AGREEMENT AND PLAN OF MERGER by and among US DRY CLEANING CORPORATION USDCC MERGER SUB, INC. and Coachella Valley Retail, LLC. Dated as of August 8, 2005 AGREEMENT AND PLAN OF MERGER
Exhibit
10.3
AGREEMENT
AND PLAN OF MERGER
by
and among
US
DRY CLEANING CORPORATION
USDCC
MERGER SUB, INC.
and
Coachella
Valley Retail, LLC.
Dated
as of August 8, 2005
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”),
dated
as of August 8, 2005, is made and entered into by and among US DRY CLEANING
CORPORATION (“USDCC”), a Delaware corporation (“USDCC”), USDCC MERGER SUB
INC.(“MERGER SUB”), a California corporation and direct, wholly-owned subsidiary
of USDCC , and Coachella Valley Retail, LLC, a California Limited Liability
Company (“CVR”).
RECITALS:
WHEREAS,
the respective boards of directors of USDCC, Merger Sub and CVR deem it
advisable and in the best interests of their respective stockholders that
Merger
Sub merge with and into CVR (the “Merger”)
upon
the terms and subject to the conditions set forth herein; and
WHEREAS
the respective boards of directors of USDCC, Merger Sub and CVR have approved
the Merger; and
WHEREAS,
as in inducement to enter into this Agreement and to consummate the Merger
the
parties hereto are willing to make certain representations and warranties
as set
forth herein;
WHEREAS,
as a further inducement to CVR and the CVR members to enter into this Agreement
and to consummate the Merger,
NOW,
THEREFORE, in consideration of the premises and the representations, warranties
and agreements contained herein, the parties hereto agree as
follows:
The
Merger
Upon
the
terms and subject to the conditions hereof, at the Effective Time (as defined
in
Section 1.1),
CVR
shall merge with and into Merger Sub and the separate existence of CVR shall
thereupon cease, and Merger Sub shall be the surviving corporation in the
Merger
(as such, the “Surviving
Corporation”).
The
Merger shall have the effects set forth in this Agreement.
1.1 Effective
Time of the Merger
The
Merger shall become effective upon execution of this Merger agreement.
Immediately after the effective date the company will file with the respective
Secretary of State of the State of California the agreement of merger (the
“Agreement
of Merger”).
ARTICLE
2
THE
SURVIVING CORPORATION
2.1 Articles
of Incorporation
The
articles of incorporation of Merger Sub in effect immediately prior to the
Effective Time shall be the articles of incorporation of the Surviving
Corporation at and after the Effective Time, and thereafter may be amended
in
accordance with the terms thereof.
2.2 Bylaws
The
bylaws of Merger Sub in effect immediately prior to the Effective Time shall
be
the bylaws of the Surviving Corporation at and after the Effective Time,
and
thereafter may be amended in accordance with their terms and as provided
by the
articles of incorporation of the Surviving Corporation.
2.3 Directors
and Officers
The
directors and officers (Managing Members) of CVR immediately prior to the
Effective Time shall resign. At and after the Effective Time, the directors
and
officers of the Merger Sub shall be the only directors and officers of the
Surviving Corporation until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation, or
removal
in accordance with the articles of incorporation and bylaws of the Surviving
Corporation.
ARTICLE
3
CONVERSION
OF SHARES
3.1 Conversion
of Capital Stock
As
of the
Effective Time, by virtue of the Merger and without any action on the part
of
the holders of any capital stock/membership interest or other securities
described below:
(a) The
members of CVR (“CVR Membership Interest”) immediately prior to the Effective
Time shall be converted into and exchanged for the right to receive 2,490,000
shares of fully paid and nonassessable Common Stock of USDCC, par value of
$.0001. The CVR Membership Interest shall automatically be canceled and retired,
and the membership interest in CVR immediately prior to the Effective Time
shall
cease to have any rights with respect thereto, except the right to receive
the
2,490,000 shares of USDCC common stock on a pro-rata basis consistent with
their
percentage of membership interest in CVR. Exhibit 1 is a complete membership
interest listing of all the members of CVR, and the corresponding number
of
USDCC
shares of Common Stock each CVR member will be entitled to receive upon the
consummation of the merger.
(b) Each
share of the common stock, no par value, of Merger Sub (the “Merger
Sub Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall automatically
be
converted into the same number of shares of common stock of the Surviving
Corporation, and shall, immediately after the Merger, be the only shares
of
capital stock of the Surviving Corporation issued and outstanding.
(c) Each
share of each class and series of USDCC Common Stock issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall
not
be affected by the Merger.
(d) The
Merger Shares issued by Merger Sub upon the Merger with CVR in accordance
with
the terms hereof shall be deemed to have been issued in full satisfaction
of all
rights pertaining to such CVR Membership Interest.
3.2 Surrender
and Payment
(a) At
the
Closing, in exchange for all outstanding membership interest (100%) the CVR
members shall receive a total of 2,490, 000 shares of USDCC Common stock
to be
distributed in amounts according to Exhibit 1..
(b) For
purposes of this Agreement, “Person”
means
an individual, a corporation, a limited-liability company, a partnership,
an
association, a trust or any other entity or organization, including a
governmental or political subdivision or any agency or instrumentality
thereof.
.
3.3 No
Fractional Shares
No
fractional share of USDCC Common Stock shall be issued in the
Merger.
3.4 Closing
(a) The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place at the offices of CVR, ▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇,
▇▇. following the date hereof as of which all of the conditions set forth
in
Article X
hereof
shall have been satisfied or waived, or at such other date and time as
USDCC/Merger Sub and CVR shall otherwise agree in writing (either such date,
the
“Closing
Date”).
(b) Following
the Closing (as soon as practical), (i) Merger Sub and CVR shall deliver
the various certificates, instruments, and documents referred to in subparagraph (c),
below,
(ii)CVR shall deliver the various certificates, instruments, and documents
referred to in subparagraph (d),
below,
(iii)
Merger
Sub and CVR shall execute and file the Agreement of Merger with the Secretary
of
State of the State of Hawaii, and (v) the parties hereto shall undertake
any other actions provided for in this Section 3.4
in
accordance with the terms of this Agreement.
(c) Following
the Closing (and as soon as practical), USDCC or Merger Sub, as applicable,
shall deliver the following:
(i) USDCC
shall issue and deliver the Merger Shares as provided in Section 3.2(a);
and
(ii) USDCC
and
Merger Sub shall furnish CVR with:
(A) a
certificate executed by the Secretary or an Assistant Secretary of each of
USDCC
and Merger Sub certifying as of the date of the Closing Date (1) a true and
complete copy of the certificate of incorporation or articles of incorporation,
as the case may be, of USDCC and Merger Sub certified as of a recent date
by the
Secretary of the State of the state of its incorporation or organization,
and a
true and complete copy of the respective bylaws of USDCC and Merger Sub,
as
certified by the Secretary or an Assistant Secretary of USDCC and Merger
Sub, as
applicable, and (2) a true and complete copy of the resolutions of the
respective boards of directors of USDCC and Merger Sub authorizing the
execution, delivery, and performance of this Agreement by USDCC and Merger
Sub
and the consummation of the transactions contemplated hereby;
(B) a
certificate of the Secretary of State of the State of Delaware or other state
of
incorporation or organization, as applicable, certifying the good standing
of
USDCC, Merger Sub, dated within 10 days of the Closing Date; and
(C) the
other
documents and instruments to be delivered by USDCC or Merger Sub on or before
the Closing as called for herein.
(d) Following
the Closing (as soon as practical), CVR shall furnish USDCC and Merger Sub
with:
(i) a
certificate executed by the Secretary or an Assistant Secretary of CVR
certifying as of the date of the Closing Date (1) a true and complete copy
of the Operating Agreement as defined in Section 4.1(c)(ii), certified as
of a
recent date by the Secretary of State of the State of California., and a
true
and complete copy of the Articles of Organization certified by the Secretary
or
an Assistant Secretary of CVR, and (2) a true and complete copy of the
resolutions of the board of directors of CVR authorizing the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby;
(ii) a
certificate of the Secretary of State of the State of California certifying
the
good standing of CVR; and
(iii) such
other documents and instruments to be delivered by CVR as called for
herein.
(e) At
the
Closing, CVR shall deliver to USDCC the resignation and release agreements
provided for in Section 8.8.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF SPHI
CVR
represents and warrants to USDCC that the statements contained in this
Article IV
are true
and correct, except as disclosed in the disclosure letter delivered by CVR
to
USDCC as of the date hereof (the “CVR
Disclosure Letter”):
4.1 Organization
and Qualification
(a) CVR
is a
Limited Liability Company duly organized, validly existing and in good standing
under the laws of the State of California, is duly qualified to do business
as a
foreign corporation and is in good standing in each jurisdiction in which
the
character of CVR’s properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure
to
be so qualified would not result in a CVR Material Adverse Effect (as defined
in
subparagraph (c),
below). CVR has all requisite corporate or other power and authority to own,
use
or lease its properties and to carry on its business as it is now being
conducted. CVR has made available to USDCC a complete and correct copy of
its
articles of organization and operating agreement. CVR is not in default in
any
material respect in the performance, observation or fulfillment of any provision
of its articles of organization, or its operating agreement.
(b) CVR
does
not have any subsidiaries.
4.2 Capitalization
As
of the
Closing, there will be no outstanding subscriptions, options, rights, warrants,
convertible securities, stock appreciation rights, phantom equity or other
agreements or commitments obligating CVR to issue, transfer, sell, redeem,
repurchase or otherwise sell, issue or acquire any membership interests of
CVR.
4.3 Authority
CVR
has
full corporate power and authority to execute and deliver this Agreement
and to
consummate the transactions contemplated hereby. The execution, delivery
and
performance of this Agreement and the consummation of the transaction
contemplated hereby have been duly and validly authorized by CVRs board of
directors and the CVRs managing members. This Agreement has been duly and
validly executed and delivered by CVR and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto,
constitutes the legal, valid and binding obligation of CVR enforceable against
CVR in accordance with its terms, except as such enforceability may be subject
to the effects of bankruptcy, insolvency, reorganization, moratorium and
other
laws relating to or affecting the rights of creditors and of general principles
of equity (the “Enforceability
Exception”).
4.4 Consents
and Approvals; No Violation
The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the performance by CVR of its obligations hereunder
will
not:
(a) conflict
with any provision of CVR’s articles of organization or operating
agreement;
(b) result
in
any violation of or the breach of or constitute a default (with notice or
lapse
of time or both) under, or give rise to any right of termination, cancellation
or acceleration or guaranteed payments or a loss of a material benefit under,
any of the terms, conditions or provisions of any note, lease, mortgage,
license, agreement or other instrument or obligation to which CVR is a party
or
by which CVR or any of its properties or assets may be bound.
4.5 Required
Consent
The
only
approval that will be necessary to consummate the Merger and the other
transactions contemplated by this Agreement is the approval of this Agreement
by
the CVR Members, which has been duly obtained as evidenced by their execution
of
this Agreement.
4.6 Financial
Statements
USDCC
has
inspected the financial statements of CVR and is satisfied with the information
contained within.
4.7 Absence
of Certain Changes
Except
as
contemplated by this Agreement, (a) CVR has conducted its business in all
material respects in the ordinary course of business.
CVR
has
filed all material tax returns or extensions required by applicable law to
be
filed by it and has paid or accrued all taxes shown as due thereon. CVR has
no
knowledge of a material tax deficiency which has been asserted or threatened
against CVR.
4.8 Litigation
Except
for matters that would not have a CVR Material Adverse Effect, there is no
material suit, claim, action, proceeding or investigation pending or, to
CVR’s
knowledge, threatened against or directly affecting CVR or any of the directors
or officers of CVR in their capacity as such. Neither CVR nor, to its knowledge,
any officer, director or employee of CVR, has been permanently or temporarily
enjoined by any order, judgment or decree of any court or any other Governmental
Authority from engaging in or continuing any conduct or practice in connection
with the business, assets or properties of CVR, nor, to the knowledge of
CVR, is
CVR or any officer, director or employee of CVR under investigation by any
Governmental Authority. There is not in existence any order, judgment or
decree
of any court or other tribunal or other agency enjoining or requiring CVR
to
take any action of any kind with respect to its business, assets or
properties.
4.9 Compliance
with Applicable Laws
CVR
holds
all material approvals, licenses, permits, registrations and similar type
authorizations necessary for the lawful conduct of its business, as now
conducted, and, to CVR’s knowledge, such business is not being, and CVR has not
received any notice from any Governmental Authority or person that any such
business has been or is being, conducted in violation of any law, ordinance
or
regulation, including without limitation any law, ordinance or regulation
relating to occupational health and safety, except for possible violations
which
either individually or in the aggregate have not resulted and would not result
in a CVR Material Adverse Effect.
4.10 Insurance
CVR
currently has in place all policies of insurance which are reasonably required
in connection with the operation of the business of CVR as currently conducted
in accordance with applicable laws and all agreements relating to
CVR.
4.11 Permits
Immediately
prior to the Effective Time, CVR will hold all of the permits, licenses,
certificates, consents, approvals, entitlements, plans, surveys, relocation
plans, environmental impact reports and other authorizations of Governmental
Authorities (“Permits”)
required or necessary to own, operate, use and maintain its properties and
conduct its operations as presently conducted, except for such Permits, the
lack
of which, individually or in the aggregate, would not have a CVR Material
Adverse Effect.
4.12 Brokers
There
are
no fees owed as a result of this transaction/merger.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF USDCC
USDCC
represents and warrants to CVR as follows, except as disclosed in a disclosure
letter delivered by USDCC to CVR as of the date hereof (the “USDCC
Disclosure Letter”):
5.1 Organization
and Qualification
(a) USDCC
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware, is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of USDCC’s properties or the nature of its business makes such qualification
necessary. USDCC has made available to the Company a complete and correct
copy
of its certificate of incorporation and bylaws, each as amended to date,
and
USDCC’s certificate of incorporation and bylaws as so delivered are in full
force and effect. USDCC is not in default in any respect in the performance,
observation or fulfillment of any provision of its certificate of incorporation
or bylaws.
(b) Merger
Sub is a corporation duly organized, validly existing and in good standing
under
the laws of the State of California. USDCC has made available to the Company
a
complete and correct copy of its articles of incorporation and bylaws, each
as
amended to date, and Merger Sub’s articles of incorporation and bylaws as so
delivered are in full force and effect. Merger Sub is not in default in any
respect in the performance, observation or fulfillment of any provision of
its
articles of incorporation or bylaws.
(c) Merger
Sub is a direct, wholly-owned Subsidiary of USDCC, was formed solely for
the
purpose of engaging in the transactions contemplated by this Agreement and
has
not engaged in any business activities or conducted any operations of any
kind,
entered into any agreement or arrangement with any Person or entity, or
incurred, directly or indirectly, any Liabilities, in each case, except in
connection with its incorporation, the negotiation of this Agreement, the
Merger
and the transactions contemplated hereby.
5.2 Capitalization
The
authorized capital stock of USDCC consists of 40,000,000 shares of authorized
common stock, $0.0001 par value per share (the “USDCC
Common Stock”),
and
20,000,000 shares of Preferred Stock, par value of $0.0001 per share
(“USDCC
Preferred Stock”).
As of
the date of this Agreement, USDCC has issued and outstanding 3,675,000 shares
of
USDCC Common Stock and is in the process of offering 35 units, each unit
consisting of a $100,000 face amount senior subordinated convertible note
(convertible into USDCC Common Stock at $1 per share and 50,000 shares of
USDCC
Common Stock). If all of the Units are sold there would be a total of 8,925,000
shares outstanding on a fully diluted basis. The authorized capital stock
of
Merger Sub consists of 5,000 shares of Merger Sub Common Stock, all of which
shares are outstanding and owned, of record and beneficially, by USDCC. There
are no other outstanding subscriptions, options, rights, warrants, convertible
securities or other agreements or commitments obligating USDCC or Merger
Sub to
issue, transfer, sell, redeem, repurchase or otherwise sell, issue or acquire
any shares of Merger Sub Common Stock. All outstanding shares of USDCC Common
Stock are validly issued, fully paid and non-assessable, and free of preemptive
rights.
5.3 Authority
(a) Each
of
USDCC and Merger Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
by
the respective board of directors of USDCC and Merger Sub, and no other
corporate proceedings on the part of USDCC and Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by USDCC
and
Merger Sub, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes the legal, valid, and binding
obligations of USDCC and Merger Sub enforceable against USDCC or Merger Sub,
as
applicable, in accordance with its terms, except for the Enforceability
Exception.
(b) The
Merger Shares have been duly and validly authorized for issuance pursuant
to the
Merger and, when issued at the Closing, will be validly issued, fully paid
and
non-assessable and free of any preemptive right. The Merger Stock Rights
have
been duly authorized for issuance pursuant to the Merger, and when issued
at the
Closing will be validly issued and free of any preemptive right.
5.4 Consents
and Approvals; No Violation
The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the performance by each of USDCC and Merger Sub of
their
respective obligations hereunder will not:
(a) conflict
with any provision of the respective certificate or articles of incorporation
or
bylaws of USDCC or Merger Sub;
(b) require
any consent, waiver, approval, order, authorization or permit of, or
registration, filing with or notification to, (i) any Governmental
Authority, except for applicable requirements of the Securities Act, the
Exchange Act, state securities or blue sky laws and Customary Post-Closing
Consents or (ii) any third party other than a Governmental Authority, other
than such non-Governmental Authority third party consents, waivers, approvals,
orders, authorizations and permits that would not (x) materially impair the
ability of USDCC or any of its Subsidiaries to perform its obligations under
this Agreement or (y) prevent the consummation of any of the transactions
contemplated by this Agreement;
(c) result
in
any violation of or the breach of or constitute a default (with notice or
lapse
of time or both) under, or give rise to any right of termination, cancellation
or acceleration or guaranteed payments or a loss of a material benefit under,
any of the terms, conditions or provisions of any note, lease, mortgage,
license, agreement or other instrument or obligation to which USDCC or any
of
its Subsidiaries is a party or by which USDCC or any of its Subsidiaries
or any
of their respective properties or assets may be bound, except for such
violations, breaches, defaults, or rights of termination, cancellation or
acceleration, or losses as to which requisite waivers or consents have been
obtained or which, individually or in the aggregate, would not
(i) materially impair the ability of USDCC or any of its Subsidiaries to
perform its obligations under this Agreement or (ii) prevent the
consummation of any of the transactions contemplated by this
Agreement;
(d) violate
the provisions of any order, writ, injunction, judgment, decree, statute,
rule
or regulation applicable to USDCC or any of its Subsidiaries;
(e) result
in
the creation of any Lien upon any properties or assets or on any shares of
capital stock of USDCC or its Subsidiaries under any agreement or instrument
to
which USDCC or any of its Subsidiaries is a party or by which USDCC or any
of
its Subsidiaries or any of their properties or assets is bound; or
(f) result
in
any holder of any securities of USDCC or any of its Subsidiaries being entitled
to appraisal, dissenters’ or similar rights.
5.5 Litigation
There
is
no material suit, claim, action, proceeding or investigation pending or,
to its
knowledge, threatened against or directly affecting USDCC, or any of the
directors or officers of USDCC in their capacity as such. Neither USDCC nor
any
officer, director or employee of USDCC has been permanently or temporarily
enjoined by any order, judgment or decree of any court or any other Governmental
Authority from engaging in or continuing any conduct or practice in connection
with the business, assets or properties of USDCC, nor, to its knowledge,
is
USDCC or any officer, director or employee of USDCC or under investigation
by
any Governmental Authority. There is not in existence any order, judgment
or
decree of any court or other tribunal or other agency enjoining or requiring
USDCC to take any action of any kind with respect to its business, assets
or
properties.
5.6 Employee
Benefit Plans
Neither
USDCC nor any trade or business, whether or not incorporated, which together
with USDCC would be deemed a “single employee” within the meaning of
Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA
has, or on or before the Closing will have, sponsored, maintained or contributed
to any employee benefits, plan or arrangement (including, but not limited
to,
any plan described in Section 3(3) of ERISA) written six years prior to the
Effective Time.
5.7 Compliance
with Applicable Laws
USDCC
holds all Permits, if any, necessary for the lawful conduct of its businesses,
as now conducted, and such businesses are not being, and USDCC has not received
any notice from any Governmental Authority or Person that any such business
has
been or is being, conducted in violation of any law, ordinance or regulation,
including without limitation any law, ordinance or regulation relating to
occupational health and safety
5.8 Insurance
USDCC
and
its Subsidiaries currently have in place the policies of insurance described
in
Schedule
5.13
of the
USDCC Disclosure Letter.
5.9 Employees
Schedule
5.14
of the
USDCC Disclosure letter sets forth a true and complete list of all directors,
and officers of USDCC.
5.10 Permits
Immediately
prior to the Effective Time and except for Customary Post-Closing Consents,
USDCC and its subsidiaries will hold all of the Permits required or necessary
to
own, operate, use and maintain their respective properties and conduct their
respective operations as presently conducted.
5.11 required
Stockholder Vote or Consent
No
vote
or consent of the holders of any class or series of USDCC Stock is or will
be
necessary to consummate the Merger and the other transactions contemplated
by
this Agreement.
5.12 Brokers
No
broker, finder or investment banker is entitled to any brokerage, finder’s fee
or other fee or commission payable by USDCC or any of its Subsidiaries or
the
Surviving corporations in connection with the transactions contemplated by
this
Agreement based upon arrangements made by or on behalf of USDCC or any of
its
Subsidiaries.
5.13 Issuance
of the Securities
Upon
the
Effective Time, the USDCC Common Stock issued or issuable pursuant to the
Merger
will be duly authorized and validly issued, fully paid and nonassessable,
free
and clear of all Liens other than restrictions on transfer provided for or
referred to in this Agreement. Upon the Effective Time, USDCC shall have
duly
reserved out of the authorized but unissued shares of USDCC Common Stock
such
number of shares of USDCC Common Stock as are issuable upon conversion and
exercise, in full, of the CVR merger stock.
ARTICLE
6
[REPRESENTATIONS
AND WARRANTIES OF SPHI SHAREHOLDERS
The
CVR
Managing Members, severally and not jointly, each represents and warrant,
to
USDCC as follows:
6.1 Power
and Authority Relative to this Transaction
Such
CVR
managing member has full power and authority and has taken all action necessary
to permit it to execute and deliver and to carry out the terms of this Agreement
and all other documents or instruments required hereby. This Agreement
constitutes the legal, valid and binding obligation of CVR, enforceable in
accordance with its terms, except for the Enforceability Exception.
6.2 Accredited
Investor
Such
CVR
managing member is an “accredited investor” as that term is defined in
Rule 501 of Regulation D promulgated under the Securities
Act.
6.3 Investment
Representations
(a) Such
CVR
Member will acquire
the
USDCC Common Stock issuable pursuant to the Merger for such member’s own account
for the purpose of investment, and not with a view to distribution or resale
thereof in violation of the Securities Act and the rules and regulations
promulgated thereunder. Such CVR member understands that none of the USDCC
Common Stock has been registered under the Securities Act or any other
applicable securities laws, and,
therefore,
cannot be resold unless they are subsequently registered under the Securities
Act and other applicable securities laws, or unless an exemption from such
registration is available. Such CVR Member agrees not to resell or otherwise
dispose of all or any part of the USDCC Common Stock, except as permitted
by
law, including, without limitation, any regulations under the Securities
Act and
other applicable securities laws.
(b) Such
CVR
Member understands and agrees that all certificates evidencing any of the
USDCC
Common Stock, whether upon initial issuance or upon any transfer thereof,
shall
bear a legend, prominently stamped or printed thereon, reading substantially
as
follows:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS. THESE SECURITIES HAVE
BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER
APPLICABLE SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT
REQUIRED OR THE TRANSFEREE IS AN AFFILIATE OF THE HOLDER.”
6.4 Access
to Information
During
the course of the transactions contemplated by this Agreement and prior to
the
purchase of any USDCC Common Stock, such CVR Member has had the opportunity
to
ask questions of and receive answers from representatives of USDCC concerning
the terms and conditions of the offering of the USDCC Common Stock, and to
obtain additional information, documents, records and books relative to USDCC
and an investment in USDCC.
6.5 Knowledge
and Experience
Such
CVR
Member has sufficient knowledge and experience in business and financial
matters
so as to enable such CVR Member to analyze and evaluate the merits and risks
of
the investment contemplated hereby and is capable of protecting its interest
in
connection with this transaction. Such CVR Member is able to bear the economic
risk of such investment, including a complete loss of the
investment.]
ARTICLE
7
CONDUCT
OF BUSINESS PENDING THE MERGER
7.1 Conduct
of Business by the USDCC and CVR Pending the Merger
From
the
date hereof until the Effective Time, unless USDCC and CVR shall otherwise
agree
in writing, and expect as otherwise contemplated by this Agreement, USDCC
and
CVR and their respective Subsidiaries shall conduct their business in the
ordinary course consistent with past practice. Except as otherwise provided
in
this Agreement, and without limiting the generality of the foregoing, from
the
date hereof until the Effective Time, without the written consent of USDCC
and
CVR, which consent shall not be unreasonably withheld:
(a) Neither
USDCC nor CVR will adopt or propose any change to their respective certificate
or articles of incorporation or bylaws;
(b) Neither
USDCC nor CVR will (i) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the respective
USDCC
and CVR, or (ii) repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other securities of, or other ownership interests
in,
USDCC or CVR, as the case may be;
(c) Neither
USDCC nor CVR will, nor permit any of its Subsidiaries to, merge or consolidate
with any other person or acquire assets of any other person except in the
ordinary course of business or pursuant to transactions among wholly-owned
subsidiaries of USDCC or CVR, as the case may be;
(d) Neither
USDCC nor CVR will, nor permit any of its Subsidiaries to, sell, lease, license
or otherwise surrender, relinquish or dispose of any material assets or
properties except in the ordinary course of business;
(e) USDCC
and
CVR will not change any method of accounting or accounting practice by USDCC
and
CVR or any of their Subsidiaries, except for any such change required by
GAAP;
(f) Neither
USDCC nor CVR will, nor permit any of its Subsidiaries to, (i) take, or
agree or commit to take, any action that would make any representation and
warranty of the respective company hereunder inaccurate in any material respect
at, or as of any time prior to, the Effective Time or (ii) omit, or agree
or commit to omit, to take any action necessary or appropriate to prevent
any
such representation or warranty from being inaccurate in any material respect
at
any such time; and
(g) Neither
USDCC nor CVR will, nor permit any of its Subsidiaries to, agree or commit
to do
any of the foregoing.
ARTICLE
8
ADDITIONAL
AGREEMENTS
8.1 Expenses
The
parties shall bear their own expenses.
8.2 Cooperation
Subject
to compliance with applicable law, from the date hereof until the Effective
Time, each of the parties hereto shall confer on a regular and frequent basis
with one or more representatives of the other parties to report operational
matters of materiality and the general status of ongoing operations and shall
promptly provide the other parties or their counsel with copies of all filings
made by such party with any Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
8.3 Publicity
Neither
the parties hereto nor any of their respective affiliates shall issue or
cause
the publication of any press release or other announcement with respect to
the
Merger, this Agreement or the other transactions contemplated hereby without
the
prior consultation of the other parties, except as may be required by law,
and
will use reasonable efforts to provide copies of such release or other
announcement to the other parties hereto, and give due consideration to such
comments as such other parties may have, prior to such release.
8.4 Additional
Actions
Subject
to the terms and conditions of this Agreement, each of the parties hereto
agrees
to use all reasonable efforts to take, or cause to be taken, all action and
to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, or to remove any injunctions or other
impediments or delays, to consummate and make effective the Merger and the
other
transactions contemplated by this Agreement.
8.5 Filings
Each
party hereto shall make all filings required to be made by such party in
connection herewith or desirable to achieve the purposes contemplated hereby,
and shall cooperate as needed with respect to any such filing by any other
party
hereto.
8.6 Consents
Each
party hereto shall use all reasonable efforts to obtain all consents necessary
or advisable in connection with such party’s obligations hereunder.
8.7 Notice
of
Certain Events
Each
party to this Agreement shall promptly as reasonably practicable notify the
other parties hereto of:
(a) any
notice or other communication from any Person alleging that the consent of
such
Person (or other Person) is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any
notice or other communication from any Governmental Authority in connection
with
the transactions contemplated by this Agreement; or
(c) any
actions, suits, claims, investigations or proceedings commenced or, to the
best
of such party’s knowledge, threatened against, relating to or involving or
otherwise affecting such party or any of such party’s Subsidiaries which, if
pending on the date of this Agreement, would have rendered untrue any
representation contained in Article IV,
V
or
VI,
or
which relate to the consummation of the transactions contemplated by this
Agreement.
8.8 Resignations
and Releases; Appointment of Directors and Officers
(a) Prior
to
the Closing Date, CVR shall obtain from each of its directors, and officers
a
written resignation and release agreement, by which each such Person agrees
to
resign from CVR effective as of the Closing Date and to release CVR and its
affiliates from any and all Liabilities.
.
ARTICLE
9
CONDITIONS
TO CONSUMMATION OF THE MERGER
9.1 Conditions
to the Obligation of Each Party
The
respective obligations of each party to effect the Merger shall be subject
to
the fulfillment at or prior to the Effective Time of the following
conditions:
(a) no
action, suit or proceeding instituted by any Governmental Authority shall
be
pending and no statute, rule or regulation and no injunction, order, decree
or
judgment of any court or Governmental Authority of competent jurisdiction
shall
be in effect, in each case which would prohibit, restrain, enjoin or restrict
the consummation of the Mergers;
(b) USDCC
and
CVR shall have obtained such permits, authorizations, consents, or approvals
required to consummate the transactions contemplated hereby; and
9.2 Conditions
to the Obligations of USDCC and Merger Sub
The
obligations of USDCC and Merger Sub to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following
conditions:
(a) CVR
shall
have performed in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Effective Time, and the
representations and warranties of CVR contained in this Agreement, to the
extent
qualified with respect to materiality shall be true and correct in all respects,
and to the extent not so qualified shall be true and correct in all material
respects, in each case, as of the date of this Agreement and at and as of
the
Effective Time as if made at and as of such time, and USDCC shall have received
a certificate of the President and Managing Member of CVR as to the satisfaction
of this condition;
(b) all
proceedings to be taken by CVR in connection with the transactions contemplated
by this Agreement and all documents, instruments and certificates to be
delivered by CVR in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to USDCC;
(c) CVR
shall
have received and delivered to USDCC the resignations and release agreements
from each of its directors, and officers.
9.3 Conditions
to the Obligations of CVR
The
obligation of CVR to effect the Merger is subject to the satisfaction at
or
prior to the Effective Time of the following conditions:
(a) USDCC
shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Effective Time
and
the representations and warranties of USDCC contained in this Agreement,
to the
extent qualified with respect to materiality shall be true and correct in
all
respects, and to the extent not so qualified shall be true and correct in
all
material respects, in each case as of the date of this Agreement and at and
as
of the Effective Time as if made at and as of such time, and CVR shall have
received a certificate of the Chief Executive Officer of USDCC as to the
satisfaction of this condition;
(b) all
proceedings to be taken by USDCC and Merger Sub, as the case may be, in
connection with the transactions contemplated by this Agreement and all
documents, instruments and certificates to be delivered by USDCC and Merger
Sub,
as the case may be, in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to CVR;
and
ARTICLE
10
SURVIVAL
AND INDEMNIFICATION
10.1 Survival
of Representations and Warranties
The
representations and warranties of the parties contained in this Agreement
shall
not survive the Effective Time.
ARTICLE
11
TERMINATION,
AMENDMENT AND WAIVER
11.1 Termination
This
Agreement may be terminated at any time prior to the Effective
Time:
(a) by
the
mutual written consent of USDCC and CVR;
(b) by
either
USDCC or CVR if the Effective Time shall not have occurred on or before August
31, 2005 (the “Termination
Date”);
provided, that the party seeking to terminate this Agreement pursuant to
this
subparagraph
(b)
shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the failure to
consummate the Mergers on or before the Termination Date;
(c) by
USDCC
or CVR if there has been a material breach by one of the other parties of
any
representation, warranty, covenant or agreement set forth in this Agreement
which breach (if susceptible to cure) has not been cured in all material
respects within 20 business days following receipt by each party of notice
of
such breach; or
(d) by
USDCC
or CVR if there shall be any applicable law, rule or regulation that makes
consummation of the Merger illegal or if any judgment, injunction, order
or
decree of a court or other Governmental Authority of competent jurisdiction
shall restrain or prohibit the consummation of the Merger, and such judgment,
injunction, order or decree shall become final and nonappealable.
11.2 Effect
of Termination
In
the
event of termination of the Agreement and the abandonment of the Merger pursuant
to this Article XII,
all
obligations of the parties shall terminate, except the obligations of the
parties pursuant to this Section 12.2
and
except for the provisions of Sections 8.1
and
8.3;
provided, however, that nothing herein shall relieve any party from liability
for any breach of this Agreement.
ARTICLE
12
MISCELLANEOUS
12.1 Notices
All
notices or communications hereunder shall be in writing (including facsimile
or
similar writing) addressed as follows:
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To
CVR:
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35-325
Date Palm Drive ste. 211
▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇▇▇
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To
USDCC:
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇. ▇▇▇▇▇
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Any
such
notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile,
(ii) one business day after being deposited with a next-day courier,
postage prepaid, or (iii) three business days after being sent certified or
registered mail, return receipt requested, postage prepaid, in each case
addressed as above (or to such other address as such party may designate
in
writing from time to time).
12.2 Separability
If
any
provision of this Agreement shall be declared to be invalid or unenforceable,
in
whole or in part, such invalidity or unenforceability shall not affect the
remaining provisions hereof which shall remain in full force and
effect.
12.3 Assignment
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors, and assigns;
provided, however, that neither this Agreement nor any rights hereunder shall
be
assignable or otherwise subject to hypothecation and any assignment in violation
hereof shall be null and void.
12.4 Interpretation
The
headings contained in this Agreement are for reference purposes only and
shall
not affect in any way the meaning or interpretation of this
Agreement.
12.5 Counterparts
This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same Agreement, and shall become effective when one
or
more such counterparts have been signed by each of the parties and delivered
to
each party.
12.6 Entire
Agreement
This
Agreement represents the entire agreement of the parties with respect to
the
subject matter hereof and shall supersede any and all previous contracts,
arrangements or understandings between the parties hereto with respect to
the
subject matter hereof.
12.7 Governing
Law
This
Agreement shall be construed, interpreted, and governed in accordance with
the
laws of California, without reference to rules relating to conflicts of
law.
12.8 Attorneys’
Fees
If
any
action at law or equity, including an action for declaratory relief, is brought
to enforce or interpret any provision of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys’ fees and expenses from the
other party, which fees and expenses shall be in addition to any other relief,
which may be awarded.
12.9 No
Third Party Beneficiaries
Except
as
provided in Section 11.2,
no
person or entity other than the parties hereto is an intended beneficiary
of
this Agreement or any portion hereof.
12.10 Amendments
and Supplements
Prior
to
the Effective Time, this Agreement may be amended or supplemented in writing
by
USDCC and CVR with respect to any of the terms contained in this Agreement,
except as otherwise provided by law.
12.11 Extensions,
Waivers, Etc.
At
any
time prior to the Effective Time, either party may:
(a) extend
the time for the performance of any of the obligations or acts of the other
party;
(b) waive
any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto; or
(c) waive
compliance with any of the agreements or conditions of the other party contained
herein.
Notwithstanding
the foregoing, no failure or delay by any party hereto in exercising any
right
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right hereunder. Any agreement on the part of a party hereto
to any
such extension or waiver shall be valid only if set forth in an instrument
in
writing signed on behalf of such party.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the
day and year first above written.
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US
Dry Cleaning Corporation
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
CEO
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USDCC
MERGER SUB, INC.
By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇
Name:
▇▇▇▇▇▇ ▇. ▇▇▇
Title:
CEO
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Coachella
Valley Retail, LLC.
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇
Title:
President
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