreement, unless waived or extended in writing by the parties
hereto. CALI shall have been furnished with a certificate, signed by a duly
authorized executive officer of POCO and dated the date of the Closing, to the
foregoing effect.
6.2 Officers' Certificate. CALI and the Shareholders shall have
been furnished with a certificate dated the same date as the Closing and
signed by a duly authorized executive officer of POCO, to the effect that no
litigation, proceeding, investigation, claim, demand or inquiry is pending,
or, to POCO's best knowledge, threatened, that might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Plan, or which might result in any material adverse change in the assets,
properties, business, or operations of POCO, and that this Agreement has been
complied with in all material respects.
6.3 No Material Adverse Change. Prior to the Closing, there shall
have not occurred any material adverse change in POCO's financial condition,
business or operations, nor shall any event have occurred which, with lapse of
time or the giving of notice or both, may cause or create any material adverse
change in the financial condition, business or operations of POCO, except as
otherwise disclosed to CALI.
6.4 Opinion of Counsel of POCO. POCO shall furnish to CALI and the
Shareholders an opinion dated as of the Closing Date and in form and substance
satisfactory to CALI and the Shareholders to the effect that:
(a) POCO is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and with all
requisite corporate power to perform its obligations under this Plan.
(b) The business of POCO, as presently conducted, including,
upon the consummation hereof, the ownership of all of the issued and
outstanding shares of CALI, does not require POCO to register to do business
as a foreign corporation in any jurisdiction other than specified under its
Articles of Incorporation or Bylaws, and POCO has complied to the best of its
knowledge in all material respects with all the laws, regulations, licensing
requirements and orders applicable to its business activities and has filed
with the proper authorities, including the Department of Commerce, Division of
Corporations, and Secretary of State for the State of Delaware, all statements
and reports required to be filed.
(c) The authorized and outstanding capital stock of POCO, as
set forth in Section 3.2 above, and all issued and outstanding shares, have
been duly and validly authorized and issued and are fully paid and
non-assessable.
(d) There are no material claims, suits or other legal
proceedings pending or threatened against POCO, in any court or before or by
any governmental body, that might materially affect its business or financial
condition.
(e) To the best of said Counsel's knowledge, the consummation
of the transactions contemplated by this Plan will not violate or contravene
the provisions of the Certificate of Incorporation or Bylaws of POCO, or any
contract, agreement, indenture, mortgage or order by which POCO is bound;
(f) This Plan constitutes a legal, valid and binding
obligation of POCO enforceable in accordance with its terms, subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium, or similar
law affecting creditors' rights generally and general principles of equity
(regardless of whether such principles are considered in a proceeding in
equity or law).
(g) The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been ratified by a
majority of the Shareholders of POCO and have been duly authorized by its
Board of Directors,
(h) POCO has not nor will undertake any action that would
endanger the tax-free structure of the Plan,
6.5 New POCO. POCO shall have completed the distribution of its
ownership interest in New POCO to the shareholders of POCO.
6.6 Good Standing. CALI shall have received a Certificate of Good
Standing from the State of Utah, dated within sixty (60) days prior to
Closing, but in no event later than ten days subsequent to the execution
hereof, certifying that it is in good standing as a corporation in the State
of Utah.
6.7 Other Items. CALI and the Shareholders shall have received
such further documents, certifications or instruments relating to the
transactions contemplated hereby as CALI and the Shareholders may reasonably
request.
Section 7
Conditions Precedent to Obligations of POCO
All obligations of POCO under this Plan are subject to the satisfaction,
at or before the Closing, except as otherwise provided for herein, or waived
or extended in writing by the parties hereto, of each of the following
conditions:
7.1 Accuracy of Representations. The representations and
warranties made by CALI and the Shareholders under this Plan were true when
made and shall be true as of the Closing date (except for changes therein
permitted by this Plan) with the same force and effect as if such
representations and warranties were made at and as of the Closing date; and,
CALI shall have performed and complied with all aspects of this Agreement,
unless waived or extended in writing by the parties hereto. POCO shall have
been furnished with a certificate, signed by a duly authorized Officer of CALI
and dated the Closing Date, to the foregoing effect.
7.2 Officers' Certificate. POCO shall have been furnished with a
certificate, dated the Closing Date and signed by CALI's duly authorized
officer, to the effect that no litigation, proceeding, investigation, claim,
deed, or inquiry is pending, or, to the best of CALI's knowledge, threatened,
that might result in an action to enjoin or prevent the consummation of the
transactions contemplated under this Plan, or that might result in any
material adverse change in CALI's assets, properties, business, or operations,
and that this Agreement has been complied with in all material respects.
7.3 No Material Adverse Change. Prior to the Closing Date, there
shall have not occurred any material adverse charge in CALI's financial
condition, business or operations, nor shall any event have occurred that,
with lapse of time or the giving of notice or both, may cause or create any
material adverse change in its financial condition, business or operations,
except as otherwise disclosed to POCO.
7.4 Good Standing. POCO shall have received a Certificate of Good
Standing from the State of Utah, dated within sixty (60) days prior to
Closing, but in no event later than ten (10) days subsequent to the execution
hereof, certifying that CALI is in good standing as a corporation in the State
of Utah.
7.5 Other Items. POCO shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as POCO may reasonably request.
7.6 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to POCO.
Section 8
Termination
The Parties may terminate this Plan at any time prior to the Closing
Date if the other party i) fails to materially comply with its duties,
obligation and covenants under this Plan; ii) if any of its representations or
warranties contained herein is materially inaccurate; and/or, iii) fails to
disclose a material fact or circumstance that would materially alter the
representations and warranties it makes under this Plan. Termination shall be
affected upon the terminating party's tendering to the other party written
notice, in accordance with the Notice provisions contained in Section 9.4 of
this Plan, identifying the material breach(es) warranting termination. The
terminating party's reasonableness in terminating this Plan is subject to
challenge, and the terminating party is not indemnified against or absolved of
being liable for any actual or consequential damages that the non-terminating
party is able to establish before a tribunal of competent authority.
8.2 Termination by Mutual Consent. This Plan may be terminated at
any time prior to the Closing Date by the Parties' mutual written consent. If
the Parties mutually terminate this Plan, this Plan shall be of no further
force and effect, and no obligation, right or liability shall arise hereunder.
Each party shall bare its own costs in connection with this Plan and any
expenses or costs incurred in the events leading to the drafting of this Plan.
Section 9
General Provisions
9.1 Further Assurances. At any time after the Closing Date, each
party will execute such additional instruments and take such action as the
other party may reasonably request to confirm or perfect title to any property
transferred hereunder, or otherwise to carry out the intent and purposes of
this Plan.
9.2 Payments of Costs and Fees. POCO and CALI shall each bear
their own costs and expenses, including any legal and accounting fees in
connection with the negotiation, execution and consummation of the Plan.
9.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, CALI and POCO shall cause to
have promptly prepared and disseminated a news release concerning the
execution and consummation of the Plan, such press release and communication
to be released promptly and within the time required by the laws, rules and
regulations as promulgated by the United States Securities and Exchange
Commission, and concomitant therewith to cause to be prepared a letter to POCO
shareholders that shall contain information required by Regulation
240.14(f)(1), as promulgated under Section 14(f) as mandated under the
Securities and Exchange Act of 1934, as amended.
9.4 Notices. All notices and other communications required or
permitted hereunder shall be presumed received if personally delivered, sent
by registered mail, or certified mail, return receipt requested, postage
prepaid, to the respective Parties at the following addresses:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CALI, Inc.
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Either party to this Plan may change its address of notice listed above via a
writing to the other party.
9.5 Entire Agreement. This Plan represents the Parties' entire
agreement relating to the subject matter hereof, including any previous
understandings, representations, warranties or agreements between and among
POCO, CALI and the Shareholders with respect to the subject matter hereof. No
understandings, agreements, representations or warranties, written or oral,
inconsistent with this Plan exist between the Parties.
9.6 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Utah, without reference
to its Conflict of Laws provisions. Venue for any lawsuit filed involving the
Parties' rights, duties and obligations under this Plan shall be in applicable
courts in the State of Utah.
9.7 Tax Treatment. The transaction contemplated under this Plan is
intended to qualify as a "tax-free' reorganization under the provisions of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended. CALI
and POCO acknowledge, however, that they have each i) retained and received
the counsel of competent tax advisors in connection with this transaction;
and, ii) made no representation or warranty to the other with respect to
treatment of this transaction or any part or effect thereof under applicable
tax laws, regulations or interpretations.
9.8 Attorney Fees and Legal Costs. In the event that a lawsuit
filed by either party is adjudicated on the merits at trial, the prevailing
party shall be entitled to receive all of its legal costs and expenses,
including a reasonable attorney's fee, from the non-prevailing party.
9.9 Amendment of Waiver. The Parties' rights under this Plan are
cumulative, and may be enforced concurrently or separately. Failure by either
party to enforce a right or rights conferred hereunder will not constitute a
waiver of said right(s).
9.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original.
9.11 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Plan.
9.12 Assignability. Neither party to this Plan may assign, transfer
or otherwise alienate its obligations under this Plan without the other
party's written consent.
IN WITNESS WHEREOF, the parties have executed this Plan of
Reorganization, effective the day and year first set forth above.
COMPUTER ASSISTED LEARNING AND INSTRUCTION, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Director and Chairman of the Board
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Director, President and Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Director, Vice-President and
Chief Operations Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇,
Director
▇▇▇▇▇▇▇▇.▇▇▇, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
____________________________________
SHAREHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇
____________________________________
R. ▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇