AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is dated as of October 10, 2005, by and among Landscape
Contractors Insurance Services, Inc. a California corporation ("Parent"), LCIS
Acquisition Corp., a Nevada corporation and wholly-owned subsidiary of Parent
("Merger Subsidiary"), and Birch Financial, Inc., a Nevada corporation (the
"Company").
WHEREAS, the Company is in the business of providing insurance premium
financing and equipment financing to the "green" industry, deriving
approximately 90% of its insurance premium financing revenues from Parent; and
WHEREAS, the Boards of Directors of Parent, the Company and Merger
Subsidiary, and the majority shareholders of the Company and Merger
Subsidiary, have approved the merger of the Merger Subsidiary with and into
the Company (the "Merger") upon the terms and subject to the conditions set
forth herein; and
WHEREAS, prior to the completion of the Merger, the Company will effected
a 100,001 for one reverse split of its outstanding voting securities, and all
computations herein take into account the effects of that reverse split on the
outstanding securities of the Company; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization within the meaning of Section 368(a)(1)(A)
and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, the parties hereto desire to make certain representations,
warranties, and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER; CONVERSION OF SHARES
ARTICLE 1.1
The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2 hereof), the Merger Subsidiary
will be merged with and into the Company in accordance with the provisions of
Chapter 92A of the Nevada Revised Statutes (the "Nevada Act"), whereupon the
separate corporate existence of the Merger Subsidiary will cease, and the
Company will continue as the surviving corporation (the "Surviving
Corporation"). From and after the Effective Time, the Surviving Corporation
will possess all the rights, privileges, powers, and franchises and be subject
to all the restrictions, disabilities, and duties of the Company and Merger
Subsidiary, all as more fully described in Chapter 92A of the Nevada Act.
ARTICLE 1.2
Effective Time. As soon as practicable after each of the conditions set
forth in Article 5 and Article 6 has been satisfied or waived, the Company and
Merger Subsidiary will file, or cause to be filed, with the Secretary of State
of the State of Nevada, Articles of Merger for the Merger, which Articles will
be in substantially the form attached hereto as Exhibit 1.2 (the "Articles of
Merger"). The Merger will become effective at the time such filing is made
or, if agreed to by Parent and the Company, such later time or date set forth
in the Articles of Merger (the "Effective Time").
ARTICLE 1.3
Closing.
(a) Closing. Unless this Agreement has been terminated and the
transactions contemplated herein have been abandoned pursuant to
Article 7 hereof, the closing of the Merger (the "Closing") will
take place at a time and on a date (the "Closing Date") to
be specified by the parties; provided, however, that all of the
conditions provided for in Articles 5 and 6 hereof shall have been
satisfied or waived by such date. The Closing shall take place by
the exchange of facsimile counterpart signature pages to the
Closing, at which time the documents and instruments necessary or
appropriate to effect the transactions contemplated herein will be
exchanged by the parties. Within one business day of such closing
by facsimile, the parties shall deliver originals of all closing
deliveries to the offices of ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or such other place
as the parties may agree. Except as otherwise provided herein, all
actions taken at the Closing will be deemed to be taken
simultaneously.
(b) Conversion of Interests. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of the Parent, the Company and/or the
Merger Subsidiary:
(i) Except as set forth in Section 1.3(c)(ii) below and
except with respect to Dissenting Shares (as defined in
Section 1.8), all of the shares of common stock of the
Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time will collectively
be converted into the right to receive an aggregate number
of shares of common stock of the Parent ("Parent Common
Stock") equal to 7.32 shares of the Parent for every share
of the Company issued and outstanding immediately prior to
the Effective Time, for a total of 2,250 shares. The
amount of Parent Common Stock into which shares of Company
Common Stock is converted is referred to herein as the
"Merger Consideration."
(ii) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time will
be canceled in consideration of the issuance of one share
of Parent Common Stock. All Dissenting Shares will be
treated as set forth in Section 1.8
(iii) All of the shares of common stock of Merger
Subsidiary ("Merger Subsidiary Common Stock"), issued and
outstanding immediately prior to the Effective Time will
collectively be converted into a number of shares of
common stock of the Surviving Corporation equal to the
number of shares of Company Common Stock that were issued
and outstanding immediately prior to the Effective Time.
ARTICLE 1.4
Post-Closing Exchanges. As soon as reasonably practicable after the
Effective Time, Parent will mail to each person that held Company Common Stock
immediately prior to the Effective Time ("Shareholder") (i) a notice advising
the Shareholders that the Merger has become effective and a letter of
transmittal in customary and appropriate form (which will specify that
delivery will be effected, and risk of loss and title of a certificate or
certificates that immediately before the Effective Time represented shares of
Company Common Stock (a "Certificate") will pass, only upon proper delivery of
the Certificates to Parent) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the number of shares of Parent
Common Stock such Shareholder is entitled to receive pursuant to Section
1.3(b). Upon surrender of a Certificate for cancellation to Parent or to such
agent or agents as may be appointed by Parent, together with such letter of
transmittal, properly completed and duly executed, and such other customary
documents as may reasonably be required by Parent, the holder of such
Certificate will be entitled to receive in exchange therefor a number of
shares of Parent Common Stock equal to the number of shares of Parent Common
Stock into which the Company Shares theretofore represented by such
Certificate have been converted pursuant to Section 1.3(b), and the
Certificate so surrendered will be canceled. In the event of a transfer of
ownership of Company shares that is not registered in the transfer records of
Company, delivery of the number of Shares of Parent Common Stock to which such
transferred Company Shares are entitled may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate is properly endorsed or otherwise is in proper form for transfer,
if the transfer is in compliance with applicable state and federal securities
laws and the person requesting such delivery pays any transfer or other taxes
required by reason of the delivery to a person other than the registered
holder of such Certificate or establishes to the satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 1.4(a), each Certificate will be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender a number of shares of Parent Common Stock into which the share of
Company Common Stock theretofore represented by such Certificate will have
been converted pursuant to Section 1.3(b). No interest will be paid or will
accrue on shares of Parent Common Stock deliverable upon the surrender of any
Certificate.
(a) All shares of Parent Common Stock issued upon the surrender for
exchange of shares of Company Common Stock in accordance with the terms
hereof will be deemed to have been issued in full satisfaction of all
rights pertaining to such Company Common Stock.
(b) As of the Effective Time, the holders of Certificates representing
shares of Company Common Stock will cease to have any rights as
shareholders of the Company (except such rights, if any, as the holders
of Dissenting Shares may have pursuant to the Nevada Act).
(c) No fractional shares of Parent Common Stock will be issued upon the
surrender for exchange of Company Certificates; no dividend or other
distribution of Parent will relate to any fractional share; and such
fractional share interests will not entitle the owner thereof to vote or
to any rights of a shareholder of Parent. All fractional shares of
Parent Common Stock to which a holder of Company Common Stock immediately
prior to the Effective Time would otherwise be entitled, at the Effective
Time, will be aggregated if and to the extent multiple Certificates of
such holder are submitted together to Parent. If a fractional share
results from such aggregation, then such fractional share will be
rounded up to the nearest whole share and each holder of shares of
Company Common Stock Interests who otherwise would be entitled to receive
such fractional share of Parent Common Stock will receive one whole share
in lieu of such fractional share.
(d) To the extent that any outstanding rights exercisable for, or
convertible into, Company Common Stock do not include provisions into
which such rights automatically convert at the Effective Time into rights
exercisable for, or convertible into, Parent Common Stock, on terms
reflecting the exchange rate implicit in the Merger, Parent shall
promptly use commercially reasonable efforts to obtain from the holders
of such rights amendments to governing instruments causing such rights to
become exercisable for, or convertible into, Parent Common Stock, on
terms reflecting the exchange rate implicit in the Merger.
ARTICLE 1.5
Articles of Incorporation of the Surviving Corporation. The Articles of
Incorporation of the Company as in effect immediately prior to the Effective
Time will be the Articles of Incorporation of the Surviving Corporation.
ARTICLE 1.6
Bylaws of the Surviving Corporation. The Bylaws of the Company, as in
effect immediately prior to the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
ARTICLE 1.7
Directors and Officers of the Surviving Corporation. The directors and
officers of the Company, as of the Effective Time, shall continue as the
directors of the Surviving Corporation.
1.8 Dissenting Shares. Notwithstanding any provision of this Agreement
to the contrary, each outstanding share of Company Common Stock, the holder of
which has demanded and perfected such holder's right to dissent from the
Merger and to be paid the fair value of such shares in accordance with
Sections 92A.300 to 92A.500 of the Nevada Act and, as of the Effective Time,
has not effectively withdrawn or lost such dissenters' rights ("Dissenting
Shares"), will not be converted into or represent a right to receive Parent
Common Stock into which Company Common Stock are converted pursuant to Section
1.3(b) hereof, but the holder thereof will be entitled only to such rights as
are granted by Section 92A.300 to 92A.500 of the Nevada Act. Prior to the
Effective Time, the Company will give Parent prompt written notice of
any notice of intent to demand fair value for any Company Common Stock,
withdrawals of such notices, and any other instruments served pursuant to the
Nevada Act and received by the Company. Notwithstanding the provisions of
this Section 1.8, if any Dissenting Shareholder shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to dissent, then, as
of the later of the Effective Time and the occurrence of such event, such
holder's shares shall automatically be converted into and represent only the
right to receive the applicable consideration to which such Shareholder is
then entitled under Section 1.3(b) of this Agreement and Nevada Law, without
interest thereon and upon surrender of the certificate representing such
shares (and the Merger Consideration shall be proportionately adjusted to
reflect the increase in shares of Company Common Stock eligible for conversion
in the Merger).
1.9 Restricted Securities. The parties acknowledge and agree that there
is no market whatsoever for the Parent Common Stock, that the offers and
issuance of shares of Parent Common Stock under this Agreement has not been,
and will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws and that such offer and
issuance are being made in reliance upon exemptions from the registration
requirements of the Securities Act and state securities laws. Accordingly,
all shares of Parent Common Stock issued in connection with the Merger will be
"restricted securities," as that term is defined in Rule 144 promulgated under
the Securities Act, and all certificates representing shares of Parent Common
Stock will bear appropriate legends evidencing the restrictions on transfer
imposed by the Securities Act and other securities laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that the statements
contained in this Article 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Effective Time (as though
made then and as though the Effective Time were substituted for the date of
this Agreement throughout this Article 2), except as set forth in the
disclosure schedule delivered by the Company in connection with the Agreement
(the "Company Disclosure Schedule"). The Company Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs and
subparagraphs contained in this Section 2. Any matter disclosed on the
Company Disclosure Schedule in respect of a particular representation will be
deemed to have been disclosed in respect of any other representation calling
for a similar or related type of disclosure (even if such matter is not
specifically referenced to the lettered and numbered paragraphs relating to
such representation), if and only to the extent that, it is clear from a
reading of the disclosure that it applies to such other representation.
Notwithstanding the foregoing, the Company Disclosure Schedule shall be
deemed to include all information contained in its Annual Report on Form
10-KSB for the calendar year ended December 31, 2004, filed with the
Securities and Exchange Commission (the "SEC") on April 8, 2005, and its
Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2005,
filed with the SEC on May 16, 2005 (including all exhibits to both documents
and incorporated by reference therein, collectively referred to as the "in
\pard plain Periodic Reports"), and the requirement that the Company
Disclosure Schedule be divided in Sections corresponding to the section of
this Article 2 shall not apply to information included in the Company
Disclosure Schedule by means of the Periodic Reports.
ARTICLE 2.1
[intentionally omitted]
ARTICLE 2.2
Corporate Organization, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada with the requisite corporate power and authority to carry on its
business as it is now being conducted and to own, operate and lease its
properties and assets, is duly qualified or licensed to do business as a
foreign corporation in good standing in every other jurisdiction in which the
character or location of the properties and assets owned, leased or operated
by it or the conduct of its business requires such qualification or licensing,
except in such jurisdictions in which the failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect (as defined below) on the Company. The Company
Disclosure Schedule contains a list of all jurisdictions in which the Company
is qualified or licensed to do business and includes complete and correct
copies of the Company's articles of incorporation and bylaws. Other than as
set forth in Section 2.2 of Company Disclosure Schedule, the Company does not
have any subsidiaries or own or control any capital stock of any corporation
or any interest in any partnership, joint venture or other entity.
ARTICLE 2.3
Capitalization. The authorized capital securities of the Company is set
forth in the Company Disclosure Schedule. The number of shares of Company
Common Stock outstanding, as of the date of this Agreement and as set forth in
the Company Disclosure Schedule, represent all of the issued and outstanding
capital securities of the Company. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and
nonassessable and are without, and were not issued in violation of, preemptive
rights. Other than as set forth in the Company Disclosure Schedule, there are
no shares of Company Common Stock or other equity securities of the Company
outstanding or any securities convertible into or exchangeable for such
interests, securities or rights. Other than as set forth on the Company
Disclosure Schedule and pursuant to this Agreement, there is no subscription,
option, warrant, call, right, contract, agreement, commitment, understanding
or arrangement to which the Company is a party, or by which it is bound, with
respect to the issuance, sale, delivery or transfer of the capital securities
of the Company, including any right of conversion or exchange under any
security or other instrument.
ARTICLE 2.4
Authorization, etc. The Company has all requisite corporate power and
authority to enter into, execute, deliver, and, subject to its obtaining
approval for the Merger from the holders of Company Common Stock, perform its
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by the Company and is the valid and binding legal
obligation of the Company enforceable against the Company in accordance with
its terms, subject to bankruptcy, moratorium, principles of equity and other
limitations limiting the rights of creditors generally.
ARTICLE 2.5
Non-Contravention. Except as set forth in the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement,
and each other agreement to be entered into in connection with this Agreement,
nor the consummation of the transactions contemplated herein will:
(a) violate, contravene or be in conflict with any provision
of the articles of incorporation or bylaws of the Company;
(b) be in conflict with, or constitute a default, however defined
(or an event which, with the giving of due notice or lapse of time,
or both, would constitute such a default), under, or cause or permit
the acceleration of the maturity of, or give rise to any right of
termination, cancellation, imposition of fees or penalties under any
debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other
agreement or obligation to which the Company is a party or by which
the Company or any of the Company's properties or assets is bound;
(c) result in the creation or imposition of any pledge, lien,
security interest, restriction, option, claim or charge of any kind
whatsoever ("Encumbrances") upon any property or assets of the
Company under any debt, obligation, contract, agreement or commitment
to which the Company is a party or by which the Company or any of the
Company's assets or properties is bound; or
(d) materially violate any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other
similar authoritative matters (referred to herein individually as a
"Law" and collectively as "Laws") of any foreign, federal, state or
local governmental or quasi-governmental, administrative, regulatory
or judicial court, department, commission, agency, board, bureau,
instrumentality or other authority applicable to the Company or its
assets and properties (referred to herein individually as an
"Authority" and collectively as "Authorities").
ARTICLE 2.6
Consents and Approvals. Except as set forth in the Company Disclosure
Schedule, with respect to the Company, no consent, approval, order or
authorization of or from, or registration, notification, declaration or filing
with ("Consent") any individual or entity, including without limitation any
Authority, is required in connection with the execution, delivery or
performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated herein.
ARTICLE 2.7
Financial Statements. The Company Disclosure Schedule contains a copy of
the financial statements of the Company for the calendar year ended December
31, 2005 and 2004, and the period ended March 31, 2005 (the "Company Financial
Statements"). Except as disclosed therein or in the Company Disclosure
Schedule, the aforesaid Company Financial Statements: (i) are in accordance
with the books and records of the Company and have been prepared in conformity
with United States Generally Accepted Accounting Principals ("GAAP") (except
as stated therein or in the notes thereto); and (ii) are true, complete and
accurate in all material respects and fairly present the financial position of
the Company as of the date thereof, and the income or loss for the period then
ended.
ARTICLE 2.8
Absence of Undisclosed Liabilities. The Company does not have any
material liabilities or obligations or claims of any kind whatsoever, whether
secured or unsecured, accrued or unaccrued, fixed or contingent, matured or
unmatured, known or unknown, direct or indirect, contingent or otherwise and
whether due or to become due (referred to herein individually as a "Liability"
and collectively as "Liabilities"), other than: (a) Liabilities that are fully
reflected or reserved for in the Balance Sheet or not required to be reflected
thereon pursuant to GAAP; (b) Liabilities that are set forth on the Company
Disclosure Schedule; (c) Liabilities incurred by the Company in the ordinary
course of business after the date of the Balance Sheet and consistent with
past practice; or (d) Liabilities in an amount not to exceed $50,000
individually or in the aggregate unless such amounts are disclosed on the
Company Disclosure Schedule.
ARTICLE 2.9
Absence of Certain Changes. Except as set forth in the Company
Disclosure Schedule, since March 31, 2005, the Company has owned and operated
its assets, properties and business in the ordinary course of business and
consistent with past practice. Without limiting the generality of the
foregoing, subject to the aforesaid exceptions:
(a) the Company has not experienced any change that has had or
could reasonably be expected to have a Material Adverse Effect on the
Company; and
(b) the Company has not suffered (i) any loss, damage, destruction
or other property or casualty (whether or not covered by insurance)
or (ii) any loss of officers, employees, dealers, distributors,
independent contractors, customers or suppliers, which had or may
reasonably be expected to result in a Material Adverse Effect on the
Company.
ARTICLE 2.10
Assets. Except as set forth in the Company Disclosure Schedule, the
Company has good and marketable title to all of its assets and properties,
whether or not reflected in the Balance Sheet or acquired after the date
thereof (except for properties sold or otherwise disposed of since the
date thereof in the ordinary course of business and consistent with past
practices), that relate to or are necessary for the Company to conduct its
business and operations as currently conducted (collectively, the "Assets"),
free and clear of any mortgage, pledge, lien, security interest, conditional
or installment sales agreement, encumbrance, claim, easement, right of way,
tenancy, covenant, encroachment, restriction or charge of any kind or nature
(whether or not of record) (a "Lien"), other than (i) liens securing specific
Liabilities shown on the Balance Sheet with respect to which no breach,
violation or default exists; (ii) mechanics', carriers', workers' or other
like liens arising in the ordinary course of business; (iii) minor
imperfections of title that do not individually or in the aggregate, impair
the continued use and operation of the Assets to which they relate in the
operation of the Company as currently conducted; and (iv) liens for current
taxes not yet due and payable or being contested in good faith by appropriate
proceedings ("Permitted Liens").
ARTICLE 2.11
Receivables and Payables.
(a) Except as set forth on the Company Disclosure Schedule, all
accounts receivable of the Company represent sales in the ordinary
course of business and, to the Company's knowledge, are current and
collectible net of any reserves shown on the Balance Sheet and none
of such receivables is subject to any Lien other than a Permitted
Lien.
(b) Except as set forth on the Company Disclosure Schedule, all
payables by the Company arose in bona fide transactions in the
ordinary course of business and no such payable is delinquent by
more than sixty (60) days beyond the due date in its payment.
ARTICLE 2.12
Intellectual Property Rights. The Company owns or has the unrestricted
right to use all patents, patent applications, patent rights, registered and
unregistered trademarks, trademark applications, tradenames, service marks,
service ▇▇▇▇ applications, copyrights, internet domain names, computer
programs and other computer software, inventions, know-how, trade secrets,
technology, proprietary processes, trade dress, software and formulae
(collectively, "Intellectual Property Rights") used in, or necessary for, the
operation of its Business as currently conducted or proposed to be conducted.
Except as set forth on the Company Disclosure Schedule, to the Company's
knowledge, the use by the Company of all Intellectual Property Rights
necessary or required for the conduct of the Business of the Company as
presently conducted and as proposed to be conducted does not infringe or
violate the Intellectual Property Rights of any person or entity. Except as
described on the Company Disclosure Schedule, to the Company's knowledge:
(a) the Company does not own or use any Intellectual Property Rights pursuant
to any written license agreement (other than a so-called "shrink wrap" license
agreements or similar agreements related to off-the-shelf software for which
aggregate licensing fees do not, or would not exceed $1,000, per year (a
"Shrink-Wrap License"); (b) the Company has not granted any person or entity
any rights, pursuant to a written license agreement or otherwise, to use the
Intellectual Property Rights; and (c) the Company owns, has unrestricted right
to use and has sole and exclusive possession of and has good and valid title
to, all of the Intellectual Property Rights owned by the Company, free and
clear of all Liens and Encumbrances. All license agreements relating to
Intellectual Property Rights are binding and there is not, under any of
such licenses, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default, or would
constitute a basis for a claim on non-performance) on the part of the Company
or, to the knowledge of the Company, any other party thereto.
ARTICLE 2.13
Litigation. Except as set forth in the Company Disclosure Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit,
claim or action of any nature or investigation, review or audit of any kind,
or any judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of the Company, threatened or contemplated by
or against or involving the Company, its assets, properties or business or its
directors, officers, agents or employees (but only in their capacity as such),
whether at law or in equity, before or by any person or entity or Authority,
or which questions or challenges the validity of this Agreement or any action
taken or to be taken by the parties hereto pursuant to this Agreement or in
connection with the transactions contemplated herein.
ARTICLE 2.14
Contracts and Commitments; No Default.
(a) Except as set forth in the Company Disclosure Schedule, the
Company is not a party to, nor are any of the Assets bound by, any
written or oral:
(i) employment, non-competition, consulting or severance
agreement, collective bargaining agreement, or pension,
profit-sharing, incentive compensation, deferred compensation,
stock purchase, stock option, stock appreciation right,
group insurance, severance pay or retirement plan or agreement;
(ii) indenture, mortgage, note, installment obligation,
agreement or other instrument relating to the borrowing of
money by the Company;
(iii) contract, agreement, lease (real or personal property)
or arrangement that (A) is not terminable on less than 30
days' notice without penalty, (B) is not over one year in
length of obligation of the Company, or (C) involves an
obligation of more than $50,000 over its term;
(iv) contract, agreement, commitment or license relating to
Intellectual Property Rights (other than a Shrink-Wrap
License);
(v) obligation or requirement to provide funds to or make any
investment (in the form of a loan, capital contribution or
otherwise) in any person or entity; or
(vi) outstanding sales or purchase contracts, commitments or
proposals that will result in any material loss upon completion
or performance thereof after allowance for direct distribution
expenses, or bound by any outstanding contracts, bids, sales or
service proposals quoting prices that are not reasonably
expected to result in a normal profit.
(b) True and complete copies (or summaries, in the case of oral
items) of all agreements disclosed pursuant to this Section 2.14
(the "Company Contracts") have been provided to Parent for review or
are available on the SEC's ▇▇▇▇▇ website. Except as set forth in
the Company Disclosure Schedule, all of the Company Contracts items
are valid and enforceable by and against the Company in accordance
with their terms, and are in full force and effect. The Company is
not in breach, violation or default, however defined, in the
performance of any of its obligations under any of the Company
Contracts, and no facts and circumstances exist which, whether with
the giving of due notice, lapse of time, or both, would constitute
such breach, violation or default thereunder or thereof by the
Company, and, to the knowledge of the Company, no other parties
thereto are in a breach, violation or default, however defined,
thereunder or thereof, and no facts or circumstances exist which,
whether with the giving of due notice, lapse of time, or both,
would constitute such a breach, violation or default thereunder or
thereof.
ARTICLE 2.15
Compliance with Law; Permits and Other Operating Rights. Except as set
forth in the Company Disclosure Schedule, the Assets, properties, business and
operations of the Company are and have been in compliance in all respects with
all Laws applicable to the Company's assets, properties, business and
operations, except where the failure to comply would not have a Material
Adverse Effect. The Company possesses all material permits, licenses and
other authorizations from all Authorities necessary to permit it to operate
its business in the manner in which it presently is conducted, except where
the failure to possession such permits, licenses and other operations would
not have a Material Adverse Effect) and the consummation of the transactions
contemplated by this Agreement will not prevent the Company from being able to
continue to use such permits and operating rights. The Company has not
received notice of any violation of any such applicable Law, and is not in
default with respect to any order, writ, judgment, award, injunction or decree
of any Authority.
ARTICLE 2.16
Brokers. Neither the Company nor, to the knowledge of the Company, any
of its directors, officers or employees, has employed any broker, finder,
investment banker or financial advisor or incurred any liability for any
brokerage fee or commission, finder's fee or financial advisory fee, in
connection with the transactions contemplated hereby, nor is there any basis
known to the Company for any such fee or commission to be claimed by any
person or entity.
ARTICLE 2.17
Issuance of Parent Common Stock. To the Company's knowledge, as of the
date of this Agreement and as of the Effective Time, no facts or circumstances
exist or will exist that could cause the issuance of Parent Common Stock
pursuant to the Merger to fail to meet the exemption from the registration
requirements of the Securities Act set forth in Rule 506 of Regulation D
under of the Securities Act.
ARTICLE 2.18
Books and Records. The books of account, minute books, stock record
books, and other material records of the Company, all of which have been made
available to Parent, are complete and correct in all material respects and
have been maintained in accordance with reasonable business practices. The
minute books of the Company contain accurate and complete records of all
formal meetings held of, and corporate action taken by, the directors and
officers, the managers and committees of the managers of the Company. At the
Closing, all of those books and records will be in the possession of the
Company.
ARTICLE 2.19
Business Generally; Accuracy of Information. No representation or
warranty made by the Company in this Agreement, the Company Disclosure
Schedule, or in any document, agreement or certificate furnished or to be
furnished to Parent at the Closing by or on behalf of the Company in
connection with any of the transactions contemplated by this Agreement
contains or will contain any untrue statement of material fact or omit or will
omit to state any material fact necessary in order to make the statements
herein or therein not misleading in light of the circumstances in which they
are made, and all of the foregoing completely and correctly present the
information required or purported to be set forth herein or therein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE MERGER SUBSIDIARY
Parent and Merger Subsidiary hereby represent and warrant to the Company
that the statements contained in this Article 3 are correct and complete as of
the date of this Agreement and will be correct and complete as of the
Effective Time (as though made then and as though the Effective Time were
substituted for the date of this Agreement throughout this Article 3),
except as set forth in the disclosure schedule delivered by Parent and Merger
Subsidiary in connection with the Agreement (the "Parent Disclosure
Schedule"). The Parent Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs and subparagraphs
contained in this Section 3. Any matter disclosed on the Parent Disclosure
Schedule in respect of a particular representation will be deemed to have been
disclosed in respect of any other representation calling for a similar or
related type of disclosure (even if such matter is not specifically referenced
to the lettered and numbered paragraphs relating to such representation), if
and only to the extent that, it is clear from a reading of the disclosure that
it applies to such other representation.
ARTICLE 3.1
[intentionally omitted]
ARTICLE 3.2
Corporate Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California; and Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Each of
Parent and Merger Subsidiary has all corporate power and authority to own its
properties and to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect on Parent
and Merger Subsidiary. Parent owns all of the outstanding capital stock of
Merger Subsidiary. Parent does not own or control any capital stock of any
corporation or any interest in any partnership, joint venture or other entity,
other than Merger Subsidiary.
ARTICLE 3.3
Authorization. Each of Parent and the Merger Subsidiary has all the
requisite corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated herein. The Board of Directors of
Parent and the Merger Subsidiary, and Parent as the sole shareholder of the
Merger Subsidiary, have taken all action required by law, their respective
articles of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement is the valid and binding
legal obligation of Parent and the Merger Subsidiary enforceable against each
of them in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization or similar
laws that affect creditors' rights generally.
ARTICLE 3.4
Capitalization. The authorized capital securities of the Parent and
Merger Subsidiary are set forth in the Parent Disclosure Schedule. The number
of shares of Parent Common Stock, as of the date of this Agreement and as set
forth in the Parent Disclosure Schedule, represent all of the issued and
outstanding capital securities of the Parent. All issued and outstanding
shares of Parent Common Stock are duly authorized, validly issued, fully paid
and nonassessable and are without, and were not issued in violation of,
preemptive rights. There are no shares of Parent Common Stock or other equity
securities of Parent outstanding or any securities convertible into or
exchangeable for such interests, securities or rights. Other than as set
forth on the Parent Disclosure Schedule and pursuant to this Agreement, there
is no subscription, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement to which Parent is a party, or by
which it is bound, with respect to the issuance, sale, delivery or transfer of
the capital securities of Parent, including any right of conversion or
exchange under any security or other instrument.
ARTICLE 3.5
Non-Contravention. Neither the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated herein
will:
(a) violate any provision of the articles of incorporation or
bylaws of Parent or the Merger Subsidiary; or
(b) be in conflict with, or constitute a default, however defined
(or an event which, with the giving of due notice or lapse of time,
or both, would constitute such a default), under, or cause or permit
the acceleration of the maturity of, or give rise to, any right of
termination, cancellation, imposition of fees or penalties under,
any debt, note, bond, lease, mortgage, indenture, license,
obligation, contract, commitment, franchise, permit, instrument or
other agreement or obligation to which Parent or the Merger
Subsidiary is a party or by which Parent or the Merger Subsidiary or
any of their respective properties or assets is bound;
(c) result in the creation or imposition of any Encumbrance upon
any property or assets of Parent or the Merger Subsidiary under any
debt, obligation, contract, agreement or commitment to which Parent
or the Merger Subsidiary is a party or by which Parent or the Merger
Subsidiary or any of their respective properties or assets is bound;
or
(d) violate any Law of any Authority.
ARTICLE 3.6
Consents and Approvals. No Consent is required by any person or entity,
including without limitation any Authority, in connection with the execution,
delivery and performance by Parent or Merger Subsidiary of this Agreement, or
the consummation of the transactions contemplated herein, other than any
Consent which, if not made or obtained, will not, individually or in the
aggregate, have a Material Adverse Effect on the business of Parent or Merger
Subsidiary.
ARTICLE 3.7
Valid Issuance. The Parent Common Stock to be issued in connection with
the Merger will be duly authorized and, when issued, delivered and paid for as
provided in this Agreement, will be validly issued, fully paid and
non-assessable.
ARTICLE 3.8
Financial Statements. The Parent Disclosure Schedule contains a copy of
the financial statements of the Parent as of the years ended December 31, 2004
and 2003, and the period ended March 31, 2005 (the "Parent Financial
Statements"). Except as disclosed therein or in the Parent Disclosure
Schedule, the aforesaid Parent Financial Statements: (i) are in accordance
with the books and records of the Parent and have been prepared in conformity
with GAAP (except as stated therein or in the notes thereto); and (ii) are
true, complete and accurate in all material respects and fairly present the
financial position of the Parent as of the date thereof, and the income or
loss for the period then ended.
ARTICLE 3.9
Absence of Undisclosed Liabilities. Parent does not have any material
liabilities or obligations or claims of any kind whatsoever, whether secured
or unsecured, accrued or unaccrued, fixed or contingent, matured or unmatured,
known or unknown, direct or indirect, contingent or otherwise and whether due
or to become due (referred to herein individually as a "Liability" and
collectively as "Liabilities"), other than: (a) Liabilities that are fully
reflected or reserved for in the Balance Sheet or not required to be reflected
thereon pursuant to GAAP; (b) Liabilities that are set forth on the Parent
Disclosure Schedule; (c) Liabilities incurred by the Parent in the ordinary
course of business after the date of the Balance Sheet and consistent with
past practice; or (d) Liabilities in an amount not to exceed $50,000
individually or in the aggregate unless such amounts are disclosed on the
Parent Disclosure Schedule.
ARTICLE 3.10
[Intentionally omitted.]
ARTICLE 3.11
Absence of Certain Changes. Except as set forth in the Parent Disclosure
Schedule, Parent has owned and operated its assets, properties and business in
the ordinary course of business and consistent with past practice. Without
limiting the generality of the foregoing, subject to the aforesaid exceptions,
Parent has not experienced any change that has had or could reasonably be
expected to have a Material Adverse Effect on the Parent.
ARTICLE 3.12
Litigation. Except as disclosed in the Parent Disclosure Schedule, there
is no legal, administrative, arbitration, or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind, or any
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of the Parent or the Merger Subsidiary,
threatened or contemplated by or against or involving the Parent, its assets,
properties or business or its directors, officers, agents or employees (but
only in their capacity as such), whether at law or in equity, before or by any
person or entity or Authority, or which questions or challenges the validity
of this Agreement or any action taken or to be taken by the parties hereto
pursuant to this Agreement or in connection with the transactions contemplated
herein.
ARTICLE 3.13
Contracts and Commitments; No Default. The Parent is not a party to, nor
are any of its Assets bound by, any contract, agreement, commitment, note,
covenant or promise, written or oral (a "Parent Contract"); that is not
disclosed in the Parent Disclosure Schedule. Except as disclosed in the
Parent Disclosure Schedule, none of the Parent Contracts contains a provision
requiring the consent of any party with respect to the consummation of the
transactions contemplated by this Agreement. The Parent is not in breach,
violation or default, however defined, in the performance of any of its
obligations under any of the Parent Contracts, and no facts and circumstances
exist which, whether with the giving of due notice, lapse of time, or both,
would constitute such breach, violation or default thereunder or thereof, and,
to the knowledge of the Parent, no other parties thereto are in a breach,
violation or default, however defined, thereunder or thereof, and no facts or
circumstances exist which, whether with the giving of due notice, lapse of
time, or both, would constitute such a breach, violation or default
thereunder or thereof.
ARTICLE 3.14
No Broker or Finder. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Merger or any of the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Parent.
ARTICLE 3.15
Intercompany And Affiliate Transactions; Insider Interests. Except as
expressly identified in the Parent Disclosure Schedule or in the Consent of
Directors of Parent approving the Merger which has been executed and provided
to the Company prior to execution, there are, and during the last two years
there have been, no transactions, agreements or arrangements of any kind,
direct or indirect, between the Parent, on the one hand, and any director,
officer, employee, stockholder, or affiliate of the Parent, on the other hand,
including, without limitation, loans, guarantees or pledges to, by or for the
Parent or from, to, by or for any of such persons, that are currently in
effect.
ARTICLE 3.16
Business Generally; Accuracy of Information. No representation or
warranty made by the Parent or Merger Subsidiary in this Agreement, the Parent
Disclosure Schedule, or in any document, agreement or certificate furnished or
to be furnished to the Company at the Closing by or on behalf of the Parent or
Merger Subsidiary in connection with any of the transactions contemplated by
this Agreement contains or will contain any untrue statement of material fact
or omit or will omit to state any material fact necessary in order to make the
statements herein or therein not misleading in light of the circumstances in
which they are made, and all of the foregoing completely and correctly present
the information required or purported to be set forth herein or therein.
ARTICLE 3.17
Compliance with Law; Permits and Other Operating Rights. The assets,
properties, business and operations of Parent and Merger Subsidiary are and
have been in compliance in all respects with all Laws applicable to the Parent
assets, properties, business and operations, except where the failure to
comply would not have a Material Adverse Effect. Parent and Merger
Subsidiary possess all material permits, licenses and other authorizations
from all Authorities necessary to permit it to operate their businesses in the
manner in which they presently are conducted, except where the failure to
possession such permits, licenses and other operations would not have a
Material Adverse Effect) and the consummation of the transactions contemplated
by this Agreement will not prevent the Parent or Merger Subsidiary from being
able to continue to use such permits and operating rights. Parent has not
received notice of any violation of any such applicable Law, and is not in
default with respect to any order, writ, judgment, award, injunction or decree
of any Authority. Merger Subsidiary has not had operations at any time and
was created after July 1, 2005 for the sole purpose of becoming a party to
this Agreement.
ARTICLE 3.18
Books and Records. The books of account, minute books, stock record
books, and other material records of Parent and Merger Subsidiary, all of
which have been made available to the Company, are complete and correct in all
material respects and have been maintained in accordance with reasonable
business practices. The minute books of the Parent and Merger Subsidiary
contain accurate and complete records of all formal meetings held of, and
corporate action taken by, the directors and officers, the managers and
committees of the managers of the Parent and Merger Subsidiary. Immediately
following Closing, all of those books and records shall be transferred to the
Company.
ARTICLE 3.19
Material Liability to an Authority. Parent has filed all reports or
returns related to all federal, state or local taxes of any time owed or owing
by Parent, and Parent has paid all federal, state and local taxes and
assessments owed by Parent with respect to time periods prior to the Effective
Time. Parent has complied and is in compliance in all respects with all
applicable federal, state, and local laws, statutes, ordinances and
regulations, and any judicial or administrative interpretation thereof,
relating to regulation and protection of human health, safety, the environment
and natural resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Except as indicated in the Parent Disclosure Schedule, Parent has
no obligations under, or with respect to, any retirement plan, employee
benefit plan or plan of any kind subject to the Employee Retirement Income
Security Act of 1974.
ARTICLE 4
COVENANTS OF THE PARTIES
ARTICLE 4.1
Conduct of Business. Except as contemplated by this Agreement or as
contemplated by Section 4.1 of the Company Disclosure Schedule, during the
period from the date of this Agreement to the Closing Date, each of Parent,
the Company and Merger Subsidiary will conduct its business and operations
according to its ordinary and usual course of business consistent with past
practices. Without limiting the generality of the foregoing, and, except as
otherwise expressly provided in this Agreement or as otherwise disclosed on
the Parent Disclosure Schedule or Company Disclosure Schedule, respectively,
prior to the Closing Date, without the prior written consent of the other
party, not to be unreasonably delayed, none of Parent, Merger Subsidiary or
the Company will:
(a) amend its articles of incorporation or bylaws;
(b) issue, reissue, sell, deliver or pledge or authorize or propose
the issuance, reissuance, sale, delivery or pledge of shares of
capital stock of any class, or securities convertible into capital
stock of any class, or any rights, warrants or options to acquire
any convertible securities or capital stock;
(c) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or
any of its other securities;
(d) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, redeem or otherwise acquire any shares
of its capital stock or other securities, alter any term of any of
its outstanding securities;
(e) (i) except as required under any employment agreement, increase
in any manner the compensation of any of its directors, officers or
other employees; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or permitted by any
existing plan, agreement or arrangement to any such director,
officer or employee, whether past or present; or (iii) commit itself
to any additional pension, profit-sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or to any
employment agreement or consulting agreement(arising out of prior
employment ) with or for the benefit of any person, or, except to
the extent required to comply with applicable law, amend any of such
plans or any of such agreements in existence on the date of this
Agreement;
(f) incur, assume, suffer or become subject to, whether directly or
by way of guarantee or otherwise, any Liabilities which,
individually or in the aggregate, exceed $10,000 in the case of
Parent or $50,000 in the case of the Company;
(g) make or enter into any commitment for capital expenditures in
excess of $10,000 in the case of Parent or $50,000 in the case of
the Company;
(h) pay, lend or advance any amount to, or sell, transfer or lease
any properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement or arrangement with, any
of its officers or directors or any affiliate or associate of any of
its officers or directors;
(i) terminate, enter into or amend in any material respect any
contract, agreement, lease, license or commitment, or take any
action or omit to take any action which will cause a breach,
violation or default (however defined) under any contract, except in
the ordinary course of business and consistent with past practice;
(j) acquire any of the business or assets of any other person or
entity;
(k) permit any of its current insurance (or reinsurance) policies
to be cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination, cancellation or
lapse, replacement policies providing coverage equal to or greater
than coverage remaining under those cancelled, terminated or lapsed
are in full force and effect;
(l) enter into other material agreements, commitments or contracts
not in the ordinary course of business or in excess of current
requirements;
(m) settle or compromise any suit, claim or dispute, or threatened
suit, claim or dispute (other than any settlement or compromise
having no effect upon the Company, its assets, operations or
financial position); or
(n) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or
warranty in this Agreement untrue or incorrect in any material
respect.
Nothing herein shall prevent the Company or the Parent from operating
their businesses in the ordinary course and consistent with past practice.
ARTICLE 4.2
Full Access. Throughout the period prior to Closing, each party will
afford to the other and its directors, officers, employees, counsel,
accountants, investment advisors and other authorized representatives and
agents, reasonable access to the facilities, properties, books and records of
the party in order that the other may have full opportunity to make such
investigations as it will desire to make of the affairs of the disclosing
party. Each party will furnish such additional financial and operating data
and other information as the other will, from time to time, reasonably
request, including without limitation access to the working papers of its
independent certified public accountants; provided, however, that any such
investigation will not affect or otherwise diminish or obviate in any respect
any of the representations and warranties of the disclosing party.
ARTICLE 4.3
Confidentiality. Each of the parties hereto agrees that it will not use,
or permit the use of, any of the information relating to any other party
hereto furnished to it in connection with the transactions contemplated herein
("Information") in a manner or for a purpose detrimental to such other party
or otherwise than in connection with the transaction, and that they will not
disclose, divulge, provide or make accessible (collectively, "Disclose"), or
permit the Disclosure of, any of the Information to any person or entity,
other than their respective directors, officers, employees, investment
advisors, accountants, counsel and other authorized representatives and
agents, except as may be required by judicial or administrative process or, in
the opinion of such party's counsel, by other requirements of Law; provided,
however, that prior to any Disclosure of any Information permitted hereunder,
the disclosing party will first obtain the recipients' undertaking to comply
with the provisions of this Section with respect to such information. The
term "Information" as used herein will not include any information relating to
a party that the party disclosing such information can show: (i) to have been
in its possession prior to its receipt from another party hereto; (ii) to be
now or to later become generally available to the public through no fault of
the disclosing party; (iii) to have been available to the public at the time
of its receipt by the disclosing party; (iv) to have been received separately
by the disclosing party in an unrestricted manner from a person entitled to
disclose such information; or (v) to have been developed independently by the
disclosing party without regard to any information received in connection with
this transaction. Each party hereto also agrees to promptly return to the
party from whom it originally received such information all original and
duplicate copies of written materials containing Information should the
transactions contemplated herein not occur. A party hereto will be deemed to
have satisfied its obligations to hold the Information confidential if it
exercises the same care as it takes with respect to its own similar
information.
ARTICLE 4.4
Filings; Consents; Removal of Objections. Subject to the terms and
conditions herein provided, the parties hereto will use their best efforts to
take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all Consents of any person or
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not
in limitation of the foregoing, it is the intent of the parties to consummate
the transactions contemplated herein at the earliest practicable time, and
they respectively agree to exert commercially reasonable efforts to that
end, including without limitation: (i) the removal or satisfaction, if
possible, of any objections to the validity or legality of the transactions
contemplated herein; and (ii) the satisfaction of the conditions to
consummation of the transactions contemplated hereby.
ARTICLE 4.5
Further Assurances; Cooperation; Notification.
(a) Each party hereto will, before, at and after Closing, execute
and deliver such instruments and take such other actions as the
other party or parties, as the case may be, may reasonably require
in order to carry out the intent of this Agreement. Without
limiting the generality of the foregoing, at any time after the
Closing, at the reasonable request of Parent and without further
consideration, the Company and Merger Subsidiary will execute and
deliver such instruments of sale, transfer, conveyance, assignment
and confirmation and take such action as Parent may reasonably deem
necessary or desirable in order to more effectively consummate the
transactions contemplated hereby.
(b) At all times from the date hereof until the Closing, each party
will promptly notify the other in writing of the occurrence of any
event which it reasonably believes will or may result in a failure
by such party to satisfy the conditions specified in this Article 4.
ARTICLE 4.6
Supplements to Disclosure Schedule. Prior to the Closing, each party will
supplement or amend its respective Disclosure Schedule with respect to any
event or development which, if existing or occurring at or prior to the date
of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule or which is necessary to correct any information in
the Disclosure Schedule or in any representation and warranty of the Company
which has been rendered inaccurate by reason of such event or development.
For purposes of determining the accuracy as of the date hereof of the
representations and warranties of the Company contained in Article 2 hereof or
Parent in Article 3 hereof in order to determine the fulfillment of the
conditions set forth herein, the Disclosure Schedule of each party will be
deemed to exclude any information contained in any supplement or amendment
hereto delivered after the delivery of the Disclosure Schedule.
ARTICLE 4.7
Public Announcements. None of the parties hereto will make any public
announcement with respect to the transactions contemplated herein without the
prior written consent of the other parties, which consent will not be
unreasonably withheld or delayed; provided, however, that any of the parties
hereto may at any time make any announcements that are required by applicable
Law so long as the party so required to make an announcement promptly upon
learning of such requirement notifies the other parties of such requirement
and discusses with the other parties in good faith the exact proposed wording
of any such announcement.
ARTICLE 4.8
Satisfaction of Conditions Precedent. Each party will use commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are applicable to them, and to cause the transactions
contemplated by this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all material consents and
authorizations of third parties and to make filings with, and give all notices
to, third parties that may be necessary or reasonably required on its part in
order to effect the transactions contemplated hereby.
4.9
[Intentionally omitted.]
4.10
Preparation of Information Statement. The parties shall jointly and
immediately complete the preparation of an Information Statement (the
"Information Statement"), which the Company shall distribute to its
Shareholders in accordance with applicable SEC requirements. The Company and
Parent each undertake to the other that all information provided for inclusion
in the Information Statement by Company on the one hand and Parent on the
other hand will not contain any untrue statement of material fact or omit to
state a material fact required to be stated herein or therein necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading. The parties shall jointly seek to ensure that
the Information Statement complies with all requirements of applicable state
and federal securities laws.
4.11
Investment Letters. The Company shall send to each Shareholder with the
Information Statement an Investment Representation Letter in a form and
substance approved by Parent (an "Investment Representation Letter"). The
Company shall use reasonable efforts to cause all shareholders to execute and
deliver to Company an Investment Representation Letter as soon as practicable
possible (and shall deliver copies of the same to Parent). In the event that
any Shareholder is not an "Accredited Investor," as defined in Rule 501(a)
under the Securities Act, the Company and Parent shall take steps reasonably
designed to confirm that such Shareholder is (i) capable of evaluating the
merits and risks of investing in the shares of Parent Common Stock, or (ii)
advised by a Purchaser Representative (as defined in Rule 501(h) promulgated
under the Securities Act) in connection with such shareholder's evaluation of
the Merger and the execution of the Investment Representation Letter. Parent
and the Company shall each provide any Shareholders with all non-confidential
information requested by such Shareholder in connection with the solicitation
of the Investment Representation Letter.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS OF THE PARENT
AND MERGER SUBSIDIARY
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of Parent and Merger Subsidiary to effect the transactions
contemplated herein will be subject to the satisfaction at or prior to the
Closing, or waiver by Parent, of each of the following conditions:
ARTICLE 5.1
Representations and Warranties True. The representations and warranties
of the Company contained in this Agreement, including without limitation in
the Company Disclosure Schedule (and not including any changes or additions
delivered to Parent pursuant to Section 4.6), will be true, complete and
accurate in all material respects as of the date when made and at and as of
the Closing Date as though such representations and warranties were made at
and as of such time, except for changes specifically permitted or contemplated
by this Agreement, and except insofar as the representations and warranties
relate expressly and solely to a particular date or period, in which case they
will be true and correct at the Closing with respect to such date or period.
ARTICLE 5.2
Performance. The Company will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Company on
or prior to the Closing.
ARTICLE 5.3
Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by the
shareholders of the Company to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly
taken.
(b) All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, will have been
delivered, made or obtained, and Parent will have received copies
thereof.
ARTICLE 5.4
Agreements and Documents. Parent and Merger Subsidiary will have
received the following agreements and documents, each of which will be in full
force and effect:
(a) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in
Sections 5.1, 5.2, 5.3, 5.5, 5.6 and 5.7 have been duly satisfied
(unless any such condition has been waived by Parent); and
(b) resolutions of the board of directors of the Company and the
stockholders of the Company, certified by the secretary of the
Company, approving the transactions contemplated by this Agreement,
including the Merger.
ARTICLE 5.5
Adverse Changes. No material adverse change will have occurred in the
business, financial condition, prospects, assets or operations of the Company
since March 31, 2005, except as set forth in the Company Disclosure Schedule
or on Schedule 5.5 attached hereto.
ARTICLE 5.6
No Proceeding or Litigation. No suit, action, investigation, inquiry or
other proceeding by any Authority or other person or entity will have been
instituted or threatened which delays or questions the validity or legality of
the transactions contemplated hereby or which, if successfully asserted,
would, in the reasonable judgment of Parent, individually or in the aggregate,
otherwise have a Material Adverse Effect on the Company's business, financial
condition, prospects, assets or operations or prevent or delay the
consummation of the transactions contemplated by this Agreement.
ARTICLE 5.7
Legislation. No Law will have been enacted which prohibits, restricts or
delays the consummation of the transactions contemplated hereby or any of the
conditions to the consummation of such transaction.
ARTICLE 5.8
Appropriate Documentation. The Parent will have received, in a form and
substance reasonably satisfactory to Parent, dated the Closing Date, all
certificates and other documents, instruments and writings to evidence the
fulfillment of the conditions set forth in this Article 5 as Parent may
reasonably request.
ARTICLE 5.9
Qualifications of Company Stockholders. All Company Shareholders shall
be either "accredited investors" or "sophisticated investors" as defined under
Rule 506 of Regulation D promulgated under the Securities Act; and there shall
be no more than 35 "sophisticated investors."
ARTICLE 5.10
Definitive Information Statement. The Company shall have filed with the
Securities and Exchange Commission a definitive information statement with
respect to the Merger and shall have mailed copies of such information
statement to its stockholders of record at least 21 days prior to the
Effective Time of the Merger.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Notwithstanding anything in this Agreement to the contrary, the
obligation of the Company to effect the transactions contemplated herein will
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
ARTICLE 5.10
Representations and Warranties True. The representations and warranties
of Parent and Merger Subsidiary contained in this Agreement will be true,
complete and accurate in all material respects as of the date when made and at
and as of the Closing, as though such representations and warranties were made
at and as of such time, except for changes permitted or contemplated in this
Agreement, and except insofar as the representations and warranties relate
expressly and solely to a particular date or period, in which case they will
be true and correct at the Closing with respect to such date or period.
ARTICLE 5.11
Performance. The Parent will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Parent at or
prior to the Closing, including the obligations of the pre-Close officers and
directors of Parent set forth in Section 4.9.
ARTICLE 5.12
Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by the
directors and stockholders of the Parent to authorize the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will have been duly and validly
taken.
(b) All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, will have been
delivered, made or obtained, and the Company will have received
copies thereof.
ARTICLE 5.13
Agreements and Documents. The Company will have received the following
agreements and documents, each of which will be in full force and effect:
(a) a certificate executed on behalf of Parent by its Chief
Executive Officer confirming that the conditions set forth in
Sections 6.1, 6.2, 6.3, 6.5, 6.6 and 6.7 have been duly satisfied
(unless any such condition has been waived by the Company);
(b) resolutions of the board of directors of Parent and the board
of directors and sole stockholder of Merger Subsidiary, certified by
the secretary of Parent, approving the transactions contemplated by
this Agreement, including the Merger and the issuance of the Merger
Consideration.
6.5 Adverse Changes. No material adverse change will have occurred in
the business, financial condition, prospects, assets or operations of
Parent since March 31, 2005, except as set forth on Schedule 6.5 attached
hereto.
6.6 No Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity
will have been instituted or threatened which delays or questions the
validity or legality of the transactions contemplated hereby or which, if
successfully asserted, would, in the reasonable judgment of the Company,
individually or in the aggregate, otherwise have a Material Adverse
Effect on Parent's business, financial condition, prospects, assets or
operations or prevent or delay the consummation of the transactions
contemplated by this Agreement.
6.7 Legislation. No Law will have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated
hereby or any of the conditions to the consummation of such transaction.
6.8 Appropriate Documentation. The Company will have received, in a
form and substance reasonably satisfactory to Company, dated the Closing
Date, all certificates and other documents, instruments and writings to
evidence the fulfillment of the conditions set forth in this Article 6 as
the Company may reasonably request.
ARTICLE 6
TERMINATION AND ABANDONMENT
ARTICLE 6.1
Termination by Mutual Consent. This Agreement may be terminated at any
time prior to the Closing by the written consent of the Company and Parent.
ARTICLE 6.2
[Intentionally omitted.]
ARTICLE 6.3
Termination for Breach. This Agreement may be terminated by the board of
directors of either Company or Parent if (a) representation or warranty of the
other party is inaccurate or untrue in a material way, or (b) a material
default is be made by the other party in the observance or in the due and
timely performance of any of its covenants and agreements herein contained
and, with respect to (b), such default is not cured by the defaulting party
prior to the earlier of the day prior to the Effective Time or within 7 days
after receipt of written notice from the non-defaulting party which indicates
the basis for such default.
ARTICLE 6.4
Procedure and Effect of Termination. In the event of termination of this
Agreement and abandonment of the transactions contemplated hereby by the
Company or Parent pursuant to this Article 7, written notice thereof will be
given to all other parties and this Agreement will terminate and the
transactions contemplated hereby will be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided
herein:
(a) Each of the parties will, upon request, redeliver all
documents, work papers and other material of the other parties
relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party
furnishing the same;
(b) All rights and obligations of the parties hereunder shall
terminate without any Liability of any party to any other party
(except for any Liability of any party then in breach related to
such breach).
(c) All filings, applications and other submissions made pursuant
to the terms of this Agreement will, to the extent practicable, be
withdrawn from the agency or other person to which made.
ARTICLE 7
MISCELLANEOUS PROVISIONS
ARTICLE 7.1
Expenses. The Parent and the Company will each bear their own costs and
expenses relating to the transactions contemplated hereby, including without
limitation, fees and expenses of legal counsel, accountants, investment
bankers, brokers or finders, printers, copiers, consultants or other
representatives for the services used, hired or connected with the
transactions contemplated hereby.
ARTICLE 7.2
Survival. As among the parties hereto, the representations and
warranties of the parties shall not survive the Effective Time, at which time
any action or claim based upon a breach of any representation or warranty with
respect to which a complaint has not been filed shall be time barred. The
foregoing shall not be deemed to limit any claim that the Company may make
against Tryant under the Indemnification Agreement or alter any survival
period set forth therein with respect to the representations and warrants of
Parent or Merger Subsidiary.
ARTICLE 7.3
Amendment and Modification. Subject to applicable Law, this Agreement
may be amended or modified by the parties hereto at any time with respect to
any of the terms contained herein; provided, however, that all such amendments
and modifications must be in writing duly executed by all of the parties
hereto.
ARTICLE 7.4
Waiver of Compliance; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial
exercise of a right or remedy will preclude any other or further exercise
thereof or of any other right or remedy hereunder. Whenever this Agreement
requires or permits the consent by or on behalf of a party, such consent will
be given in writing in the same manner as for waivers of compliance.
ARTICLE 7.5
No Third Party Beneficiaries. Nothing in this Agreement will entitle any
person or entity (other than a party hereto and his, her or its respective
successors and assigns permitted hereby) to any claim, cause of action, remedy
or right of any kind.
ARTICLE 7.6
Notices. All notices, requests, demands and other communications
required or permitted hereunder will be made in writing and will be deemed to
have been duly given and effective: (i) on the date of delivery, if delivered
personally or by express courier; (ii) on the earlier of the fourth (4th) day
after mailing or the date of the return receipt acknowledgement, if mailed,
postage prepaid, by certified or registered mail, return receipt requested; or
(iii) on the date of transmission, if sent by facsimile, telecopy, telegraph,
telex or other similar telegraphic communications equipment (with written
confirmation of delivery):
If to the Company:
With a copy to:
Birch Financial, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as either the Company will furnish to the
other parties hereto in writing in accordance with this subsection.
If to the Parent or Merger Subsidiary:
With a copy to:
Landscape Contractors Insurance Services,Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax:
________________________________
________________________________
_____________________________
or to such other person or address as Parent will furnish to the other parties
hereto in writing in accordance with this subsection.
ARTICLE 7.7
Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder will be assigned
(whether voluntarily, involuntarily, by operation of law or otherwise) by any
of the parties hereto without the prior written consent of the other parties.
ARTICLE 7.8
Governing Law. This Agreement and the legal relations among the parties
hereto will be governed by and construed in accordance with the internal
substantive laws of the State of Nevada (without regard to the laws of
conflict that might otherwise apply) as to all matters, including without
limitation matters of validity, construction, effect, performance and
remedies.
ARTICLE 7.9
Jurisdiction and Venue. Each of the parties submits to the exclusive
jurisdiction of any state or federal court sitting in the state of California
in any action or proceeding arising out of or relating to this agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action
or proceeding arising out of or relating to this agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party
with respect thereto. Any party may make service on any other party by
sending or delivering a copy of the process (i) to the party to be served at
the address and in the manner provided for the giving of notices in Section
8.6 above or the giving of notices in Section 8.6 above. Each party agrees
that a final judgment in any action or proceeding so brought shall be
conclusive and may e enforced by suit on the judgment or in any other manner
provided by law or in equity.
ARTICLE 7.10
Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. A facsimile copy of any
counterpart signature page to this Agreement shall be valid as an original.
ARTICLE 7.11
Headings. The table of contents and the headings of the sections and
subsections of this Agreement are inserted for convenience only and will not
constitute a part hereof.
ARTICLE 7.12
Entire Agreement. This Agreement, the Disclosure Schedule and the
exhibits and other writings attached to or delivered at Closing in connection
with this Agreement, together they embody the entire agreement and
understanding of the parties hereto in respect of the transactions
contemplated by this Agreement and together they are referred to as this
"Agreement" or the "Agreement." There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement. Provisions of
this Agreement will be interpreted to be valid and enforceable under
applicable Law to the extent that such interpretation does not materially
alter this Agreement; provided, however, that if any such provision becomes
invalid or unenforceable under applicable Law such provision will be
stricken to the extent necessary and the remainder of such provisions and the
remainder of this Agreement will continue in full force and effect.
ARTICLE 7.13
Definition of Material Adverse Effect. "Material Adverse Effect" with
respect to a party means a material adverse change in or effect on the
business, operations, financial condition, properties or liabilities of that
party taken as a whole; provided, however, that a Material Adverse Effect will
not be deemed to include (i) changes as a result of the announcement of this
transaction, (ii) events or conditions arising from changes in general
business or economic conditions or (iii) changes in generally accepted
accounting principles.
Signature Page Follows
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LANDSCAPE CONTRACTORS
BIRCH FINANCIAL, INC., a Nevada INSURANCE SERVICES, INC., a
corporation California corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
LCIS ACQUISITION CORP., a Nevada
corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President