Exhibit 2.1
FrameWaves, Inc.
10-KSB
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"),
dated as of the 27th day of December, 2000, by and between
FrameWaves, a Nevada corporation ("FrameWaves") and Corners,
Inc., a Nevada corporation, ("Corners") and the shareholders of
Corners ("Shareholders"), with reference to the following:
A. FrameWaves is a Nevada corporation organized on
December 23, 1985. FrameWaves has authorized capital stock
of 100,000,000 shares of common stock, $.001 par value, of
which 208,569 shares are issued and outstanding and
10,000,000 shares of preferred stock, $.001 par value, of
which no shares are issued and outstanding.
B. Corners, Inc. is a privately held corporation
organized under the laws of the State of Nevada on November
17, 1998. Corners has authorized capital stock of
50,000,000 shares of common stock, $.001 par value, of which
1,500 shares are issued and outstanding.
C. The respective Boards of Directors of FrameWaves
and Corners have deemed it advisable and in the best
interests of FrameWaves and Corners that FrameWaves acquire
Corners, pursuant to the terms and conditions set forth in
this Agreement.
D. FrameWaves and Corners propose to enter into this
Agreement which provides that FrameWaves shall acquire all
of the outstanding shares of Corners, in exchange for
1,000,000 shares of FrameWaves restricted common stock.
E. The parties desire the transaction to qualify as a
tax-free reorganization under Section 368 (a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 1,500 common shares, which
represents all of the outstanding shares of Corners shall be
acquired by FrameWaves in exchange for 1,000,000 restricted
common shares of FrameWaves. The shares of FrameWaves to be
issued in this transaction shall be issued as set forth in
Exhibit A to this Agreement.
1.02 At the Closing, Corners will cause it's shareholders to
deliver certificates for the outstanding shares of Corners, duly
endorsed so as to make FrameWaves the sole holder thereof, free
and clear of all claims and encumbrances and FrameWaves shall
deliver a transmittal letter directed to the transfer agent of
FrameWaves directing the issuance of shares to the shareholders
of Corners as set forth on Exhibit A of this Agreement.
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1.03 Following the reorganization there will be a total of
1,208,569 shares, $.001 par value, issued and outstanding in
FrameWaves.
1.04 Following the reorganization, Corners will be a wholly owned
subsidiary of FrameWaves.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at Interwest
Transfer Company, 1981 East ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ on or before December 27, 2000, (the "Closing
Date") or at such other place or date and time as may be agreed
to in writing by the parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FRAMEWAVES, INC.
FrameWaves hereby represents and warrants to Corners as
follows:
3.01 FrameWaves shall deliver to Corners, on or before
Closing, each of the following:
(a) Financial Statements. Unaudited financial
statements of FrameWaves including, but not limited to,
balance sheets and profit and loss statements for the
periods ending November 30, 2000, and December 31, 1999,
prepared in accordance with generally accepted accounting
principles and which fairly present the financial condition
of FrameWaves at the dates thereof. (Schedule A)
(b) Property. An accurate list and description of all
property, real or personal, owned by FrameWaves of a value
equal to or greater than $1,000. (Schedule B.)
(c) Liens and Liabilities. A complete and accurate
list of all material liens, encumbrances, easements,
security interests or similar interests in or on any of the
assets listed on Schedule A. (Schedule C.) A complete and
accurate list of all debts, liabilities and obligations of
FrameWaves incurred or owing as of the date of this
Agreement. (Schedule C.1.)
(d) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether of real
or personal property) and each contract, promissory note,
mortgage, license, franchise, or other written agreement to
which FrameWaves is a party which involves or can reasonably
be expected to involve aggregate future payments or receipts
by FrameWaves (whether by the terms of such lease, contract,
promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or
indemnity against the failure to pay same) of $1,000 or more
annually during the twelve-month period ending December 31,
2000, or any consecutive
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twelve-month period thereafter, except any of said
instruments which terminate or are cancelable without
penalty during such twelve-month period. (Schedule D.)
(e) Loan Agreements. Complete and accurate copies of
all loan agreements and other documents with respect to
obligations of FrameWaves for the repayment of borrowed
money. (Schedule E.)
(f) Consents Required. A complete list of all
agreements wherein consent to the transaction herein
contemplated is required to avoid a default thereunder; or
where notice of such transaction is required at or
subsequent to closing, or where consent to an acquisition,
consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule F.)
(g) Articles and Bylaws. Complete and accurate copies
of the Certificate and Articles of Incorporation and Bylaws
of FrameWaves together with all amendments thereto to the
date hereof. (Schedule G.)
(h) Shareholders. A complete list of all persons or
entities holding capital stock of FrameWaves or any rights
to subscribe for, acquire, or receive shares of the capital
stock of FrameWaves (whether warrants, calls, options, or
conversion rights), including copies of all stock option
plans whether qualified or nonqualified, and other similar
agreements. (Schedule H.)
(i) Officers and Directors. A complete and current
list of all officers and directors of FrameWaves. (Schedule I.)
(j) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current salary
rate for each present employee of FrameWaves who received
$1,000 or more in aggregate compensation from FrameWaves
whether in salary, bonus or otherwise, during the year 1999,
or who is presently scheduled to receive from FrameWaves a
salary in excess of $1,000 during the year ending December
31, 2000, including in each case the amount of compensation
received or scheduled to be received, and a schedule of the
hourly rates of all other employees listed according to
departments. (Schedule J.)
(k) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal,
administrative, arbitration or other such proceedings or
investigations (including without limitations unfair labor
practice matters, labor organization activities,
environmental matters and civil rights violations) pending
or, to the knowledge of FrameWaves threatened, which may
materially and adversely affect FrameWaves. (Schedule K.)
(l) Tax Returns. Accurate copies of all Federal and
State tax returns for FrameWaves for the last fiscal year.
(Schedule L.)
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(m) Agency Reports. Copies of all material reports or
filings (and a list of the categories of reports or filings
made on a regular basis) made by FrameWaves under ERISA,
EEOC, FDA and all other governmental agencies (federal,
state or local) during the last fiscal year. (Schedule M.)
(n) Banks. A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the
name of each bank in which FrameWaves has an account or safe
deposit box, and (2) the names and addresses of all
signatories. (Schedule N.)
(o) Jurisdictions Where Qualified. A list of all
jurisdictions wherein FrameWaves is qualified to do business
and is in good standing. (Schedule O.)
(p) Subsidiaries. A complete list of all subsidiaries
of FrameWaves. (Schedule P.) The term "Subsidiary" or
"Subsidiaries" shall include corporations, unincorporated
associations, partnerships, joint ventures, or similar
entities in which FrameWaves has an interest, direct or
indirect.
(q) Union Matters. An accurate list and description
(in all material respects) of all union contracts and
collective bargaining agreements of FrameWaves, if any.
(Schedule Q.)
(r) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant contracts which
FrameWaves may have, other than those listed in the schedule
on Union Matters. (Schedule R.)
(s) Employee Benefit Plans. Complete and accurate
copies of all salary, stock options, bonus, incentive
compensation, deferred compensation, profit sharing,
retirement, pension, group insurance, disability, death
benefit or other benefit plans, trust agreements or
arrangements of FrameWaves in effect on the date hereof or
to become effective after the date thereof, together with
copies of any determination letters issued by the Internal
Revenue Service with respect thereto. (Schedule S.)
(t) Insurance Policies. A complete and accurate list
(in all material respects) and a description of all material
insurance policies naming FrameWaves as an insured or
beneficiary or as a loss payable payee or for which
FrameWaves has paid all or part of the premium in force on
the date hereof, specifying any notice or other information
possessed by FrameWaves regarding possible claims
thereunder, cancellation thereof or premium increases
thereon, including any policies now in effect naming
FrameWaves as beneficiary covering the business activities
of FrameWaves. (Schedule T.)
(u) Customers. A complete and accurate list (in all
material respects) of the customers of FrameWaves, including
presently effective contracts of FrameWaves to be assigned
to FrameWaves, accounting for the principle revenues of
FrameWaves,
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indicating the dollar amounts of gross income of each such
customer for the current period. (Schedule U.)
(v) Licenses and Permits. A complete list of all
licenses, permits and other authorizations of FrameWaves.
(Schedule V.)
3.02 Organization, Standing and Power. FrameWaves is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada with all requisite
corporate power to own or lease its properties and carry on its
businesses as are now being conducted.
3.03 Qualification. FrameWaves is duly qualified and is licensed
as a foreign corporation authorized to do business in each
jurisdiction wherein it conducts its business operations. Such
jurisdictions, which are the only jurisdictions in which
FrameWaves is duly qualified and licensed as a foreign
corporation, are shown in Schedule O.
3.04 Capitalization of FrameWaves. The authorized capital stock
of FrameWaves consists of 100,000,000 shares of Common Stock,
$.001 par value, of which 208,569 shares are currently issued and
outstanding and 10,000,000 shares of Preferred Stock, $.001 par
value, of which no shares are currently issued and outstanding.
There are no preemptive rights with respect to the FrameWaves
stock.
3.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate actions, including but
not limited to duly and validly authorized action and approval by
the Board of Directors, on the part of FrameWaves. This
Agreement constitutes the valid and binding obligation of
FrameWaves enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the
availability of the remedy of specific performance. This
Agreement has been duly executed by FrameWaves and the execution
and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall not result in
any breach of any terms or provisions of FrameWaves' Certificate
and Articles of Incorporation or Bylaws or of any other
agreement, court order or instrument to which FrameWaves is a
party or bound by.
3.06 Absence of Undisclosed Liabilities. FrameWaves has no
material liabilities of any nature, whether fixed, absolute,
contingent or accrued, which were not reflected on the financial
statements set forth in Schedule A or otherwise disclosed in this
Agreement or any of the Schedules or Exhibits attached hereto.
3.07 Absence of Changes. Since November 30, 2000, there has not
been any material adverse change in the condition (financial or
otherwise), assets, liabilities, earnings or business of
FrameWaves, except for changes resulting from completion of those
transactions described in Section 5.01.
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3.08 Tax Matters. All taxes and other assessments and levies
which FrameWaves is required by law to withhold or to collect
have been duly withheld and collected, and have been paid over to
the proper government authorities or are held by FrameWaves in
separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and
employer's share) have been paid over to the government or placed
in a separate and segregated bank account for such purpose.
There are no known deficiencies in income taxes for any periods
and further, the representations and warranties as to absence of
undisclosed liabilities contained in Section 3.06 includes any
and all tax liabilities of whatsoever kind or nature (including,
without limitation, all federal, state, local and foreign income,
profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by FrameWaves
income or business prior to the Closing Date.
3.09 Options, Warrants, etc. Except as otherwise described in
Schedule H, there are no outstanding options, warrants, calls,
commitments or agreements of any character to which FrameWaves or
its shareholders are a party or by which FrameWaves or its
shareholders are bound, or are a party, calling for the issuance
of shares of capital stock of FrameWaves or any securities
representing the right to purchase or otherwise receive any such
capital stock of FrameWaves.
3.10 Title to Assets. Except for liens set forth in Schedule C,
FrameWaves is the sole unconditional owner of, with good and
marketable title to, all assets listed in the schedules as owned
by it and all other property and assets are free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever.
3.11 Agreements in Force and Effect. Except as set forth in
Schedules D and E, all material contracts, agreements, plans,
promissory notes, mortgages, leases, policies, licenses,
franchises or similar instruments to which FrameWaves is a party
are valid and in full force and effect on the date hereof, and
FrameWaves has not breached any material provision of, and is not
in default in any material respect under the terms of, any such
contract, agreement, plan, promissory note, mortgage, lease,
policy, license, franchise or similar instrument which breach or
default would have a material adverse effect upon the business,
operations or financial condition of FrameWaves.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K,
there are no civil, criminal, administrative, arbitration or
other such proceedings or investigations pending or, to the
knowledge of either FrameWaves or the shareholders thereof,
threatened, in which, individually or in the aggregate, an
adverse determination would materially and adversely affect the
assets, properties, business or income of FrameWaves. FrameWaves
has substantially complied with, and is not in default in any
material respect under, any laws, ordinances, requirements,
regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of FrameWaves and
except as set forth in Schedule K, FrameWaves is not in violation
of or in default with respect to any applicable law or
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any applicable rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report
required to be filed with any governmental commission, board,
bureau, agency or instrumentality which violation or default
could have a material adverse effect upon the business,
operations or financial condition of FrameWaves.
3.14 Brokers and Finders. FrameWaves shall be solely responsible
for payment to any broker or finder retained by FrameWaves for
any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated herein.
3.15 Accuracy of Information. No representation or warranty by
FrameWaves contained in this Agreement and no statement contained
in any certificate or other instrument delivered or to be
delivered to Corners pursuant hereto or in connection with the
transactions contemplated hereby (including without limitation
all Schedules and exhibits hereto) contains or will contain any
untrue statement of material fact or omits or will omit to state
any material fact necessary in order to make the statements
contained herein or therein not misleading.
3.16 Subsidiaries. Except as listed in Schedule P, FrameWaves
does not have any other subsidiaries or own capital stock
representing ten percent (10%) or more of the issued and
outstanding stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or
approval of, or registration, qualification or filing with, any
governmental authority or other person is required to be obtained
or accomplished by FrameWaves or any shareholder thereof in
connection with the consummation of the transactions contemplated
hereby.
3.18 Improper Payments. Neither FrameWaves, nor any person
acting on behalf of FrameWaves has made any payment or otherwise
transmitted anything of value, directly or indirectly, to (a) any
official or any government or agency or political subdivision
thereof for the purpose of influencing any decision affecting the
business of FrameWaves (b) any customer, supplier or competitor
of FrameWaves or employee of such customer, supplier or
competitor, for the purpose of obtaining, retaining or directing
business for FrameWaves or (c) any political party or any
candidate for elective political office nor has any fund or other
asset of FrameWaves been maintained that was not fully and
accurately recorded on the books of account of FrameWaves.
3.19 Copies of Documents. FrameWaves has made available for
inspection and copying by Corners and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with the
Securities and Exchange Commission and all other governmental
agencies which are material to the terms and conditions contained
in this Agreement. Furthermore, all filings by FrameWaves with
the Securities and Exchange Commission, and all other
governmental agencies, including but not limited to the Internal
Revenue Service, have contained information which is true and
correct, to the best knowledge of the Board of Directors of
FrameWaves, in all material respects and did not contain any
untrue
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statement of a material fact or omit to state any material fact
necessary to make the statements made therein not misleading or
which could have any material adverse effect upon the financial
condition or operations of FrameWaves or adversely effect the
objectives of this Agreement with respect to Corners including,
but not limited to, the issuance and subsequent trading of the
shares of common stock of FrameWaves to be received hereby,
subject to compliance by the shareholders of Corners with
applicable law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CORNERS, INC.
Corners hereby represents and warrants to FrameWaves as
follows:
4.01 Corners shall deliver to FrameWaves, on or before Closing,
the following:
(a) Financial Statements. Unaudited financial
statements of Corners including, but not limited to, balance
sheets and profit and loss statements for the periods ending
November 30, 2000, and December 31, 1999, prepared in
accordance with generally accepted accounting principles and
which fairly present the financial condition of Corners at
the dates thereof. (Schedule AA)
(b) Property. An accurate list and description of all
property, real or personal owned by Corners of a value equal
to or greater than $1,000. (Schedule BB)
(c) Liens and Liabilities. A complete and accurate
list of all material liens, encumbrances, easements,
security interests or similar interests in or on any of the
assets listed on Schedule AA. (Schedule CC.) A complete
and accurate list of all debts, liabilities and obligations
of Corners incurred or owing as of the date of this
Agreement. (Schedule CC.1.)
(d) Leases and Contracts. A complete and accurate list
describing all material terms of material leases (whether of
real or personal property) and each contract, promissory
note, mortgage, license, franchise, or other written
agreement to which Corners is a party which involves or can
reasonably be expected to involve aggregate future payments
or receipts by Corners (whether by the terms of such lease,
contract, promissory note, license, franchise or other
written agreement or as a result of a guarantee of the
payment of or indemnity against the failure to pay same) of
$1,000 or more annually during the twelve-month period
ending December 31, 2000 or any consecutive twelve-month
period thereafter, except any of said instruments which
terminate or are cancelable without penalty during such
twelve-month period. (Schedule DD.)
(e) Loan Agreements. Complete and accurate copies of
all loan agreements and other documents with respect to
obligations of Corners for the repayment of borrowed money.
(Schedule EE.)
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(f) Consents Required. A complete list of all
agreements wherein consent to the transaction herein
contemplated is required to avoid a default thereunder; or
where notice of such transaction is required at or
subsequent to closing, or where consent to an acquisition,
consolidation, or sale of all or substantially all of the
assets is required to avoid a default thereunder. (Schedule
FF.)
(g) Articles and Bylaws. Complete and accurate copies
of the Articles of Incorporation and Bylaws of Corners,
together with all amendments thereto to the date hereof.
(Schedule GG.)
(h) Shareholders. A complete list of all persons or
entities holding capital stock of Corners or any rights to
subscribe for, acquire, or receive shares of the capital
stock of Corners (whether warrants, calls, options, or
conversion rights), including copies of all stock option
plans whether qualified or nonqualified, and other similar
agreements. (Schedule HH.)
(i) Officers and Directors. A complete and current
list of all officers and directors of Corners. (Schedule
II.)
(j) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current salary
rate or each present employee of Corners who received $1,000
or more in aggregate compensation from Corners whether in
salary, bonus or otherwise, during the year 1999, or who is
presently scheduled to receive from Corners a salary in
excess of $1,000 during the year ending December 31, 2000,
including in each case the amount of compensation received
or scheduled to be received, and a schedule of the hourly
rates of all other employees listed according to
departments. (Schedule JJ.)
(k) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal,
administrative, arbitration or other such proceedings or
investigations (including without limitations unfair labor
practice matters, labor organization activities,
environmental matters and civil rights violations) pending
or, to the knowledge of Corners threatened, which may
materially and adversely affect Corners. (Schedule KK.)
(l) Tax Returns. Accurate copies of all Federal and
State tax returns for Corners, if any. (Schedule LL.)
(m) Agency Reports. Copies of all material reports or
filings (and a list of the categories of reports or filings
made on a regular basis) made by Corners under ERISA, EEOC,
FDA and all other governmental agencies (federal, state or
local). (Schedule MM.)
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(n) A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the
name of each bank in which Corners has an account or safe
deposit box, and (2) the names and addresses of all
signatories. (Schedule NN.)
(o) Jurisdictions Where Qualified. A list of all
jurisdictions wherein Corners is qualified to do business
and is in good standing. (Schedule OO.)
(p) Subsidiaries. A complete list of all subsidiaries
of Corners. (Schedule PP.) The term "Subsidiary" or
"Subsidiaries" shall include corporations, unincorporated
associations, partnerships, joint ventures, or similar
entities in which Corners has an interest, direct or
indirect.
(q) Union Matters. An accurate list and description
(in all material respects of union contracts and collective
bargaining agreements of Corners, if any. (Schedule QQ.)
(r) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant contracts which
Corners may have, other than those listed in the schedule on
Union Matters. (Schedule RR.)
(s) Employee Benefit Plans. Complete and accurate
copies of all salary, stock option, bonus, incentive
compensation, deferred compensation, profit sharing,
retirement, pension, group insurance, disability, death
benefit or other benefit plans, trust agreements or
arrangements of Corners in effect on the date hereof or to
become effective after the date thereof, together with
copies of any determination letters issued by the Internal
Revenue Service with respect thereto. (Schedule SS.)
(t) Insurance Policies. A complete and accurate list
(in all material respects) and description of all material
insurance policies naming Corners as an insured or
beneficiary or as a loss payable payee or for which Corners
has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed
by Corners regarding possible claims thereunder,
cancellation thereof or premium increases thereon, including
any policies now in effect naming Corners as beneficiary
covering the business activities of Corners. (Schedule TT.)
(u) Customers. A complete and accurate list (in all
material respects) of the customers of Corners, including
all presently effective contracts of Corners to be assigned
to Corners, accounting for the principle revenues of
Corners, indicating the dollar amounts of gross revenues of
each such customer for the current period. (Schedule UU.)
(v) Licenses and Permits. A complete list of all
licenses, permits and other authorizations of Corners.
(Schedule VV.)
4.02 Organization, Standing and Power. Corners is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada, under the name of Corners, Inc.,
with all requisite corporate power to own or lease its properties
and carry on its business as is now being conducted.
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4.03 Qualification. Corners is duly qualified and licensed as a
foreign corporation authorized to do business in each
jurisdiction wherein it conducts business operations. Such
jurisdictions, which are the only jurisdictions in which Corners
is duly qualified and licensed as a foreign corporation, is shown
in Schedule OO.
4.04 Capitalization of Corners. The authorized capital stock of
Corners consists of 50,000,000 shares of Common Stock, $.001 par
value, of which the only shares issued and outstanding are 1,500
shares issued to the shareholders listed on Schedule HH, which
shares were duly authorized, validly issued and fully paid and
nonassessable. There are no preemptive rights with respect to
the Corners stock.
4.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action, including but
not limited to duly and validly authorized action and approval by
the Board of Directors, on the part of Corners. This Agreement
constitutes the valid and binding obligation of Corners,
enforceable against it in accordance with its terms, subject to
the principles of equity applicable to the availability of the
remedy of specific performance. This Agreement has been duly
executed by Corners and the execution and delivery of this
Agreement and the consummation of the transactions contemplated
by this Agreement shall not result in any breach of any terms or
provisions of Corners 's Articles of Incorporation or Bylaws or
of any other agreement, court order or instrument to which
Corners is a party or bound.
4.06 Absence of Undisclosed Liabilities. Corners has no material
liabilities of any nature, whether fixed, absolute, contingent or
accrued, which were not reflected on the financial statements set
forth in Schedule AA or otherwise disclosed in this Agreement or
any of the Schedules or Exhibits attached hereto.
4.07 Absence of Changes. Since its inception, there has not been
any material adverse change in the condition (financial or
otherwise), assets, liabilities, earnings or business of Corners,
except for changes resulting from completion of those
transactions described in Section 5.02.
4.08 Tax Matters. All taxes and other assessments and levies
which Corners is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to the
proper government authorities or are held by Corners in separate
bank accounts for such payment or are represented by depository
receipts, and all such withholdings and collections and all other
payments due in connection therewith (including, without
limitation, employment taxes, both the employee's and employer's
share) have been paid over to the government or placed in a
separate and segregated bank account for such purpose. There are
no known deficiencies in income taxes for any periods and
further, the representations and warranties as to absence of
undisclosed liabilities contained in Section 4.06 includes any
and all tax liabilities of whatsoever kind or nature (including,
without limitation, all federal, state, local and foreign income,
profit,
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franchise, sales, use and property taxes) due or to become due,
incurred in respect of or measured by Corners income or business
prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in
Schedule HH, there are no outstanding options, warrants, calls,
commitments or agreements of any character to which Corners or
its shareholders are a party or by which Corners or its
shareholders are bound, or are a party, calling for the issuance
of shares of capital stock of Corners or any securities
representing the right to purchase or otherwise receive any such
capital stock of Corners.
4.10 Title to Assets. Except for liens set forth in Schedule CC,
Corners is the sole and unconditional owner of, with good and
marketable title to, all the assets and patents listed in the
schedules as owned by them and all other property and assets are
free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in
Schedules DD and EE, all material contracts, agreements, plans,
promissory notes, mortgages, leases, policies, licenses,
franchises or similar instruments to which Corners is a party are
valid and in full force and effect on the date hereof, and
Corners has not breached any material provision of, and is not in
default in any material respect under the terms of, any such
contract, agreement, plan, promissory note, mortgage, lease,
policy, license, franchise or similar instrument which breach or
default would have a material adverse effect upon the business,
operations or financial condition of Corners.
4.12 Legal Proceedings, Etc. Except as set forth in Schedule KK,
there are no civil, criminal, administrative, arbitration or
other such proceedings or investigations pending or, to the
knowledge of Corners, threatened, in which, individually or in
the aggregate, an adverse determination would materially and
adversely affect the assets, properties, business or income of
Corners. Corners has substantially complied with, and is not in
default in any material respect under, any laws, ordinances,
requirements, regulations or orders applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of Corners and
except as set forth in Schedule KK, Corners is not in violation
of or in default with respect to any applicable law or any
applicable rule, regulation, order, writ or decree of any court
or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report
required to be filed with any governmental commission, board,
bureau, agency or instrumentality which violation or default
could have a material adverse effect upon the business,
operations or financial condition of Corners.
4.14 Broker and Finders. Corners shall be solely responsible for
payment to any broker or finder retained by Corners for any
brokerage fees, commissions or finders' fees in connection with
the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by
Corners contained in this Agreement and no statement contained in
any certificate or other instrument delivered or to be delivered
to FrameWaves pursuant hereto or in connection with the
transactions contemplated
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hereby (including without limitation all Schedules and Exhibits
hereto) contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact
necessary in order to make the statements contained herein or
therein not misleading.
4.16 Subsidiaries. Except as listed in Schedule PP, Corners does
not have any other subsidiaries or own capital stock representing
ten percent (10%) or more of the issued and outstanding stock of
any other corporation.
4.17 Consents. Except as listed in Schedule FF, no consent or
approval of, or registration, qualification or filing with, any
other governmental authority or other person is required to be
obtained or accomplished by Corners or any shareholder thereof,
in connection with the consummation of the transactions
contemplated hereby.
4.18 Improper Payments. No person acting on behalf of Corners
has made any payment or otherwise transmitted anything of value,
directly or indirectly, to (a) any official or any government or
agency or political subdivision thereof for the purpose of
influencing any decision affecting the business of Corners, or
(b) any political party or any candidate for elective political
office, nor has any fund or other asset of Corners been
maintained that was not fully and accurately recorded on the
books of account of Corners.
4.19 Copies of Documents. Corners has made available for
inspection and copying by FrameWaves and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with any
governmental agencies which are material to the terms and
conditions contained in this Agreement. Furthermore, all filings
by Corners with governmental agencies, including but not limited
to the Internal Revenue Service, have contained information which
is true and correct in all material respects and did not contain
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not
misleading or which could have any material adverse effect upon
the financial condition or operations of Corners or adversely
affect the objectives of this Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of
Corners represents and warrants to FrameWaves that the shares of
FrameWaves being acquired pursuant to this Agreement are being
acquired for his own account and for investment and not with a
view to the public resale or distribution of such shares and
further acknowledges that the shares being issued have not been
registered under the Securities Act and are "restricted
securities" as that term is defined in Rule 144 promulgated under
the Securities Act and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption
from such registration is available.
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ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of FrameWaves. During the period
from the date hereof to the date of Closing, FrameWaves shall:
(a) Conduct its operations in the ordinary course of
business, including but not limited to, paying all
obligations as they mature, complying with all applicable
tax laws, filing all tax returns required to be filed and
paying all taxes due;
(b) Maintain its records and books of account in a
manner that fairly and correctly reflects its income,
expenses, assets and liabilities.
FrameWaves shall not during such period, except in the
ordinary course of business, without the prior written consent of
Corners:
(c) Except as otherwise contemplated or required by
this Agreement, sell, dispose of or encumber any of its
properties or assets;
(d) Except as set forth in paragraph 5.01(c) above,
declare or pay any dividends on shares of its capital stock
or make any other distribution of assets to the holders
thereof;
(e) Except as set forth in paragraph 5.01(d) above,
issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to
issue, reissue or sell, any shares of its capital stock or
acquire or agree to acquire any shares of its capital stock;
(f) Except as otherwise contemplated and required by
this Agreement, amend its Articles of Incorporation or merge
or consolidate with or into any other corporation or sell
all or substantially all of its assets or change in any
manner the rights of its capital stock or other securities;
(g) Except as contemplated or required by this
Agreement, pay or incur any obligation or liability, direct
or contingent, of more than $1,000;
(h) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for
obligations of any other party, or make loans or advances to
any other party;
(i) Make any material change in its insurance coverage;
E-14
(j) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees;
except in accordance with existing employment contracts;
(k) Enter into any agreement or make any commitment to
any labor union or organization;
(l) Make any capital expenditures.
5.02 Conduct and Transactions of Corners. During the period from
the date hereof to the date of Closing, Corners shall:
(a) Obtain an investment letter from each shareholder
of Corners in a form substantially like that attached hereto
as Exhibit B;
(b) Conduct the operations of Corners in the ordinary
course of business.
Corners shall not during such period, except in the ordinary
course of business, without the prior written consent of
FrameWaves:
(c) Except as otherwise contemplated or required by
this Agreement, sell, dispose of or encumber any of the
properties or assets of Corners;
(d) Declare or pay any dividends on shares of its
capital stock or make any other distribution of assets to
the holders thereof;
(e) Issue, reissue or sell, or issue options or rights
to subscribe to, or enter into any contract or commitment to
issue, reissue or sell, any shares of its capital stock or
acquire or agree to acquire any shares of its capital stock;
(f) Except as otherwise contemplated and required by
this Agreement, amend its Articles of Incorporation or merge
or consolidate with or into any other corporation or sell
all or substantially all of its assets or change in any
manner the rights of its capital stock or other securities;
(g) Except as otherwise contemplated and required by
this Agreement, pay or incur any obligation or liability,
direct or contingent, of more than $1,000;
(h) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for
obligations of any other party, or make loans or advances to
any other party;
(i) Make any material change in its insurance coverage;
E-15
(j) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees;
except in accordance with existing employment contracts;
(k) Enter into any agreement or make any commitment to
any labor union or organization;
(l) Make any material capital expenditures.
(m) Allow any of the foregoing actions to be taken by
any subsidiary of Corners.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the
date of Closing of the acquisition, FrameWaves and Corners agree
to use their best efforts to give the other party, including its
representatives and agents, full access to the premises, books
and records of each of the entities, and to furnish the other
with such financial and operating data and other information
including, but not limited to, copies of all legal documents and
instruments referred to on any schedule or exhibit hereto, with
respect to the business and properties of FrameWaves or Corners,
as the case may be, as the other shall from time to time request;
provided, however, if there are any such investigations: (1) they
shall be conducted in such manner as not to unreasonably
interfere with the operation of the business of the other parties
and (2) such right of inspection shall not affect in any way
whatsoever any of the representations or warranties given by the
respective parties hereunder. In the event of termination of
this Agreement, FrameWaves and Corners will each return to the
other all documents, work papers and other materials obtained
from the other party in connection with the transactions
contemplated hereby, and will take such other steps necessary to
protect the confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Corners. The obligation of
Corners to perform this Agreement is subject to the satisfaction
of Corners to the following conditions precedents, to be
performed by FrameWaves, on or before the Closing unless waived
in writing by Corners.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by
FrameWaves which in the opinion of Corners would materially
adversely affect the proposed transaction and intent of the
parties as set forth in this Agreement. The representations
and warranties of FrameWaves set forth in Article 3 hereof
shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing as though made
on and as of the Closing, except as otherwise permitted by
this Agreement.
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(b) Performance of Obligations. FrameWaves shall have
in all material respects performed all agreements required
to be performed by it under this Agreement and shall have
performed in all material respects any actions contemplated
by this Agreement prior to or on the Closing and FrameWaves
shall have complied in all material respects with the course
of conduct required by this Agreement.
(c) Corporate Action. FrameWaves shall have furnished
minutes, certified copies of corporate resolutions and/or
other documentary evidence satisfactory to counsel for
Corners that FrameWaves has submitted with this Agreement
and any other documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the
shareholders of Corners and any consents necessary for or
approval of any party listed on any Schedule delivered by
FrameWaves whose consent or approval is required pursuant
thereto shall have been obtained.
(e) Financial Statements. Corners shall have been
furnished with unaudited financial statements of FrameWaves
including, but not limited to, balance sheets and profit and
loss statements for the periods that ended December 31, 1999
and November 30, 2000, prepared in accordance with generally
accepted accounting principles and which fairly present the
financial condition of FrameWaves at the dates thereof.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by FrameWaves of the transactions
contemplated by this Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations,
consents, approvals, permits and orders of all federal and
state governmental agencies required to be obtained by
FrameWaves for consummation of the transactions contemplated
by this Agreement shall have been obtained.
(h) Changes in Financial Condition of FrameWaves.
There shall not have occurred any material adverse change in
the financial condition or in the operations of the business
of FrameWaves, except expenditures in furtherance of this
Agreement.
(i) Absence of Pending Litigation. FrameWaves is not
engaged in or threatened with any suit, action, or legal,
administrative or other proceedings or governmental
investigations pertaining to this Agreement or the
consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. Corners shall
have received in form and substance satisfactory to counsel
for Corners a letter instructing and authorizing the
Registrar and Transfer Agent for the shares of common stock
of FrameWaves to issue stock certificates representing
ownership of FrameWaves common stock to Corners
E-17
shareholders in accordance with the terms of this Agreement
and a letter from said Registrar and Transfer Agent
acknowledging receipt of the letter of instruction and
stating to the effect that the Registrar and Transfer Agent
holds adequate supplies of stock certificates necessary to
comply with the letter of instruction and the terms and
conditions of this Agreement.
7.02 Conditions to Obligations of FrameWaves. The obligation of
FrameWaves to perform this Agreement is subject to the
satisfaction of FrameWaves to the following condition precedents,
to be performed by Corners, on or before the Closing unless
waived in writing by FrameWaves.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by Corners,
which in the opinion of FrameWaves, would materially
adversely affect the proposed transaction and intent of the
parties as set forth in this Agreement. The representations
and warranties of Corners set forth in Article 4 hereof
shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing as though made
on and as of the Closing, except as otherwise permitted by
this Agreement.
(b) Performance of Obligations. Corners shall have in
all material respects performed all agreements required to
be performed by it under this Agreement and shall have
performed in all material respects any actions contemplated
by this Agreement prior to or on the Closing and Corners
shall have complied in all respects with the course of
conduct required by this Agreement.
(c) Corporate Action. Corners shall have furnished
minutes, certified copies of corporate resolutions and/or
other documentary evidence satisfactory to Counsel for
FrameWaves that Corners has submitted with this Agreement
and any other documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval
of any party listed on any Schedule delivered by Corners,
whose consent or approval is required pursuant thereto,
shall have been obtained.
(e) Financial Statements. FrameWaves shall have been
furnished with unaudited financial statements of Corners
including, but not limited to, balance sheets and profit and
loss statements for the periods that ended December 31, 1999
and November 30, 2000, prepared in accordance with generally
accepted accounting principles and which fairly present the
financial condition of Corners at the dates thereof.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by Corners of the transactions
contemplated by this Agreement shall have been fulfilled.
E-18
(g) Governmental Approval. All authorizations,
consents, approvals, permits and orders of all federal and
state governmental agencies required to be obtained by
Corners for consummation of the transactions contemplated by
this Agreement shall have been obtained.
(h) Employment Agreements. Existing Corners employment
agreements will have been delivered to counsel for
FrameWaves.
(i) Changes in Financial Condition of Corners. There
shall not have occurred any material adverse change in the
financial condition or in the operations of the business of
Corners, except expenditures in furtherance of this
Agreement.
(j) Absence of Pending Litigation. Corners is not
engaged in or threatened with any suit, action, or legal,
administrative or other proceedings or governmental
investigations pertaining to this Agreement or the
consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Corners shareholders
shall have approved the Agreement and Plan of
Reorganization.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and
agree that they shall, from time to time, execute and deliver or
cause to be executed and delivered all such further instruments
of conveyance, transfer, assignments, receipts and other
instruments, and shall take or cause to be taken such further or
other actions as the other party or parties to this Agreement may
reasonably deem necessary in order to carry out the purposes and
intent of this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate,
schedule, exhibit or other written instrument delivered by
FrameWaves or Corners pursuant hereto, or otherwise adopted by
FrameWaves, by its written approval, or by Corners by its written
approval, or in connection with the transactions contemplated
hereby, shall be deemed representations and warranties by
FrameWaves or Corners as the case may be. All representations,
warranties and agreements made by either party shall survive for
the period of the applicable statute of limitations and until the
discovery of any claim, loss, liability or other matter based on
fraud, if longer.
E-19
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary
notwithstanding, this Agreement and any agreement executed as
required hereunder and the acquisition contemplated hereby may be
terminated at any time before the Closing as follows:
(a) By mutual written consent of the Boards of
Directors of FrameWaves and Corners.
(b) By the Board of Directors of FrameWaves if any of
the conditions set forth in Section 7.02 shall not have been
satisfied by the Closing Date.
(c) By the Board of Directors of Corners if any of the
conditions set forth in Section 7.01 shall not have been
satisfied by the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions;
Payment of Expenses. In the event this Agreement and the
acquisition are terminated and abandoned pursuant to this Article
10 hereof, this Agreement shall become void and of no force and
effect and there shall be no liability on the part of any of the
parties hereto, or their respective directors, officers,
shareholders or controlling persons to each other. Each party
hereto will pay all costs and expenses incident to its
negotiation and preparation of this Agreement and any of the
documents evidencing the transactions contemplated hereby,
including fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.01 Exchange of Shares. At the Closing, FrameWaves shall
issue a letter to the transfer agent of FrameWaves with a copy of
the resolution of the Board of Directors of FrameWaves
authorizing and directing the issuance of FrameWaves shares as
set forth on Exhibit A to this Agreement.
11.02 Restrictions on Shares Issued to Corners. Due to the
fact that Corners will receive shares of FrameWaves common stock
in connection with the acquisition which have not been registered
under the 1933 Act by virtue of the exemption provided in Section
4(2) of such Act, those shares of FrameWaves will contain the
following legend:
The shares represented by this
certificate have not been registered under
the Securities Act of 1933. The shares have
been acquired for investment and may not be
sold or offered for sale in the absence of an
effective Registration Statement for the
shares under the Securities Act of 1933 or an
opinion of counsel to the Corporation that
such registration is not required.
E-20
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and
enforced in accordance with the laws of the State of Nevada
excluding the conflicts of laws.
12.02 Notices. All notices necessary or appropriate under
this Agreement shall be effective when personally delivered or
deposited in the United States mail, postage prepaid, certified
or registered, return receipt requested, and addressed to the
parties last known address which addresses are currently as
follows:
If to "FrameWaves"
FrameWaves, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
If to "Corners"
Corners, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
12.03 Amendment and Waiver. The parties hereby may, by
mutual agreement in writing signed by each party, amend this
Agreement in any respect. Any term or provision of this
Agreement may be waived in writing at any time by the party which
is entitled to the benefits thereof, such waiver right shall
include, but not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies in representations by the
other contained in this Agreement or in any document
delivered pursuant hereto;
(c) Waive compliance by the other with any of the
covenants contained in this Agreement, and performance of
any obligations by the other; and
(d) Waive the fulfillment of any condition that is
precedent to the performance by the party so waiving of any
of its obligations under this Agreement. Any writing on the
part of a party relating to such amendment, extension or
waiver as provided in this Section 12.03 shall be valid if
authorized or ratified by the Board of Directors of such
party.
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12.04 Remedies not Exclusive. No remedy conferred by any of
the specific provisions of this Agreement is intended to be
exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies
by FrameWaves or Corners shall not constitute a waiver of the
right to pursue other available remedies.
12.05 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
12.06 Benefit. This Agreement shall be binding upon, and
inure to the benefit of, the respective successors and assigns of
FrameWaves and Corners and its shareholders.
12.07 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto, represent the entire agreement of the
undersigned regarding the subject matter hereof, and supersedes
all prior written or oral understandings or agreements between
the parties.
12.08 Each Party to Bear its Own Expense. FrameWaves and
Corners shall each bear their own respective expenses incurred in
connection with the negotiation, execution, closing, and
performance of this Agreement, including counsel fees and
accountant fees.
12.09 Captions and Section Headings. Captions and section
headings used herein are for convenience only and shall not
control or affect the meaning or construction of any provision of
this Agreement.
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Executed as of the date first written above.
FrameWaves, Inc. Corners, Inc.
a Nevada corporation a Nevada corporation
By: /s/▇▇▇▇▇▇ ▇. Thhomsen By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
The undersigned hereby approves the Agreement and Plan of
Reorganization with FrameWaves, Inc., a Nevada corporation. The
undersigned hereby represents and warrants that the undersigned
has read the Agreement and Plan of Reorganization with
FrameWaves, Inc., and understands its terms and conditions.
Shareholders of Corners, Inc., a Nevada corporation
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
E-23
EXHIBIT A
Name of Number of
Shareholder Shares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 333,334
▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇ 333,333
▇▇▇▇▇ ▇▇▇▇▇▇▇ 333,333
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
ACQUIRER: [Name of Corners shareholder]
ISSUER: FrameWaves, Inc.
SECURITY: Common Stock, par value $.001
QUANTITY: 333,333 Shares
In connection with the acquisition of the above-listed
Securities of the Company, I, the purchaser represent to the
Company the following:
(1) Investment. I am aware of the Company's business
affairs and financial condition. I am acquiring the Securities
for investment for my own account only and not with a view to, or
for resale in connection with, any "distribution" thereof within
the meaning of the Securities Act of 1933 (as Amended). These
securities have not been registered under the Securities Act by
reason of a specific exemption therefrom, which exemption depends
on, among other things, the bona fide nature of the investment
intent as expressed herein. In this connection I understand
that, in view of the Securities and Exchange Commission ("SEC"),
the statutory basis for such exemption may be unavailable if my
representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until
an increase or decrease in the market price of the Securities or
for the period of one year or any other fixed period in the
future.
(2) Restrictions on Transfer Under Securities Act. I
further acknowledge and understand that the Securities must be
held indefinitely unless they are subsequently registered under
the Securities Act or unless an exemption from such registration
is available. Moreover, I understand that the Company is under
no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or unless the Company
receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required.
(3) Sales Under Rule 144. I am aware of the adoption of
Rule 144 by the SEC promulgated under the Securities Act, which
in substance permits limited public resale of securities acquired
in a non- public offering subject to the satisfaction of certain
conditions, including: (i) the availability of certain current
public information about the Company, (ii) the resale being made
through a broker in an unsolicited "broker's transaction" or in
transactions directly with a " market maker," and (iv) the amount
of securities sold during any three-month period not exceeding
specified limitations (generally 1% of the total shares
outstanding).
(4) Limitations on Rule 144. I further acknowledge and
understand that the Company is not now, and at any time I wish to
sell the Securities may not be, satisfying the public information
requirement of Rule 144, and, in such case, I would be precluded
from selling the Securities under Rule 144 even if the minimum
holding period had been satisfied.
E-25
(5) Sales Not Under Rule 144. I further acknowledge that,
if all the requirements of Rule 144 are not met, then Regulation
A, or some other registration exemption will be required; and
that, although Rule 144 is not exclusive, the staff of the
Commission has expressed its opinion (i) that persons proposing
to sell private placement securities other than in a registered
offering or exemption from registration is available for such
offers or sales, and (ii) that such persons and the brokers who
participate in the transactions do so their own risk.
(6) Stop Transfer Instructions. I further understand that
stop transfer instructions will be in effect with respect to the
transfer of the Securities consistent with the above.
(7) Additional Representations and Warranties. In
addition, I represent and warrant:
(i) That I have had the opportunity to ask
questions of, and receive answers from, the
Company (or its agents) concerning the
Company and my proposed acquisition of the
Securities;
(ii) That I have concluded that I have
sufficient information upon which to base my
decision to acquire the Securities;
(iii) That I have made my own
determination of the value of the Securities
and have not relied upon any statements,
representations or warranties of the Company
regarding the value of the Securities or the
business prospects of the Company;
(iv) That I understand that in acquiring the
Securities, I am making a highly speculative
investment with the knowledge that the
Company is in the initial stages of
development;
(v) That I am capable of bearing the
economic risk and burdens of the investment,
the possibility of complete loss of all of
the investment, and the possible inability to
readily liquidate the investment due to the
lack of public market; and
(vi) That I understand that, in selling and
transferring the Securities, the Company had
relied upon an exemption from the
registration requirements of the Securities
Act and that, in an attempt to effect
compliance with all the conditions of such
exemption, the Company is relying in good
faith upon all of my foregoing
representations and warranties.
SIGNATURE OF ACQUIRER Date: December 27, 2000
______________________________________
[Name of Corners shareholder]
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