DISTRIBUTION
AGREEMENT
THIS
DISTRIBUTION AGREEMENT (the " Agreement ") is made and
entered into this 30th day of April 2004, by and between
Draco Holding Corporation , a Nevada corporation ("
Draco "), and Jump'n Jax, Inc. , a Utah
corporation and wholly-owned subsidiary of Draco (" Jump'n Jax,
Inc. ").
W I T N E S S E T
H:
WHEREAS, Draco
is the parent of Jump'n Jax and Jump'n Jax is a wholly-owned
subsidiary of Draco;
WHEREAS, Draco
anticipates closing an Agreement for Share Exchange (the "
Acquisition ") with Hong Xiang Petroleum Group Limited, a
British Virgin Islands corporation ("HXP"), which transaction in
expected to close on or about April 30, 2004;
WHEREAS,
conditioned upon the closing of the Acquisition, the Board of
Directors of Draco has resolved that it would be in the best
interests of Draco and its stockholders that (i) all of the
outstanding securities of Jump'n Jax (the " Jump'n Jax
Shares ") should be distributed to the record common
stockholders of Draco existing at the close of business on March 8,
2004 (the " Record Date ") and immediately prior to the
closing of those certain Stock Purchase Agreements Dated March 9,
2004, subject to adjustment by the National Association of
Securities Dealers, Inc. (the " NASD ") setting an
ex-dividend date, pro rata, on a one share for one share basis (the
" Distribution "); and (ii) that all shares of common
stock of Draco issued after the opening of business on March 9,
2004, would be issued subject to waiver of the Dividend only;
and
WHEREAS, the
respective Boards of Directors of Draco and Jump'n Jax have adopted
resolutions pursuant to which Draco shall deposit all of the Jump'n
Jax Shares with OTC Stock Transfer, Inc. (" OTC Stock
Transfer "), a transfer agency registered with the Securities
and Exchange Commission, to be held by OTC Stock Transfer for
Distribution to the Draco stockholders, subject to the filing and
effectiveness by Jump'n Jax of a registration statement on the
appropriate form and related prospectus with the Securities and
Exchange Commission (the " Registration Statement" and the
Prospectus ) and such comparable applicable state
agencies, or in reliance upon an available exemption from the
applicable federal and state registration requirements as may be
necessary, to lawfully effect the Distribution by dividend (the "
Dividend ) to the Draco stockholders of all of the Jump'n
Jax Shares on Draco's behalf, subject to the terms and provisions
hereof (the " Plan of Distribution ");
NOW, THEREFORE,
in consideration of the closing of the Acquisition and the mutual
covenants and promises contained herein, it is agreed:
Section
1. Plan of
Distribution, Effective Date and Stockholders Entitled to
Participate .
1.1 The effective
date (the " Effective Date ") of the Dividend will be the
same date as the closing of the Acquisition, at which time this
Agreement shall take effect. At the close of business on March 8,
2004, there were 941,390 outstanding shares of common stock of
Draco. Only Draco stockholders of record at that time on March 8,
2004 ( and prior to the closing of those certain Stock Purchase
Agreements Dated March 9, 2004), the Record Date for the Dividend
(subject to the effects of any adjustments resulting from the NASD
setting an ex-dividend date immediately following the closing of
the Acquisition), will be entitled to participate in the Dividend
and Distribution of the Jump'n Jax Shares.
1.2 Prior to the
Effective Date, the Jump'n Jax Board of Directors will have taken
all necessary and requisite action to effect a forward stock split
of the 1,000 shares of Jump'n Jax common stock issued and
outstanding on a 941.390 shares for one share basis, resulting in
941,390 shares of Jump'n Jax common stock outstanding and subject
to the Dividend.
1.3 Draco hereby
conveys all of the assets of Draco and Jump'n Jax at the Record
Date to Jump'n Jax.
1.4 Jump'n Jax
will assume, pay and indemnify and hold Draco harmless from and
against any and all liabilities of Draco and Jump'n Jax that
existed at the Record Date, of every kind and nature whatsoever,
whether by contract, lease, license or otherwise, without
qualification, including the costs and expenses of the Dividend,
the Distribution and the Plan of Distribution.
1.5 The
Distribution and the Plan of Distribution will be subject to the
following conditions:
(a) All of the
Jump'n Jax Shares that are owned by Draco, amounting to 941,390
shares (post-split as per section 1.2 above), will be deposited
with OTC Stock Transfer and held by OTC Stock Transfer in escrow
(the " Distribution Escrow ") with a list of stockholders
of Draco at the Record Date, subject to Distribution, on
satisfaction of the following conditions:
(i) The prior
filing and effectiveness of a Registration Statement and Prospectus
with the Securities and Exchange Commission or an available
exemption from the applicable federal and state registration
requirements applicable to the Distribution of the Jump'n Jax
Shares by Draco, in accordance with all applicable federal and
state securities laws, rules and regulations at Jump'n Jax's sole
cost and expense within a reasonable time, but not later than six
months from the date hereof; and
(ii) Compliance
with applicable "blue sky" laws, rules and regulations respecting
the Dividend and the Distribution, by registration or exemption, in
any state in which any stockholder of Draco resided at the Record
Date, as may be adjusted by any ex-dividend date set by the NASD,
by Jump'n Jax, in accordance with all applicable federal and state
securities laws, rules and regulations at Jump'n Jax's sole cost
and expense within a reasonable time but not later than six months
from the date hereof.
1.6 &n
