EX-2.1 4 ex21.txt AGREEMENT AND PLAN OF EXCHANGE EXHIBIT 2.1 AGREEMENT AND PLAN OF EXCHANGE THIS AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), is dated as of June 20, 2000 and entered into by and between Cedar Mountain Distributors, Inc. a Nevada corporation ("Cedar Mountain"), and Tarus International, Inc., a Kansas corporation ("Tarus"). RECITALS WHEREAS, Cedar Mountain and Tarus and their respective Board of Directors deem it advisable to exchange all of the issued and outstanding common stock of Tarus for 1,000,000 shares of common stock of Cedar Mountain as herein contemplated, pursuant to which exchange the shareholders of Tarus shall become shareholders of Cedar Mountain and Tarus shall become a wholly owned subsidiary of Cedar Mountain; WHEREAS, the exchange provided for hereby (the "Exchange") shall be consummated in accordance with the terms and conditions hereof and shall be consummated as of the close of business on the date on which the duly executed Agreement pursuant to Section 92A.200 of the Nevada General Corporation Law has been duly filed with the Secretary of State of the State of Nevada (the "Effective Date"); it being understood that the parties shall endeavor to cause the Effective Date to occur on the same day as the date of the closing of this Agreement (the "Closing Date"); WHEREAS, Cedar Mountain and Tarus intend that the Exchange shall be recognized as a tax-free reorganization under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"); NOW THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and the provisions hereinafter contained, Cedar Mountain and Tarus agree as follows: ARTICLE I EFFECT OF EXCHANGE ON CEDAR MOUNTAIN SHARES AND TARUS SHARES Section 1.1 Exchange. The manner and basis of exchanging the Tarus shares and the Cedar Mountain shares in the Exchange shall be hereafter in this Article I. Section 1.2. Exchange of Tarus shares. Each of the Tarus shares issued and outstanding on the Effective Date, and all rights in respect thereof, shall on the Effective Date, without any action on the part of any holder thereof, shall be exchanged for five shares of common stock of Cedar Mountain, each of which shall be validly issued, fully paid and nonassessable. ARTICLE II REPRESENTATIONS AND WARRANTIES Tarus represents and warrants as follows: Section 4.1. No Breaches of Statute or Contract; Required Consents. Neither the execution and delivery of this Agreement or the related articles of exchange by Tarus, nor compliance by Tarus with the terms and provisions thereof and of the Plan will: (i) conflict with or result in a breach of any of the provisions of the articles of incorporation, bylaws or other governing instruments of Tarus, or any judgment, order, decree, or ruling to which Tarus is a party, or any injunction to which it is subject of any court of governmental authority or of any agreement, contract or commitment to which it is a party and which is material to the financial condition of Tarus considered as a whole, or (ii) require the affirmative consent or approval of any non-governmental third party (apart from stockholder approval referred to elsewhere herein). Section 2.2. Authorization of Agreement. Tarus has the corporate power to enter into this Agreement and to perform its obligations hereunder; the execution, delivery and, subject to requisite stockholder approval, the performance of this Agreement by Tarus has been duly and validly authorized by the Board of Directors of Tarus, and Tarus has taken, or will use its best efforts to take prior to the Effective Date, all action required by law, its Articles of Incorporation and bylaws to authorize the execution, delivery and performance or this Agreement, the Plan, and related articles of exchange. Section 2.3. Further Representations. (a) Tarus is duly organized, validly existing and in good standing as a corporation under the laws of the State of Kansas; has full corporate power to carry on its business as its is now being conducted, and to own and operate the properties and assets it now owns or operates; and is duly qualified to do business and is in good standing in each jurisdiction where the conduct of its business or the ownership of its properties require such qualification. (b) Tarus has issued and outstanding of 200,000 shares of common stock, each validly issued, fully paid and nonassessable. Tarus has no other class of stock or convertible securities outstanding. There are no existing options, warrants, calls, commitments or rights of any character to purchase or otherwise acquire from Tarus shares of capital stock of any class, no outstanding securities of Tarus that are convertible into shares of capital stock of Tarus of any class, and no options, warrants or rights to purchase from Tarus any such convertible securities. (c) Tarus has heretofore delivered to Cedar Mountain accurate and complete copies of the balance sheet of Tarus at March 31, 2000 (the "Tarus 2000 Balance Sheet") and the related statements of income, stockholders' equity and changes in financial position of Tarus from inception through March 31, 2000. Such balance sheet fairly presents the financial position of Tarus at the date thereof and all such statements of income, stockholders; equity and changes in financial position for the periods indicated, in conformity with accounting principles generally accepted in the United States and consistently applied. (d) Tarus has delivered to Cedar Mountain the following documents, all of which have been signed for identification by the President of Tarus and are dated as of the date hereof: (i) a list of all the liabilities and obligations of Tarus as of May 31, 2000 (Schedule "A"); and (ii) a list of all property and all other assets of Tarus as of May 31, 2000 (Schedule "B"). Tarus has good and marketable title to all properties and assets, real and personal, described in Schedule "B". All of the properties and assets listed on Schedule "B" are free and clear of all mortgages, pledges, liens, charges, security interests or other encumbrances of any nature whatsoever, except for mortgages, pledges, liens, charges, security interests or other encumbrances as set forth in Schedule "B", liens for current taxes not yet due and payable, and imperfections of title, easements and encumbrances, if any, that are not substantial in character, amount or extent and do not materially detract from the value, or interfere with the present or proposed use, of the property or assets subject thereto or affected thereby, or otherwise materially impair business operations. All leases pursuant to which Tarus leases any substantial amount of real or personal property are in good standing, valid and effective in accordance with their respective terms, and under none of these leases is there any existing default, event of default or event that with notice or the lapse of time, or both, would constitute a default and in respect to which Tarus has not taken adequate steps to prevent a default from occurring. (e) Between March 31, 2000 and the date of this Agreement there has not been any material adverse change in the financial condition or in the operations, business or property of Tarus. (f) The structures, equipment, computers, and other physical assets of Tarus that are necessary to the operation of the business being conducted by it are in good operating condition and repair, subject only to the ordinary wear and tear of the business. (g) Neither Tarus nor, to the knowledge of its shareholders, any other party have breached any material provision of, or defaulted in any material respect of the terms of any contract or agreement to which Tarus is a party which would have a materially adverse effect upon the business or financial condition of Tarus. (h) Tarus will deliver such other lists, descriptions, information, schedules, documents and reports as may reasonably be requested by Cedar Mountain. (i) To the best knowledge of its shareholders, there is no default or claim, purported or alleged default, or statement of facts under which lack of notice or the lapse of time, or both, would constitute a default on any obligation to be performed by Tarus under any material lease, contract, plan or other arrangement. (j) No suit, action or legal, administrative or arbitration proceeding, which might materially and adversely affect the overall financial condition, business property or Tarus is pending or, to the knowledge of its shareholders, threatened. (k) Tarus owns or possesses, or reasonably believes it can acquire on reasonable terms, adequate patent rights or other rights to use patent rights, inventions, trademarks, service marks, trade names and copyrights necessary to conduct the business now operated by it, and Tarus has not received any notice of infringement of or conflict with asserted rights of others with respect to any patent, patent rights, inventions, trademarks, service marks, trade names or copyrights which, individually or in the aggregate, if subject of an unfavorable decision, ruling or finding, would have a material adverse affect upon the business, operations, properties, assets or condition, financial or otherwise, of Tarus. (l) The representations and warranties of its shareholders and Tarus shall be as of the date of this Agreement and as of the date of the Effective Date. Any such representation made as of such dates shall survive the Closing Date. All representations and warranties of Tarus are based upon knowledge only of its officers and directors and no one else. ARTICLE III REPRESENTATIONS AND WARRANTIES OF CEDAR MOUNTAIN Cedar Mountain represents and warrants as follows: Section 3.1. Status of Cedar Mountain Shares. The shares of Cedar Mountain shares to be issued to the Tarus shareholders pursuant to this Agreement and plan, when so issued, will be duly and validly authorized and issued, fully paid and nonassessable. Section 3.2. No Breach of Contract; Required Consents. Neither the execution and delivery of this Agreement nor compliance by Cedar Mountain with the terms of provisions hereof and of the plan will: (i) conflict with or result in a breach of any of the provisions of the Articles of Incorporation or bylaws or other governing instruments of Cedar Mountain, or any judgment, order, decree, or ruling to which Cedar Mountain is a party, or any injunction to which it is subject of any court or government authority, or of any agreement, contract or commitment to which Cedar Mountain is a party and which is material to the financial condition or results of operations or conduct of the business of Cedar Mountain considered as a whole, or (ii) require the affirmative consent or approval of any non-governmental third party. Section 3.3. Authorization of Agreement. Cedar Mountain has the corporate power to enter into this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by Cedar Mountain have been duly and validly authorized and approved by the Board of Directors of Cedar Mountain; and Cedar Mountain has taken, or will use its best efforts to take prior to the Effective Date, all action required by law, its Articles of Incorporation or bylaws to authorize the execution, delivery and performance of this Agreement and the Plan. Section 3.4. Current Shares Outstanding. As of the date of this agreement, there are currently issued 2,000,000 shares of fully paid and validly issued common stock. ARTICLE IV CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE DATE Section 4.1. Access; Operation of Business between the Date of this Agreement and the Effective Date. (a) Access. Tarus and Cedar Mountain each agrees to furnish the other with such financial and operating data and other information with respect to the business and properties of it as the other shall from time to time reasonably request in furtherance of consummating the Exchange; provided, however, that any such investigation shall not affect any of the representations and warranties hereunder. In the event of termination of this Agreement, Tarus and Cedar Mountain will each return to the other all documents and other material obtained from the other in connection with the transactions contemplated hereby, and each shall maintain the confidentiality of such materials. (b) Conduct of Business. Tarus [sic] and Cedar Mountain shall continue to conduct their business in conformity with established industry practice in a diligent manner and will use their best efforts to preserve intact their present business organizations and preserve their relationships with persons having business dealings with them. (c) No Mergers. Tarus and Cedar Mountain will not merge or consolidate with any other corporation, or acquire any stock or, except in the ordinary course of business, any business, property or assets of any other person, firm, association, corporation or other business organization. (d) No Securities Issuances. Tarus and Cedar Mountain will not issue any shares of any class of their capital stock, or enter into any contract, or grant any option, warrant or right, calling for the issuance of any such shares, and will not create or issue any securities convertible into any such shares or convertible into securities in turn so convertible or enter into any contract, or grant any option, warrant or right, calling for the issuance of any such convertible securities. Section 4.3. Stockholder Approval of Tarus. Tarus acknowledges and represents that the execution of this Agreement by James R. Smith as the sole shareholder of Tarus, shall constitute all necessary shareholder approval of the transaction contemplated hereby as is necessary under Kansas law. James R. Smith further acknowledges and represents that the shares of Cedar Mountain he or his assigns may acquire as a result of the Exchange contemplated herein are being acquired for investment purposes only and not with a view toward their redistribution or re-offering. All stock certificates representing shares of Cedar Mountain issued to the shareholders of Tarus shall be endorsed with the following restrictive 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 offered, sold or otherwise transferred in the absence of an effective registration statement for the shares under the Securities Act of 1933, or a prior opinion of counsel satisfactory to the issuer, that registration is not required under the Act. Cedar Mountain shall obtain approval of the Exchange by consent of a majority of the shareholders in interest without a shareholder meeting as provided by Nevada law. ARTICLE V CONDITIONS TO OBLIGATIONS OF CEDAR MOUNTAIN AND TARUS Section 5.1. General Conditions. The obligations of the parties hereto to effect the Exchange shall be subject to the following conditions: (a) No Governmental Proceedings. No governmental action or proceeding shall have been instituted or be threatened at the Closing Date by or before a court or other governmental body, agency or authority to restrain or prohibit the transactions contemplated by this Agreement. (b) No Litigation. There shall be no litigation pending at the Closing Date challenging the authority of either Tarus or Cedar Mountain or the officers or directors of either to enter into this Agreement or seeking to restrain or prohibit the transactions contemplated hereby, which the Board of Directors of either Tarus or Cedar Mountain shall reasonably believe to present a substantial risk either of restraining or prohibiting such transactions or of resulting in the award of material damages or other relief. (c) Statutory Requirements and Approvals. All statutory requirements for the valid consummation by Tarus and Cedar Mountain of the transactions contemplated by this Agreement and the Plan shall have been fulfilled; no approvals of the transactions contemplated by this Agreement shall be required from any federal or state governmental agency or authorities. Section 5.2. Conditions of Obligation of Cedar Mountain. (a) Representations and Warranties of Tarus to be True. The representations and warranties of Tarus herein contained shall be true in all material respects at the Closing Date with the same effect as though made at such time, except to the extent waived hereunder or affected by the transactions contemplated herein; Tarus shall have performed all obligations and complied with all covenants and conditions required by this Agreement to be performed or complied with by it at or prior to the Closing Date; and Tarus shall have delivered to Cedar Mountain a certificate of Tarus in form and substance satisfactory to Cedar Mountain, dated the Closing Date and signed by its President or Vice President to all such effects. (b) Certificate of James R. Smith. Cedar Mountain shall have received a certificate dated the Closing Date and signed by James R. Smith to all such effects and to the effect that the statements contained in the Tarus certificate described above and in any other written documents delivered by or on behalf of Tarus pursuant to the provisions of this Agreement constitute representations and warranties of Tarus under this Agreement to the same extent as if herein set forth in full. (c) Letter from John Garrison, dated as of the Closing Date, that after reading the unaudited financial statements of March 31, 2000 and for the period from March 31, 2000 to the date not more than five business days prior to the delivery of such letter; and making inquiries of certain officials of Tarus who have responsibility for financial and accounting matters regarding the specific items for which representations are requested below; nothing has come to his attention as a result of the foregoing procedures that cause him to believe that at the date of the latest available interim financial statements there was nay change in the capital stock or long-term debt of Tarus or any decreases in net current assets or net assets or Section 5.3. Conditions of Obligation of Tarus. The obligation of Tarus to effect the Exchange shall be subject to the following conditions: (a) Representations and Warranties of Cedar Mountain to e True. The representations and warranties of Cedar Mountain herein contained shall be true in all material respects at the Closing Date with the same effect as though made at such time, except to the extent waived hereunder or affected by the transactions contemplated herein; Cedar Mountain shall have performed all obligations and complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to the Closing Date; and Cedar Mountain shall have delivered to Tarus a certificate of Cedar Mountain in form and substance satisfactory to Tarus, dated the Closing Date and signed by its President and its principal financial officer, to all such effects. ARTICLE VI INDEMNIFICATION Section 6.1. Continuation of Representation and Warranties. Cedar Mountain and Tarus agree that the representations, warranties and covenants of Cedar Mountain and Tarus contained herein or in any instrument or certificate delivered hereunder shall survive the Effective Date of the Exchange, regardless of any investigation or inquiry by or on behalf of Cedar Mountain and Tarus. Section 6.2. Indemnification by Tarus. Tarus agrees to indemnify and hold harmless Cedar Mountain and each person, if any, who controls Cedar Mountain within the meaning of Section 15 of the 1933 Act against any and all losses, liabilities, claims, damages and expenses (including interest, expenses of litigation and attorneys' fees) arising out of or as a result of any inaccuracy or breach of any of the representations, warranties and covenants of Tarus contained in this Agreement and contained in any instrument, schedule or certificate delivered to Cedar Mountain pursuant to this Agreement, or the defense or settlement of any claim asserted against Cedar Mountain challenging any such representation, warranty and covenant, or the failure or default of Tarus to perform or observe any covenant or condition under this Agreement. Section 6.3. Indemnification by Cedar Mountain. Cedar Mountain agrees to indemnify and hold harmless Tarus and each person, if any, who controls Tarus against any and all losses, liabilities, claims, damages and expenses (including interest, expenses of litigation and attorneys' fees) arising out of or as a result of any inaccuracy or breach of any of the representations, warranties and covenants of Cedar Moutnain contained in this Agreement and contained in any instrument or certificate, delivered to Tarus pursuant to this Agreement, or the defense or settlement of any claim asserted against Tarus challenging any such representation, warranty and covenant, or the failure or default of Cedar Mountain to perform or observe any covenant or condition under this Agreement. Section 6.4. Notice. Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to do so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this Agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. ARTICLE VII MODIFICATION, WAIVERS AND ABANDONMENT Section 7.1. Modification. Tarus and Cedar Mountain may, by mutual consent of the respective Board of Directors, amend, modify or supplement this Agreement in such manner as may be mutually agreed upon in a writing executed by Tarus and Cedar Mountain at any time before or after action hereon by the stockholders of Tarus and Cedar Mountain; provided, however, that no such amendment, modification or supplement shall affect the rights of the stockholders of Tarus or Cedar Mountain in a manner which is materially adverse to such stockholders in the judgment of the Board of Directors or Tarus and Cedar Mountain, respectively. Section 7.2. Waivers. Each of Tarus and Cedar Mountain may, pursuant to action by its respective Board of Directors, by an instrument in writing , extend the time for or waive the performance of any of the obligations of the other or waive compliance by the other with any of the covenants or conditions contained herein; provided, however, that no such waiver or extension shall affect the rights of the stockholders of Cedar Mountain or Tarus in an manner which would be materially adverse to such stockholders. Section 7.3. Abandonment. The Exchange may be abandoned before the Closing Date of the Exchange without liability on the part of any party hereto exercising such right of abandonment or restriction on the future activities of either party hereto. (a) Mutual Consent. By the mutual consent of the Boards of Directors of Cedar Mountain and Tarus evidenced by a writing by Cedar Mountain and Tarus or; (b) Lapse of Time. By the Board of Directors of Cedar Mountain or Tarus if the Effective Date has not occurred on or prior to August 31, 2000; provided, however, that such date shall be extended for up to twenty-five (25) days in the event an order restraining or prohibiting the Exchange has been issued by any public authority or court. The power of abandonment provided for by this Section 7.3 may be exercised by Cedar Mountain or Tarus only by their respective Boards of Directors and will be effective only after written notice thereof, signed on behalf of the party for which it is given by its Chairman of the Board or President, shall have been given to the other. If the Exchange shall be abandoned, no articles of exchange or certificates relating to the Exchange shall be filed by the officers of any such party in the States of Nevada and Kansas. Abandonment shall not effect any rights theretofore accruing hereunder. ARTICLE VIII ADDITIONAL MATTERS Section 8.1. Management. The parties agree that the respective corporations to the Exchange shall continue to have the same management after the contemplated Exchange that they had prior to the Exchange. Section 8.2. Closing. The Closing of the Exchange contemplated by this Agreement shall take place at such time and place as may be convenient to all the parties but in no event later than August 31, 2000. At the Closing Tarus and Cedar Mountain shall deliver and exchange the certificates specified in Sections 5.2(a) and 5.3(a) of this Agreement. Section 8.3. Notices. All notices, requests, demands and other communications which are required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered personally or when mailed by registered or certified mail, postage pre-paid, as follows: If to Cedar Mountain to: c/o James R. Smith 1236 East Frontier Lane Olathe, Kansas 66062 If to Tarus to: c/o James R. Smith 1236 East Frontier Lane Olathe, Kansas 66062 Section 8.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. Section 8.5. Entire Agreement. This Agreement supersedes any and all oral or written agreements heretofore made relating to the subject matter hereof and constitutes the entire agreement of the parties in relation to the subject matter hereof. Section 8.6. No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to given any person, firm or corporation, other than Cedar Mountain and Tarus and their stockholders, any rights or remedies under or by reason of this Agreement. Section 8.7. Headings. The headings in this Agreement are inserted for convenience of reference only and shall not be part of, or control or affect the meaning of this Agreement. Section 8.8. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties hereof has caused this Agreement to be executed on its behalf and attested by its officers thereunto duly authorized, all as of the date and year first above written. CEDAR MOUNTAIN DISTRIBUTORS INC., A NEVADA CORPORATION BY: /s/ JAMES R. SMITH --------------------------------- JAMES R. SMITH PRESIDENT TARUS INTERNATIONAL, INC., A KANSAS CORPORATION BY: /s/ JAMES R. SMITH --------------------------------- JAMES R. SMITH PRESIDENT