PLAN OF REORGANIZATION AND
STOCK EXCHANGE AGREEMENT
BY AND AMONG
LITTLE CREEK, INC.,
▇▇▇▇▇▇ SERVICES, INC.,
THE MORTGAGE STORE FINANCIAL, INC.,
AND
THE MORTGAGE STORE FINANCIAL, INC. STOCKHOLDER
APRIL 5, 2002
PLAN OF REORGANIZATION AND STOCK EXCHANGE AGREEMENT (the "Agreement")
dated as of April 5, 2002, by and among Little Creek, Inc., a Delaware
corporation ("Little Creek"); ▇▇▇▇▇▇ Services, Inc., a Utah corporation, a
financial consultant to Little Creek and one of its principal stockholders
("▇▇▇▇▇▇ Services"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual and President of Little
Creek, and ▇▇▇▇▇ ▇▇▇▇▇▇, an individual and principal of ▇▇▇▇▇▇ Services
(collectively, the "Principals"); The Mortgage Store Financial, Inc., a
California corporation ("Mortgage Store"); and the sole Mortgage Store common
stockholder (the "Mortgage Store Stockholder"), who is listed in Schedule 1.1
hereto.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Little Creek and Mortgage
Store (sometimes referred to collectively as the "Constituent Corporations" or
individually as a "Constituent Corporation"), ▇▇▇▇▇▇ Services and the Mortgage
Store Stockholder deem it advisable that at the closing (the "Closing") of the
transactions contemplated hereby the Mortgage Store Stockholder shall exchange
all of his shares of Mortgage Store common stock, no par value (sometimes
called the "Mortgage Store Shares") for shares of Little Creek common stock,
$0.001 par value per share (sometimes called the "Little Creek Shares"), in
the manner and in such amount as is set forth in Article I hereof and Schedule
1.1 and upon the terms and conditions otherwise set forth in this Agreement
(the "Reorganization") in order that Mortgage Store shall become a 100%
subsidiary of Little Creek upon consummation of the Reorganization; and
WHEREAS, to effectuate the foregoing, the parties desire to adopt a plan
of reorganization in accordance with the provisions of Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties do hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
Article I
EXCHANGE OF STOCK
1.1 Transfer and Number of Shares. The Mortgage Store Stockholder
agrees to transfer to Little Creek at the Closing, 100% of the outstanding
Mortgage Store Shares listed in Schedule 1.1 hereto, in exchange for 9,500,000
Little Creek Shares, also as outlined in Schedule 1.1. At Closing, and
excluding the securities to be exchanged for the Mortgage Store Shares, the
outstanding securities of Little Creek will amount to 336,365 shares of $0.001
par value common stock, after taking into account the cancellation as outlined
in Article 1.4 of 1,295,118 of the pre-Reorganization outstanding Little Creek
Shares. Accordingly, assuming that the Mortgage Store Stockholder becomes
party to the Agreement, there will be 9,836,365 post-Reorganization
outstanding shares of common stock of Little Creek.
1.2 Exchange of Certificates by the Mortgage Store Stockholder. The
transfer of the Mortgage Store Shares shall be effected by the delivery to
Little Creek at the Closing of stock certificate or certificates representing
the transferred shares duly endorsed in blank or accompanied by stock powers
executed in blank with all signatures witnessed or guaranteed to the
satisfaction of Little Creek and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the holders' expense. At the Closing,
Little Creek shall issue instructions to its transfer agent to issue
certificates for Little Creek Shares in the amount as is set forth in Article
I hereof and Schedule 1.1 to the Mortgage Store Stockholder.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the Mortgage Store Stockholder shall execute such additional
instruments and take such other action as Little Creek may request in order to
exchange and transfer clear title and ownership in the Mortgage Store Shares.
1.4 Cancellation of Shares of Little Creek. On the Closing, ▇▇▇▇▇▇
Services, in consideration of this Agreement and the Reorganization, agrees to
deliver to Little Creek for cancellation without any conversion thereof,
1,295,118 Little Creek Shares as follows: 545,118 shares of the 545,118 shares
owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇; 250,000 shares of the 285,000 shares owned by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇; 250,000 shares of the 285,000 shares owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
250,000 of the 250,000 shares owned by ▇▇▇▇▇▇ Services. These stock
certificates shall be duly endorsed to Little Creek and shall bear a
"Medallion" signature guarantee of a bank or registered broker/dealer. No
Little Creek Shares retained by any of these persons or that were otherwise
outstanding prior to the Closing of this Agreement shall have any
"registration rights" of any type or nature that would require Little Creek in
the future to file a registration statement with the Securities and Exchange
Commission (the "Commission") or any other federal or state agency respecting
any such shares.
1.5 Approval of Agreement, Name Change and Change of Domicile. Prior to
the Closing, Little Creek shall have obtained the requisite stockholder
approval to change its domicile from the State of Utah to the State of
Delaware, to merge Little Creek into the Delaware entity, to file a
Certificate of Ownership and Merger with the Delaware Secretary of State, and,
subject to Closing, to change its name to "TMSF Holdings, Inc."
1.6 Consulting Agreement and Indemnification. On Closing of this
Agreement, Little Creek (at that time the entity will be known as "TMSF
Holdings, Inc..") will enter into a one year consulting agreement (the
"Consulting Agreement") with ▇▇▇▇▇▇ Services as attached hereto in Schedule
1.6.1 pursuant to which principals and/or employees and agents of ▇▇▇▇▇▇
Services will perform those tasks and pay those expenses that are set forth in
Schedule 1.6.2 hereto. In consideration for the services to be provided under
the Consulting Agreement, as well as for the agreement of ▇▇▇▇▇▇ Services to
indemnify and hold harmless Little Creek and Mortgage Store for any and all
past liabilities of any type or nature whatsoever of Little Creek existing at
Closing, including expenses of Little Creek related to the Reorganization as
set forth in Schedule 1.6.2 and otherwise, and providing certain
representations and warranties herein, the reorganized Little Creek will pay
▇▇▇▇▇▇ Services the sum of $265,000 and issue five year warrants to purchase
163,635 shares of its post-Reorganization authorized shares at a per share
exercise price of $0.05 in the names of the principals and/or employees and
agents of ▇▇▇▇▇▇ Services who provide such services in the amounts as shall be
provided by ▇▇▇▇▇▇ Services (the "Consultants' Warrants"). The Consultants
Warrants shall be in the form of Schedule 1.6.3 hereto and will provide for a
cashless exercise at the option of the holder thereof.
1.7 Resignations of Present Directors and Executive Officers and
Designation of New Directors and Executive Officers. On Closing and once the
Mortgage Store Stockholder has been determined to be a stockholder of record
of Little Creek, the present directors and executive officers of Little Creek
shall designate the directors and executive officers nominated by Mortgage
Store to serve in their place and stead, until the next respective annual
meetings of the stockholders and the Board of Directors of the reorganized
Little Creek, and until their respective successors shall be elected and
qualified or until their respective prior resignations or terminations, who
shall be: (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (ii) ▇▇▇▇▇ ▇▇▇▇▇▇▇ and (iii) ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, and then, the current directors and executive officers shall
resign, in seriatim. Prior to the Closing, the Board of Directors of Little
Creek shall adopt resolutions specified by Mortgage Store directing the
issuance of Little Creek Shares to the Mortgage Store Stockholder so that the
issuance of such shares is an exempt liability under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
1.8 Assets and Liabilities of Little Creek at Closing. Little Creek
shall have no material assets and no liabilities at Closing, and all costs
incurred by Little Creek incident to this Agreement shall have been paid or
satisfied.
1.9 No Reverse Splits for a Period of Twelve Months. The reorganized
Little Creek shall not reverse split its post-Agreement outstanding common
stock for a period of twelve months from the Closing without the prior written
consent of the current Board of Directors of Little Creek. In the event of
any reverse split effected in violation of this Article during this period of
time without this consent, all pre-Agreement common stockholders of Little
Creek who are still stockholders of Little Creek shall be immediately issued
without further consideration additional shares of Little Creek common stock
so that the reverse split will have had no effect on the number of their
pre-reverse split shares of Little Creek common stock that are still owned by
any of such persons.
Article II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Little Creek and ▇▇▇▇▇▇ Services.
Little Creek, ▇▇▇▇▇▇ Services, the Principals, jointly and severally,
represent and warrant to Mortgage Store and the Mortgage Store Stockholder, as
follows:
(a) Power and Authority. Little Creek, ▇▇▇▇▇▇ Services each have
the corporate power and authority to enter into this Agreement and to carry
out each's obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Little Creek and ▇▇▇▇▇▇
Services and no other corporate proceedings on the part of Little Creek or
▇▇▇▇▇▇ Services are necessary to authorize this Agreement and the transactions
contemplated hereby. Prior to Closing, the Little Creek stockholders who own
in excess of a majority of its outstanding voting securities shall have
adopted, ratified and approved the Agreement.
(b) Little Creek Financial Statements. Little Creek has
heretofore delivered to Mortgage Store its audited Balance Sheet and Income
Statements for the fiscal year ended July 31, 2001 (sometimes called the "2001
Statements") and its Balance Sheet and Income Statement for the six month
period ended January 31, 2002 (sometimes called the "January Balance Sheet").
As of the respective dates of the 2001 Statements and the January Balance
Sheet (collectively, the "Financial Statements"), the Financial Statements did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. At Closing, the Financial Statements shall reflect no liabilities
and no assets or satisfactory evidence of payment of all liabilities shall be
provided.
(c) No Material Adverse Effect. Except as set forth in Schedule
2.1(c), since January 31, 2002?, there has not been any material adverse
change in the business, operations, properties, assets, condition, financial
or otherwise, or prospects of Little Creek.
(d) Due Organization; Power; Qualification; Subsidiaries and
Affiliates, Etc.
(i) Little Creek and ▇▇▇▇▇▇ Services are each corporations duly
organized, validly existing, and in good standing under the
laws of the state of their respective states of
incorporation and have the corporate power to own their
property and to carry on their respective business as now
conducted. The nature of the business now conducted by
Little Creek, the character of the property owned by it, or
any other state of facts do not require Little Creek to be
qualified to do business as a foreign corporation in any
jurisdiction. Little Creek does not presently conduct any
active trade or business.
(ii) Except as set forth in Schedule 2.1(d), Little Creek has no
subsidiaries or affiliates (as that term is used in the
regulations of the Commission promulgated under the
Securities Act of 1933, as amended (the "Securities Act")).
Neither Little Creek, nor any of the subsidiaries or
affiliates set forth in Schedule 2.1(d), has agreed nor is
obligated to make nor is bound by any written or oral
agreement, contract, subcontract, lease, binding
understanding, instrument, obligation note, bond, mortgage,
indenture, option, warranty, purchase order, license,
sublicense, permit, franchise insurance policy, benefit
plan, commitment or undertaking of any nature, as of the
date hereof or as may hereafter be in effect under which it
may become obligated to make, any future investment in or
capital contribution to any other entity.
(iii) Little Creek has heretofore delivered to Mortgage Store true
and complete copies of the certificate of incorporation and
bylaws and equivalent organizational documents, each as
amended to date, of Little Creek as currently in full force
and effect. Little Creek is not in violation of any of the
provisions of its certificate of incorporation and bylaws.
(e) Capitalization.
(i) The total authorized capital stock of Little Creek consists
of 50,000,000 shares of common stock, $0.001 par value, as
of the date hereof and 10,000,000 shares of preferred stock,
$0.001 par value, will have been authorized pursuant to
Little Creek's Certificate of Incorporation in Delaware, as
of the Closing Date. As of the date hereof, 1,631,483
Little Creek Shares represent all of the issued and
outstanding capital stock of Little Creek. As of the
Closing Date, 336,365 Little Creek Shares shall represent
all of the issued and outstanding capital stock of Little
Creek. All of the outstanding Little Creek Shares have
been, and all of the outstanding Little Creek Shares as of
the Closing Date will be, duly authorized and validly issued
and are fully paid and non-assessable. All of the
outstanding Little Creek shares were issued in accordance
with federal and state securities laws, rules and
regulations and no registration is required for any resale
of these securities. None of the outstanding Little Creek
Shares are subject to pre-emptive rights or were issued in
violation of any pre-emptive rights. No Little Creek Shares
were hold by subsidiaries of Little Creek.
(ii) Except as set forth in Article I hereof, there are no
present and on the Closing Date there will be no outstanding
subscriptions, options, preferred stock, warrants,
contracts, calls, puts, agreements, demands or other
commitments or rights of any type to purchase or acquire any
securities of Little Creek, nor are there outstanding
securities of Little Creek which are convertible into or
exchangeable for any shares of capital stock of Little
Creek, and Little Creek has no obligation of any kind to
issue any additional securities.
(f) Financial Information: No Material Adverse Change.
(i) Little Creek has furnished to Mortgage Store the Financial
Statements. The Financial Statements have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes
thereto), and fairly present in all material respects, the
financial condition of Little Creek as at the respective
dates thereof, and the results of operation of Little Creek
for the periods then ended.
(ii) Since January 31, 2002, the business of Little Creek has
been conducted in the ordinary course consistent with past
practices and there has been no material adverse change in
the business or financial condition or the operations of
Little Creek except as set forth on Schedule 2.1(f).
(iii) At January 31, 2002, there were no liabilities, unknown,
accrued, absolute, contingent or otherwise of Little Creek
that were not shown or reserved against on the balance
sheets included in the Financial Statements, except
obligations under the contracts shown on or as otherwise
disclosed in Schedule 2.1(f). As of the Closing Date,
Little Creek had no material assets and no liabilities of
any kind, whether known or unknown, accrued, absolute,
contingent or otherwise.
(iv) Since January 31, 2002, Little Creek has not sold or
otherwise disposed of or encumbered any of the properties or
assets reflected in the Financial Statements, or other
assets owned or leased by it, except in the ordinary course
of business, or otherwise disclosed on Schedule 2.1(f).
(g) Tax Matters.
(i) Little Creek has filed or caused to be filed with the
appropriate federal, state, county, local and foreign
governmental agencies or instrumentalities, all tax returns
and tax reports required to be filed, and all taxes,
assessments, fees and other government charges have been
fully paid when due (subject to any extensions filed on a
timely basis).
(ii) There is not pending nor, to the best knowledge of Little
Creek or ▇▇▇▇▇▇ Services, is there any threatened federal,
state or local tax audit of Little Creek. There is no
agreement with any federal, state or local taxing authority
by Little Creek that may affect the subsequent tax
liabilities of Little Creek.
(iii) Without limiting the foregoing: (a) the Financial Statements
include adequate provisions under United States general
accepted accounting principles for all taxes, assessments,
fees, penalties and governmental charges which have been or
in the future may be assessed against Little Creek with
respect to the period then ended and all periods prior
thereto; and (b) on the date hereof, Little Creek is not
liable for any taxes, assessments, fees or governmental
charges.
(iv) Little Creek is not a party to any tax sharing agreement or
to any other agreement or arrangement, as a result of which
liability of Little Creek to a governmental authority is
determined or taken into account with reference to the
activities of any other person, and Little Creek is not
currently under any obligation to pay any amounts as a
result of having been a party to such an agreement or
arrangement, regardless of whether such a tax is imposed on
Little Creek.
(h) No Conflict or Default; Enforceability; Corporate Records;
Compliance with Law. Except as set forth on Schedule 2.1(h), neither the
execution and delivery of this Agreement, nor compliance with the terms and
provisions hereof, including without limitation the consummation of the
transactions contemplated hereby, will violate any statute, regulation or
ordinance of any governmental authority, or conflict with or result in the
material breach of any term, condition or provision of the Articles of
Incorporation, Certificate of Incorporation, By-laws or other charter
documents of Little Creek or ▇▇▇▇▇▇ Services, nor of any agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation or
instrument to which Little Creek or ▇▇▇▇▇▇ Services is a party or by which any
of them or any of their assets or properties are or may be bound; or
constitute a material default (or an event which, with the lapse of time or
the giving of notice, or both, would constitute a material default)
thereunder, nor result in the creation or imposition or any lien, charge or
encumbrance, or restriction of any nature whatsoever with respect to any
properties or assets of Little Creek or ▇▇▇▇▇▇ Services, nor give to others
any interest or rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets, contracts or
business of Little Creek or ▇▇▇▇▇▇ Services. This Agreement and all other
agreements and documents delivered by Little Creek or ▇▇▇▇▇▇ Services in
connection herewith have been duly executed and delivered by Little Creek and
▇▇▇▇▇▇ Services and constitute the binding obligations of Little Creek and
▇▇▇▇▇▇ Services enforceable in accordance with their respective terms. Little
Creek has permitted Mortgage Store to examine Little Creek's corporate minute
and stock records books. The corporate minute books contain the Articles of
Incorporation, Certificate of Incorporation, By-laws and other charter
documents of Little Creed as in effect on the date hereof and a true and
complete record of all actions by and meetings of the directors (and
committees thereof) and stockholders of Little Creek and accurately reflect
all transactions referred to therein. Little Creek is not in violation of any
outstanding arbitration award, judgment, order or decree; or in violation of
any statute, regulation or ordinance ("Law"), including, but not limited to,
any anti-discrimination, hazardous and toxic substances, wage, hour, working
condition, payroll withholding, pension, building, zoning and tax Law. There
have been no allegations of or inquiries concerning any violations of Law by
Little Creek within the past five years.
(i) Party to Agreements. Except as set forth on Schedule 2.1(i),
Little Creek is not a party to any contract or other arrangement other than
this Agreement.
(j) Compliance with Laws and Court Orders. Little Creek is and,
since inception has been incompliance with, and to the knowledge of Little
Creek is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree
that would be material to Little Creek.
(k) Litigation. There are no actions, suits, investigations or
proceedings pending, nor, to the knowledge of Little Creek and ▇▇▇▇▇▇
Services, threatened against Little Creek, the performance of the terms and
conditions hereof, or the consummation of the transactions contemplated
hereby, in any court or by or before any governmental body or agency,
including without limitation any claim, proceeding or litigation for the
purpose of challenging, enjoining or preventing the execution, delivery or
consummation of this Agreement. Little Creek is not subject to any order,
judgment, decree, stipulation or consent or any agreement issued by any
governmental body or agency.
(l) Securities Filings. The common stock of Little Creek is
listed on the NASD OTC Electronic Bulletin Board. Little Creek has heretofore
provided to Mortgage Store true and correct copies of its annual report on
Form 10-KSB for the fiscal year ended July 31, 2001, and its quarterly reports
on Form 10Q-SB dated January 31, 2001; April 30, 2001; October 31, 2001; and
January 31, 2002. All such reports are true, correct and accurate as of the
dates of filing and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed on Schedule 2.1(l), no material
adverse change in the business, financial condition or operations of Little
Creek has occurred since the date of such reports. Little Creek will have on
the Closing Date, and thereafter, made all filings required to be made by
Little Creek with the Commission and any state securities authorities.
(m) Governmental and Other Approval. Little Creek has all
permits, licenses, orders and approvals of all federal, state, local or
foreign governmental or regulatory bodies required for Little Creek to conduct
its business as presently conducted. All such permits, licenses, orders and
approvals are in full force and effect and no suspension or cancellation of
any of them is threatened, and none of such permits, licenses, orders or
approvals will be affected by the consummation of the transactions
contemplated by this Agreement. Except for the Certificate of Ownership and
Merger to be filed with the Delaware Secretary of State, no approval or
authorization of or filing with any governmental authority, including the
Commission, or any other person or entity on the part of Little Creek or
▇▇▇▇▇▇ Services is required as a condition to the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby
other than the filing of any documents contemplated by this Agreement.
(n) Salaries. There is set forth on Schedule 2.1(n) annexed
hereto and made a part hereof, a true and complete list, as of the date of
this Agreement, of all of the persons who are employed by Little Creek,
together with their compensation (including bonuses) for the fiscal year ended
July 31, 2001, and the period ended January 31, 2002, and the rate of
compensation (including bonus arrangements) currently being paid to each such
employee. There are no employment agreements between Little Creek and any of
its employees.
(o) Accrued Compensation; Benefits. Little Creek does not have
any outstanding liability for payment of wages, vacation pay (whether accrued
or otherwise), salaries, bonuses, pensions or contributions and does not have
any responsibility for providing medical insurance or medical benefits under
any labor or employment contract, whether oral or written, or pursuant to any
law, rule or regulation or by reason of any past practices with respect to its
current or former officers, directors or employees based upon or accruing with
respect to services of its present or former officers, directors or employees.
(p) Employee Benefit Plans. Little Creek does not have, maintain
or contribute to, never has had, maintained or contributed to or has plans or
commitments to establish any pension plan, profit sharing plan or employee's
savings plan, and is not otherwise subject to any applicable provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
(q) Restrictions on Business Activities. Except as set forth on
Schedule 2.1(q), there is no contract, judgment, injunction, order or decree
binding upon Little Creek or to which Little Creek is a party which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any material business practice of Little Creek, any material
acquisition of property by Little Creek or the conduct of business by Little
Creek as currently conducted.
(r) Material Contracts, Etc. Schedule 2.1(r) contains an accurate
list of all contracts, commitments, leases, instruments, agreements, licenses
or permits, written or oral, to which Little Creek is a party or by which it
or its properties are bound, including without limitation contracts with
customers, joint venture or partnership agreements, contracts with any labor
organizations, employment agreements, consulting agreements, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase land,
liens, pledges or other security agreements, any other material agreement
which is terminable upon or prohibits a change of ownership or control of
Little Creek.
(s) Title and Authority. The shareholders as listed in Schedule
2.1(s) are together the holders of record and, to the knowledge of Little
Creek, the sole beneficial owners, of all of the outstanding Little Creek
Shares. Schedule 2.1(s) shall not be deemed to be a publicly available
Schedule to this Agreement.
(t) Financial Information: Contingent Liabilities.
(i) At January 31, 2002, there were no liabilities, unknown,
accrued, absolute, contingent or otherwise of Little Creek
that were not shown or reserved against on the balance
sheets included in the Financial Statements, except
obligations under the contracts shown on Schedule 2.1(t).
(ii) Since January 31, 2002, Little Creek has not sold or
otherwise disposed of or encumbered any of the properties or
assets reflected on the Financial Statements, or otherwise
owned or leased by it, except in the ordinary course or
business, or as otherwise disclosed on Schedule 2.1(t).
(u) Insider Transactions. All transactions between Little Creek
and its employees, officers, directors and stockholders, and between Little
Creek and ▇▇▇▇▇▇ Services and the employees, officers, directors and
shareholders of ▇▇▇▇▇▇ Services, including the issuance of Little Creek
Shares, have been made on an arm's length basis on terms and conditions
comparable to what Little Creek would have given to unrelated third parties.
No director, officer or employee of Little Creek or ▇▇▇▇▇▇ Services has any
claim of any nature against Little Creek.
(v) Environmental. There are no environmental liens, actions or
proceedings, nor is there any cause for any such lien, action or proceeding
related to the business operations of Little Creek. There are no substances
or conditions which may support a claim or cause of action against Little
Creek or any of Little Creek' current or former officers, directors, agents or
employees, whether by a governmental agency or body, private party or
individual, under any Law or Hazardous Materials Regulations. "Hazardous
Materials" means any oil or petrochemical products, PCB's, asbestos, urea
formaldehyde, flammable explosives, radioactive materials, solid or hazardous
wastes, chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials" or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conversation and
Recovery Act and the Federal Water Pollution Control Act.
(w) Title to Property. Little Creek does not own any material
real property. At Closing, Little Creek shall have no material assets or
owned properties.
(x) Tax Treatment. Little Creek has not taken or agreed to take
any actions, or is aware of any fact or circumstance, that would cause
transactions contemplated under this Agreement from qualifying as a
reorganization within the meaning of Section 368(a)(1)(B) of the Code.
(y) No Liquidation of Mortgage Store. Little Creek has no plan or
intention to (i) liquidate Mortgage Store, (ii) merge Mortgage Store into any
other corporation, (iii) cause Mortgage Store to sell or otherwise dispose any
of its assets, except for dispositions made in the ordinary course of
business, or (iv) sell or otherwise dispose of any of the Mortgage Store
Shares acquired pursuant to this Agreement.
(z) Information Statement. The information statement of Little
Creek to be filed with the Commission in connection with Little Creek's change
of domicile and approval of the Agreement and any amendments or supplements
thereto will, when filed, comply as to form in all material respects with the
applicable requirements of the Exchange Act. At the time the information
statement is first mailed to the shareholders of Little Creek, the information
statement will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(aa) No Reacquisition of Little Creek Shares. Little Creek has no
plan or intention to reacquire any of the Little Creek Shares issued pursuant
to this Agreement.
(bb) Registration of Little Creek Shares. Following the
cancellation of the 1,295,118 Little Creek Shares, none of such shares owned
by ▇▇▇▇▇▇ Services, Inc. or its affiliates are "restricted shares" and that
all of them have been registered with the Commission pursuant to an effective
registration statement. All shares of Little Creek issued pursuant to an S-8
registration statement will not be resold by the holders for a period of 90
days following the Closing.
(cc) No Prior Ownership of Mortgage Store Shares. Little Creek
does not own, directly or indirectly, nor has it owned during the past five
(5) years, directly or indirectly, any Mortgage Store Shares.
(dd) No Investment Company Parties. Neither Little Creek nor
▇▇▇▇▇▇ Services is an "investment company" as defined in IRC Sections
368(a)(2)(F)(iii) and (iv).
(ee) Disclosure. The representations and warranties contained
herein do not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2.2 Representations and Warranties of Mortgage Store. Mortgage Store
represents and warrants to Little Creek as follows:
(a) Power and Authority. Mortgage Store has the corporate power
and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board
of Directors of Mortgage Store, and, no other corporate
proceedings on the part of Mortgage Store are necessary to
authorize this Agreement and the transactions contemplated
hereby.
(b) Mortgage Store Financial Statements. Mortgage Store has
heretofore delivered to Little Creek its audited financial
statements for the years ended December 31, 2000 and 2001
(the "Mortgage Store Financial Statements"). The Mortgage
Store Financial Statements do not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
(c) No Material Adverse Effect. Except as set forth on Schedule
2.2(c), since December 31, 2001, there has not been any
material adverse change in the business, operations,
properties, assets, condition, financial or otherwise of
Mortgage Store.
(d) Due Organization; Power; Qualification; Subsidiaries and
Affiliates, Etc.
(i) Mortgage Store is a corporation duly organized,
validly existing, and in good standing under the laws
of the State of California and has the corporate power
to own its property and to carry on its business as
now conducted. Mortgage Store is qualified to do
business as a foreign corporation in each jurisdiction
where the failure to qualify would have a material
adverse effect on Mortgage Store.
(ii) Mortgage Store has no subsidiaries (as that term is
used in the regulations promulgated under the
Securities Act).
(e) Capitalization.
(i) The total authorized capital stock of Mortgage Store
consists of 17,100 shares of stock, of which 7,500
shares are common stock, no par value per share, with
7,500 shares issued and outstanding; 1,000 shares are
Series A preferred stock, $275.00 par value per share,
with 1,000 shares issued and outstanding; 100 shares
are Series B preferred stock, no par value per share,
with 100 shares issued and outstanding; and 1,000
shares are Series C preferred stock, no par value per
share, with 1,000 shares issued and outstanding, as of
the date hereof. Except as set forth on Schedule
2.2(e)(i), all the outstanding Mortgage Store Shares
have been duly authorized and validly issued, and are
fully paid and non-assessable.
(ii) There are no present and on the Closing Date there
will be no outstanding options, warrants, convertible
securities or rights which may require Mortgage Store
to issue additional shares of its capital stock other
than as listed on Schedule 2.2(e)(ii).
(f) Financial Information: No Material Adverse Change.
(i) At December 31, 2001, there were no material
liabilities, absolute or contingent of Mortgage Store
that were not shown or reserved against on the balance
sheets included in the Mortgage Store Financial
Statements, except obligations under the contracts
shown on or as otherwise disclosed in Schedule
2.2(f)(i).
(ii) Since December 31, 2001, Mortgage Store has not sold
or otherwise disposed of or encumbered any of the
properties or assets reflected on the Mortgage Store
Financial Statements, or other assets owned or leased
by it, except in the ordinary course of business or as
otherwise disclosed on Schedule 2.2(f)(ii).
(g) Tax Matters.
(i) Mortgage Store has filed or caused to be filed with
the appropriate federal, state, county, local and
foreign governmental agencies or instrumentalities all
tax returns and tax reports required to be filed, and
all taxes, assessments, fees and other governmental
charges have been fully paid when due (subject to any
extensions filed on a timely basis).
(ii) There is not pending nor, to the best knowledge of
Mortgage Store, is there any threatened federal, state
or local tax audit of Mortgage Store. There is no
agreement with any federal, state or local taxing
authority that may affect the subsequent tax
liabilities of Mortgage Store.
(iii) Without limiting the foregoing: (a) the Mortgage Store
Financial Statements include adequate provisions under
United States general accounting principles for all
taxes, assessments, fees, penalties and governmental
charges which have been or in the future may be
assessed against Mortgage Store with respect to the
period then ended and all periods prior thereto; and
(b) Mortgage Store is not, on the date hereof, liable
for any taxes, assessments, fees or governmental
charges.
(h) No Conflict or Default; Enforceability; Corporate Records;
Compliance with Law. Except as set forth on Schedule
2.2(h), neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions
hereof, including without limitation the consummation of the
transactions contemplated hereby, will violate any statute,
regulation or ordinance of any governmental authority, or
conflict with or result in the material breach of any term,
condition or provision of the Articles of Incorporation or
By-laws of Mortgage Store, nor of any agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which Mortgage Store is a party
or by which it or any of its respective assets or properties
are or may be bound; or constitute a material default (or an
event which, with the lapse of time or the giving of notice,
or both, would constitute a material default) thereunder,
nor result in the creation of imposition of any lien, charge
or encumbrance, or restriction of any nature whatsoever with
respect to any properties or assets of Mortgage Store, nor
give to others any interest of rights, including rights of
termination, acceleration or cancellation in or with respect
to any of the properties, assets, contracts or business of
Mortgage Store. This Agreement and each other agreement and
document delivered by Mortgage Store in connection herewith
have been duly executed and delivered by Mortgage Store and
constitute the binding obligations of Mortgage Store
enforceable in accordance with their respective terms.
Mortgage Store has permitted Little Creek to examine
Mortgage Store's corporate minute and stock records books.
The corporate minute books contain the Articles of
Incorporation, By-laws and other charter documents of
Mortgage Store as in effect on the date hereof and a true
and complete record of all actions by and meetings of the
directors (and committees thereof) and stockholders of
Mortgage Store and accurately reflect all transactions
referred to therein. Except as set forth on Schedule
2.2(h), Mortgage Store is not in violation of any
outstanding arbitration award, judgment, order or decree; or
in violation of any statute, regulation or ordinance
("Law"), including, but not limited to, any
anti-discrimination, hazardous and toxic substances, wage,
hour, working condition, payroll withholding, pension,
building, zoning and tax Law. There have been no
allegations of or inquiries concerning any violations of Law
by Mortgage Store within the past five years.
(i) Litigation. Except as set forth on Schedule 2.2(i), there
are no actions, suits, investigations, or proceedings
pending, nor, to the knowledge of Mortgage Store,
threatened, against Mortgage Store, the performance of the
terms and conditions hereof, or the consummation of the
transactions contemplated hereby, in any court or by or
before any governmental body or agency, including without
limitation any claim, proceeding or litigation for the
purpose of challenging, enjoining or preventing the
execution, delivery or consummation of this Agreement.
Mortgage Store is not subject to any order, judgment,
decree, stipulation or consent or any agreement with any
governmental body or agency which affects its business or
operations.
(j) Governmental and Other Approval. To the best of its
knowledge, Mortgage Store has all permits, licenses, orders
and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for Mortgage
Store to conduct its business as presently conducted.
Except as set forth on Schedule 2.2(j), all such permits,
licenses, orders and approvals are in full force and effect
and no suspension or cancellation of any of them is
threatened, and none of such permits, licenses, orders of
approvals will be affected by the consummation of the
transactions contemplated by this Agreement. Except as set
forth on Schedule 2.2(l), no approval or authorization of or
filing with any governmental authority or any other person
or entity on the part of Mortgage Store is required as a
condition to the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby
other than the filing of documents contemplated by this
Agreement.
(k) Title and Authority. The stockholder as listed in Schedule
2.2(k) is the holder of record and, to the knowledge of
Mortgage Store, the sole beneficial owner of all of the
outstanding shares of Mortgage Store capital stock being
exchanged pursuant to this Agreement.
(l) Disclosure. The representations and warranties contained
herein do not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make
the statements therein in light of the circumstances under
which they were made, not misleading.
2.3 Additional Representations and Warranties of Mortgage Store.
Mortgage Store represents and warrants to Little Creek and ▇▇▇▇▇▇ Services as
follows:
(a) No Investment Company Parties. Mortgage Store is not an
"investment company" as defined in IRC Sections 368(a)(2)(F)(iii) and (iv).
(b) Fair Market Value of Assets. The fair market value of
Mortgage Store's assets exceeds the sum of its liabilities plus the
liabilities, if any, to which the assets are subject.
(c) No Compensation for Mortgage Store Shares. None of the
compensation received by any stockholder-employee of Mortgage Store will be
separate consideration for, or allocable to, any of Mortgage Store Shares
owned, none of the Little Creek Shares received by any stockholder-employee of
Mortgage Store will be separate consideration for, or allocable to, any
employment agreement, and the compensation paid to any stockholder of Mortgage
Store will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arms' length for similar services.
2.4 Representations and Warranties of Mortgage Store Stockholder. The
Mortgage Store Stockholder, with respect to, for and on behalf of itself
(himself) only, represents and warrants to Little Creek as follows:
(a) Power and Authority. The Mortgage Store Stockholder has the
capacity and authority, to enter into this Agreement and carry out his
obligations hereunder.
(b) No Conflict or Default; Enforceability. Neither the execution
and delivery of this Agreement, nor compliance with the terms and provisions
hereof, including without limitation the consummation of the transactions
contemplated hereby, will violate any statute, regulation or ordinance of any
governmental authority, or conflict with or result in the material breach of
any term, condition or provision of any agreement, deed, contract, mortgage,
indenture, writ, order, decree, legal obligation or instrument to which the
Mortgage Store Stockholder is a party or by which he or it or any of his or
its assets or properties are bound; or constitute a material default (or an
event which, with the lapse of time or the giving of notice, or both, would
constitute a material default) thereunder, nor result in the creation or
imposition of any lien, charge or encumbrance, or restriction of any nature
whatsoever with respect to any properties or assets of the Mortgage Store
Stockholder, nor give to others any interest or rights, including rights of
termination, acceleration or cancellation in or with respect to any of the
properties, assets, contracts or business of the Mortgage Store Stockholder.
This Agreement and each other agreement and document delivered by the Mortgage
Store Stockholder in connection herewith have been duly executed and delivered
by such Mortgage Store Stockholder and constitute the binding obligations of
such Mortgage Store Stockholder enforceable in accordance with their
respective terms.
(c) Governmental and Other Approval. No approval or authorization
of or filing with any governmental authority or any other person or entity on
the part of the Mortgage Store Stockholder is required as a condition to the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby other than the filing of any documents of any
document contemplated by this Agreement.
(d) No Investment Company Parties. The Mortgage Store Stockholder
is not an "investment company" as defined in IRC Sections 368(a)(2)(F)(iii)
and (iv).
(e) No Disposition of Little Creek Shares. There is no plan or
intention by the Mortgage Store Stockholder to sell, exchange, or otherwise
dispose of a number of Little Creek Shares that would reduce the Mortgage
Store Stockholder's ownership of Little Creek Shares to a number having a
value, as of the Closing Date, of less than fifty percent (50%) of the value
of all of the outstanding capital stock of Mortgage Store outstanding as of
the Closing Date.
Article III
COVENANTS
3.1 Mortgage Store agrees that prior to the Closing Date:
(a) Except as set forth on Schedule 3.1, no dividend shall be
declared or paid by other distribution (whether in cash, stock, property or
any combination thereof) or payment declared or made in respect to Mortgage
Store Shares, nor shall Mortgage Store purchase, acquire or redeem or split,
combine or reclassify any shares of its capital stock unless prior to the
record date for such dividend or the effective date of such split, combination
or reclassification, it tenders to Little Creek its agreement to amend this
Agreement so as to effect an appropriate adjustment in the number of shares
deliverable upon the Closing Date.
(b) No change shall be made in the number of shares of authorized
or issued Mortgage Store Shares; nor shall any option, warrant, call, right,
commitment or agreement of any character be granted or made by Mortgage Store
relating to its authorized or issued Mortgage Store Shares; nor shall Mortgage
Store issue, grant or sell any securities or obligations convertible into or
exchangeable for shares of Mortgage Store Shares.
(c) Mortgage Store will not take, agree to take, or knowingly
permit to be taken any action or do or knowingly permit to be done anything in
the conduct of the business of Mortgage Store or otherwise, which would be
contrary to or in breach of any of the terms or provisions of this Agreement,
or which would cause any of Mortgage Store's representations contained herein
to be or become untrue in any material respect at the Closing Date.
(d) Except as set forth on Schedule 3.1(d), as occurs in the
ordinary course of business or as contemplated by Article I hereof, Mortgage
Store will not (i) incur any indebtedness for borrowed money; (ii) assume,
guarantee, endorse, or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
individual, firm or corporation, or (iii) make any loans, advances or capital
contributions to or investments in, any other individual, firm or corporation
in excess of $100,000, except with the consent of Little Creek which consent
shall not be unreasonably withheld.
3.2 Little Creek agrees that prior to the Closing Date:
(a) No dividend shall be declared or paid or other distribution
(whether in cash, stock, property or any combination thereof) or payment
declared or made in respect of Little Creek Shares, nor shall Little Creek
purchase, acquire or redeem or split, combine or reclassify any shares of its
capital stock.
(b) Except as set forth in Article 1 hereof, no change shall be
made in the number of authorized or issued Little Creek Shares (other than
pursuant to this Agreement); nor shall any option, warrant, call, right,
commitment or agreement (other than this Agreement) of any character be
granted or made by Little Creek relating to its authorized or issued Little
Creek Shares; nor shall Little Creek issue, grant or sell any securities or
obligations convertible into or exchangeable for Little Creek Shares.
(c) Little Creek will not take, agree to take, or knowingly permit
to be taken any action, nor do or knowingly permit to be done anything in the
conduct of the business of Little Creek or otherwise, which would be contrary
to or in breach of any of the terms or provisions of this Agreement, or which
would cause any of Little Creek's representations and warranties contained
herein to be or become untrue in any material respect at the Closing Date
including without limitation amending Little Creek's charter documents and
By-laws, except as otherwise provided herein.
(d) Except as contemplated by Article I, Little Creek will not (i)
incur any indebtedness for borrowed money; (ii) assume, guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other individual, firm or corporation;
or (iii) make any loans, advances or capital contributions to or investments
in, any other individual, firm or corporation.
(e) Little Creek will not make, alter or change any employment or
other contract with any of its management personnel or make, adopt, alter,
revise, or amend any pension, bonus, profit-sharing or other employee benefit
plan, or grant any salary increase or bonus to any person without the prior
written consent of Mortgage Store which consent may be withheld in its sole
discretion.
3.3 Each party to this Agreement agrees that the fair market value of
the Little Creek Shares received by the Mortgage Store Stockholder pursuant to
this Agreement will be approximately equal to the fair market value of the
Mortgage Store Shares surrendered by such Mortgage Store Stockholder in the
exchange.
3.4 All shares of Little Creek issued pursuant to an S-8 registration
statement shall not be resold by the holders for a period of 90 days following
the Closing. Mortgage Store shall in no way be responsible for the required
registration of any of the aforementioned shares or to cause such shares to
become transferable under Rule 144 if it is subsequently determined that such
shares are not otherwise resalable pursuant to Rule 144 or otherwise.
Article IV
CERTAIN COVENANTS
4.1 Directors' Meeting. Each of Mortgage Store, Little Creek and ▇▇▇▇▇▇
Services will take all actions necessary in accordance with applicable law and
its Certificate of Incorporation and By-laws to convene a meeting or obtain
the written consent of its directors as promptly as practicable to consider
and vote upon the approval of the transactions contemplated by this Agreement.
4.2 Conduct of Business Pending the Reorganization. Prior to the
effective date of the Reorganization, unless Little Creek and Mortgage Store
shall otherwise agree in writing, each company shall not (i) operate its
business otherwise than in the ordinary course, or (ii) authorize, recommend
or propose any merger, consolidation, acquisition of assets, disposition of
assets, material change in its capitalization or any comparable event, not in
the ordinary course of business (in each case, other than the transactions
contemplated hereby and transactions as to which written notice has been given
to the other companies prior to the date hereof), provided, however, that
Mortgage Store shall be able to undertake any of the foregoing with the
consent of Little Creek which consent shall not be unreasonably withheld.
4.3 Confidentiality. Little Creek acknowledges to and agrees with
Mortgage Store that Little Creek will have possession or may become familiar
with or aware of certain Confidential Information (as such term is hereinafter
defined) disclosed by the Mortgage Store or one or more of its officers,
directors, employees, shareholders, partners, agents or representatives (each
of such relationships being defined with this paragraph as an "Affiliate").
Accordingly, Little Creek hereby agrees that any and all Confidential
Information disclosed or furnished to it, or to any of its Affiliates, by
Mortgage Store or any of its Affiliates, is and shall remain proprietary to
Mortgage Store. Neither Little Creek, nor any Affiliate of Little Creek,
shall have any rights to distribute or divulge any of such Confidential
Information to any third party without Mortgage Store's prior consent, or to
use any of such Confidential Information in any way detrimental to Mortgage
Store or any of its Affiliates, or in any way which would otherwise destroy,
injure or impair any of Mortgage Store's or its Affiliates' rights in or in
respect of any such Confidential Information including, without limitation, by
using any of such Confidential Information to solicit away from Mortgage Store
any of its employees, contractors, customers or vendors or other business
relationships, or to establish or assist any person or entity which is or will
be, directly or indirectly, in competition with Mortgage Store. For purposes
of this Agreement, the term "Confidential Information" shall mean any and all
proprietary information belonging to Mortgage Store, whether tangible or
intangible, written or oral, including, without limitation, any intellectual
property rights, books and records, computer software and files, lists of (or
proprietary information concerning) its customers, suppliers, vendors and
other business relationships, and any other item which may properly be
classified as a protected trade secret. Little Creek expressly agrees and
understands that its agreement to abide by the provisions of this paragraph
4.3 constitutes a material part of the consideration inducing Mortgage
Store to enter into this Agreement and the transactions contemplated herein,
and that any violation of such provisions could create immediate and
irreparable harm to Mortgage Store. In the event of any breach of this
paragraph 4.3, the parties hereby agree that, in addition to whatever other
remedies may be available to the Mortgage Store, it shall be entitled to seek
injunctive and other equitable relief, and Little Creek hereby waives any
bonding or other requirement as a precursor thereto.
4.4 Recommendation of Approval. The Board of Directors of Little Creek
and Mortgage Store shall continue to recommend to their respective
shareholders approval of this Agreement and the transactions contemplated
hereby except as the fiduciary obligations and other duties of each such Board
of Directors may otherwise require and only to the extent that approval of
their respective stockholders is required under the laws of their respective
states of incorporation.
4.5 Access. Prior to the Closing, Mortgage Store shall afford to the
officers, attorneys, accountants, and other authorized representatives of
Little Creek free and full access to the premises, books and records of
Mortgage Store in order that Little Creek may make such investigation as it
may desire of the affairs of Mortgage Store, provided such access is not
unreasonably disruptive to Mortgage Store's business. Prior to the Closing,
Little Creek shall afford to the officers, attorneys, accountants, and other
authorized representatives of Mortgage Store free and full access to the
premises, books and records of Little Creek so that it may make such
investigations as it may desire of the affairs of Little Creek, provided such
access is not unreasonably disruptive to Little Creek.
4.6 No Solicitation. Until the Closing Date, or if there is no Closing,
until this Agreement has been terminated or expired by its terms, neither
Mortgage Store nor Little Creek will (nor will either of them permit any agent
or affiliate to) solicit, initiate or encourage any Acquisition Proposal (as
hereinafter defined) or furnish any information to, or cooperate with, any
person, corporation, firm or other entity with respect to an Acquisition
Proposal. As used herein "Acquisition Proposal" means a proposal for a merger
or other business combination involving such entity or for the acquisition of
a substantial equity interest in, or a substantial portion of the assets of
such entity other than the Reorganization. Further, during this period of
time, ▇▇▇▇▇▇ Services shall not sell any of the Little Creek Shares held by it
and shall not permit any of its affiliates to sell their Little Creek Shares
and neither ▇▇▇▇▇▇ Services nor any of its affiliates shall agree to an
Acquisition Proposal.
4.7 Reasonable Efforts; Notification. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
Article V
CONDITIONS
5.1 Conditions to the Obligations of Little Creek and ▇▇▇▇▇▇ Services.
The obligations of Little Creek and ▇▇▇▇▇▇ Services to consummate the
transactions contemplated by this Agreement are subject to the satisfaction,
at or before the consummation of the transactions contemplated hereby of each
of the following conditions:
(a) No action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted, entered, enforced or
deemed applicable to the transactions contemplated hereby by any federal,
state or foreign government or governmental authority or by any court,
domestic or foreign, including entry of a preliminary or permanent injunction,
which would, in the reasonable opinion of Little Creek, (i) make the
transactions contemplated hereby illegal, (ii) require the divestiture by
Little Creek or any subsidiary of Little Creek of the shares of any company or
of a material portion of the business of Little Creek and its subsidiaries
taken as a whole, (iii) impose material limits on the ability of Little Creek
to effectively control the business of Little Creek and its subsidiaries, (iv)
otherwise materially adversely affect Little Creek and its subsidiaries taken
as a whole, or (v) if the transactions contemplated hereby are consummated,
subject any officer, director, or employee of Little Creek to criminal
penalties or to civil liabilities not adequately covered by insurance or
enforceable indemnification maintained by Little Creek;
(b) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person, domestic or foreign, shall be threatened, instituted or
pending which would reasonably be expected to result in any way of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) Mortgage Store shall have complied in all material respects
with its agreements and covenants herein, and all representations and
warranties of Mortgage Store herein shall be true and correct in all material
respects at the time of Closing as if made at that time, except to the extent
they expressly relate to an earlier date, and Little Creek shall have received
a certificate to that effect to the best of the knowledge of Mortgage Store,
signed by the President of Mortgage Store;
(d) Each Mortgage Store Stockholder shall have complied in all
material respects with its agreements and covenants herein, and all
representations and warranties of each Mortgage Store Stockholder herein shall
be true and correct in all material respects at the time of the Closing as if
made at that time, except to the extent they expressly relate to an earlier
date, and Little Creek shall have received a certificate to that effect to the
best knowledge of each Mortgage Store Stockholder, signed by each Mortgage
Store Stockholder;
(e) A Good Standing Certificate of Mortgage Store, dated no more
than 10 days prior to the Closing Date, from the Secretary of State of
California;
(f) The Mortgage Store Stockholder listed on Schedule 5.1(f) shall
have agreed to exchange his Mortgage Store Shares pursuant hereto;
(g) The Mortgage Store Stockholder shall have delivered to
Interwest Stock Transfer, Little Creek's transfer agent, certificates
representing such Mortgage Store Stockholder's Mortgage Store Shares which are
being transferred hereunder, which certificate shall have been duly endorsed
in blank by such Mortgage Store Stockholder or with blank stock powers
attached, in proper form for transfer to Little Creek;
(h) The delivery of an opinion from ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, in
the form set forth on Schedule 5.1(h); and
(i) An executed Investment Letter in the form set forth on
Schedule 5.1(i) from the Mortgage Store Stockholder as part of his compliance
with Section 1.2 hereof.
5.2 Conditions to the Obligations of Mortgage Store and the Mortgage
Store Stockholder. The obligations of Mortgage Store and the Mortgage Store
Stockholder to consummate the transactions contemplated hereby are subject to
the satisfaction, at or before the consummation of the transactions
contemplated hereby, of each of the following conditions:
(a) The directors of Mortgage Store shall have duly approved the
transactions contemplated hereby in accordance with applicable law;
(b) No action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted, entered, enforced or
deemed applicable to the transactions contemplated hereby by any federal,
state or foreign government or governmental authority or by any court,
domestic or foreign, including the entry of a preliminary or permanent
injunction, which would (i) make the transactions contemplated hereby illegal,
(ii) require the divestiture by Mortgage Store or any subsidiary of Mortgage
Store of the shares of any company or of a material portion of the business of
Mortgage Store and its subsidiaries taken as a whole, (iii) impose material
limits on the ability of Mortgage Store to effectively control the business of
Mortgage Store and its subsidiaries, (iv) otherwise materially adversely
affect Mortgage Store and its subsidiaries taken as a whole or any Mortgage
Store Stockholder, or (v) if the transactions contemplated hereby are
consummated, subject any officer, director or employee of Mortgage Store to
criminal penalties or to civil liabilities not adequately covered by insurance
or enforceable indemnification maintained by Mortgage Store;
(c) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person, domestic or foreign, shall be threatened, instituted or
pending which would reasonably be expected to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (b) above;
(d) Little Creek shall have complied in all respects with its
agreements and covenants herein, and all representations and warranties of
Little Creek herein shall be true and correct in all respects at the time of
Closing as if made at that time, except to the extent they expressly relate to
an earlier date, and Mortgage Store shall have received a certificate to that
effect, signed by the Presidents of Little Creek and ▇▇▇▇▇▇ Services;
(e) ▇▇▇▇▇▇ Services and the Principals shall have complied in all
material respects with its agreements and covenants herein, and all
representations and warranties of ▇▇▇▇▇▇ Services herein shall be true and
correct in all material respects at the time of the Closing as if made at that
time, except to the extent they expressly relate to an earlier date, and
Mortgage Store and the Mortgage Store Stockholder shall have received a
certificate to that effect, signed by the President of ▇▇▇▇▇▇ Services;
(f) A Good Standing Certificate of Little Creek, dated no more
than 10 days prior to the Closing Date, from the Secretary of State of
Delaware;
(g) All necessary third party and governmental consents and
approvals required for transactions contemplated hereby shall have been
obtained;
(h) The number of Little Creek Shares outlined in Article 1.4
shall have been delivered to Little Creek for cancellation and evidence of
such cancellation shall have been delivered to Mortgage Store;
(i) Little Creek shall have (a) received the requisite shareholder
approval for its change of domicile from Utah to Delaware and the merger of
Little Creek into its Delaware wholly-owned subsidiary, (b) file a Certificate
of Incorporation with the Secretary of State of Delaware to authorize a class
of preferred stock and (c) file a Certificate of Ownership and Merger
effecting the merger of Little Creek into its Delaware wholly-owned subsidiary
and changing its name to "TMSF Holdings, Inc.".
(j) Little Creek shall have delivered to Interwest Stock Transfer,
Little Creek's transfer agent, certificates representing the Little Creek
Shares which are being transferred hereunder, to be issued to the Mortgage
Store Stockholder in accordance with the terms of this Agreement;
(k) The conditions set forth in Articles 1.4, 1.5, 1.6 and 1.7
shall have been complied with by the appropriate parties;
(l) The delivery of an opinion from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq. in
the form set forth on Schedule 5.2(l); and
(m) The Mortgage Store Stockholder shall have executed and
delivered this Agreement to Little Creek and ▇▇▇▇▇▇ Services.
Article VI
INDEMNIFICATION
6.1 ▇▇▇▇▇▇ Services and the Principals hereby agrees to indemnify and
hold Mortgage Store, its officers, directors, employees and agents and each
person, if any, who controls Mortgage Store within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, the Mortgage Store Stockholder
and, following the Closing, Little Creek and all of its then officers,
directors, employees and agents and each person, if any, who then controls
Little Creek within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, harmless from and against the following:
(a) Any and all liabilities, losses, claims, costs, expenses,
damages and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to such liabilities, losses,
claims, costs, expenses, damages and judgments and any action to enforce this
Article VI) (collectively, the "Losses") resulting from or arising out of any
breach of any representation, warranty, or non-performance of any covenant or
agreement on the part of Little Creek or ▇▇▇▇▇▇ Services contained in this
Agreement or in any statement or certificate furnished or to be furnished by
Little Creek or ▇▇▇▇▇▇ Services pursuant hereto or in connection with the
transactions contemplated hereby;
(b) Any and all Losses they suffer resulting from or arising out
of any untrue statement or alleged untrue statement of a material fact
concerning Little Creek or ▇▇▇▇▇▇ Services resulting from any omission or
alleged omission to state a material fact concerning Little Creek or ▇▇▇▇▇▇
Services required to be stated or necessary to make the statements made
concerning Little Creek or ▇▇▇▇▇▇ Services not misleading; and
(c) Any and all Losses resulting from or arising out of the
conduct of any business, any act or any omissions by or on behalf of Little
Creek prior to the Closing.
(d) Any and all past liabilities of any type or nature whatsoever
of Little Creek existing at the Closing of the Agreement, which includes all
expenses related to the Agreement and the compromise and settlement of any
amounts due and owing to ▇▇▇▇▇▇ Services for advances or otherwise that were
incurred by Little Creek in this respect prior to the Closing of the
Agreement.
(e) For any and all sums from the $10,000 retainer paid to the
trust account of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq., less any fees incurred by ▇▇.
▇▇▇▇▇▇▇▇▇▇ in conjunction with this Agreement, if such funds are not returned
upon an event of termination of the Plan of Reorganization for any reason
other than a breach by Little Creek. Notwithstanding the foregoing, to the
extent that Little Creek or ▇▇▇▇▇▇ Services breaches any provision of this
Agreement so that Mortgage Store withdraws from the Plan of Reorganization,
▇▇▇▇▇▇ Services shall be responsible for the repayment in full to Mortgage
Store of said $10,000 and shall indemnify Mortgage Store is such sum is not
repaid.
6.2 Mortgage Store hereby agrees to indemnify and hold Little Creek and
▇▇▇▇▇▇ Services, and their respective officers, directors, employees and
agents and each person, if any, who controls Little Creek or ▇▇▇▇▇▇ Services
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
harmless from and against the following:
(a) Any and all Losses resulting from or arising out of any breach
of any representation, warranty, or non-performance of any covenant or
agreement on the part of Mortgage Store or the Mortgage Store stockholder
contained in this Agreement or in any statement or certificate furnished or to
be furnished by Mortgage Store pursuant hereto or in connection with the
transactions contemplated hereby; and
(b) Any and all Losses they suffer resulting from or arising out
of any untrue statement or alleged untrue statement of a material fact
concerning Mortgage Store or any Mortgage Store Stockholder resulting from any
omission or alleged omission to state a material fact concerning Mortgage
Store or any Mortgage Store Stockholder required to be stated or necessary to
make the statements made concerning Mortgage Store or any Mortgage Store
Stockholder not misleading.
6.3 Mortgage Store hereby agrees to indemnify and hold the Mortgage
Store Stockholder harmless from and against any and all Losses resulting from
or arising out of any breach of any representation, warranty, covenant or
agreement on the part of Mortgage Store contained in Article 2.3 of this
Agreement.
6.4 The Mortgage Store Stockholder hereby agrees to indemnify and hold
Little Creek and ▇▇▇▇▇▇ Services, and their respective officers, directors,
employees and agents and each person, if any, who controls Little Creek or
▇▇▇▇▇▇ Services within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act harmless from and against any and all Losses resulting from
or arising out of any breach of any representation, warranty, covenant or
agreement on the part of such Mortgage Store Stockholder contained in Article
2.4 of this Agreement.
6.5 In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Article 6.1, 6.2 or 6.4
(the "Indemnified Party"), the Indemnified Party shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Party") in
writing. A delay in giving notice shall only relieve the Indemnifying Party
of liability to the extent the Indemnifying Party suffers actual prejudice
because of the delay. The Indemnifying Party shall have the right, at its
option and expense, to defend any such a proceeding or claim, but not to
control the defense, negotiation or settlement thereof, which control shall at
all times rest with the Indemnified Party, unless the proceeding or claim
involves only money damages or relates to a corporate restructuring,
recapitalization or stock issuance while the Indemnifying Party was a
principal stockholder of Little Creek prior to the Closing, not an injunction
or other equitable relief, and unless the Indemnifying Party:
(i) irrevocably acknowledges in writing complete responsibility for
and agrees to indemnify the Indemnified Party, and
(ii) furnishes satisfactory evidence of the financial ability to
indemnify the Indemnified Party,
in which case the Indemnifying Party may assume such control through counsel
of its choice and at its expense, but the Indemnified Party shall continue to
have the right to be represented, at its own expense, by counsel of its choice
in connection with the defense of such a proceeding or claim. If the
Indemnifying Party does not assume control of the defense of such a proceeding
or claim, (i) the entire defense of the proceeding or claim by the Indemnified
Party, (ii) any settlement made by the Indemnified Party, and (iii) any
judgment entered in the proceeding or claim shall be deemed to have been
consented to by, and shall be binding on, the Indemnifying Party as fully as
though it alone had assumed the defense thereof and a judgment had been
entered in the proceeding or claim in the amount of such settlement or
judgment, except that the right of the Indemnifying Party to contest the right
of the Indemnified Party to indemnification under the Agreement with respect
to the proceeding or claim shall not be extinguished. If the Indemnifying
Party does assume control of the defense of such a proceeding or claim, it
will not, without the prior written consent of the Indemnified Party settle
the proceeding or claim or consent to entry of any judgment relating thereto
which does not include as an unconditional term thereof the giving by the
claimant to the Indemnified Party a release from all liability in respect of
the proceeding or claim. The parties hereto agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any
such proceeding or claim.
6.6 The remedies provided for in this Article 6 are the exclusive
remedies of the parties with respect to the breach of any representation,
warranty, covenant or agreement set forth herein.
6.7 The parties agree that all of the representations and warranties
contained herein shall survive the Closing and continue to be binding
regardless of any investigation made at any time by any party.
Article VII
CLOSING DATE
7.1 The Closing for the consummation of the Reorganization contemplated
by this Agreement shall unless another date or place is agreed to in writing
by the parties hereto, take place at the offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
LLP, located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the date which is no later than the fifth business day
after the last to occur of the following dates (the actual date of the Closing
shall be referred to as the "Closing Date"):
(a) The date on which all the other conditions set forth in
Article V hereof shall have been satisfied, except to the extent any such
conditions shall have been waived by Little Creek or Mortgage Store; or
(b) December 31, 2002 unless extended by the parties.
Article VIII
POST-CLOSING MATTERS
At the Closing, subject to the Mortgage Store Stockholder being deemed
to be a stockholder of record of the reorganized Little Creek, Little Creek
will cause all of its officers and directors to resign from office and to
cause to be elected to the Board of Directors of Little Creek those persons
designated by Mortgage Store to wit: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
Article IX
MISCELLANEOUS
9.1 Termination. With respect to each company, this Agreement may be
terminated and the transactions contemplated hereby may be abandoned (i) by
the mutual consent of Little Creek and Mortgage Store at any time, or (ii) by
either Mortgage Store or Little Creek if the transactions contemplated hereby
have not been consummated prior to December 31, 2002, for any reason, or (iii)
by Mortgage Store if Little Creek has not obtained the requisite shareholder
approval for the transactions herein or (iv) by either Mortgage Store or
Little Creek if either discovers a material breach of a representation,
warranty, covenant or agreement by the other and such breach is not cured
within ten (10) days of the breaching party's receipt of a notice from the
non-breaching party. In the event of such termination and abandonment, none
of Little Creek, Mortgage Store, ▇▇▇▇▇▇ Services, the Principals nor the
Mortgage Store Stockholder (or any of their respective directors or officers)
shall have any liability or further obligation to any other party to this
Agreement, except that nothing herein will relieve any party from liability
for any willful breach of this Agreement.
9.2 Expenses. Whether or not the transactions contemplated are
consummated, all out-of-pocket costs and expenses incurred in connection with
this Agreement and the transactions contemplated will be paid by the party
incurring such expenses; provided, however, that the sum of $10,000 deposited
to the trust account of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq. by Mortgage Store as a
retainer for his services rendered and to be rendered for and on behalf of
Little Creek shall be retained by ▇▇. ▇▇▇▇▇▇▇▇▇▇ as his fees, and in the event
that no Closing occurs as provided herein, that ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall only be
required to refund that portion, if any, of this sum that has not been
utilized in his billing of legal fees related to the representation of Little
Creek in connection with this Agreement and all related matters.
9.3 Brokers. No broker or finder is entitled to any brokerage or
finder's fee or other commission or fee from any company or based upon
arrangements made by or on behalf of any party with respect to the
transactions contemplated by this Agreement, except as disclosed on Schedule
9.3 annexed hereto, and the party so indicated on Schedule 9.3 shall be liable
for the payment thereof.
9.4 Arbitration. Any controversy arising out of, connected to, or
relating to any transactions herein contemplated, or this Agreement, including
the indemnification provisions contained herein, or the breach thereof,
including, but not limited to any claims of violations of federal and/or state
securities acts, banking statues, consumer protection statutes, federal and/or
state anti-racketeering (e.g. RICO) claims as well as any common law claims
and any state law claims of fraud, negligence, negligent misrepresentations,
and/or conversion and any disputes as to the arbitrability of any such claim
shall be settled by arbitration in the county in which Mortgage Store
principal operations are situated in the State of California and in accordance
with the commercial rules of the American Arbitration Association by three (3)
arbitrators appointed in accordance with such rules. Any judgment on the
arbitrator's award may be entered in any court having jurisdiction thereof.
The arbitrators shall hear and determine the matter and shall execute and
acknowledge its award, in writing, and if requested by either party, shall
make findings of fact and conclusions of law. Any award determined by the
arbitrators shall be final and binding on the parties, however, in the event
of any misconduct, partiality, corruption or the like of any arbitrator, the
parties shall retain any rights of appeal to which they may be entitled
pursuant to applicable law. The cost and expense of arbitration, including
the fees of the arbitrator, and the reasonable legal and accounting fees and
expenses of the parties, shall be divided between the parties in such
proportion as the arbitrators may determine, and may be assessed against one
party if the arbitrators so determine.
9.5 Other Actions. Each of the parties hereto agrees to execute and
deliver such other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
9.6 Entire Agreement; Waiver and Amendment. This Agreement, the
exhibits and schedules hereto contain the entire agreement by and among Little
Creek, Mortgage Store, ▇▇▇▇▇▇ Services and the Mortgage Store Stockholder with
respect to the transactions contemplated hereby. Any and all prior
discussions, negotiations, commitments and understandings relating to the
subject matter of this Agreement are superseded by this Agreement. This
Agreement may not be modified, amended or terminated except by a written
agreement specifically referring to this Agreement signed by all of the
parties hereto. No waiver of any breach or default hereunder shall be
considered valid unless in writing signed by the party giving such waiver, and
no such waiver shall be deemed a waiver of any subsequent breach or default of
the same or similar nature.
9.7 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to its
principles of conflicts of laws.
9.8 Descriptive Headings. The descriptive headings are for convenience
of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail postage prepaid, or sent via facsimile
(receipt confirmed) to the parties at following addresses or facsimile numbers
(or at such other address or facsimile numbers for a party as shall be
specified by like notice):
If to Little Creek:Little Creek, Inc.
South ▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Hermes Building, Suite 205
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Mortgage Store:The Mortgage Store Financial, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one agreement.
9.11 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
9.12 Publicity. All public announcements relating to this Agreement or
the transactions contemplated hereby will be made only as may be agreed upon
by Little Creek and Mortgage Store or as required by Law. If public
disclosure or notice is required by Law, the disclosing party will use its
best efforts to give the other prior written notice of the disclosure to be
made.
9.13 Gender; Number. The use of a particular pronoun herein shall not
be restrictive as to gender, and the use of the singular or plural shall not
be restrictive as to number, but shall be interpreted in all cases as the
context may require.
9.14 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment in violation of this Section shall be void.
9.15 Waiver of Jury Trial. EACH OF LITTLE CREEK, MORTGAGE STORE,
MORTGAGE STORE STOCKHOLDER, PRINCIPALS AND ▇▇▇▇▇▇ SERVICES HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF LITTLE CREEK, MORTGAGE STORE, MORTGAGE STORE
STOCKHOLDER, PRINCIPALS OR ▇▇▇▇▇▇ SERVICES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
9.16 Schedules. The Schedules attached hereto and/or delivered herewith
are an integral part of this Agreement as if fully re-written herein.
9.17 Binding Effect. This Agreement will be binding upon and will inure to
the benefit of the parties and their respective heirs, personal
representatives, successors and permitted assigns. Except as herein provided,
no party will have the right to assign this Agreement, or any of such party's
rights hereunder, without the prior written consent of the other parties.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein
above written.
LITTLE CREEK, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
THE MORTGAGE STORE FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
MORTGAGE STORE FINANCIAL, INC. STOCKHOLDER
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an individual
"PRINCIPALS"
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, an individual
SCHEDULE 1.1
Holder Number of Shares Par Value
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 7,500 None
Little Creek, Inc. 9,500,000 $0.001
SCHEDULE 1.6.1
FINANCIAL CONSULTING AGREEMENT
This Financial Consulting Agreement (the "Agreement") is made as of
November 1, 2002 by and between, TMSF Holdings, Inc. a Delaware corporation
having its business address at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter the "Company") and ▇▇▇▇▇▇ Services, Inc., having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, #▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ (hereinafter "Consultant").
In consideration of the mutual promises contained herein and on the
terms and conditions hereinafter set forth, the Company and Consultant agree
as follows:
1.Provision of Services.
(a)Consultant agrees to place at the disposal of the Company
its judgment and experience and to provide the following financial and
business development consulting services to the Company:
(i) Coordination of filing current report on Form 8-K with
respect to the acquisition of the Mortgage Store, Inc. by
Little Creek, Inc. (renamed TMSF Holdings, Inc. (the
"Acquisition");
(ii) S&P filing with respect to the Acquisition;
(iii) Coordination of delivery of new 15c2-11 to broker with
respect to the Acquisition;
(iv) Coordination of filing of Amended 8-K reflecting
consolidated, combined financials statements of the Company
and the Mortgage Store within 15 days of the date hereof
with respect to the Acquisition;
(v) Assisting the Company in its marketing efforts, introducing
the Company to strategic partners to further corporate
objectives, and advise with regard to stockholder relations
and public relations matters; and
(vi) Providing such other similar services to the extent
reasonably requested by the Company and as agreed to by the
Consultant.
(b)Consultant agrees to use its best efforts at all times in
the furnishing of advice and recommendations, and for this purpose Consultant
shall at all times maintain or keep available for the Company an adequate
organization of personnel or a network of outside professionals for the
performance of its obligations under this Agreement.
2.Compensation. In consideration for services to be rendered under
this Agreement, the Company and Consultant hereby agree that the Company shall
(i) pay Consultant on the date hereof the sum of $265,000 and (ii) issue
Consultant five (5) year warrants to purchase an aggregate of 163,635 shares
of the Common Stock of the Company at a per share exercise price of $0.05,
such warrants to be in the form attached hereto as Exhibit "A".
3. Status of Consultant. Consultant shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Company.
4.Other Activities of Consultant. The Company recognizes that
Consultant now renders and may continue to render financial and other services
to other companies which may or may not have policies and conduct activities
similar to those of the Company. Consultant shall be free to render such
advice and other services and the Company hereby consents thereto. Consultant
shall not be required to devotes its full time and attention to the
performance of its duties under this Agreement, but shall devote only so much
of its time and attention as it deems reasonable or necessary for such
purposes.
5.Term. Consultant's retention hereunder shall be for a term of one
year commencing upon the execution of this Agreement.
6.Miscellaneous. This Agreement sets forth the entire agreement and
understanding between the parties and supersedes all prior discussions,
agreements and understandings of every and any nature between them. This
Agreement shall be construed and interpreted according to the laws of the
State of California.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers or representatives duly authorized the day and
year first above written.
TMSF HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
▇▇▇▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
EXHIBIT "A"
FORM OF WARRANT AGREEMENT
See Schedule 1.6.3
SCHEDULE 1.6.2
The following expenses will be included and paid by ▇▇▇▇▇▇ Services in
conjunction with the Plan of Reorganization Pre-Closing, assuming receipt by
the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq. Trust Account of the $10,000 retainer, as per
Section A(iii):
* Legal work to be completed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
-Letter of Intent.
- Plan of Reorganization.
- Reincorporation of Little Creek in Delaware immediately prior to
the Closing.
- Proxy Statement, if required, or Information Statement.
* Execution of Closing documents by officers and directors of Little Creek and
Mortgage Store.
- Little Creek officers and directors will offer resignations.
The following services will be rendered and expenses paid by ▇▇▇▇▇▇
Services in conjunction with the Plan of Reorganization and further to the
Consulting Agreement, assuming receipt of the $265,000 by ▇▇▇▇▇▇ Services as
per Section A(iii):
* Post-Plan of Reorganization filings are made, with the following agencies.
- Articles of Amendment - reflecting new name as designated by
Mortgage Store.
- Certificate of Designation - define rights, title, and preferences
for classes of stock or warrants that are authorized by Mortgage
Store
- National Quotation Bureau ("NQB") - new cusip number.
- National Association of Securities Dealers ("NASD") - request new
symbol as designated by Mortgage Store.
- Coordination of filing current report on Form 8-K.
- S&P filing.
- Coordination of delivery of new 15c2-11 to broker.
- Coordination of filing of Amended 8-K reflecting consolidated,
combined financials statements of Mortgage Store and Little Creek
within 15 days of transaction.
The following expenses will be included and paid by Mortgage Store, in
conjunction with the Plan of Reorganization:
-Order and issue new certificates;
Mortgage Store audited Financial Statements for the most recent
year end; and
- Pro forma combined balance sheet taking into consideration the
Plan of Reorganization.
SCHEDULE 1.6.3
WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") AND MAY NOT BE SOLD, OFFERED
FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION
RULE 144.
WARRANT TO PURCHASE COMMON STOCK
OF
TMSF HOLDINGS, INC.
(Subject to Adjustment)
NO. 1
THIS CERTIFIES THAT, for value received, ▇▇▇▇▇▇ Services, Inc., a Utah
corporation ("Holder"), is entitled, subject to the terms and conditions of
this Warrant, at any time or from time to time after November 1, 2002 (the
"Effective Date"), to purchase from TMSF Holdings, Inc., a Delaware
corporation (the "Company"), up to One Hundred Sixty Three Thousand Six
Hundred Thirty Five (163,635) shares of common stock of the Company at a price
per share of $0.05 (the "Purchase Price"). This Warrant shall expire at 5:00
p.m. Pacific time on the fifth anniversary of the Effective Date of this
Warrant (the "Expiration Date"). Both the number of shares of Common Stock
purchasable upon exercise of this Warrant and the Purchase Price are subject
to adjustment and change as provided herein. This Warrant is issued pursuant
to that certain Financial Consultant Agreement of even date hereof between the
Company and the Holder.
1.CERTAIN DEFINITIONS. As used in this Warrant the following terms shall
have the following respective meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"Common Stock" shall mean the Common Stock of the Company and any other
securities at any time receivable or issuable upon exercise of this Warrant.
"Fair Market Value" of a share of Common Stock as of a particular date
shall mean:
(a)If traded on a securities exchange or the Nasdaq National Market,
the Fair Market Value shall be deemed to be the average of the closing prices
of the Common Stock of the Company on such exchange or market over the 5
business days ending immediately prior to the applicable date of valuation;
(b)If actively traded over-the-counter, the Fair Market Value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending immediately prior to the applicable date of valuation; and
(c)If there is no active public market, the Fair Market Value shall
be the value as determined in good faith by the Company's Board of Directors
upon a review of relevant factors, including due consideration of the
Registered Holders' determination of the value of the Company.
"Registered Holder" shall mean any person in whose name this Warrant is
registered upon the books and records maintained by the Company.
"SEC" shall mean the Securities and Exchange Commission.
2.EXERCISE OF WARRANT
2.1.Payment. Subject to compliance with the terms and conditions of
this Warrant and applicable securities laws, this Warrant may be exercised, in
whole or in part at any time or from time to time, on or before the Expiration
Date by the delivery (including, without limitation, delivery by facsimile) of
the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of
Exercise"), duly executed by the Registered Holder, at the principal office of
the Company, and as soon as practicable after such date, surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash (by check) or by wire transfer, (ii) by
cancellation by the Registered Holder of indebtedness of the Company to the
Registered Holder; or (iii) by a combination of (i) and (ii), of an amount
equal to the product obtained by multiplying the number of shares of Common
Stock being purchased upon such exercise by the then effective Purchase Price
(the "Exercise Amount").
▇.▇.▇▇▇ Issue Exercise. In lieu of the payment methods set forth in
Section 2.1(b) above, the Registered Holder may elect to exchange all or some
of the Warrant for shares of Common Stock equal to the value of the amount of
the Warrant being exchanged on the date of exchange. If the Registered Holder
elects to exchange this Warrant as provided in this Section 2.2, the
Registered Holder shall tender to the Company the Warrant for the amount being
exchanged, along with written notice of the Registered Holder's election to
exchange some or all of the Warrant, and the Company shall issue to the
Registered Holder the number of shares of the Common Stock computed using the
following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to the Registered
Holder.
Y = the number of shares of Common Stock purchasable under the amount of the
Warrant being exchanged (as adjusted to the date of such calculation).
A = the Fair Market Value of one share of the Company's Common Stock.
B = Purchase Price of one share of the Company's Common Stock (as adjusted to
the date of such calculation).
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
2.3."Easy Sale" Exercise. In lieu of the payment methods set forth in
Section 2.1(b) above, when permitted by law and applicable regulations
(including Nasdaq and NASD rules), the Registered Holder may pay the Purchase
Price through a "same day sale" commitment from the Registered Holder (and if
applicable a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer")), whereby the Registered Holder
irrevocably elects to exercise this Warrant and to sell a portion of the
shares of Common Stock so purchased to pay the applicable Purchase Price and
the Registered Holder (or, if applicable, the NASD Dealer) commits upon sale
(or, in the case of the NASD Dealer, upon receipt) of such shares of Common
Stock to forward the Purchase Price directly to the Company.
2.4.Stock Certificates; Fractional Shares. As soon as practicable on
or after the date of an exercise of this Warrant, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of whole shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share equal to such
fraction of the current Fair Market Value of one whole share of Common Stock
as of the date of exercise of this Warrant. No fractional shares or scrip
representing fractional shares shall be issued upon an exercise of this
Warrant.
2.5Partial Exercise; Effective Date of Exercise. In case of any
partial exercise of this Warrant, the Company shall cancel this Warrant upon
surrender hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Common Stock purchasable hereunder.
This Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above.
The person entitled to receive the shares of Common Stock issuable upon
exercise of this Warrant shall be treated for all purposes as the holder of
record of such shares as of the close of business on the date the Registered
Holder is deemed to have exercised this Warrant.
3.VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and
non-assessable, and the Company shall pay all taxes and other governmental
charges that may be imposed in respect of the issue or delivery thereof. The
Company shall not be required to pay any tax or other charge imposed in
connection with any transfer involved in the issuance of any certificate for
shares of Common Stock in any name other than that of the Registered Holder of
this Warrant, and in such case the Company shall not be required to issue or
deliver any stock certificate or security until such tax or other charge has
been paid, or it has been established to the Company's reasonable satisfaction
that no tax or other charge is due.
4.ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares
of Common Stock issuable upon exercise of this Warrant (or any shares of stock
or other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of
the following events:
4.1.Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares. The Purchase Price of this Warrant shall be proportionally decreased
and the number of shares of Common Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities at the time issuable upon
exercise of this Warrant) shall be proportionally increased to reflect any
stock split or subdivision of the Company's Common Stock. The Purchase Price
of this Warrant shall be proportionally increased and the number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company's Common
Stock.
4.2.Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. In case the Company shall make or issue, or shall fix
a record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the
Warrant) payable in (a) securities of the Company or (b) assets (excluding
cash dividends paid or payable solely out of retained earnings), then, in each
such case, the Registered Holder of this Warrant on exercise hereof at any
time after the consummation, effective date or record date of such dividend or
other distribution, shall receive, in addition to the shares of Common Stock
(or such other stock or securities) issuable on such exercise prior to such
date, and without the payment of additional consideration therefor, the
securities or such other assets of the Company to which such Registered Holder
would have been entitled upon such date if such Registered Holder had
exercised this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock available by it as
aforesaid during such period giving effect to all adjustments called for by
this Section 4.
4.3.Reclassification. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which
purchase rights under this Warrant exist into the same or a different number
of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would
have been issuable as the result of such change with respect to the securities
that were subject to the purchase rights under this Warrant immediately prior
to such reclassification or other change and the Purchase Price therefore
shall be appropriately adjusted, all subject to further adjustment as provided
in this Section 4. No adjustment shall be made pursuant to this Section 4.3
upon any conversion or redemption of the Common Stock which is the subject of
Section 4.5.
4.4.Adjustment for Capital Reorganization, Merger or Consolidation.
In case of any capital reorganization of the capital stock of the Company
(other than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), or any merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all the
assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the Registered Holder of this Warrant shall thereafter
be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Purchase Price then in effect, the
number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 4. The foregoing provisions of
this Section 4.4 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of
this Warrant. If the per-share consideration payable to the Registered Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all
events, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the Registered Holder
after the transaction, to the end that the provisions of this Warrant shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant.
4.5.Conversion of Common Stock. In case all or any portion of the
authorized and outstanding shares of Common Stock of the Company are redeemed
or converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Common Stock
otherwise ceases to exist, then, in such case, the Registered Holder of this
Warrant, upon exercise hereof at any time after the date on which the Common
Stock is so redeemed or converted, reclassified or ceases to exist (the
"Termination Date"), shall receive, in lieu of the number of shares of Common
Stock that would have been issuable upon such exercise immediately prior to
the Termination Date, the securities or property that would have been received
if this Warrant had been exercised in full and the Common Stock received
thereupon had been simultaneously converted immediately prior to the
Termination Date, all subject to further adjustment as provided in this
Warrant. Additionally, the Purchase Price shall be immediately adjusted to
equal the quotient obtained by dividing (x) the aggregate Purchase Price of
the maximum number of shares of Common Stock for which this Warrant was
exercisable immediately prior to the Termination Date by (y) the number of
shares of Common Stock of the Company for which this Warrant is exercisable
immediately after the Termination Date, all subject to further adjustment as
provided herein.
5.CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the
Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer or Controller of the Company shall
compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of the
adjusted Purchase Price. The Company shall promptly send (by facsimile and by
either first class mail, postage prepaid or overnight delivery) a copy of each
such certificate to the Registered Holder.
6.LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to
the Company of the ownership of and the loss, theft, destruction or mutilation
of this Warrant, and of indemnity reasonably satisfactory to it, and (in the
case of mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of like tenor
as the lost, stolen, destroyed or mutilated Warrant.
7.RESERVATION OF COMMON STOCK. The Company hereby covenants that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Common Stock or other shares of capital stock
of the Company as are from time to time issuable upon exercise of this Warrant
and, from time to time, will take all steps necessary to amend its Certificate
of Incorporation to provide sufficient reserves of shares of Common Stock or
other shares of capital stock issuable upon exercise of this Warrant (and
shares of its Common Stock for issuance on conversion of such capital stock).
All such shares shall be duly authorized, and when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights, except encumbrances or
restrictions arising under federal or state securities laws. Issuance of this
Warrant shall constitute full authority to the Company's officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock and other capital stock upon
the exercise of this Warrant.
8.TRANSFER AND EXCHANGE. Subject to compliance with all applicable
securities laws, this Warrant and all rights hereunder may be transferred by
the Registered Holder to any person, in whole or in part, on the books of the
Company maintained for such purpose at the principal office of the Company
referred to above, by the Registered Holder hereof in person, or by duly
authorized attorney, upon surrender of this Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. Upon any partial transfer, the Company will issue and
deliver to the Registered Holder a new Warrant or Warrants with respect to the
portion of this Warrant not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this
Warrant, as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is
duly registered on the books of the Company, the Company may treat the
Registered Holder hereof as the owner for all purposes.
9.RESTRICTIONS ON TRANSFER. The Registered Holder, by acceptance hereof,
agrees that, absent an effective registration statement filed with the SEC
under the 1933 Act, covering the disposition or sale of this Warrant or the
Common Stock issued or issuable upon exercise hereof or the Common Stock
issuable upon conversion thereof, as the case may be, and registration or
qualification under applicable state securities laws, such Registered Holder
will not sell, transfer, pledge, or hypothecate any or all such Warrants or
Common Stock, as the case may be, unless either (i) the Company has received
an opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is not required in connection
with such disposition or (ii) the sale of such securities is made pursuant to
SEC Rule 144.
10.COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Registered Holder hereby represents, warrants and covenants that any shares of
stock purchased upon exercise of this Warrant or acquired upon conversion
thereof shall be acquired for investment only and not with a view to, or for
sale in connection with, any distribution thereof; that the Registered Holder
has had such opportunity as such Registered Holder has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the Registered Holder to evaluate the merits and risks of its
investment in the Company; that the Registered Holder is able to bear the
economic risk of holding such shares as may be acquired pursuant to the
exercise of this Warrant for an indefinite period; that the Registered Holder
understands that the shares of stock acquired pursuant to the exercise of this
Warrant or acquired upon conversion thereof will not be registered under the
1933 Act (unless otherwise required pursuant to exercise by the Registered
Holder of the registration rights, if any, previously granted to the
Registered Holder) and will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and that the exemption from registration under
Rule 144 will not be available for at least one year from the date of exercise
of this Warrant, subject to any special treatment by the SEC for exercise of
this Warrant pursuant to Section 2.2, and even then will not be available
unless a public market then exists for the stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and that all stock certificates
representing shares of stock issued to the Registered Holder upon exercise of
this Warrant or upon conversion of such shares may have affixed thereto a
legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
▇▇.▇▇ RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not
entitle the Registered Holder to any voting rights or other rights as a
stockholder of the Company. In the absence of affirmative action by such
Registered Holder to purchase Common Stock by exercise of this Warrant, no
provisions of this Warrant, and no enumeration herein of the rights or
privileges of the Registered Holder hereof shall cause such Registered Holder
hereof to be a stockholder of the Company for any purpose.
12.NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, return receipt requested, or by telecopier, or by email
or otherwise delivered by hand or by messenger, addressed or telecopied to the
person to whom such notice or communication is being given at its address set
forth after its signature hereto. In order to be effective, a copy of any
notice or communication sent by telecopier or email must be sent by registered
or certified mail, postage prepaid, return receipt requested, or delivered
personally to the person to whom such notice or communication is being at its
address set forth after its signature hereto. If notice is provided by mail,
notice shall be deemed to be given five (5) business days after proper deposit
with the United States mail or nationally recognized overnight courier, or
immediately upon personally delivery thereof, to person to whom such notice or
communication is being at such address. If notice is provided by telecopier,
notice shall be deemed to be given upon confirmation by the telecopier machine
of the receipt of such notice at the telecopier number provided above. If
notice is provided by email, notice shall be deemed to be given upon
confirmation by the sender's email program of the receipt of such notice at
the email address provided after the signature of the person to whom such
notice or communication is being. The addresses set forth after the
signatures hereto may be changed by written notice complying with the terms of
this Section 12.
13HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
▇▇.▇▇▇ GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.
15.NOTICES OF RECORD DATE. In case:
15.1.the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant), for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or
15.2.of any consolidation or merger of the Company with or into another
corporation, any capital reorganization of the Company, any reclassification
of the capital stock of the Company, or any conveyance of all or substantially
all of the assets of the Company to another corporation in which holders of
the Company's stock are to receive stock, securities or property of another
corporation; or
15.3.of any voluntary dissolution, liquidation or winding-up of the
Company; or
15.4.of any redemption of any outstanding capital stock of the Company;
then, and in each such case, the Company will mail or cause to be mailed to
the Registered Holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, or (ii) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, winding-up, redemption or conversion is to take
place, and the time, if any is to be fixed, as of which the holders of record
of Common Stock (or such stock or securities as at the time are receivable
upon the exercise of this Warrant) shall be entitled to exchange their shares
of Common Stock (or such other stock or securities) for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up.
Such notice shall be delivered at least thirty (30) days prior to the date
therein specified.
16.SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
17.COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
18.SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. on the next business day.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Effective Date.
TMSF HOLDINGS, INC. ▇▇▇▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer Title: CEO
and President
Address for Notices:Address for Notices:
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
___________________ WARRANT NO. ___
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of TMSF Holdings, Inc., as provided for therein, and (check the
applicable box):
[ ] Tenders herewith payment of the exercise price in full in the form of
cash or a certified or official bank check in same-day funds in the
amount of $____________ for _________ such securities.
[ ] Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________ of
such securities, according to the following calculation:
X = Y (A-B)( ) = (____) [(_____) - (_____)]
------- -------------------------
A (_____)
Where X = the number of shares of Common Stock to be issued to the
Registered Holder.
Y = the number of shares of Common Stock purchasable under the amount of
the Warrant being exchanged (as adjusted to the date of such
calculation).
A = the Fair Market Value of one share of the Company's Common Stock.
B = Purchase Price (as adjusted to the date of such calculation).
[ ] Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________ of
such securities, according to the following calculation:
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name: ____________________________________________
Address: ____________________________________________
Signature: ____________________________________________
Note: The above signature should correspond exactly with the name on the
first page of this Warrant Certificate or with the name of the assignee
appearing in the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate) WARRANT NO. ___
For value received, hereby sells, assigns and transfers unto
________________________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the
number of Warrants set forth below, with full power of substitution in the
premises:
Name(s) of Assignee(s) Address # of Warrants
____________________________ _____________________ _____________________
____________________________ _____________________ _____________________
And if said number of Warrants shall not be all the Warrants represented by
the Warrant Certificate, a new Warrant Certificate is to be issued in the name
of said undersigned for the balance remaining of the Warrants registered by
said Warrant Certificate.
Dated: ____________________________
Signature: ____________________________
Notice: The signature to the foregoing Assignment must correspond to the name
as written upon the face of this security in every particular, without
alteration or any change whatsoever; signature(s) must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Securities and Exchange Commission
Rule 17Ad-15.
SCHEDULE 2.1(c)
None.
SCHEDULE 2.1(d)
None.
SCHEDULE 2.1(f)
None.
SCHEDULE 2.1(h)
None.
SCHEDULE 2.1(i)
None.
SCHEDULE 2.1(l)
None.
SCHEDULE 2.1(c)
None.
SCHEDULE 2.1(q)
None.
SCHEDULE 2.1(r)
None.
SCHEDULE 2.1(s)
Not a publicly available Schedule.
SCHEDULE 2.1(t)
None.
SCHEDULE 2.2(c)
None.
SCHEDULE 2.2(e)(i)
None.
SCHEDULE 2.2(e)(ii)
None.
SCHEDULE 2.2(f)(i)
None.
SCHEDULE 2.2(f)(ii)
None.
SCHEDULE 2.2(h)
None.
SCHEDULE 2.2(e)(i)
None.
SCHEDULE 2.2(i)
None.
SCHEDULE 2.2(j)
None.
SCHEDULE 2.2(k)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SCHEDULE 3.1
The Mortgage Store Financial shall redeem all of its outstanding
preferred stock prior to the Closing Date.
SCHEDULE 3.1(d)
None.
SCHEDULE 5.1(f)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SCHEDULE 5.1(h)
(Letterhead of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP)
November 4, 2002
Little Creek, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special counsel for The Mortgage Store Financial, Inc., a
California corporation (the "Company"), in connection with the Plan of
Reorganization and Stock Exchange Agreement dated April 5, 2002 (the
"Agreement") by and among the Company, Little Creek, Inc., a Utah corporation
("Little Creek"), ▇▇▇▇▇▇ Services, Inc. ("▇▇▇▇▇▇ Services"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
principal of ▇▇▇▇▇▇ Services, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a principal of Little
Creek and the sole shareholder of the Company (the "Company Shareholder").
The Agreement provides for the transfer of 100% of the outstanding shares of
Common Stock of the Company by the Company Shareholder (the "Mortgage Store
Shares") in exchange for 9,500,000 shares of Little Creek Common Stock. We
are delivering this opinion to you at the request of the Company pursuant to
Section 5.1 of the Agreement.
The following documents are referred to collectively in this opinion as the
"Documents":
1. the Agreement,
2. the Consulting Agreement, and
3. the Consultants' Warrant.
Capitalized terms used but not defined in this opinion letter have the
meanings given to them in the Agreement. References in this opinion letter to
our knowledge mean a conscious awareness of facts without investigation by any
of the lawyers currently with this firm who have given substantive attention
to the legal representation of the Company in matters directly relating to the
Documents.
In connection with the rendering opinions set forth below, we have examined
the Documents, the Articles of Incorporation, as amended, of the Company, the
Bylaws of the Company, minutes of meetings or actions of the Company's Board
of Directors with respect to the transactions covered by this opinion letter
and stock certificates No. 3 and 5 issued to the Company Shareholder and we
have made such other investigation as we have deemed appropriate. We have
examined and relied on certificates and statements of certain government
officials and, as to certain matters of fact that are material to our
opinions, we have relied upon the representations and warranties made by the
Company and the Company Shareholder contained in the Documents, certificates
and other documents delivered by or on behalf of the Company or the Company
Shareholder pursuant to the Documents and a certificate of an officer of the
Company (the "Fact Certificate"). A copy of the Fact Certificate is attached
to this opinion letter. We have not independently established any of the facts
so relied on.
For purposes of this opinion letter we have made the assumptions that are
customary in opinion letters of this kind, including, (a) that each document
submitted to us is accurate and complete (b) the genuineness of all signatures
on original and certified documents (other than signatures of the Company
Shareholder and signatures on behalf of the Company); (b) the authenticity of
all documents submitted to us as originals; (c) the conformity to original and
certified documents of all copies submitted to us as conformed, photostatic or
other copies; (d) the legal capacity of natural persons; (e) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties contained in all of such documents; (f) the due authorization,
execution and delivery of all such documents by Little Creek, ▇▇▇▇▇▇ Services,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the legal, valid and binding effect
thereof on Little Creek, ▇▇▇▇▇▇ Services, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇; and (g) that Little Creek, ▇▇▇▇▇▇ Services, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and the Company will act in accordance with their respective
representations and warranties as set forth in the Documents. We have not
verified any of those assumptions.
The opinions expressed in this opinion letter are limited to the state of
California other than its law relating to choice of law and the federal
securities laws of the United States that in our experience is applicable to
transactions of the type contemplated by the Documents. We express no opinion
as to compliance or noncompliance with applicable federal or state anti-fraud
statutes, laws, rules and regulations.
Based on the foregoing, and subject to the foregoing and the additional
qualifications and other matters set forth below, it is our opinion that:
1.The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California, is qualified
to do business in Alaska, California, Colorado, Connecticut, Florida, Georgia,
Idaho, Indiana, Illinois, Kentucky, Louisianna, Maryland, Michigan, Minnesota,
Montana, Nevada, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas,
Virginia and Washington and the Company has the requisite corporate power to
conduct its business, and to own, lease and operate its properties.
2.The authorized capital stock of the Company consists of 17,100
shares of stock. To our knowledge, based solely on an examination of the
Company's capital stock records, 7,500 shares of Common Stock, which
constitute the Mortgage Store Shares, are issued and outstanding and the
Mortgage Store Shares constitute all of the issued and outstanding shares of
capital stock of the Company. The Mortgage Store Shares are duly authorized,
have been validly issued, and are fully paid and nonassessable.
3.The Company has (a) the requisite corporate power to execute,
deliver, and perform its obligations under the Documents (b) taken all
corporate action necessary to authorize the execution, delivery, and
performance of the Documents, and (c) duly executed and delivered the
Documents.
4.The Company Shareholder has (a) the requisite power to execute,
deliver, and perform its obligations under the Agreement and (b) has duly
executed and delivered the Agreement.
5.The Documents constitute the valid and legally binding obligations
of the Company and are enforceable against the Company in accordance with
their respective terms.
▇.▇▇ our knowledge based solely on an examination of the Company's
capital stock records, the Company Shareholder is the sole record owner of the
Mortgage Store Shares. Upon delivery to Little Creek of the stock certificate
representing the Mortgage Store Shares, together with a stock power
certificate duly executed by the Company Shareholder, Little Creek will
acquire all the rights in the Mortgage Store Shares that the Company
Shareholder has or has power to transfer and, assuming that Little Creek does
not have any adverse claim, those rights will be free of any adverse claim
within the meaning of the Uniform Commercial Code.
7.The execution and delivery by the Company and the performance by
the Company of its obligations under the Documents to which it is a party do
not constitute a violation by the Company of (a) the Company's Articles of
Incorporation and By-laws, (b) the California Corporations Code, or any
applicable statute, rule or regulation of the State of California or the
United States, or (c) any existing obligation of the Company or the Company
Shareholder under the express terms of any court order which, to our knowledge
without investigation, names the Company Shareholder or the Company and is
specifically directed to it or its property.
8.The execution and delivery by the Company of and the performance
by the Company of its obligations under the Documents to which it is a party
do not (a) breach or constitute a default of the Company under the express
terms of any agreement or instrument listed in Schedule 2.2(h), (b) result in
the acceleration of (or entitle any party to accelerate) the maturity of any
obligation of the Company under any such agreement or instrument pursuant to
the express terms thereof, or (c) result in a lien on any property of the
Company pursuant to the express terms of any such agreement or instrument.
9.The execution and delivery by the Company of and the performance
by the Company of its obligations under the Documents do not require the
Company to obtain any approval by or make any filing with any governmental
authority under California Corporations Code, or any applicable statute, rule
or regulation of the State of California or the federal securities laws of the
United States other than approvals and filings previously obtained or made and
in full force and effect.
The opinions set forth above are based upon, and subject to, the further
comments, assumptions, limitations, qualifications and exceptions set forth
below:
(a)we give no opinion concerning the rules, regulations and related
statutes promulgated by, governing or pertaining to the (i) Federal Deposit
Insurance Corporation; (ii) California State Banking Department (and the
Superintendent of Banks); (iii) the Federal Reserve Board; (iv) any rules and
regulations similar to (i), (ii) and (iii) above; (v) the Government National
Mortgage Association; (vi) Federal Home Loan Mortgage Corporation; (vii)
Federal National Mortgage Association; (viii) California Department of Real
Estate; and (ix) Department of Housing and Urban Development.
(b)with respect to the enforceability of any agreement, the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
(including without limitation, California and federal laws relating to
fraudulent transfers or conveyances) and court decisions of general
application, and other legal or equitable principles of general application,
relating to, limiting or affecting the enforcement of creditors' rights
generally;
(c)limitations imposed by applicable law or public policy on the
enforceability of the indemnification provisions of any agreement;
(d)the net impact or result of any conflict of laws between or among
laws of competing jurisdictions and the applicability of the law of any
jurisdiction in such instance beyond California;
(e)the limitations imposed by a California court might not permit the
exercise or attempted exercise of any right or remedy provided in any
agreement if such exercise or attempted exercise is deemed to be in breach of
the covenant of good faith and fair dealing implied under California law to
exist in all agreements or if the party seeking to exercise same fails to act
in a commercially reasonable manner;
(f)the limitations imposed by California law and court decisions
relating to the strict enforcement of certain covenants in contracts absent a
showing of damage or increased risk to the party seeking enforcement (such
covenants may include, without limitation, covenants to provide reports or
notices and covenants restricting rights of assignment);
(g)the effect of certain California court decisions, indicating that
a California court would probably refuse to give strict and literal effect to
contractual provisions if it concluded that enforcement of such provisions, on
the basis of the facts and circumstances then before such court, was not
reasonably necessary to protect the rights and interest of the party seeking
enforcement;
(h)the unenforceability under certain circumstances of contractual
provisions respecting various self-help or summary remedies without notice or
opportunity for hearing or correction, especially if their operation would
work a substantial forfeiture or impose a substantial penalty upon the
burdened party;
(i)the unenforceability under certain circumstances of provisions
waiving vaguely or broadly stated rights or unknown future rights and of
provisions stating that rights or remedies are not exclusive, that every right
or remedy is cumulative and may be exercised in addition to or with any other
right or remedy, or that the election of some particular remedy or remedies
does not preclude recourse to one or more others;
(j)the effect of section 1670.5 of the California Civil Code, which
provides that if a court as a matter of law finds a contract or any clause of
a contract to have been "unconscionable" at the time it was made, the court
may refuse to enforce the contract, or the court may enforce the remainder of
the contract without the "unconscionable" clause so as to avoid an
"unconscionable" result. That section also permits parties to present
evidenced as to the commercial setting, purpose and effect of any contract or
clause thereof claimed to be "unconscionable" to aid the court in making its
determination;
(k)the effect of Trident Center v. Connecticut General Life Ins. Co.,
847 F.2d 564 (9th Cir. 1988) in which the Ninth Circuit Court of Appeals,
applying what it said was California law, held parol evidenced was admissible
to vary the provisions of an unambiguous agreement. To the extent Trident
accurately expresses California law on the subject matter, our opinion assumes
that no party to any agreement or document referenced herein in any action
seeking to enforce it offers any parol evidence which varies the express terms
of said agreement or document; and
(l)Limitations imposed by state law, federal law or general equitable
principles upon specific enforceability of any of the remedies, covenants or
other provisions of any applicable agreement and upon the availability of
injunctive relief or other equitable remedies, regardless of whether
enforcement of any such agreement is considered in a proceeding in equity or
at law.
We are furnishing this opinion letter to solely in connection with the
Agreement and the transaction contemplated thereby. You may not rely on this
opinion letter in any other connection, and it may not be furnished to or
relied upon by any other person for any purpose, without our specific prior
written consent.
The foregoing opinion is rendered as of the date of this letter. We assume no
obligation to update or supplement any of such opinion to reflect any changes
of law or fact that may occur.
Yours truly,
/s/ ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SCHEDULE 5.1(i)
INVESTMENT LETTER
Little Creek, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
In connection with the transfer by Little Creek, Inc. (the "Company") to
the undersigned of 9,500,000 shares of common stock of the Company, the
undersigned hereby acknowledges, represents, warrants, and covenants as
follows:
1. The shares to be acquired by the undersigned (the "Shares") have not
been registered under the United States Securities Act of 1933, as amended
(the "Act"), and are not freely tradable. The Shares may not be offered or
sold except pursuant to an exemption from the registration requirements of the
Act unless the Shares are registered under the Act.
2. The Company has no obligation to the undersigned to register any or
all the Shares under the Act for distribution. Neither the Company nor Seller
has agreed with the undersigned to comply with Regulation A or any other
exemption under the Act respecting the resale or other transfer of the Shares.
3. The Shares are being acquired for investment for the undersigned's
own account and not with a view to sale or resale, distribution (as that term
is defined in the Act), or transfer, or to offers in connection therewith.
When the Shares have been acquired, no other person will have a beneficial
interest in the Shares.
4. The Company will affix a legend in substantially the following form
to the certificates evidencing the Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES
ARE REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
5. Prior to any proposed sale, pledge, hypothecation, gift, or other
transfer, for value or otherwise, of any or all of the Shares or of any
interest therein (hereinafter, a "Transfer"), the undersigned shall give
written notice to the Company describing the Transfer. The undersigned shall
not effect any Transfer unless and until (a) the Company receives an opinion
of the undersigned's counsel, in form and substance acceptable to counsel for
the Company, that the Transfer may be effected without registration under the
Act and without registration or qualification under applicable state
securities laws, and (b) satisfaction of such other conditions as may be
required by counsel to the Company in order to assure compliance with the Act
and with applicable state securities laws.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter
effective as of October 30, 2002.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SCHEDULE 5.1(l)
(Letterhead of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.)
November 4, 2002
The Mortgage Store Financial, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have acted as special counsel for Little Creek, Inc., a Utah
corporation ("Little Creek Utah"), and its wholly-owned subsidiary, Little
Creek, Inc., a Delaware corporation ("Little Creek Delaware") (sometimes
hereinafter collectively referred to as "Little Creek" or the "Company"), in
connection with the Plan of Reorganization and Stock Exchange Agreement dated
April 5, 2002 (the "Agreement"), by and among the Company; ▇▇▇▇▇▇ Services,
Inc. ("▇▇▇▇▇▇ Services"); ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, principal of ▇▇▇▇▇▇ Services;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a principal of Little Creek; the Mortgage Store Financial,
Inc., a California corporation ("Mortgage Store"); and the sole shareholder of
Mortgage Store (the "Mortgage Store Shareholder"). The Agreement provides for
the transfer of 100% of the outstanding shares of Common Stock of Mortgage
Store by the Mortgage Store Shareholder (the "Mortgage Store Shares") in
exchange for 9,500,000 shares of Little Creek Common Stock. I am delivering
this opinion to you at the request of the Company pursuant to Section 5.2 of
the Agreement.
The following documents are referred to collectively in this opinion as
the "Documents":
1. the Agreement,
2. the Consulting Agreement,
3. the Consultants' Warrant, and
4. the Certificate of Ownership and Merger.
Capitalized terms used but not defined in this opinion letter have the
meanings given to them in the Agreement. References in this opinion letter to
our knowledge mean a conscious awareness of facts without investigation by any
of the lawyers currently with this firm who have given substantive attention
to the legal representation of the Company in matters directly relating to the
Documents.
In connection with rendering the opinions set forth below, I have
examined the Documents, the Articles of Incorporation, as amended, of the
Company, the Bylaws of the Company, minutes of meetings or actions of the
Company's Board of Directors with respect to the transactions covered by this
opinion letter and I have made such other investigation as I have deemed
appropriate. I have examined and relied on certificates and statements of
certain government officials and, as to certain matters of fact that are
material to our opinions, I have relied upon the representations and
warranties made by the Company and ▇▇▇▇▇▇ Services contained in the Documents,
certificates and other documents delivered by or on behalf of the Company or
▇▇▇▇▇▇ Services pursuant to the Documents and a certificate of an officer of
the Company (the "Little Creek Compliance Certificate") and a certificate of
an officer of ▇▇▇▇▇▇ Services (the "▇▇▇▇▇▇ Services Compliance Certificate").
Copies of the Little Creek Compliance Certificate and the ▇▇▇▇▇▇ Services
Compliance Certificate are attached to this opinion letter. I have not
independently established any of the facts so relied on.
For purposes of this opinion letter, I have made the assumptions that
are customary in opinion letters of this kind, including, (a) that each
document submitted to us is accurate and complete (b) the genuineness of all
signatures on original and certified documents; (b) the authenticity of all
documents submitted to us as originals; (c) the conformity to original and
certified documents of all copies submitted to us as conformed, photostatic or
other copies; (d) the legal capacity of natural persons; (e) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties contained in all of such documents; (f) the due authorization,
execution and delivery of all such documents by Mortgage Store, ▇▇▇▇▇▇
Services, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the legal, valid and
binding effect thereof on Mortgage Store, ▇▇▇▇▇▇ Services, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and (g) that Mortgage Store, ▇▇▇▇▇▇ Services, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Company will act in accordance with their
respective representations and warranties as set forth in the Documents. I
have not verified any of those assumptions.
The opinions expressed in this opinion letter are limited to the State
of Utah and when applicable, the State of Delaware, respecting Little Creek's
change of domicile to Delaware, other than their laws relating to choice of
law and the federal securities laws of the United States that in our
experience is applicable to transactions of the type contemplated by the
Documents. I express no opinion as to compliance or noncompliance with
applicable federal or state anti-fraud statutes, laws, rules and regulations.
Based on the foregoing, and subject to the foregoing and the additional
qualifications and other matters set forth below, it is our opinion that:
1. Little Creek Utah and its wholly-owned subsidiary, Little Creek
Delaware, are duly incorporated, validly existing and in good standing in
their states of incorporation; have qualified to do business in each state
where required unless the failure to do so would not have a material impact on
their operations; and have the requisite corporate power and authority to
conduct their business, and to own, lease and operate their properties.
2. Little Creek Utah and Little Creek Delaware have the requisite
corporate power and authority to execute, deliver and perform their
obligations under the Documents and have taken all corporate action necessary
to authorize the execution, delivery and performance of the Documents. The
Documents have been (a) duly approved by the Boards of Directors of Little
Creek Utah and Little Creek Delaware, and (b) the Securities, when issued
pursuant to the Agreement and upon delivery, shall be validly issued and
outstanding, fully paid and non- assessable.
3. The authorized capital stock of Little Creek Utah consists of
50,000,000 shares of stock. To our knowledge, based solely on an examination
of the Little Creek Utah's capital stock records, 1,631,483 shares of Common
Stock are issued and outstanding, subject to the cancellation of 1,295,118
shares pursuant to the Agreement. The Little Creek Utah Shares are duly
authorized, have been validly issued, and are fully paid and non-assessable.
4. The authorized capital stock of Little Creek Delaware consists of
100,000,000 shares of common stock, 1,000 shares of which are issued and
outstanding and all owned by Little Creek Utah, and 10,000,000 shares of
preferred stock, none of which are issued and outstanding. The Little Creek
Delaware Shares are duly authorized, have been validly issued, and are fully
paid and non-assessable.
5. The Documents constitute the valid and legally binding obligations of
the Company and are enforceable against the Company in accordance with their
respective terms.
6. The execution and delivery by the Company and the performance by the
Company of its obligations under the Documents to which it is a party do not
constitute a violation by the Company of (a) the Company's Articles of
Incorporation and By-laws, (b) the Utah Revised Business Corporation Act, or
any applicable statute, rule or regulation of the State of Utah or the United
States, or the General Corporation Law of the State of Delaware, or any
applicable statute, rule or regulation of the State of Delaware or the United
States, or (c) any existing obligation of the Company under the express terms
of any court order which, to our knowledge without investigation, names the
Company and is specifically directed to it or its property.
7. The execution and delivery by the Company of and the performance by
the Company of its obligations under the Documents to which it is a party do
not (a) breach or constitute a default of the Company under the express terms
of any agreement or instrument listed in Schedule 2.1(h), (b) result in the
acceleration of (or entitle any party to accelerate) the maturity of any
obligation of the Company under any such agreement or instrument pursuant to
the express terms thereof, or (c) result in a lien on any property of the
Company pursuant to the express terms of any such agreement or instrument.
8. The execution and delivery by the Company of and the performance by
the Company of its obligations under the Documents do not require the Company
to obtain any approval by or make any filing with any governmental authority
under the Utah Revised Business Corporation Act, or any applicable statute,
rule or regulation of the State of Utah, or the General Corporation Law of the
State of Delaware, or any applicable statute, rule or regulation of the State
of Delaware or the federal securities laws of the United States other than
approvals and filings previously obtained or made and in full force and
effect.
The opinions set forth above are based upon, and subject to, the further
comments, assumptions, limitations, qualifications and exceptions set forth
below:
(a)With respect to the enforceability of any agreement, the
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws (including without limitation, Utah and federal laws relating to
fraudulent transfers or conveyances) and court decisions of general
application, and other legal or equitable principles of general application,
relating to, limiting or affecting the enforcement of creditors' rights
generally;
(b)Limitations imposed by applicable law or public policy on
the enforceability of the indemnification provisions of any agreement;
(c)The net impact or result of any conflict of laws between or
among laws of competing jurisdictions and the applicability of the law of any
jurisdiction in such instance beyond Utah or Delaware;
(d)The limitations imposed by a Utah or Delaware court might
not permit the exercise or attempted exercise of any right or remedy provided
in any agreement if such exercise or attempted exercise is deemed to be in
breach of the covenant of good faith and fair dealing implied under Utah or
Delaware law to exist in all agreements or if the party seeking to exercise
same fails to act in a commercially reasonable manner;
(e)The limitations imposed by Utah or Delaware law and court
decisions relating to the strict enforcement of certain covenants in contracts
absent a showing of damage or increased risk to the party seeking enforcement
(such covenants may include, without limitation, covenants to provide reports
or notices and covenants restricting rights of assignment);
(f)The effect of certain Utah or Delaware court decisions,
indicating that a Utah or Delaware court may refuse to give strict and literal
effect to contractual provisions if it concluded that enforcement of such
provisions, on the basis of the facts and circumstances then before such
court, was not reasonably necessary to protect the rights and interest of the
party seeking enforcement;
(g)The unenforceability under certain circumstances of
contractual provisions respecting various self-help or summary remedies
without notice or opportunity for hearing or correction, especially if their
operation would work a substantial forfeiture or impose a substantial penalty
upon the burdened party;
(h) The unenforceability under certain circumstances of provisions
waiving vaguely or broadly stated rights or unknown future rights and of
provisions stating that rights or remedies are not exclusive, that every right
or remedy is cumulative and may be exercised in addition to or with any other
right or remedy, or that the election of some particular remedy or remedies
does not preclude recourse to one or more others;
(i)The effect of any Utah or Delaware law which provides that
if a court as a matter of law finds a contract or any clause of a contract to
have been "unconscionable" at the time it was made, the court may refuse to
enforce the contract, or the court may enforce the remainder of the contract
without the "unconscionable" clause so as to avoid an "unconscionable" result.
(j)Assumes that no party to any agreement or document
referenced herein in any action seeking to enforce it offers any parol
evidence which varies the express terms of said agreement or document; and
(k)Limitations imposed by state law, federal law or general
equitable principles upon specific enforceability of any of the remedies,
covenants or other provisions of any applicable agreement and upon the
availability of injunctive relief or other equitable remedies, regardless of
whether enforcement of any such agreement is considered in a proceeding in
equity or at law.
I am furnishing this opinion letter to solely in connection with the
Agreement and the transaction contemplated thereby. You may not rely on this
opinion letter in any other connection, and it may not be furnished to or
relied upon by any other person for any purpose, without our specific prior
written consent.
The foregoing opinion is rendered as of the date of this letter. I
assume no obligation to update or supplement any of such opinion to reflect
any changes of law or fact that may occur.
Yours very sincerely,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
LWB/sr