[ EXHIBIT 2.1 - PLAN OF REORGANIZATION ]
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of this 15th day of November, 2002 by and among
INTERNATIONAL STAR, INC., a Nevada corporation ("STAR"), PITA KING BAKERIES
INTERNATIONAL INC., a Nevada corporation ("PITA KING") and the Shareholders of
PITA KING. Such shareholders are listed on Schedule A attached and made part
hereto (the "PITA KING Shareholders").
RECITALS
A. The PITA KING Shareholders own and control all of the issued and/or
outstanding shares of PITA KING.
B. STAR desires to acquire and the PITA KING Shareholders desire to
transfer to STAR all outstanding shares of PITA KING on the terms and conditions
set forth herein.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
EXCHANGE TERMS
1.1 ACQUISITION. At the closing of the acquisition (the "Closing"), the
PITA KING Shareholders shall sell, transfer and deliver to STAR certificates
endorsed to the order of STAR representing all outstanding shares of the PITA
KING Common Stock $.001 par value, (the "PITA KING Shares"), or a certificate
from the Secretary of PITA KING indicating that certificates have not been
issued, and listing all PITA KING shareholders and the number of PITA KING
shares owned by each.
1.2 CONSIDERATION. In exchange for the delivery of the PITA KING Shares at
the Closing, STAR shall issue and deliver to the PITA KING Shareholders
certificates representing in the aggregate 4,139,500 shares of the Common Stock
of STAR (the "STAR Shares"), to be issued to the several PITA KING shareholders
in the same proportion as each PITA KING shareholder's proportionate ownership
of the total shares of PITA KING Common Stock outstanding.
1.3 CLOSING. The Closing shall take place effective October 1, 2002.
ARTICLE 2
ADDITIONAL TERMS
2.1 TAX TREATMENT. The exchange of shares is intended to qualify as a
reorganization within the meaning of ss.368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"). The parties hereto will perform and
refrain from performing all acts as required by the Code and all rules,
regulations or judicial interpretations thereof which would jeopardize this
transaction being treated as a reorganization as stated above.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PITA KING
AND THE PITA KING SHAREHOLDERS
PITA KING and the PITA KING Shareholders hereby represent and warrant, as
of the date hereof and as of the Closing Date, as follows:
3.1 ORGANIZATION, CAPACITY AND AUTHORITY. PITA KING has been duly organized
and is validly existing and in good standing under the laws of the state of
Nevada. PITA KING has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by the Shareholders and
Board of Directors of PITA KING and no other corporate proceedings on the part
of PITA KING are necessary to authorize this Agreement or the transactions
contemplated hereby. The PITA KING Shareholders have full capacity to enter into
this Agreement and perform its obligations hereunder. The execution, delivery
and performance of this Agreement by the PITA KING Shareholders are duly
authorized and no other proceeding or action on behalf of the PITA KING
Shareholders is necessary to authorize the transactions contemplated hereby.
3.2 TITLE TO SHARES. The PITA KING Shares held by the PITA KING
Shareholders and to be transferred at the Closing are and will be free and clear
of any lien, charge, claim, security interest or other encumbrance. The PITA
KING Shareholders hold legal and beneficial title to such PITA KING Shares. No
restriction on transfer, stop order or other instruction with respect to such
PITA KING Shares is or will be entered on PITA KING's transfer records with
respect to such PITA KING Shares prior to, at or after Closing, other than
customary restrictive legends and stop order instructions related to the
transfer of such shares in compliance with applicable federal and state
securities laws.
3.3 NO CONFLICT, BREACH, OR DEFAULT. The execution and delivery of this
Agreement and the performance by PITA KING and the PITA KING Shareholders of the
terms hereof do not (i) conflict with or result in a violation of the Articles
of Incorporation or Bylaws of PITA KING; (ii) violate any order, writ, judgment
or decree to which PITA KING or any PITA KING Shareholders are a party or are
subject, or (iii) conflict with or result in a violation of, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of PITA KING or any PITA KING Shareholders under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, lease, license, agreement or other instrument or obligation to which PITA
KING or any PITA KING Shareholders are bound or by which PITA KING, the PITA
KING Shareholders or any of their properties or assets may be bound.
3.4 APPROVALS AND CONSENTS. No approval, authorization, consent, exemption,
filing or other action by or filing with any governmental authority is required
in connection with the execution and delivery by PITA KING or the PITA KING
shareholders of this Agreement or the transactions contemplated herein or
therein.
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3.5 VALID OBLIGATION. This Agreement constitutes a legal, valid and binding
obligation of PITA KING or the PITA KING Shareholders enforceable against all of
them in accordance with its terms, except that (i) the enforceability of the
same may be limited by applicable bankruptcy, insolvency, reorganization or
similar laws affecting enforcement of creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.
3.6 CAPITAL STOCK OF PITA KING. The authorized capital stock of PITA KING
consists of 10,000,000 shares of Preferred Stock, $0.001 par value, of which no
shares are issued and outstanding, and 65,000,000 shares of Common Stock, $0.001
par value, of which 4,139,500 shares were outstanding under subscription
agreements as of September 30, 2002. No additional shares will be issued prior
to the Closing. All the outstanding shares of Common Stock of PITA KING are duly
and validly authorized, fully-paid and non-assessable, none of the shares of
Common Stock have been issued in violation of any laws, and there exist no
preemptive rights of any present or former stockholders of the Common Stock.
PITA KING has no other outstanding securities convertible into or exercisable
for its Common Stock and no other agreements of any nature what so ever whereby
PITA KING may, under any circumstances be obligated to issue additional shares
of Common Stock.
3.7 PITA KING FINANCIAL STATEMENTS.
(a) Schedule 3.7(a) hereto sets forth a listing of financial
statements of PITA KING delivered or to be promptly delivered to STAR
(collectively, the "PITA KING Financial Statements"). The PITA KING Financial
Statements are true, accurate and complete and present fairly the financial
position of PITA KING as of the dates stated and the results of the operations
of PITA KING for the periods stated and have been prepared in accordance with
generally accepted accounting principles, consistently applied with all
adjustments as mandated by any agency or other authority.
(b) PITA KING has, and as of the Closing Date will have, no
liabilities or obligations of any nature (whether accrued, absolute, asserted,
unasserted, known, unknown, contingent or otherwise) except for those disclosed
in the most current PITA KING Financial Statement ("Current Financial
Statement") or in Schedule 3.7(b) hereto.
3.8 REGULATORY FILINGS. PITA KING has heretofore filed all reports,
registration statements, schedules and notices as required pursuant to any
applicable law. All such filings by PITA KING complied as of their respective
dates in all material respects with the applicable requirements of such laws and
the rules and regulations adopted thereunder.
3.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the date of the most
Current Financial Statements delivered to STAR (the "Current Financial
Statements"), there have not been any changes in the affairs, prospects,
condition (financial or otherwise, or arising as a result of any legislative or
regulatory change), operations, liabilities, earnings or business of PITA KING
which have been or will be, individually or in the aggregate with other changes,
adverse.
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3.10 NO BREACH OF STATUTE, DECREE OR ORDER. Except as disclosed in Schedule
3.10, PITA KING is not in default under, or in violation in any respect of any
material applicable statute, law ordinance, decree, order, rule or regulation of
any regulatory agency or any other governmental body, and the consummation of
this Agreement and the transactions contemplated hereby will not constitute or
result in any such default, breach or violation. Except as set forth in Schedule
3.10, there is no known or suspected material action or proceeding by any
governmental body, pending or threatened against PITA KING relating to the
conduct of its business, and there is no basis for any such action or
proceeding.
3.11 LITIGATION. Except as disclosed in Schedule 3.11, there is no suit,
claim, action, proceeding or governmental investigation now pending or
threatened, nor, to the best of its knowledge, is there any condition or set of
facts which will give rise to any litigation, against PITA KING before any
court, administrative or regulatory body or any governmental agency arising out
of or relating to any aspect of the business, or any part of the properties, of
PITA KING, or concerning the transactions contemplated by this Agreement. Except
as disclosed in Schedule 3.11, there are no decrees, injunctions or orders of
any court or governmental department or agency outstanding or threatened against
PITA KING relating to any aspect of its business or any part of its properties.
3.12 EMPLOYEE BENEFIT PLANS. Schedule 3.12 contains a list of all
employment contracts (including agreements with any union) and all employee
policy manuals, all deferred compensation amounts and agreements, all
non-competition agreements, all bonus, stock option, profit-sharing, pension,
retirement, consultation after retirement, payment upon retirement, or severance
agreements, all incentive pay agreements, any extraordinary vacation accruals,
education payments or benefits, all disability, medical, life or other insurance
plans or arrangements, or any other fringe benefits applicable to employees of
PITA KING, and a list of any determination letters issued by the Internal
Revenue Service with respect thereto. Each employee plan is in full compliance
with all applicable government laws, rules and regulations.
3.13 PERMITS AND LICENSES. PITA KING has, as of the date hereof, and will
have as of the Closing Date, such permits, licenses and authorities as required
by any governmental authority with jurisdiction over PITA KING with respect to
its business as currently conducted. Except as may be expressly permitted by the
terms of this Agreement or otherwise disclosed in this Agreement or any schedule
hereto, the business of PITA KING as presently conducted in any jurisdiction
meets all known and suspected applicable legal requirements of such
jurisdiction, all known and suspected requisite governmental approvals have been
duly obtained and are in full force and effect, and there is no basis for any
governmental body to deny or rescind any approval for the conduct of the
business of PITA KING.
3.14 ACCURACY OF BOOKS AND RECORDS. The books and records, financial and
otherwise, of PITA KING accurately set out and disclose the financial position
of PITA KING, and all transactions PITA KING have been accurately recorded in
such books and records in accordance with generally accepted accounting
principals.
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3.15 MATERIAL CONTRACTS. Attached hereto as Schedule 3.15 is a list of all
contracts of PITA KING involving either (a) an aggregate payment by or to it of
more than $2,500; (b) or extending for a term beyond 12 months; and (c) a list
showing all policies of insurance in force as of the date hereof.
3.16 TAXES. Except as listed on Schedule 3.16 PITA KING has filed all
federal and provincial tax returns as required to be filed; all taxes,
assessments and other governmental charges known by the officers of PITA KING to
be due from PITA KING or with respect to any of its income, payroll, sales,
property or assets have been duly paid and no extensions for the time of payment
have been requested. There are no pending or threatened audits or additional
assessments of taxes of any kind by any governmental authority known to any of
the officers of PITA KING. No unexpired waivers of the statute of limitations
executed by PITA KING with respect to taxes of any kind are in effect on the
date hereof. The accruals and reserves made for tax liabilities of PITA KING in
the Current Financial Statements are adequate for the payment of all of PITA
KING's federal, state and local tax liabilities of any kind for all periods
ending on or before the date of the Current Financial Statements.
3.17 TITLE TO PROPERTIES. Except as disclosed in Schedule 3.17, the PITA
KING has good and marketable title, free and clear of any mortgage, pledge,
lien, charge or other encumbrance, to all of its real and/or personal property
and other assets reflected on the Current Financial Statements, or acquired by
it subsequent to the date thereof or used by it in the ordinary course of its
business, except for (a) liens or encumbrances on such property or assets
described in the Current Financial Statements, (b) liens for current taxes not
yet due and payable, (c) such imperfections of title and encumbrances, if any,
as are not material in character, amount or extent and do not detract from the
value or interfere with the present or presently contemplated future use of the
properties subject thereto or affected thereby, and (d) acquisition and
dispositions in the ordinary course of business. PITA KING enjoys peaceable and
undisturbed possession under all material leases under which it is operating,
and all of its premises, which are leased, are in good condition and repair and
are suitable for the purposes for which such premises are being utilized. PITA
KING has not received any notice of violation of any applicable zoning ordinance
or other law, order, regulation or requirement relating to its operations or to
its owned or leased properties. Each parcel of real property owned or leased by
PITA KING is free of any and all hazardous wastes, hazardous emissions, toxic
substances or other types of contamination or matters of environmental concern,
and PITA KING is not subject to any liability (under the Comprehensive
Environmental Response, Compensation and Liability Act or otherwise) resulting
from or related to any such wastes, emissions, substances, contaminants or
matters of environmental concern in connection with any such property.
3.18 ACCURACY OF STATEMENTS. PITA KING and the PITA KING Shareholders have
disclosed to STAR herein all facts required by this Agreement and material to
the liabilities, assets, business, prospects, conditions, organization and
operations (financial and otherwise) of PITA KING. Neither this Agreement nor
any exhibit or schedule hereto nor any certificate, documents, instrument or
information furnished or to be furnished by PITA KING to STAR in connection with
this Agreement or any of the transactions contemplated hereby contained, or will
contain, any untrue statement of a material fact or omit or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they are made, not misleading.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF STAR
STAR hereby represents and warrants to PITA KING and the PITA KING
Shareholders, as of the date hereof and as of the Closing Date, as follows:
4.1 ORGANIZATION AND AUTHORITY OF STAR. STAR has been duly organized and is
validly existing and in good standing under the laws of the State of Nevada and
has full corporate power and authority to enter into this Agreement. The
execution, delivery and performance of this Agreement has been duly authorized
by STAR and no other corporate proceedings on the part of STAR are necessary to
authorize this Agreement and the transactions contemplated hereby or thereby.
4.2 NO CONFLICT, BREACH OR DEFAULT. The execution and delivery of this
Agreement and the performance by STAR of its terms do not (i) conflict with or
result in a violation of the Articles of Incorporation or Bylaws of STAR; (ii)
violate any order, writ, judgment or decree to which STAR is a party or is
subject, or (iii) conflict with or result in a violation of, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of STAR under, any of the terms, conditions or provisions
of any note, bond mortgage, indenture, deed of trust, lease, license, agreement
or other instrument or obligation to which STAR is bound or by which STAR or any
of their properties or assets may be bound.
4.3 APPROVALS AND CONSENTS. No approval, authorization, consent, exemption,
filing or other action by or filing with any governmental authority is required
in connection with the execution and delivery by STAR of this Agreement or the
transactions contemplated herein or therein.
4.4 VALID OBLIGATION. This Agreement constitutes a legal, valid and binding
obligation of STAR enforceable against it in accordance with its terms, except
that (i) the enforceability of the same may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforcement of creditors'
rights generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefore may be brought.
4.5 VALIDLY ISSUED SHARES. Upon issuance, all STAR Shares to be issued to
the PITA KING Shareholders in exchange for their PITA KING Shares will be duly
authorized, validly issued and non-assessable outstanding shares of the capital
stock of STAR.
4.6 CAPITAL STOCK OF STAR. The authorized capital stock of STAR is
100,000,000 shares of common stock, $0.001 par value, of which 31,836,237 shares
are issued and outstanding as of the date of this agreement. No additional
shares will be issued prior to the Closing. All the outstanding shares of Common
Stock of STAR are duly and validly authorized and issued, fully-paid and
non-assessable, none of the shares of Common Stock have been issued in violation
of any state or federal securities or banking laws, and there exist no
preemptive rights of any present or former stockholders of the Common Stock.
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Other than as disclosed in the financial statements, STAR has no other
outstanding securities convertible into or exercisable for its Common Stock and
no other agreements of any nature what so ever whereby STAR may, under any
circumstances be obligated to issue additional shares of Common Stock.
4.7 STAR FINANCIAL STATEMENTS.
(a) Schedule 4.7(a) hereto sets forth a listing of financial
statements of STAR delivered or to be promptly delivered to PITA KING
(collectively, the "STAR Financial Statements"). The STAR Financial Statements
are true, accurate and complete and present fairly the financial position of
STAR as of the dates stated and the results of the operations of STAR for the
periods stated and have been prepared in accordance with generally accepted
accounting principles, consistently applied with all adjustments as mandated by
any agency or other authority.
(b) STAR has, and as of the Closing Date will have, no liabilities or
obligations of any nature (whether accrued, absolute, asserted, unasserted,
known, unknown, contingent or otherwise) except for those disclosed in the most
current STAR Financial Statement ("Current Financial Statement") or in Schedule
4.7(b) hereto.
4.8 REGULATORY FILINGS. STAR has heretofore filed all reports, registration
statements, schedules and notices as required pursuant to any applicable law.
All such filings by STAR complied as of their respective dates in all material
respects with the applicable requirements of such laws and the rules and
regulations adopted thereunder.
4.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the date of the most
current Financial Statements delivered to PITA KING (the "Current Financial
Statements"), there have not been any changes in the affairs, prospects,
condition (financial or otherwise, or arising as a result of any legislative or
regulatory change), operations, liabilities, earnings or business of STAR which
have been or will be, individually or in the aggregate with other changes,
adverse.
4.10 NO BREACH OF STATUTE, DECREE OR ORDER. Except as disclosed in Schedule
4.10, STAR is not in default under, or in violation in any respect of any
material applicable statute, law ordinance, decree, order, rule or regulation of
any state or federal regulatory agency or any other governmental body, and the
consummation of this Agreement and the transactions contemplated hereby will not
constitute or result in any such default, breach or violation. Except as set
forth in Schedule 4.10, there is no known or suspected material action or
proceeding by any governmental body, pending or threatened against STAR relating
to the conduct of its business, and there is no basis for any such action or
proceeding.
4.11 LITIGATION. Except as disclosed in Schedule 4.11, there is no suit,
claim, action proceeding or governmental investigation now pending or
threatened, nor, to the best of its knowledge, is there any condition or set of
facts which will give rise to any litigation, against STAR before any court,
administrative or regulatory body or any governmental agency arising out of or
relating to any aspect of the business, or any part of the properties, of STAR,
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or concerning the transactions contemplated by this Agreement. Except as
disclosed in Schedule 4.11, there are no decrees, injunctions or orders of any
court or governmental department or agency outstanding or threatened against
STAR relating to any aspect of its business or any part of its properties.
4.12 EMPLOYEE BENEFIT PLANS. Schedule 4.12 contains a list of all
employment contracts (including agreements with any union) and all employee
policy manuals, all deferred compensation amounts and agreements, all
non-competition agreements, all bonus, stock option, profit-sharing, pension,
retirement, consultation after retirement, payment upon retirement, or severance
agreements, all incentive pay agreements, any extraordinary vacation accruals,
education payments or benefits, all disability, medical, life or other insurance
plans or arrangements, or any other fringe benefits applicable to employees of
STAR, and a list of any determination letters issued by the Internal Revenue
Service with respect thereto. Each employee plan is in full compliance with all
applicable government laws, rules and regulations.
4.13 PERMITS AND LICENSES. STAR has, as of the date hereof, and will have
as of the Closing Date, such permits, licenses and authorities as required by
any governmental authority with jurisdiction over STAR with respect to its
business as currently conducted. Except as may be expressly permitted by the
terms of this Agreement or otherwise disclosed in this Agreement or any schedule
hereto, the business of STAR as presently conducted in any jurisdiction meets
all known and suspected applicable legal requirements of such jurisdiction, all
known and suspected requisite governmental approvals have been duly obtained and
are in full force and effect, and there is no basis for any governmental body to
deny or rescind any approval for the conduct of the business of STAR.
4.14 ACCURACY OF BOOKS AND RECORDS. The books and records, financial and
otherwise, of STAR accurately set out and disclose the financial position of
STAR, and all transactions of STAR have been accurately recorded in such books
and records in accordance with generally accepted accounting principals.
4.15 MATERIAL CONTRACTS. Attached hereto as Schedule 3.15 is a list of all
contracts of STAR involving either (a) an aggregate payment by or to it of more
than $2,500; (b) or extending for a term beyond 12 months; and (c) a list
showing all policies of insurance in force as of the date hereof.
4.16 TAXES. Except as listed on Schedule 4.16 STAR has filed all federal
and state tax returns as required to be filed; all taxes, assessments and other
governmental charges known by the officers of STAR to be due from STAR or with
respect to any of its income, payroll, sales, property or assets have been duly
paid and no extensions for the time of payment have been requested. There are no
pending or threatened audits or additional assessments of taxes of any kind by
any governmental authority known to any of the officers of STAR. No unexpired
waivers of the statute of limitations executed by STAR with respect to taxes of
any kind are in effect on the date hereof. The accruals and reserves made for
tax liabilities of STAR in the Current Financial Statements are adequate for the
payment of all of STAR's federal, state and local tax liabilities of any kind
for all periods ending on or before the date of the Current Financial
Statements.
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4.17 TITLE TO PROPERTIES. Except as disclosed in Schedule 4.17, the STAR
has good and marketable title, free and clear of any mortgage, pledge, lien,
charge or other encumbrance, to all of its real and/or personal property and
other assets reflected on the Current Financial Statements, or acquired by it
subsequent to the date thereof or used by it in the ordinary course of its
business, except for (a) liens or encumbrances on such property or assets
described in the Current Financial Statements, (b) liens for current taxes not
yet due and payable, (c) such imperfections of title and encumbrances, if any,
as are not material in character, amount or extent and do not detract from the
value or interfere with the present or presently contemplated future use of the
properties subject thereto or affected thereby, and (d) acquisition and
dispositions in the ordinary course of business. STAR enjoys peaceable and
undisturbed possession under all material leases under which it is operating,
and all of its premises, which are leased, are in good condition and repair and
are suitable for the purposes for which such premises are being utilized. STAR
has not received any notice of violation of any applicable zoning ordinance or
other law, order, regulation or requirement relating to its operations or to its
owned or leased properties. Each parcel of real property owned or leased by STAR
is free of any and all hazardous wastes, hazardous emissions, toxic substances
or other types of contamination or matters of environmental concern, and STAR is
not subject to any liability (under the Comprehensive Environmental Response,
Compensation and Liability Act or otherwise) resulting from or related to any
such wastes, emissions, substances, contaminants or matters of environmental
concern in connection with any such property.
4.18 ACCURACY OF STATEMENTS. STAR and the STAR Shareholders have disclosed
to PITA KING herein all facts required by this Agreement and material to the
liabilities, assets, business, prospects, conditions, organization and
operations (financial and otherwise) of STAR. Neither this Agreement nor any
exhibit or schedule hereto nor any certificate, documents, instrument or
information furnished or to be furnished by STAR to PITA KING in connection with
this Agreement or any of the transactions contemplated hereby contained, or will
contain, any untrue statement of a material fact or omit or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they are made, not misleading.
ARTICLE 5
COVENANTS OF PITA KING AND THE PITA KING SHAREHOLDERS
5.1 ACCESS TO INFORMATION. PITA KING and the PITA KING Shareholders shall
provide STAR, its counsel, accountants and other representatives full access,
from and after the date of this Agreement, to all of PITA KING's properties,
books, contracts, commitments and records, and PITA KING shall furnish to STAR
during such period all such information concerning PITA KING and its affairs as
STAR may reasonably request. In addition, PITA KING shall make its officers,
personnel and vendors available to discuss with the designated representatives
of STAR the substance of all documents, financial statements and other
information provided by PITA KING to STAR and such other matters as STAR shall
deem pertinent to the transactions contemplated by this Agreement.
5.2 CONDUCT OF BUSINESS. Except as otherwise consented to in writing by
STAR, from the date of execution of this Agreement until the Closing Date or the
date of termination of this Agreement, the PITA KING Shareholders shall cause
PITA KING to and PITA KING shall:
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(a) maintain and operate its properties in a manner consistent with
the efficient operation of its business and conduct its business only in the
ordinary course. It shall not be considered to be in the ordinary course of its
business to make any acquisition of direct or indirect ownership or control of
voting shares of any other corporation, or of any interest in any partnership,
joint venture, association or similar organization, other than shares acquired
in satisfaction of a security interest or of a debt previously contracted or in
a fiduciary or custodial capacity.
(b) punctually pay and discharge all taxes, assessments and
governmental charges lawfully imposed upon it or any of its property, or upon
the income and profits thereof; provided, however, that nothing herein contained
shall require PITA KING to pay or discharge any tax assessment or governmental
charge so long as the validity thereof shall be contested in good faith and by
appropriate proceedings unless property essential to the conduct of its business
will be lost, forfeited or materially endangered.
(c) maintain its existence as a corporation in good standing under the
laws of the State of Nevada and comply in all material respects with all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to its business or its properties, except while
contesting the validity of any of the foregoing in good faith and by appropriate
proceedings.
(d) notify STAR of the commencement of any material litigation against
PITA KING or of the existence of any adverse business conditions threatening the
continued, normal business operations of PITA KING or of any agreement, consent
or order involving PITA KING.
(e) at all times maintain, preserve and keep its properties in good
repair, working order and condition in all material respects so that the
business carried on in connection therewith may be properly and advantageously
conducted.
(f) make every reasonable effort to fulfill its contractual
obligations and to maintain in effect its insurance as currently in effect.
(g) use its best efforts to preserve its business relations with its
present customers.
(h) use its best efforts to assure, to the extent within its control,
the satisfaction of the conditions to the effectiveness of the transactions
contemplated in this Agreement.
5.3 NEGATIVE COVENANTS. Prior to the Closing Date or the termination of
this Agreement, the PITA KING Shareholders shall not permit PITA KING to and
PITA KING shall not, unless STAR shall have otherwise consented in writing:
(a) amend its Articles of Incorporation or Bylaws, except to the
extent necessary to effect the transactions contemplated by this Agreement;
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(b) issue, sell or otherwise dispose of any shares of its capital
stock or any of its securities convertible into or representing a right or
option to purchase any such shares or enter into other agreements to issue or
sell any shares of its capital stock or change the presently outstanding shares
of such stock into a greater or lesser number of shares either by way of a
recapitalization, reorganization, consolidation of shares or the like, or by way
of a merger or consolidation;
(c) purchase, redeem, retire or otherwise acquire or sell,
hypothecate, pledge or otherwise encumber, any shares of its capital stock;
(d) declare, set aside, make or pay stock or cash dividends on any
share of its capital stock or make any other distribution of assets to the
holders of any shares of its capital stock;
(e) institute a wage or salary adjustment increasing the base
compensation rate of any person whose annual base compensation rate on the date
hereof exceeds $25,000, pay a new employee an annual base compensation rate
exceeding $50,000, enter into any agreement, understanding or commitment,
written or oral, which obligates PITA KING, its successors or assigns, to pay,
at any time, to a new employee an annual base compensation rate exceeding
$50,000, or institute or agree to institute wage or salary adjustments which,
taken either individually or in the aggregate, increase by more than 10% the
aggregate of the annual base compensation rates paid by PITA KING on the date
hereof to all of its employees;
(f) Enter into or institute any employment contracts, including but
not limited to employee policy manual, deferred compensation, non-competition,
bonus, stock option, profit-sharing, pension, retirement, consultation after
retirement, payments upon retirement, severance agreement, incentive,
extraordinary vacation accrual, education payment or benefit, disability,
medical, life or other insurance plan or arrangement or, except as required by
applicable law or regulation, renew, amend, modify or terminate any such
arrangement or plan now in existence;
(g) enter into any agreement, understanding or commitment, written or
oral, with any other person which is in any manner inconsistent with obligations
of PITA KING arising under this Agreement; and
(h) make any loan, advance or commitment to extend credit to any of
its directors, officers or any affiliated or related persons of such directors
or officers; renew any outstanding loan or any outstanding commitment to extend
credit to any of its directors, officers or any affiliated or related persons of
such directors or officers; increase any outstanding loan to any of its
directors, officers or any affiliated or related persons of such directors or
officers; or enter into any agreement, understanding or commitment, written or
oral, which obligates PITA KING, its successors or assigns, to make any loan or
advance or payment to any of its directors or officers or to any affiliated or
related persons of any such directors or officers.
-11-
5.4 SHAREHOLDER STATUS/RESTRICTED STOCK. Each of the PITA KING Shareholders
exchanging shares hereunder acknowledge that they have had the opportunity to
conduct a review of the business, operations and prospects of STAR and the
management of STAR has provided any and all such information requested and
answered such questions regarding STAR as requested by the PITA KING
Shareholders. The PITA KING Shareholders have reviewed such information and
conducted their own independent due diligence of STAR to the extent desired by
the PITA KING Shareholders and are basing their investment decision with respect
to the transactions contemplated by this Agreement solely upon such independent
review. The PITA KING Shareholders are acquiring the STAR Shares hereunder for
their own account and not with a view to transfer or distribute such shares. The
PITA KING Shareholders acknowledge that the STAR Shares issued under the terms
of this Agreement are "Restricted Securities" as defined under Rule 144 and Rule
145 of the Act and shall bear appropriate legends setting forth such
restrictions. The PITA KING Shareholders further acknowledge that the covenants
set forth herein are being relied upon by STAR with respect to its qualification
for exemption from registration of the STAR Shares being issued hereunder.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO THE OBLIGATION OF STAR TO CLOSE. The obligation of STAR
to consummate the transactions contemplated hereby shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions:
(a) STAR and its authorized agents shall have been given access to the
properties, books, records and reports of PITA KING; shall have conducted the
review, searches and tests of such information as STAR, in its reasonable
discretion, shall determine to conduct, and shall have, on or before August 31,
1999, set forth in writing the statement that STAR is satisfied with the results
of such review, searches and test and intents to proceed with the transactions
contemplated by this Agreement;
(b) during the period from the date of the Current Financial
Statements to the Closing Date, there shall not have occurred any material
adverse change, other than as set forth on any schedule or exhibit hereto, in
the financial condition, business or operation of PITA KING taken as a whole,
and STAR shall have received at the Closing a certificate dated as of the
Closing Date, signed by the Chief Executive Officer and Chief Financial Officer
of PITA KING to that effect;
(c) each of the representations and warranties of PITA KING contained
in this Agreement shall, in all material respects, be true when made and as of
the Closing Date, with the same effect as though such representations and
warranties had been made on and as of such date; each of the covenants and
agreements to PITA KING to be performed on or prior to the Closing Date shall
have been duly performed in all material respects; and STAR shall have received
at the Closing a certificate to that effect dated as of the Closing Date and
executed by the Chief Executive Officer and Chief Financial Officer of PITA
KING;
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(d) any item listed in Schedule 3.10 hereto shall have been removed,
lifted or abated and there shall not have been issued or be in effect any order
of any court, agency or other tribunal of competent jurisdiction which has the
effect of prohibiting or prohibits the performance of the Agreement and the
transactions contemplated thereby or imposes limitations on the ability of PITA
KING to exercise and possess all of its rights, privileges, immunities and
franchises or to otherwise conduct its business (with limitations applicable
only to all similar entities engaged in similar business) as of the Closing
Date;
(e) all proceedings, corporate or otherwise, to be taken in connection
with the transactions contemplated by this Agreement, including the shareholder
approvals of the transactions contemplated by this Agreement, shall have
occurred and all appropriate documents incident thereto as STAR may reasonably
request shall have been delivered to it, including, without limitation, the
receipt of appropriate consents from any third parties which may be necessary to
effect the transactions contemplated hereby;
(f) no action, suit or proceeding before any court or any governmental
or regulatory authority shall have been commenced or threatened, and no
investigation by any governmental or regulatory authority shall have been
commenced against the parties hereto or any of the affiliates, associates,
officers or directors, or any of them, seeking to restrain, prevent or change
the transactions contemplated hereby, or questioning the validity or legality of
any such transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions; and
(g) within 45 days after the execution of this Agreement, PITA KING
shall have received any requisite approvals to this Agreement from all third
parties referred to in the schedules attached hereto, having, under the terms of
its respective loan, lease and other agreements, the right to approve or reject
this Agreement or to cancel its agreement with PITA KING on or before the
Closing; PITA KING hereby represents that all such third parties have been
disclosed to STAR as required by this Agreement.
(h) prior to the closing date, PITA KING shall have engaged an
independent auditor to conduct a full financial audit of PITA KING in accordance
with Generally Accepted Auditing Standards and the specific requirements of
Regulation S-X under the Securities Act of 1933, as amended, including an
understanding that the audit shall be completed within 60 days following the
date of closing.
6.2 CONDITIONS TO THE PITA KING SHAREHOLDERS' AND PITA KING'S OBLIGATIONS
TO CLOSE. The obligation of PITA KING and the PITA KING Shareholders to
consummate the transactions contemplated hereby shall be subject to each of the
representations and warranties of STAR contained in this Agreement being, in all
material respects, true when made and as of the Closing Date, with the same
effect as though such representations and warranties had been made on and as of
such date; each of the covenants and agreements of STAR to be performed on or
prior to the Closing Date being duly performed in all material respects; and
PITA KING shall have received at the Closing a certificate, to that effect dated
as of the Closing Date and executed on behalf of STAR by its Chief Executive
Officer and Chief Financial Officer.
-13-
ARTICLE 7
CLOSING
The Closing of this Agreement (the "Closing") shall take place on or before
October 1, 2002 at such place and time as STAR and PITA KING shall mutually
agree, such time and date being herein referred to as the "Closing Date".
ARTICLE 8
AMENDMENT AND WAIVER
8.1 AMENDMENT AND MODIFICATION. This Agreement may only be amended or
modified in writing signed by STAR and PITA KING with the approval of their
respective Boards of Directors at any time prior to the Closing Date.
8.2 WAIVER. At any time prior to the Closing Date, the parties hereto may
by mutual agreement extend the time for the performance of any of the
obligations or other acts of any other party hereto. Any party may waive any
inaccuracies in the representations and warranties of any other party contained
herein or in any schedule or document delivered pursuant hereto and waive
compliance by any other party with any of the covenants, agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the parties hereto.
ARTICLE 9
TERMINATION
9.1 TERMINATION BY PARTIES. This Agreement may be terminated prior to the
Closing Date:
(a) at the option of the respective Board of Directors of either STAR
or PITA KING, upon written notice to the other parties, if in the good faith
opinion of such Board of Directors any other party has breached any of the
representations and warranties or other covenants of this Agreement or the
failure to occur of any of the conditions precedent set forth in Article 6
hereof;
(b) by mutual agreement of the Board of Directors of STAR and PITA
KING; and
(c) at the option of the respective Board of Directors of STAR or PITA
KING, if any litigation is instituted against PITA KING or STAR, the object of
which is to enjoin any party from proceeding with the transactions contemplated
under this Agreement or to seek damages against any party hereto or any officer,
director or agent of any party as a result of the transactions proposed under
this Agreement.
9.2 EFFECT OF TERMINATION. In the event this Agreement is terminated as
provided in Sections 9.1(b) and 9.1(c), this Agreement shall be void and of no
further force and effect, and, except as set forth herein and Section 9.3 below,
there shall be no further liability on the part of STAR or PITA KING or any of
their respective directors, officers or stockholders as a result of this
Agreement. Section 9.3 of Article 9 shall survive any termination of this
Agreement.
-14-
9.3 CONFIDENTIAL INFORMATION. If this Agreement is terminated for any
reason, each of the parties hereto shall hold in confidence all information it
and its representative have obtained from any other party hereto and promptly
shall return or cause to be returned to the party supplying the same any and all
documents or summaries in the possession of such party or its representatives.
ARTICLE 10
POST CLOSING UNDERTAKINGS OF STAR
10.1 APPIONTMENT. STAR shall undertake, within a reasonable time subsequent
to Closing, the appointment of a PITA KING officer to the Board of Directors of
STAR.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties included or provided for herein or in any exhibit or schedule or
certificate or other document delivered pursuant to this Agreement shall survive
the Closing Date for a period of five years.
11.2 MATERIALITY. The parties hereto acknowledge that they have made
numerous representations and warranties in this Agreement, and hereby agree
that, notwithstanding any other provisions contained herein to the contrary, no
actionable claim, right or cause of action shall exist on the part of any party
against the other, including, in particular, any right to terminate this
Agreement as a result of a breach of any representations or warranties, unless
and until the dollar value of the aggregate of all such claims, rights or causes
of action shall exceed $5,000.
11.3 ENTIRE AGREEMENT. This Agreement, and the exhibits and schedules
attached hereto, and the agreements contemplated by this Agreement contain the
entire agreement among the parties and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. There are
no written or oral agreements, understandings, representations or warranties
between the parties other than those set forth or referred to in this Agreement.
11.4 EXPENSES. All legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
11.5 BROKER'S OR FINDER'S COMMISSIONS. The parties warrant, each to the
other, that there are no broker's commissions, finder's fees or payments of any
nature due to any third party as a result of the consummation of this Agreement.
11.6 SECTION HEADINGS. The section headings contained in this Agreement are
for reference purpose only and shall not in any way affect the meaning or
interpretation of this Agreement.
-15-
11.7 ASSIGNMENT. This Agreement shall not be assigned by any party without
the written consent of the other parties and any attempted assignment without
such written consent shall be null and void and without legal effect.
11.8 NOTICES. All notices hereunder shall be deemed given if in writing and
delivered personally or sent by telex, telegram, telecopier, registered mail or
certified mail (return receipt requested) to the parties at the following
addresses below (or at such other addresses as shall be specified by like
notice). Any notice, however given, shall be effective 5 days after it is sent.
If to STAR: INTERNATIONAL STAR, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, President
If to PITA KING: PITA KING BAKERIES INTERNATIONAL, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to conflict of
law principles.
11.10 ILLEGALITY. In the event that any provision in this Agreement shall
be held to be invalid, illegal or enforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
impaired thereby.
11.11 EQUITABLE REMEDIES. The parties hereto hereby agree that the remedies
at law may be inadequate to protect against an Event of Default, and therefore,
the parties hereto hereby agree and consent to the granting of injunctive relief
or other forms of equitable relief by a court of competent jurisdiction or a
similar judicial body, whether temporary, preliminary or final, whether or not
actual damages can be shown.
11.12 NUMBER OF DAYS. In computing the number of days for purposes of this
Agreement, all days will be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or day that is a legal holiday in the State of Nevada, then the final day
will be deemed to be the next day that is not a Saturday, Sunday or day that is
a legal holiday in the State of Nevada.
11.13 PROVISIONS SEVERABLE. The provisions of this Agreement are
independent of and severable from each other, and no provision will be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
Further, if a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable as written, the court may interpret,
construe, rewrite or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable, consistent with the intent of the
parties hereto.
-16-
11.14 CONSTRUCTION. The parties hereto hereby acknowledge and agree that
each party has participated in the drafting of this Agreement and that this
Agreement has been, to the extent it was felt necessary, reviewed by the
respective legal counsel for the parties hereto and that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be applied to the interpretation of this Agreement. No
inference in favor of, or against, any party will be drawn from the fact that
one party has drafted any portion hereof.
11.15 ADVICE OF COUNSEL. Each Party hereby acknowledges that they are
entitled to and have been afforded the opportunity to consult legal counsel of
their choice regarding the terms and conditions and legal effects of this
Agreement, as well as the advisability and propriety thereof. Each party hereby
further acknowledges that having so consulted with legal counsel of their
choosing or having chosen not to consult, hereby waives any right to such legal
representation or effective representation and any right to raise or rely upon
the lack of representation or effective representation in any future proceedings
or in connection with any future claim.
11.16 HEADINGS. The headings contained in this Agreement are for
convenience only and will not affect the meaning or interpretation of this
Agreement.
11.17 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original as against any
party whose signature appears thereon, and all of which will together constitute
one and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bears the signatures of all
of the parties reflected hereon as the signatories. Any photocopy of this
Agreement, with all signatures reproduced on one or more sets of signature
pages, will be considered for all purposes as if it were an executed counterpart
of this Agreement.
11.18 RECITALS, SCHEDULES AND EXHIBITS. The Recitals, Schedules and
Exhibits referred to in this Agreement shall be construed with and are an
integral part of this agreement to the same extent as if the same had been set
forth verbatim herein.
IN WITNESS WHEREOF, this Agreement has been executed by each of the parties
as of the day and year first above written.
PITA KING BAKERIES INTERNATIONAL, INC. INTERNATIONAL STAR, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President/Director ▇▇▇▇▇ ▇▇▇▇▇▇, President/Director
-17-
EXHIBIT AND SCHEDULE LIST
Schedule A PITA KING Shareholders Names and PITA KING Shares held
Schedule 3.7(a) PITA KING Financial Statement
Schedule 3.7(b) PITA KING Additional Liabilities
Schedule 3.10 PITA KING Defaults
Schedule 3.11 PITA KING Litigation
Schedule 3.12 PITA KING Employee Contracts, Manual, Etc.
Schedule 3.15 PITA KING Material Contracts and Insurance Policy
Schedule 3.16 PITA KING Taxes due or unfiled or extended
Schedule 3.17 PITA KING Encumbrances
Schedule 4.7(a) STAR Financial Statement
Schedule 4.11 STAR Litigation
Schedule 4.12 STAR Employee Contracts, Manual, Etc
Schedule 4.16 STAR Taxes due or unfiled or extended
Schedule 4.17 STAR Encumbrances
-18-
SCHEDULE A
THE PITA KING SHAREHOLDERS
PITA KING shareholders and shares held as of September 30, 2002.
Shareholder Name Total Shares
▇▇▇▇▇ ▇▇▇▇▇ 10,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3,000
▇▇▇▇▇ ▇▇▇▇▇ 5,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000
▇▇▇▇▇ ▇▇▇▇▇▇ 2,500
J.▇▇▇▇▇ and/or ▇.▇▇▇▇▇▇ 10,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 50,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 12,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ 10,000
Faimous ▇▇ ▇▇▇▇▇▇▇▇ 5,000
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 800,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 400,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 400,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 400,000
▇▇▇▇ ▇▇▇▇▇ 2,000,000
---------
Total Shares Outstanding 4,139,500
-19-
Schedule 3.7(a) PITA KING Financial Statement
NOTE: The Company has filed the required Form 8-K announcing this transaction
and intends to amend the Form 8-K Current Report and to file therewith audited
financial statements for Pita King within 60 days of closing.
Schedule 3.7(b) PITA KING Additional Liabilities
None.
Schedule 3.10 PITA KING Defaults
None.
Schedule 3.11 PITA KING Litigation
None.
Schedule 3.12 PITA KING Employee Contracts, Manual, Etc.
None.
Schedule 3.15 PITA KING Material Contracts and Insurance Policy
Attached hereto as Schedule 3.15 is a list of all contracts of PITA KING
involving either (a) an aggregate payment by or to it of more than $2,500; (b)
or extending for a term beyond 12 months; and (c) a list showing all policies of
insurance in force as of the date hereof.
(a) PITA KING has a monthly building and property lease payment of $5,200.
(b) The PITA KING building and lease agreement was effective July 1, 2001 for a
period of five years.
(c) PITA KING maintains business liability insurance at a cost of approximately
$5,200 per year.
(d)
Schedule 3.16 PITA KING Taxes due or unfiled or extended
None.
Schedule 3.17 PITA KING Encumbrances
None.
-20-
Schedule 4.7(a) STAR Financial Statement
See Form 10-QSB, Quarterly Report of period ending June 30, 2002, and period
ending September 30, 2002 when available.
Schedule 4.11 STAR Litigation
None.
Schedule 4.12 STAR Employee Contracts, Manual, Etc
None.
Schedule 4.16 STAR Taxes due or unfiled or extended
None.
Schedule 4.17 STAR Encumbrances
None.