AGREEMENT AND PLAN OF MERGER
AMONG
TWO RIVERS WATER COMPANY,
TRWC, INC.
AND
TWO RIVERS BASIN, LLC
DATED AS OF
SEPTEMBER 14, 2010
ARTICLE 1 CERTAIN DEFINITIONS..................................................1
1.1 Certain Definitions................................................1
1.2 Index to Certain Defined Terms.....................................6
ARTICLE 2 MERGER...............................................................7
2.1 Merger.............................................................7
2.2 Closing............................................................7
2.3 Effective Time.....................................................7
2.4 Articles of Incorporation..........................................8
2.5 Bylaws.............................................................8
2.6 Directors..........................................................8
2.7 Officers...........................................................8
2.8 HCIC...............................................................8
ARTICLE 3 MANNER OF EXCHANGING STOCK...........................................8
3.1 Exchange of Stock in Merger........................................8
3.2 Closing Procedures.................................................9
3.3 Unpaid Obligations................................................10
3.4 Investor Rights and Restrictions..................................10
3.5 Release and Waiver................................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY................11
4.1 Organization, Standing and Power..................................11
4.2 Authorization and Approval........................................11
4.3 No Conflict or Violation..........................................11
4.4 Consents and Approvals............................................12
4.5 Equity Interests..................................................12
4.6 Subsidiaries; Other Affiliates; Agent.............................13
4.7 Books and Records.................................................13
4.8 Absence of Undisclosed Liabilities................................13
4.9 Absence of Certain Changes or Events..............................13
4.10 Personal Property.................................................14
4.11 Real Property; Water Rights.......................................15
4.12 Contracts.........................................................15
4.13 Intellectual Property.............................................16
4.14 Tax Matters.......................................................16
4.15 Employee Benefit Plans............................................18
4.16 Assets............................................................18
4.17 Litigation........................................................18
4.18 Compliance With Laws..............................................18
4.19 Environmental Matters.............................................19
4.20 Governing Provisions..............................................20
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4.21 Statements True and Correct.......................................20
4.22 Disclosure of Information.........................................20
4.23 No Brokers........................................................20
4.24 Bank Accounts; Powers of Attorney.................................20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TRWC..............................21
5.1 Organization of TRWC..............................................21
5.2 Authorization.....................................................21
5.3 No Conflict or Violation..........................................21
5.4 Consents and Approvals............................................21
5.5 Litigation........................................................21
5.6 No Brokers........................................................22
5.7 Other Representations and Warranties..............................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT............................22
6.1 Organization of Parent............................................22
6.2 Capitalization of Parent..........................................22
6.3 Authorization.....................................................23
6.4 No Conflict or Violation..........................................23
6.5 Consents and Approvals............................................23
6.6 Statements True and Correct.......................................23
6.7 Litigation........................................................24
6.8 No Brokers........................................................24
6.9 Representations Concerning the Stock Consideration................24
6.10 Other Representations and Warranties..............................24
ARTICLE 7 CONDITIONS TO CLOSING...............................................25
7.1 Conditions to Obligations of Each Party...........................25
7.2 Conditions to Obligations of TRWC and Parent......................25
7.3 Conditions to Obligations of the Company and the TRB Members......27
ARTICLE 8 INDEMNIFICATION.....................................................29
8.1 Indemnification by TRWC...........................................29
8.2 Indemnification by Parent.........................................29
8.3 Indemnification of TRWC and Parent................................29
8.4 Survival of Indemnification.......................................29
8.5 Payment and Setoff; Order of Recovery.............................30
8.6 Indemnification Procedures and Third Party Claims.................31
8.7 Exclusive Remedy..................................................32
8.8 Limitations.......................................................33
ARTICLE 9 ADDITIONAL COVENANTS................................................33
9.1 Post-Merger Existence of TRWC.....................................33
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9.2 Further Assurances................................................33
9.3 Expenses..........................................................33
9.4 Confidentiality...................................................33
9.5 Filings; Other Actions; Notifications.............................34
9.6 Tax Matters.......................................................34
9.7 Plan of Merger; Reservation of Shares of Parent Stock.............36
ARTICLE 10 TERMINATION........................................................36
10.1 Termination by Mutual Consent.....................................36
10.2 Termination by Either the Company or TRWC.........................36
10.3 Termination by the Company........................................37
10.4 Termination by TRWC...............................................37
10.5 Effect of Termination and Abandonment.............................37
ARTICLE 11 MISCELLANEOUS......................................................37
11.1 Amendment.........................................................37
11.2 Waiver............................................................37
11.3 Governing Law; Consent to Jurisdiction............................37
11.4 Notices...........................................................38
11.5 Invalid Provision.................................................39
11.6 Assignment........................................................39
11.7 Binding Effect; Third Party Beneficiaries.........................39
11.8 Payments in U.S. Dollars..........................................39
11.9 Headings..........................................................39
11.10 Person and Gender.................................................39
11.11 Entire Agreement..................................................40
11.12 Interpretations...................................................40
11.13 Execution in Counterparts.........................................40
11.14 No Tax Advice.....................................................40
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LIST OF SCHEDULES
Schedule A List of TRB Members and Individual Consideration
Schedule 4.3 Conflicts or Violations
Schedule 4.4 Company Required Consents and Approvals
Schedule 4.8(a) Undisclosed Liabilities
Schedule 4.8(b) Guarantees
Schedule 4.9 Company Changes or Events
Schedule 4.12(a) Contracts
Schedule 4.14 Tax Matters
Schedule 4.17 Litigation
Schedule 4.19 Environmental Matters
Schedule 4.24 Bank Accounts; Powers of Attorney
Schedule 5.4 TRWC Required Consents and Approvals
Schedule 5.5 TRWC Litigation
Schedule 6.4 Parent Required Consents and Approvals
Schedule 6.7 Parent Litigation
Schedule 7.2 Company Contracts to be Terminated
LIST OF EXHIBITS
Exhibit 1.1 Statement of Merger
Exhibit 2.4 Articles of Incorporation of TRWC
Exhibit 2.5 Bylaws of TRWC
Exhibit 2.8 Amended and Restated Operating Agreement of HCIC
Exhibit 3.2 Form of Stock Power
Exhibit 3.4 Investor Rights Agreement
Exhibit 3.5 Release and Waiver
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
as of September 14, 2010, by and among Two Rivers Water Company, a Colorado
corporation ("Parent"); TRWC, Inc., a Colorado corporation and wholly owned
subsidiary of Parent ("TRWC"); and Two Rivers Basin, LLC, a Colorado limited
liability company (the "Company").
Background
This Agreement provides for TRWC to exchange, by merger of the
Company with and into TRWC, all of the issued and outstanding membership
interests denominated as units of the Company ("Company Units") for an aggregate
of 7.5 million shares of the $0.001 par value per share common stock of Parent
("Parent Stock").
The acquisition will be structured as follows: (i) on the
Closing Date, the Company will merge with and into TRWC, the separate corporate
existence of the Company will cease, and TRWC will be the Surviving Corporation;
and (ii) as of the Effective Time of such Merger, each Company Unit outstanding
prior to the Merger shall be exchanged for shares of Parent Stock as set forth
in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Certain Definitions. As used herein and in the Schedules and Exhibits
hereto, the following terms have the following respective meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Act" means the Colorado Corporations and Associations Act, as
amended.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, Losses, obligations, Taxes, Liens,
expenses and fees of any nature, including court costs and reasonable attorneys'
fees and expenses. As used in this Agreement, "Adverse Consequences" are not
limited to matters asserted by third parties, but include Adverse Consequences
incurred or sustained by a Person other than as a result of claims by third
parties.
"Affiliate" of a Person means any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person.
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"Agreement" means this Agreement and Plan of Merger and all
Schedules and Exhibits hereto, as the same may be supplemented, modified or
amended from time to time.
"Assets" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, owned or leased, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or not
carried on the books and records of such Person, and whether or not owned in the
name of such Person or any Affiliate of such Person and wherever located.
"Closing" means the consummation of the transactions
described in this Agreement, and "Closing Date" means the date upon which such
consummation occurs.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Company Units" means the duly authorized and issued units
representing membership interests of the Company.
"Company Material Adverse Effect" means an event, change or
occurrence (other than those resulting from actions taken by TRWC or Parent)
that, individually or together with any other event, change or occurrence, has
or is reasonably likely to have a material adverse effect on (a) the financial
condition, business or results of operations of the Company, (b) the ability of
the Company to perform its obligations under this Agreement, or (c) the ability
of the Company to consummate the Merger.
"Contract" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding, or other undertaking of any kind or
character, or other document to which such Person is a party or that is binding
on such Person or its assets or business.
"Debt" of the Company means(a) all of the indebtedness for
borrowed money of the Company, (b) all obligations of the Company, evidenced by
notes, bonds, performance or surety bonds, debentures or similar instruments
(including capital lease obligations), (c) all indebtedness of the Company
created or arising under any conditional sale or other title retention
agreement, (d) all outstanding obligations of the Company under acceptance,
letter of credit or similar facilities, (e) all indebtedness of the type
described in clauses (a) through (d) above guaranteed, directly or indirectly,
in any manner by the Company, including interest and penalties thereon, (f) any
indebtedness of the type described in clauses (a) through (e) above secured by
(or for which the holder of such indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on assets or property owned by the
Company, (g) all accrued but unpaid interest (or interest equivalent) to the
date of determination related to any items of indebtedness of the type described
in clauses (a) through (f) above, (h) all obligations of the Company, for the
deferred purchase price of property or services other than trade accounts
payable in the ordinary course and that are not more than sixty (60) days past
due, (i) all indebtedness of the Company to Members; and (j) the amount of any
loss on an interest rate swap or other debt hedging instrument of the Company.
2
"Environmental Laws" means all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata or protection of human
health) and which are administered, interpreted or enforced by any Governmental
Authority with jurisdiction over pollution or protection of the environment,
including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. ▇▇.▇▇. 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. ▇▇.▇▇. 6901 et
seq., and other Laws relating to remediation, removal, emissions, discharges,
releases or threatened releases of any Pollutant, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Pollutant.
"Equity Rights" means all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, warrants, or other binding
obligations of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock or membership
interests of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or membership interests or other Equity
Rights.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"ERISA Affiliate" means any Person that is or was (a) together
with the Company, treated as a "single employer" under Section 414(b), 414(c) or
414(m) of the Code, (b) required to be aggregated with the Company under Section
414(o) of the Code, or (c) under "common control" with the Company under Section
4001(a)(14) of ERISA.
"Fiscal Year" means the fiscal year of the Company consisting
of the twelve-month period ending on December 31st of each year.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"Governmental Authority" means any federal, state, county,
local or other governmental or public agency, instrumentality, commission,
authority, board or body of the United States of America or any other country or
jurisdiction in which the Company has operated or performed services.
"HCIC" means HCIC Holdings, LLC, a Colorado limited liability
company.
"HCIC Operating Agreement" means the Operating Agreement of
HCIC dated as of August 17, 2009.
"Indemnified Party" means the party or parties to be
indemnified pursuant to Article 8.
"Indemnifying Party" means the party or parties from whom
indemnification is sought pursuant to Article 8.
"IRS" means the United States Internal Revenue Service.
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"Knowledge" as used with respect to the Company (including
references to the Company being aware of a particular matter) means the personal
knowledge, after due inquiry, of ▇▇▇▇ ▇. ▇▇▇▇▇ (as manager of the Company), ▇▇▇▇
▇. ▇▇▇▇▇ ▇▇ (as a manager of the Company), ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (as member of the
Company and employee of Parent and Parent's subsidiary), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Roerhrich, and ▇▇▇▇▇ ▇▇▇▇▇ (each as a
member of the Company); and with respect to TRWC or Parent (including references
to TRWC or Parent, respectively, being aware of a particular matter) means the
personal knowledge, after due inquiry, of ▇▇▇▇ ▇▇▇▇▇▇▇ (CEO, Chairman and
Director of Parent, CEO and President of TRWC) and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (CFO of Parent,
Vice President, Secretary and Treasurer of TRWC).
"Laws" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and Orders of all Governmental Authorities.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on or with respect to any Asset, capital stock,
equity interest, property or property interest.
"Litigation" means any action, arbitration, suit, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or other
proceeding before any court, Governmental Authority or private arbitration
tribunal, or notice (written or oral) by any Person alleging potential liability
relating to or affecting a Person, or any member, director, officer or employee
thereof in his or her capacity as such, its business, assets, units or capital
stock, or the transactions contemplated by this Agreement.
"Loss" means any and all loss, demand, action, cause of
action, assessment, damage, liability, reduction in value, claim, cost,
settlement or expense, including, without limitation, interest, penalties and
reasonable attorneys' and other professional fees and expenses incurred in the
investigation, prosecution, defense or settlement of any such loss, demand,
action or cause of action.
"Managers" means ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇, in their
capacity as the managers of the Company.
"Member Agent" means ▇▇▇▇▇▇ Kwitek & ▇▇▇▇▇▇ PC, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., whose principal office address is ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
#▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, appointed by all of the TRB Members to act as
agent on behalf of the TRB Members with respect to certain discrete matters.
"Members" or "TRB Members" means the Members of the Company on
the date hereof, as listed on Schedule A attached hereto.
4
"Merger" means the merger of the Company with and into TRWC in
accordance with this Agreement and the Act.
"Notice of Claim" means a notice by the Indemnified Party or
its authorized representative (a) stating that the Indemnified Party has
suffered Adverse Consequences to which it is entitled to indemnification
pursuant to Article 8 and the amount thereof (to the extent known); and (b)
specifying, to the extent possible, (i) the individual items of Adverse
Consequences included in the amount so stated, (ii) the date each such item was
incurred and (iii) the basis upon which such Adverse Consequences are claimed.
"Notice of Objection" means a written notice of objection by
the Indemnifying Party or its authorized representative which shall set forth
the grounds upon which the objection is based and state whether the Indemnifying
Party objects to all or only a portion of the matter described in the Notice of
Claim.
"Order" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any Governmental Authority, or any binding determination pursuant to
arbitration or other similar alternative dispute resolution forum.
"Parent Stock" means the common stock, par value $0.001 per
share, of Parent.
"Parent Stock Price" means $1.00 per share of Parent Stock.
"Party" means, individually, Parent, TRWC, or the Company, as
applicable, and "Parties" means such Persons collectively.
"Person" means a natural person, or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, partnership,
limited liability company, association, trust or unincorporated organization.
"Pollutant" means any chemical, waste, contaminant, petroleum,
petroleum product or oil, hazardous waste, hazardous material, hazardous
substance, dangerous substance or toxic substance defined in or regulated by any
Environmental Laws or regulated by any Governmental Authority.
"Related Party" means the officers, directors, members,
managers and partners of the Company, and any of such Persons' spouses,
siblings, parents, grandparents or descendants (including those by adoption),
and any business entity in which any of such Persons or relatives has any
material direct or indirect interest.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
5
"Securities Laws" means, as applicable, the Securities Act,
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such acts and all other applicable Laws, rules and regulations
of the United States; all applicable state securities "blue sky" Laws and
regulations; and, with respect to Parent, all applicable rules and regulations
of the NYSE Amex.
"Statement of Merger" means the Statement of Merger in
substantially the form of Exhibit 1.1 hereto, to be executed by the Company and
TRWC and filed with the State of Colorado Secretary of State as contemplated by
Sections 2.1 and 2.3 of this Agreement.
"Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
stock or other interests entitled to vote in the election of the board of
directors of such corporation, managers, trustees or other controlling persons,
or an equivalent controlling interest therein, of such entity is, at the time,
directly or indirectly, owned by such Person and/or one or more subsidiaries of
such Person.
"Surviving Corporation" means TRWC, the corporation surviving
the Merger.
"Tax Return" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Tax" or "Taxes" means any taxes, charges, fees, levies,
imposts, duties, or other assessments of any Governmental Authority, including
income (net, gross or other, including recapture of any tax items such as
investment tax credits), gross receipts, excise, employment, sales, use,
transfer, premium, gains, license, payroll, franchise, severance, stamp,
occupation, environmental, federal highway use, commercial rent, customs duties,
capital stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, imposed or required to be withheld by any
Governmental Authority, including any interest, penalties, and additions imposed
thereon or with respect thereto.
"Tax Member" means such representative or designee appointed
to act on behalf of the TRB Members with respect to Tax matters.
"Treasury Regulations" means the rules and regulations
promulgated under the Code.
1.2 Index to Certain Defined Terms. Each term set forth below is defined in
the referenced Section:
Term Section
---- -------
Agreement 1st Paragraph
Claim 8.6
Company 1st Paragraph
Company Benefit Plan 4.15
Company Debt 4.8(c)
Company HCIC Units 4.5(b)
Confidential Information 9.4
Current Filings 4.22
6
Equipment 4.10
ERISA Affiliate 4.15
Exchange Deliveries 3.2(b)
Final Tax Returns 9.6(a)
Holdback 3.2(c)
Individual Consideration 3.1(a)
Intellectual Property 4.13
Investor Rights Agreement 3.4
Material Contracts 4.12(a)
Member Agent Shares 6.9
Parent 1st Paragraph
Secretary of State 2.1
Stock Consideration 3.1(a)
Stock Power(s) 3.2
TRB Member 1st Paragraph
TRB Indemnitees 8.1
TRWC 1st Paragraph
TRWC Indemnitees 8.3
Termination Date 10.2
Transaction Documents 4.2
Unpaid Obligations 3.3
ARTICLE 2
MERGER
2.1 Merger. Upon the terms and subject to the conditions of this Agreement,
on the Closing Date, the Company and TRWC shall execute and file the Statement
of Merger with the State of Colorado Secretary of State (the "Secretary of
State") in connection with the Closing. On the terms and subject to the
conditions of this Agreement, at the Effective Time, the Company shall be merged
with and into TRWC in accordance with the applicable provisions of the Act. TRWC
shall be the Surviving Corporation resulting from the Merger and shall remain a
wholly owned subsidiary of Parent and shall continue to be organized under the
laws of the State of Colorado. At and after the Effective Time, the Merger shall
have the effects set forth in Article 90, Section 204 of the Act.
2.2 Closing. The Closing of the transactions contemplated hereby shall
occur on the Closing Date after the satisfaction or waiver of the closing
conditions contained in Article 7 via facsimile transmission or in such other
manner as mutually agreed to by the Parties. At the Closing, each of the Parties
shall take all such action and deliver all such documents, instruments,
certificates and other items as may be required, under this Agreement or
otherwise, in order to perform or fulfill all covenants, conditions and
agreements on its part to be performed or fulfilled at or prior to the Closing
Date.
2.3 Effective Time. On the Closing Date, TRWC and the Company shall cause
the Statement of Merger to be executed and filed with the Secretary of State as
provided in Article 90, Section 203.7 of the Act. The Merger shall become
effective as of the date and time set forth in the Statement of Merger (the
"Effective Time").
7
2.4 Articles of Incorporation. At the Effective Time, the articles of
incorporation of TRWC attached as Exhibit 2.4, which are in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until otherwise amended.
2.5 Bylaws. At the Effective Time, the bylaws of TRWC attached as Exhibit
2.5, which are in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation until otherwise amended.
2.6 Directors. The directors of TRWC immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation, termination of employment
or removal in accordance with the articles of incorporation and bylaws of the
Surviving Corporation. Immediately following the Effective Time subject to the
conditions and upon the terms set forth in the Investor Rights Agreement
attached hereto as Exhibit 3.4, the TRB Members shall be granted certain rights
in connection with the designation for election of one member of Parent's board
of directors.
2.7 Officers. The officers of TRWC immediately prior to the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their 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.
2.8 HCIC. As a result of the Merger, as of and after the Effective Time,
HCIC shall be a wholly-owned subsidiary of TRWC, and shall, for federal tax
purposes, be a disregarded entity. The HCIC Operating Agreement shall terminate
immediately as of the Effective Time and Parent shall cause TRWC to adopt the
Amended and Restated Operating Agreement attached as Exhibit 2.8 to become
effective as and after the Effective Time.
ARTICLE 3
MANNER OF ExCHANGING STOCK
3.1 Exchange of Stock in Merger.(a) Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, TRWC, the Company, or the shareholders or
members of any of the foregoing:
(a) All of the Company Units issued and outstanding immediately
prior to the Effective Time shall be exchanged for shares of Parent Stock, the
aggregate amount of which shall equal 7,500,000 shares (such shares,
collectively, "Stock Consideration"). The number of Company Units owned by each
TRB Member and the number of shares of Parent Stock to be received by each TRB
Member in connection with the Merger and subject to Sections 3.2 and 3.3 below
shall be set forth on Schedule A (such shares, "Individual Consideration").
(b) Subject to Section 3.2 below regarding TRWC's right to retain a
portion of the Stock Consideration, and subject to Section 3.3 below regarding a
reduction of the Stock Consideration for Unpaid Obligations existing as of the
Effective Time, (i) the unit transfer books of the Company shall be closed and
no transfer of Company Units will thereafter be made or recognized; (ii) any
Company Units that are held by the Company as treasury units shall be cancelled;
8
and (iii) all Company Units that are issued and outstanding shall be exchanged
for the Stock Consideration, which shall be delivered in accordance with Section
3.2 below, subject to all of the terms and conditions of this Agreement.
3.2 Closing Procedures.
(a) At the Closing, Parent shall issue the Individual Consideration
to each TRB Member or his or her designee in accordance with this Section 3.2;
provided, however, that the Stock Consideration shall be decreased (i) to the
extent of the portion of the Individual Consideration payable with respect to a
TRB Member until such TRB Member delivers (A) a counterpart to the Investor
Rights Agreement attached as Exhibit 3.4; and (B) a Stock Power attached as
Exhibit 3.2 with respect to the shares of Parent Stock representing the
Individual Consideration payable to such TRB Member but retained by Parent as
such TRB Member's proportionate share of the Holdback in accordance with Section
3.2(c) below; and (ii) by the aggregate amount of the Holdback to be retained as
security for indemnity claims as provided in Section 3.2(c) below.
(b) Upon delivery to TRWC by a TRB Member at or after the Effective
Time duly executed (i) counterpart to the Investor Rights Agreement attached as
Exhibit 3.4; and (ii) Stock Power attached as Exhibit 3.2 with respect to the
shares of Parent Stock representing the Individual Consideration payable to such
TRB Member but retained by Parent as such TRB Member's proportionate share of
the Holdback in accordance with Section 3.2(c) below, Parent shall promptly
cause its transfer agent to deliver to the Member Agent, the stock certificates
representing the Individual Consideration each TRB Member is entitled to receive
for all such Company Units as provided in Section 3.2(a) above (Investor Rights
Agreement and Stock Powers together, "Exchange Deliveries"). Until the Exchange
Deliveries are delivered to TRWC by a TRB Member as contemplated by this Section
3.2(b), each Company Unit outstanding immediately prior to the Effective Time
shall be deemed, after the Effective Time, to be cancelled by consummation of
the Merger and to represent only the right to receive, upon delivery of the
Exchange Deliveries, the Individual Consideration payable therefor in accordance
with the provisions of this Section 3.2.
(c) At the Closing, Parent shall, in accordance with the Escrow
Agreement attached hereto as Exhibit 3.2(c), deliver to the escrow agent 750,000
shares of the total issued Stock Consideration as security for and to be applied
to satisfy Parent or TRWC's claims for indemnification pursuant to Article 8 of
this Agreement and, to the extent not used to satisfy such claims for indemnity,
certificates representing such escrowed shares of the Individual Consideration
shall be released from the escrow and delivered pursuant to Section 3.2(d) (such
escrowed amount, as may be decreased pursuant to this Section 3.2(c), and
interest accruing thereon, shall be collectively referred to herein as the
"Holdback"). TRWC shall retain the Holdback for a period of time equal to that
period during which the shares comprising the Stock Consideration are restricted
from resale pursuant to the terms and subject to the conditions set forth in the
Investor Rights Agreement attached as Exhibit 3.4 ("Holdback Release Date").
(d) Within ten days after the Holdback Release Date, subject to
each TRB Member's compliance with the provisions of Section 3.2(b), Parent shall
cause (through its transfer agent) release of the Holdback and delivery to each
TRB Member or its designee(s), certificates representing the remaining
9
Individual Consideration which such TRB Member is entitled to receive minus (i)
the aggregate amount of setoffs or reductions validly made against the Holdback
for indemnity claims resolved in favor of the TRWC Indemnitees pursuant to
Article 8 prior to such date, and (ii) the amount needed to cover any pending
unresolved claims for indemnity of any TRWC Indemnitee asserted by a Notice of
Claim in accordance with Article 8. To the extent that the shares issuable to
the Members from the Holdback as provided above are reduced by the amount of any
setoff or reduction validly made against the Holdback for indemnity claims
resolved in favor of the TRWC Indemnitees pursuant to Article 9, the aggregate
amount of the Stock Consideration and the Individual Consideration payable to
each Member shall be deemed adjusted by the amount of such setoff or reduction,
apportioned among the Members on a pro rata basis.
3.3 Unpaid Obligations. If, as of the Closing, there are any obligations
related to any Company Debt that have not yet been (i) fully paid, (ii)
discharged or, (iii) with respect to fees owed to professional advisors,
adequate arrangements for the payment thereof have not been adopted, as of the
Closing Date ("Unpaid Obligations"), then TRWC may waive the closing conditions
as to the payment of the Unpaid Obligations pursuant to Article 7, proceed with
the Merger, and pay, or cause the Surviving Corporation to pay, the Unpaid
Obligations as and when they become due and payable. In the event that TRWC
elects to proceed with the Merger notwithstanding the existence of the Unpaid
Obligations, the Stock Consideration will be reduced dollar for dollar by the
aggregate amount of Unpaid Obligations that are outstanding as of the Effective
Time, and the Individual Consideration payable to each TRB Member shall be
deemed adjusted by the amount of such reduction, apportioned among the TRB
Members on a pro rata basis.
3.4 Investor Rights and Restrictions.(a) At the Closing, Parent and the TRB
Members shall execute and deliver the Investor Rights Agreement attached hereto
as Exhibit 3.4, pursuant to which (i) Parent shall grant certain registration
rights to the TRB members in the event that Parent determines to prepare and
file with the Securities and Exchange Commission, or participate in the filing
of, a registration statement or a prospectus supplement to an effective
registration statement registering under the Securities Act any Parent Stock
held by ▇▇▇▇ ▇▇▇▇▇▇▇ or any of his Family Members (as defined in the Investor
Rights Agreement); (ii) so long as the TRB Members collectively hold at least
one-half of the aggregate number of shares of the Stock Consideration issued at
Closing, and such total number of shares of Stock Consideration then held by the
TRB Members equals or exceeds ten percent (10%) of the total number of shares of
Parent Stock issued and outstanding, the TRB Members shall be granted certain
rights in connection with the election and removal of members of the Parent's
board of directors; and (iii) each TRB Member shall agree not to sell or
otherwise transfer any shares of Parent Stock for the restricted period set
forth therein.
3.5 Release and Waiver. As a condition to Closing, the Parties shall
execute and deliver a release and waiver, attached as Exhibit 3.5 (the "Release
and Waiver"), of any and all claims and liabilities arising under or in
connection with (a) the Contribution Agreement dated as of August 17, 2009,
among the Company, the TRB Members, TRWC and HCIC; (b) the HCIC Operating
Agreement dated as of August 17, 2009; and (c) the Assignment and Assumption of
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Share Purchase Agreements and Real Property Options dated as of August 17, 2009,
by and between the Company and HCIC. The Release and Waiver shall become
effective only upon the Closing Date and fulfillment of all conditions to
Closing as set forth in Section 7.2 and Section 7.3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to Parent and TRWC
that the statements contained in this Article 4 are true, correct and accurate
as of the date of this Agreement (except that in the case of those statements
that by their terms are limited to a specific date, as of such date) and will be
correct and complete as of the Effective Time. For purposes of clarification,
the representations and warranties set forth in this Article 4 shall not be
construed to be representations and warranties with respect the business,
operations or assets of HCIC except as specifically stated herein.
4.1 Organization, Standing and Power. The Company is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the State of Colorado and has full power and authority to carry on its business
as it is now being conducted and to own all of its properties and Assets. No
basis for claims or any Adverse Consequences exist with respect to the
limitations on the Company's limited liability company powers. Other than its
Equity Rights in HCIC, the Company has no Equity Rights in any Person. The
Company has made all filings with the Secretary of State and with all other
necessary Colorado agencies required by a limited liability company organized
under the Laws of the State of Colorado and required in order to engage in the
business conducted by the Company at any time during its existence. The Company
has, if required, registered with all regulatory boards, and is otherwise in
compliance with all Laws, in the jurisdictions in which it engages in any
regulated activities in connection with its business. The Company has delivered
correct and complete copies of its articles of organization, operating
agreements (and all amendments thereto) minute books and records to TRWC, and
there have been no amendments, modifications, or supplements made thereto since
the date of such delivery.
4.2 Authorization and Approval. The Company has all requisite power and
authority, and has taken all action necessary, to execute, deliver and perform
its obligations under this Agreement and all other agreements, documents and
instruments to be executed and delivered in connection with the transactions
contemplated by this Agreement ("Transaction Documents"), and to consummate the
transactions contemplated hereby and thereby. This Agreement is the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating to
or affecting creditors' rights and to general equity principles. This Agreement,
the Statement of Merger and the Merger have been duly and validly authorized and
approved by all requisite action of the Managers of the Company and, as of the
Closing date, by the TRB Members.
4.3 No Conflict or Violation. Except as set forth on Schedule 4.3, none of
the execution and delivery of this Agreement and the Statement of Merger by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor the compliance by the Company with any of the provisions hereof,
11
will (a) violate or conflict with any provision of the articles of organization
or the operating agreement of the Company; (b) result in a breach of, or a
default under, any provision of any Material Contract to which the Company is a
party or bound or to which any Asset or capital stock or equity interest of the
Company is subject, or an event which, with notice, lapse of time, or both,
would result in any such breach or default; (c) result in the creation of any
Lien on any Asset or equity interest of the Company; or (d) result in a material
violation by the Company of any Law or Order (or an event which with notice,
lapse of time, or both, would result in any such violation).
4.4 Consents and Approvals. Except for the filing of the Statement of
Merger with the Secretary of State, and except as set forth on Schedule 4.4, no
approval or consent of, or authorization or declaration, filing or registration
with, any Governmental Authority or any other Person is required to be made or
obtained by the Company in connection with the Company's execution, delivery and
performance of this Agreement, the Statement of Merger and the consummation of
the transactions contemplated hereby, that has not been made or obtained.
4.5 Equity Interests.
(a) The authorized equity interests of the Company consist of
15,000,000 units of membership interests in Company, all of which are issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
units of Company ownership interests are duly authorized and validly issued. All
right, title and interest (legal and beneficial) in the Company Units is owned
of record and beneficially by the Persons in the amounts set forth on Schedule
A. The Company Units were not issued in violation of any preemptive or similar
right of any Person and, except as provided in Article 7 of the Company's
operating agreement (the application of which will be waived in connection with
the consummation of the Merger), are not currently subject to, any right of
first refusal or similar right of any Person. All Company Units have been issued
in transactions exempt from registration under the Securities Laws, and the
Company has not violated any Securities Laws in connection with the issuance of
any such Company Units. There are not declared or accrued unpaid distributions
with respect to any Company Units. No Person claiming by or through the Company
has any agreement or option or any right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option for the purchase of any
of such shares to be issued pursuant to the Merger at the Effective Time. The
Company has granted no options to purchase or Equity Rights relating to Company
Units that have not been properly and fully exercised prior to the Effective
Time. All repurchases or retirements of Company Units prior to the Effective
Time have been completed in accordance with all applicable Laws, the governing
documents of the Company and all contracts applicable to such repurchases or
retirements.
(b) The Company has good, valid and marketable title to, and owns
15,000,000 units in HCIC, ("Company HCIC Units"). Except for any rights of TRWC
under this Agreement, (i) the Company HCIC Units are free and clear of all Liens
of any nature whatsoever; and (ii) no Person other than the Company has any
Equity Rights in the Company HCIC Units of any nature whatsoever.
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4.6 Subsidiaries; Other Affiliates; Agent. Other than the Company HCIC
Units as set forth in Section 4.5(b) above, the Company (i) has no Equity Rights
in HCIC; and (ii) does not now own, directly or indirectly, and has never owned,
directly or indirectly, any Subsidiaries or any partnership or joint venture
interest. The Company has no current engagement letter, agreement or other
arrangement with Member Agent for legal representation of the Company nor will
the Company enter into any such engagement prior to the Effective Time. For
purposes of clarification, legal representation as used in this context does not
include escrow services provided by Member Agent.
4.7 Books and Records.(a) The Company's books and records have been
properly maintained and are complete and correct in all material respects.
4.8 Absence of Undisclosed Liabilities.
(a) Except as set forth on Schedule 4.8(a), the Company does not
have any liabilities, including contingent and/or unmatured liabilities. The
Company has not incurred or paid any liability other than those liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are fully reflected on the books and records of the
Company.
(b) Except as set forth on Schedule 4.8(b), the Company is not (i)
a guarantor or otherwise liable for any liability or obligation of any other
Person, or (ii) obligated to guaranty or assume any debt, commitment or dividend
of any Person.
(c) The Company has no (i) existing credit facilities, capitalized
lease obligations or other Debt of the Company (the "Company Debt"), or (ii) any
Liens on assets as security for any Company Debt.
4.9 Absence of Certain Changes or Events.(a) Since December 31, 2009,
except as set forth on Schedule 4.9, there have been no events, changes or
occurrences that have had, or are reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect. Without limiting the
generality of the foregoing, except as set forth on Schedule 4.9, since December
31, 2009, the Company has not:
(a) amended its articles of organization, operating agreement or
other governing documents as applicable, or merged, engaged in a unit or other
equity exchange or recapitalization, consolidated, liquidated or dissolved;
(b) issued any ownership interests or Equity Rights, or split, sub-
divided or reclassified its units or other equity interests;
(c) declared, paid or set aside for payment any distributions on
its units or ownership interests or made any other payment or distribution to
any TRB Member or other equity interest owner (other than compensation in the
ordinary course of business);
(d) entered into any employment agreement or any commitment to
compensate any Manager or Member (including, without limitation, any commitment
to pay retirement or other benefits);
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(e) (i) created or incurred any Debt, (ii) entered into or terminat
-ed any lease of real property, (iii) created any Subsidiary, (iv) released or
created any Liens or other security interests or (v) agreed to any settlement of
any Litigation matter;
(f) other than in the ordinary course of business, (i) made any
capital expenditure or capital expenditure commitment, or (ii) entered into any
lease of capital Equipment as lessee or lessor;
(g) sold any Asset, made any commitment relating to its Assets
transferred any Asset (other than compensation in the ordinary course of
business and transfers described in clauses (c), (d) and (e)) to TRB Members,
incurred material damage, destruction or loss to any Assets which is not covered
by insurance or had any Assets subjected to a Lien;
(h) made any change of a material nature in its accounting
procedures, methods, policies or practices or the manner in which it maintains
its records;
(i) entered into or terminated any Material Contract, or done or
failed to do anything that would cause a breach of, or default under, any
Material Contract;
(j) made any loan, advance or other extension of credit for borrow-
ed money to any Person;
(k) established any contingencies or other reserves for liability;
(l) cancelled, compromised, written down, written off or waived any
claim or right;
(m) paid any severance or termination pay to any Member, Manager,
or partner of the Company;
(n) entered into any Company Benefit Plan or any plan or arrange-
ment subject to ERISA or any other arrangement or practice relating to employees
or independent contractors;
(o) terminated or been advised of the termination of or material
reduction in its relationship under any Material Contract;
(p) changed in any material respect the business policies or
practices of the Company, entered into any material transaction or failed to
operate the business of the Company in good faith and in the ordinary course;
(q) entered into any agreement to take any action that would be in
contravention of paragraphs (a) through (q) above.
4.10 Personal Property. The Company does not own or lease (i) any
automobiles or any other motor vehicles; (ii) any machinery, equipment, tools,
computer equipment, office equipment, business machines, telephones and
telephone systems, parts, accessories and the like ("Equipment"); or (iii) any
furniture, fixtures or any other items of personal property.
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4.11 Real Property; Water Rights. Other than indirectly through its ownership of
HCIC Units, the Company does not own, lease or otherwise have any interests in
any real property (including any water rights), and holds no options to purchase
or lease real property, including any water rights.
4.12 Contracts.
(a) Schedule 4.12(a) contains a correct and complete list of all
Contracts pursuant to which the Company enjoys any rights or benefits or
undertakes any obligations or liabilities, including without limitation, those
that:
(i) have a duration of twelve (12) months or more and that
are not terminable without penalty upon thirty (30) days or less prior written
notice;
(ii) require or could reasonably be expected to require any
party thereto to pay any amount as of or after the Closing Date;
(iii) are between the Company and any Affiliate of the
Company, any TRB Member or other equity interest owner of the Company or other
Related Party;
(iv) are between the Company and any Governmental
Authority;
(v) have or may have the effect of prohibiting or impairing
any business practice of the Company, any acquisition of property (tangible or
intangible) by the Company or the conduct of business by the Company;
(vi) under which the Company is restricted from conducting
business in any geographic area or during any period of time; or
(vii) contain any restrictive covenant or confidential or
secrecy agreement (Contracts listed pursuant to clauses (i) through (vii) are,
collectively, the "Material Contracts").
Except as set forth on Schedule 4.12(a), (A) all Material Contracts are in full
force and effect, (B) the Company is not in default under any Material Contract,
nor has any event occurred which with the passage of time or the giving of
notice or both would result in the Company being in default in any material
respect under, any of the terms of any Material Contract, and (C) there is no
basis for any claim against the Company in connection with any Material
Contract. Without limiting the foregoing, except as set forth in Schedule
4.12(a), the Company has not received any notice nor, to the Knowledge of the
Company, any threat of notice of, noncompliance by the Company with respect to
any Contract.
(b) None of the TRB Members or other equity interest owners of the
Company or any Related Party has any interest (other than as a TRB Member in the
Company), directly or indirectly, in any Contract to which the Company is a
party, any interest (other than as a TRB Member in the Company) in any
properties or assets owned or leased by the Company or any interest in any
competitor of the Company (other than ownership by any TRB Member of no more
than 2% of the outstanding equity securities of any publicly traded company).
15
4.13 Intellectual Property. The Company does not own, lease, license,
possess or hold any other rights to or interests in any (a) registered and
unregistered, foreign and United States patents, patent applications,
trademarks, trade names, service marks and copyrights, (b) trade secrets,
designs, art work, designs-in-process, formulations, know-how, prototypes and
inventions, in each case, whether or not patentable, or (c) computer software
other than commercially available software under a standard "shrink-wrap"
license (collectively, the "Intellectual Property").
4.14 Tax Matters. Except as set forth on Schedule 4.14:
(a) The Company has timely filed all income Tax Returns and all
other Tax Returns which it is required to file under applicable Law or such
filings are pending under validly filed extensions for periods ending before the
Closing Date and there are no pending audits of such Tax Returns, nor continuing
liability under any previously audited Tax Return. With respect to any Tax
periods or portions thereof ending on or before the Closing Date, the Company
acknowledges and agrees that it shall be solely liable for all liabilities,
including past Taxes and interest or penalties thereon, arising therefrom or
related thereto;
(b) All such Tax Returns filed prior to the Closing Date are true
and accurate in all material respects, and copies of the Company's Tax Returns
filed for years 2008 and 2009 have been provided to TRWC;
(c) With respect to all Tax periods (or portion thereof) of the
Company ending on or before December 31, 2009, the Company has paid all Taxes
due and owing by it (whether or not such Taxes are required to be shown on a Tax
Return), and with respect to all Taxes not yet due and owing or otherwise not
paid for such Tax periods the Company has accrued any such Taxes as a liability
or reserved funds in adequate amounts to pay such Taxes, and has withheld and
paid over to the appropriate taxing authority all Taxes which it is required to
withhold from amounts paid or owing to any TRB Member, other equity interest
owner, creditor or other third party. With respect to the Tax period of the
Company commencing January 1, 2010 through the Closing Date, the Company has
paid all Taxes due and owing by it, and has withheld and paid over to the
appropriate taxing authority all Taxes which it is required to withhold from
amounts paid or owing to any TRB Member, other equity interest owner, creditor
or other third party.
(d) The Company has disclosed in its United States income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code Section 6662.
(e) No claim has been made by a taxing authority in a jurisdiction
where the Company does not file Tax Returns that is or may be subject to
taxation by that jurisdiction. There are no Tax audits by any Governmental
Authority or administrative or judicial proceedings pending or being conducted
with respect to the Company.
(f) No information related to Tax matters has been requested from
the Company by any Governmental Authority and no written notice indicating an
intent to open an audit or other review has been received by the Company from
any Governmental Authority.
16
(g) There are no unresolved claims concerning the Tax liability of
the Company. No waivers of statutes of limitation or extensions of open Tax
periods have been given or requested with respect to the Company in connection
with any Tax Returns covering the Company.
(h) The Company has not agreed to or is required to make any adjust
-ments pursuant to Code Section 481(a) or any similar provision of state, local
or foreign law by reason of a change in accounting method initiated by the
Company. The IRS has not proposed to the Company any such adjustment or change
in accounting method. There is no application by or on behalf of the Company
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Company.
(i) The Company is not a party to any Tax allocation, indemnity,
sharing or similar agreement, except among the entities in the Company Group.
(j) The Company has not made any payments nor is it obligated to
make payments nor is it a party to an agreement that could obligate it to make
any payments that would not be deductible under Code Section 280G.
(k) The Assets of the Company are not subject to any Liens in
respect of Taxes.
(l) The Company has not been the subject of a Tax ruling by any
Governmental Authority that would have any continuing effect after the Closing,
nor has the Company granted a power of attorney with respect to any Tax matters
that would have a continuing effect after the Closing.
(m) The Company has not had any (i) "excess loss accounts" or
(ii) "deferred gains" with respect to any "deferred intercompany transactions"
within the meaning of the Treasury Regulations promulgated under Section 1502 of
the Code.
(n) The Company has not participated in any "reportable trans-
action" or "listed transaction" as those terms are defined in Section 6707A(c)
of the Code.
(o) No relief for Tax purposes (whether by way of deduction, reduct
-ion, set-off, exemption, postponement, roll-over, hold-over, repayment or
allowance or otherwise) has been claimed and/or given to the Company which has
been taken into account as an asset or in computing any provision for Tax which
could be effectively withdrawn, postponed, restricted, clawed back or otherwise
lost as a result of any act, omission, event or circumstance arising or
occurring either at or at any time before Closing. For the avoidance of doubt, a
provision for deferred tax shall not be deemed a "relief" for purposes of this
Section 4.14.
(p) The Company has made a valid and effective election to be treat
-ed as a corporation for federal income tax purposes and such election was made
on August 18, 2009 and has been continuously in effect since such date of
election. There exists no reasonable basis upon which the IRS would be expected
17
to challenge the status of the Company prior to the Closing as a corporation as
that term is defined in Section 7701(a)(3) of the Code. The Company has provided
to TRWC with a valid copy of such election together with evidence of filing.
4.15 Employee Benefit Plans. Neither the Company nor any Person that would
be considered a single employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate") has ever adopted, maintained,
sponsored, or been obligated to contribute to any pension, retirement, profit
sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, or any other written
employee programs, arrangements or agreements, any medical, vision, dental or
other health plans, any life insurance plans, or any other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, for the benefit of employees, managers,
members, directors, independent contactors, retirees, dependents, spouses, or
other beneficiaries (collectively, the "Company Benefit Plans").
4.16 Assets. The Company has no cash or Assets other than the Company HCIC
Units. The Company has good and marketable title to all of its owned Assets.
None of the TRB Members or other equity interest owners of the Company, any
Affiliate of the Company, any Related Party of any of them, nor any third party,
including parties to the Company's Contracts, owns or leases any of the Assets
used by the Company in its business.
4.17 Litigation. Except as set forth on Schedule 4.17, (a) there is no
Litigation pending or, to the Knowledge of the Company, threatened against or
otherwise relating to or affecting the Company, any member, officer, manager, or
partner of the Company in his, her or its capacity as such, or its Assets or
that would, if adversely determined, would have a Company Material Adverse
Effect or materially adversely affect the Surviving Corporation's business
operations or Assets following the Closing; (b) the Company is not subject to
any Order, and there are no unsatisfied judgments against the Company; (c) there
have not been any product or service liability claims that have been asserted
against the Company, whether or not covered by insurance and whether or not
resolved as of the date of this Agreement; and (d) there is not any basis for
any product or service liability claims or any other type of claim against the
Company.
4.18 Compliance With Laws. The Company is, and at all times has conducted
its business, in compliance with all applicable Laws in all material respects.
No licenses, permits, registrations or other authorizations are required in
connection with the Company's business as conducted immediately prior to the
Effective Time. The Company has not received any written notification or written
communication from any Governmental Authority asserting that the Company is not,
or has not been in compliance with (a) any Law, or (b) any license, permit,
registration or authorization, which assertion of noncompliance remains
unresolved on the date hereof. Neither the Company nor any of its members,
managers, officers, partners, agents, or other person related to the Company has
(i) directly or indirectly used any funds of the Company for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) directly or indirectly made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
funds of the Company, (iii) violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended, or any similar treaties
of the United States; or (iv) directly or indirectly made any bribe, unlawful
18
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government or party official or employee the effect of which
violation would have Adverse Consequences on the Company.
4.19 Environmental Matters. Except as disclosed on Schedule 4.19:
(a) The Company, the Company's current Assets or properties, the
Company's use of any third party's assets, the conduct of the Company's business
and the performance of the Company under its Contracts is and has been in
compliance with all applicable Environmental Laws. There is no Litigation
pending, or to the Knowledge of the Company, threatened, before any court,
Governmental Authority or other forum in which the Company or any member,
manager, officer, or partner of the Company in his, her or its capacity as such,
has been, or with respect to threatened Litigation may be, named as a defendant
(i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Pollutant, whether or not occurring at, on, under or involving an Asset or
property owned or leased by the Company. There is no reasonable basis for any
Litigation of a type described in the preceding sentence.
(b) During the period of ownership or operation of any of its
current or former Assets or properties, neither the Company nor any other Person
has used any of the Company's Assets or properties or any part thereof for the
handling, treatment, storage or disposal of any Pollutants except in a manner
that complies with all applicable Environmental Laws, and there have been no
releases, discharges, emissions or disposals of Pollutants in, on, under or
affecting such Assets or properties, in any instance in violation of
Environmental Law or which could create liability for the Company. Prior to the
period of the Company's ownership or operation of any of its current or former
Assets or properties, to the Knowledge of the Company, no Person used any of the
Company's Assets or properties or any part thereof for the handling, treatment,
storage or disposal of any Pollutants except in a manner that complies with all
applicable Environmental Laws and there were no releases of Pollutants in, on,
under or affecting any such Assets or properties, in any instance in violation
of Environmental Law or which could create liability for the Company. There is
no condition existing on the Company's current, or to the Knowledge of the
Company, former Assets or properties that requires material remediation,
removal, closure or other corrective action under any Environmental Laws, and
there is no basis under any Environmental Laws for material remediation,
removal, closure or other corrective action concerning, any portion of any of
Company's current or former assets or properties.
(c) All Pollutants generated, used, handled, stored, treated or
disposed of (directly or indirectly) by the Company, if any, have been released
or disposed of in compliance with all applicable reporting requirements under
all applicable Environmental Laws, and there is not any material liability or
any reasonable basis for any material liability with respect to such release or
disposal or reporting.
(d) No Lien in favor of any Governmental Authority for liability
under or resulting from Environmental Laws, or damages arising from, or costs
incurred by such Governmental Authority in response to, a release of Pollutants
is now, or has ever been, filed against the Company.
19
4.20 Governing Provisions. The Company has taken all action so that the
entering into of this Agreement, and the consummation of the transactions
contemplated by this Agreement, do not and will not result in the grant of any
rights to any Person other than TRWC under the Statement of Merger, or articles
of organization, certificate of formation, operating agreement, or other
governing instruments of the Company.
4.21 Statements True and Correct. No statement, certificate, instrument, or
document furnished or to be furnished by the Company, any Related Party or any
Affiliate of the Company or any of them to TRWC pursuant to this Agreement or
any other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.22 Disclosure of Information. The Company has received and reviewed
Parent's Form 10-Q for the quarter ended March 31, 2010, Form 10-K for the
fiscal year ended December 31, 2009, Proxy Statement for November 19, 2009
Annual Meeting of Shareholders, and such other documents of Parent as are
publicly available relating to Parent's business, finances and operations
("Current Filings"). The Company represents that it has internet access through
the ▇▇▇▇▇ System at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ to all past filings made by Parent and
agrees that each such filing shall be deemed to have been delivered to the
Company. The Company further understands that the Stock Consideration will be
governed by Parent's organizational documents, which the Company has received
and reviewed. The Company has been furnished any additional information that it
considers necessary or appropriate to enable the Company to evaluate the merits
and risks of the Merger and the transactions contemplated by this Agreement. The
Company has had an opportunity to ask questions and receive answers from Parent
regarding the terms and conditions of the offering of the Parent Stock
constituting the Stock Consideration and the business, properties, prospects and
financial condition of Parent, and all such questions have been answered to the
full satisfaction of the Company.
4.23 No Brokers. The Company has not entered into any agreement or incurred
any obligation, directly or indirectly, for the payment of any broker's or
finder's fee or commission, or any other similar payment to any Person in
connection with this Agreement or the transactions contemplated hereby, and the
Company is not otherwise obligated to pay any such fee, commission or other
payment in connection with this Agreement or the transactions contemplated
hereby.
4.24 Bank Accounts; Powers of Attorney. Schedule 4.24 sets forth a list of
all bank or any other account maintained at any financial institution by the
Company, together with a list of all authorized signatories for such accounts,
and all safe deposit boxes maintained by the Company, and all Persons authorized
to gain access thereto. Schedule 4.24 also sets forth a list of all powers of
attorney granted by the Company.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRWC
TRWC hereby represents and warrants to the Company and the TRB
Members that the statements contained in this Article 5 are correct and accurate
as of the date of this Agreement and will be correct and complete as of the
Effective Time. For purposes of clarification, the representations and
warranties set forth in this Article 5 shall not be construed to be
representations and warranties with respect the business, operations or assets
of HCIC except as specifically stated herein.
5.1 Organization of TRWC. TRWC is a corporation, duly organized, validly
existing and in good standing under the Laws of the State of Colorado, and has
full power and authority to carry on its business as it is now being conducted
and to own and lease all of its properties and Assets. TRWC is neither qualified
nor, to its Knowledge, required to be qualified in any jurisdiction other than
the State of Colorado.
5.2 Authorization. TRWC has all requisite corporate power and authority,
and has taken all corporate action necessary, to execute, deliver and perform
its obligations under this Agreement and the Transaction Documents to which it
is a party, and to consummate the transactions contemplated hereby and thereby.
This Agreement is the valid and binding agreement of TRWC enforceable against
TRWC in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
This Agreement, the Statement of Merger and the Merger have been duly and
validly authorized and approved by all requisite corporate action on the part of
TRWC.
5.3 No Conflict or Violation. Neither the execution and delivery of this
Agreement by TRWC nor the consummation by TRWC of the transactions contemplated
hereby, nor the compliance by TRWC with any of the provisions hereof, will (a)
violate or conflict with any provision of the certificate or articles of
incorporation, bylaws, or other organizational documents of TRWC; (b) result in
a breach of, or a default under, any provision of any Contract to which TRWC is
a party or bound or to which any property, Asset or capital stock of TRWC is
subject, or an event that, with notice, lapse of time, or both, would result in
any such breach or default; (c) result in the creation of any Lien on any Asset
of TRWC; or (d) result in a violation by TRWC of any Law or Order (or an event
that with notice, lapse of time, or both, would result in any such violation).
5.4 Consents and Approvals. Except for the filing of the Statement of
Merger with the Secretary of State, and except as set forth on Schedule 5.4, no
consent, approval or authorization or declaration, filing or registration with
any Governmental Authority, or any other Person, is required to be made or
obtained by TRWC in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
that has not been made or obtained.
5.5 Litigation. Except as set forth on Schedule 5.5, (a) there is no
Litigation pending or, to the Knowledge of TRWC, threatened against or otherwise
relating to or affecting TRWC, any member, officer, manager, or partner of TRWC
in his, her or its capacity as such, or its Assets or that would, if adversely
21
determined, would materially adversely affect the TRWC's business operations or
Assets following the Closing; (b) TRWC is not subject to any Order, and there
are no unsatisfied judgments against TRWC; (c) there have not been any product
or service liability claims that have been asserted against TRWC, whether or not
covered by insurance and whether or not resolved as of the date of this
Agreement; and (d) there is not any basis for any product or service liability
claims or any other type of claim against TRWC.
5.6 No Brokers. Neither TRWC nor any of its Affiliates has entered into any
agreement or incurred any obligation, directly or indirectly, for the payment of
any broker's or finder's fee or commission, or any other similar payment to any
Person in connection with this Agreement or the transactions contemplated
hereby, and neither TRWC nor any of its Affiliates is otherwise obligated to pay
any such fee, commission or other payment in connection with this Agreement or
the transactions contemplated hereby.
5.7 Other Representations and Warranties.
(a) TRWC has no present plan or intention to issue additional
shares of its stock that would result in Parent losing control of TRWC within
the meaning of Section 368(c)(1) of the Code.
(b) No stock of TRWC will be issued in the Merger.
(c) Neither TRWC nor any Affiliate of TRWC has a current engagement
letter, agreement or other arrangement with Member Agent for legal
representation of TRWC or any Affiliate of TRWC (as the case may be) nor will
TRWC or any Affiliate of TRWC enter into any such engagement at any time during
the Restricted Period (as defined in the Investor Rights Agreement). For
purposes of clarification, legal representation as used in this context does not
include escrow services provided by Member Agent.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company and the TRB Members
that the statements contained in this Article 6 are correct and accurate as of
the date of this Agreement and will be correct and complete as of the Effective
Time. For purposes of clarification, the representations and warranties set
forth in this Article 6 shall not be construed to be representations and
warranties in any way related to the business, operations or assets of HCIC
except as specifically stated herein.
6.1 Organization of Parent. Parent is a corporation, duly organized,
validly existing and in good standing under the Laws of the State of Colorado,
and has full corporate power and authority to carry on its respective business
as it is now being conducted and to own and lease all of its properties and
Assets.
6.2 Capitalization of Parent. The authorized capital stock of Parent
consists of 100,000,000 shares of common stock, with $0.001 par value. Parent's
Articles of Incorporation also authorize the issuance of up to 10,000,000 shares
of voting preferred stock with a par value of $0.001, none of which have been
22
designated or issued. All issued and outstanding shares of Parent's capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as described in Parent's Current Filings, there are no
authorized or outstanding subscriptions, options, convertible securities,
warrants, calls or other rights of any kind issued or granted by, or binding
upon, Parent or TRWC to purchase or otherwise acquire any security of or equity
interest in Parent or TRWC. Parent is the sole owner of TRWC. The shares of
Parent common stock reserved as provided in Section 9.7 are free of any rights
and have not been reserved for any other purpose, and such shares are available
for issuance as provided pursuant to this Agreement and the Plan of Merger.
Holders of Parent common stock do not have preemptive rights.
6.3 Authorization. Parent has all requisite corporate power and authority,
and has taken all corporate action necessary, to execute, deliver and perform
its obligations under this Agreement and the Transaction Documents to which it
is a party, and to consummate the transactions contemplated hereby and thereby.
This Agreement is the valid and binding agreement of Parent enforceable against
Parent in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. This Agreement, the Statement of Merger and the Merger have been
duly and validly authorized and approved by all requisite action on the part of
Parent.
6.4 No Conflict or Violation. None of the execution and delivery of this
Agreement by Parent, nor the consummation by Parent of the transactions
contemplated hereby, nor the compliance by Parent with any of the provisions
hereof, will (a) violate or conflict with any provision of the certificate or
articles of incorporation, bylaws, other organizational documents of Parent; (b)
result in a breach of, or a default under, any provision of any material
Contract to which Parent is a party or bound or to which any property, Asset or
capital stock of Parent is subject, or an event that, with notice, lapse of
time, or both, would result in any such breach or default; (c) result in the
creation of any Lien on any Asset of Parent; or (d) result in a violation by
Parent of any material Law or Order (or an event that with notice, lapse of
time, or both, would result in any such violation).
6.5 Consents and Approvals. Except for (a) filings or consents under
applicable Securities Laws, and (b) the filing of the Statement of Merger with
the Secretary of State, and except as set forth on Schedule 6.4, no consent,
approval or authorization or declaration, filing or registration with any
Governmental Authority, or any other Person, is required to be made or obtained
by Parent in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, that has
not been made or obtained.
6.6 Statements True and Correct. Parent has delivered or made available to
the Company the Current Filings. The Current Filings, to the Knowledge of Parent
as of the date of the filing thereof, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
23
6.7 Litigation. (a) Except as described in Parent's Current Filings, there
is no Litigation pending, and, except as set forth on Schedule 6.7, to the
Knowledge of Parent, there is no Litigation threatened against or otherwise
relating to or affecting Parent, any member, officer, manager, or partner of
Parent in his, her or its capacity as such, or its Assets or that would, if
adversely determined, would materially adversely affect Parent's business
operations or Assets following the Closing; (b) Parent is not subject to any
Order, and there are no unsatisfied judgments against Parent; (c) there have not
been any product or service liability claims that have been asserted against
Parent, whether or not covered by insurance and whether or not resolved as of
the date of this Agreement; and (d) there is not any basis for any product or
service liability claims or any other type of claim against Parent.
6.8 No Brokers. Neither Parent nor any of its Affiliates has entered into
any agreement or incurred any obligation, directly or indirectly, for the
payment of any broker's or finder's fee or commission, or any other similar
payment to any Person in connection with this Agreement or the transactions
contemplated hereby, and neither Parent nor any of its Affiliates is otherwise
obligated to pay any such fee, commission or other payment in connection with
this Agreement or the transactions contemplated hereby.
6.9 Representations Concerning the Stock Consideration. Notwithstanding the
delivery of the Stock Consideration (other than that portion constituting the
Holdback) pursuant to Section 7.3(a) (the "Member Agent Shares") to the Member
Agent, at and as of Closing:
(a) the Stock Consideration will have been duly authorized, validly
issued, fully paid and nonassessable and, with respect to the Member Agent
Shares, issued to the TRB Members;
(b) the Stock Consideration shall appear as issued and outstanding
on the balance sheet of Parent and be deemed legally outstanding under Colorado
law;
(c) all dividends paid on (i) the Holdback will be added to the
Escrow and distributed in accordance with the Escrow Agreement and (ii) the
Member Agent Shares will be distributed by Parent to the TRB Members in
accordance with Parent's Articles of Incorporation and Bylaws or other governing
documents generally applicable to the Parent Stock;
(d) all voting rights of the Member Agent Shares shall be exercis-
able by or on behalf of the TRB Members in accordance with the Investor Rights
Agreement and Parent's Articles of Incorporation and Bylaws or other governing
documents generally applicable to the Parent Stock; and
(e) the Member Agent Shares shall not be subject to restrictions
requiring their return to Parent.
6.10 Other Representations and Warranties.
(a) Prior to the Closing, Parent is in control of TRWC within the
meaning of Section 368(c)(1) of the Code.
24
(b) Parent has no plan or intention to reacquire any of the Stock
Consideration.
(c) Parent has no plan or intention: (i) to liquidate TRWC; (ii) to
merge TRWC with and into another corporation; (iii) to sell or otherwise dispose
of the stock of TRWC; (iv) or to cause TRWC to sell or otherwise dispose of any
of the Assets of the Company acquired in the Merger, except for dispositions
made in the ordinary course of business or transfers described in Section
368(a)(2)(C) of the Code.
(d) No stock of TRWC will be issued in the Merger. (e) Neither
Parent nor any Affiliate of Parent has a current engagement letter, agreement or
other arrangement with Member Agent for legal representation of Parent or any
Affiliate of Parent (as the case may be) nor will Parent or any Affiliate of
Parent enter into any such engagement at any time during the Restricted Period
(as defined in the Investor Rights Agreement). For purposes of clarification,
legal representation as used in this context does not include escrow services
provided by Member Agent.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the fulfillment prior to or at
Closing of the following conditions, unless waived by all Parties in writing:
(a) Member Approval. This Agreement and the Merger shall have been
duly approved by the requisite vote of the Members of the Company at a special
meeting in accordance with the organizational documents of the Company.
(b) Legal Proceedings. No court or Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by this
Agreement, or proposed or sought by legal process to enact, issue, promulgate or
enforce any such action which would, if determined adversely to any Party, have
such effect.
7.2 Conditions to Obligations of TRWC and Parent. The obligations of TRWC
and Parent to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the fulfillment prior to or at
Closing of the following conditions (any one or more of which may be waived in
whole or in part in writing by TRWC and Parent, as applicable):
(a) Representations and Warranties. All representations and
warranties of the Company and the TRB Members given herein or in any Transaction
Document shall be true and correct in all material respects (except for such
representations and warranties that are qualified by "material," "materiality,"
or similar words, which shall be true and correct) as of the Closing Date.
25
(b) Performance and Compliance. The Company shall have performed
in all material respects all of the covenants and complied in all material
respects with all of the provisions required by this Agreement to be performed
by it or complied with by it on or before the Closing.
(c) Incumbency. The Company shall have delivered to TRWC resolu-
tions or other evidence of the incumbency of all managers or officers of the
Company who have executed this Agreement or any of the other agreements,
documents or instruments required to be delivered hereunder, including specimens
of the signatures of each of such manager or officer and shall be executed by an
authorized agent of the Company other than a manager or officer whose incumbency
or authority is certified.
(d) Transaction Document Deliveries. The Company, or the TRB Mem-
bers, as applicable, shall have delivered to TRWC or Parent, as applicable, duly
executed originals of the following:
(i) Stock Powers, in the form attached as Exhibit 3.2, to the
certificates representing that portion of the Individual Consideration
each TRB Member is entitled to receive pursuant to this Agreement that
is retained by the Company as the Holdback;
(ii) this Agreement;
(iii) the Investor Rights Agreement attached hereto as Exhibit
3.4; and
(iv) the Release and Waiver attached hereto as Exhibit 3.5.
(e) Statement of Merger. The Company shall have agreed to the State
-ment of Merger, in form and content as required by the Act, to be filed by
TRWC.
(f) Certificates of Existence. The Company shall have delivered to
TRWC a certificate of the Secretary of State dated not more than ten days before
the Closing Date, stating that the Company is a limited liability company in
existence and good standing under the laws of such state.
(g) Resolutions. The Company shall have delivered to TRWC copies
of resolutions adopted by the manager of the Company, and of resolutions adopted
by the TRB Members, satisfactory to TRWC and Parent, (i) approving this
Agreement and the consummation of the transactions contemplated hereby; (ii)
waiving any conflicts of interest associated with such transactions; and waiving
the applicability of Article 7 of the Company's operating agreement to this
Agreement and the Transaction Documents or any of the transactions to be
consummated pursuant to this Agreement or any of the Transaction Documents.
(h) Salary and Compensation Adjustments. The Company shall not have
made any salary or other compensation arrangements with or adjustments for
Members or Managers.
26
(i) Expenses. All out-of-pocket expenses of the Company for fees
of independent professional advisors in connection with this Agreement and the
transactions contemplated hereby, including but not limited to fees payable to
any outside legal advisers or outside accountants incurred prior to the
Effective Time, shall have been paid or adequate arrangements for payment of
such fees by the TRB Members shall have been adopted.
(j) Delivery of Possession. The Company shall deliver, or make pro-
vision to deliver, to TRWC possession and control of the Company's Assets,
including all ownership records, minute books, and all other business and
financial records of the Company and keys and access codes to property, if any.
(k) Other Consents. The Company shall deliver all other consents
listed on Schedule 4.4.
(l) Termination of Agreements. To the extent reasonably required
by TRWC prior to the Effective Time, the Company shall have taken action, and
shall have caused the TRB Members to take action, to terminate the Contracts set
forth on Schedule 7.2.
(m) Termination and Release of Guaranties. TRWC shall have
received satisfactory evidence of the termination of all Company liabilities (if
any), including without limitation, termination and release of all Company
guarantees, relating to member debt to third parties.
(n) Payment of Company Debt. TRWC shall have received satisfactory
evidence of the payment in full of all Company Debt.
(o) Payment of Debt to Members. TRWC shall have received satis-
factory evidence of the payment in full of all Company liabilities for
distributions to Members, including any amounts owed to former members related
to the repurchase of Company Units.
(p) No Company Material Adverse Effect. There shall not have occurr
-ed any event or series of events which has had or would reasonably be expected
to have a Company Material Adverse Effect.
(q) Other Documents. The Company shall have delivered to TRWC or
Parent, as applicable, such other documents as are reasonably necessary or as
TRWC, Parent or their respective counsel may reasonably request in order to
consummate the transactions contemplated hereby.
7.3 Conditions to Obligations of the Company and the TRB Members. The
obligations of the Company and the TRB Members to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are subject
to the fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by the Company or the TRB
Members, or both, as applicable):
(a) Payment. Parent, upon its receipt of the Exchange Deliveries
to be delivered by the TRB Members in accordance with Article 3, shall promptly
cause its transfer agent to deliver the Stock Consideration (other than that
portion constituting the Holdback) to the Member Agent by physically delivering
the certificates representing the Individual Consideration portion of the Stock
Consideration in accordance with Section 3.2.
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(b) Representations and Warranties. All representations and
warranties of Parent and TRWC given herein or in any Transaction Document shall
be true and correct in all material respects (except for such representations
and warranties that are qualified by "material," "materiality," or similar
words, which shall be true and correct) as of the Closing Date.
(c) Performance and Compliance. Each of TRWC and Parent, respec-
tively, shall have performed in all material respects all of the covenants and
complied in all material respects with all of the provisions required by this
Agreement to be performed by it or complied with by it on or before the Closing.
(d) Incumbency. Each of TRWC and Parent shall deliver to the
Company resolutions or other evidence of the incumbency of all officers of each
of TRWC and Parent, respectively, who have executed this Agreement or any of the
other agreements, documents or instruments required to be delivered hereunder,
including specimens of the signatures of each of such officers.
(e) Statement of Merger. TRWC shall have delivered to the Company
the Statement of Merger, in form and content as required by the Act, duly
executed by TRWC.
(f) Copies of Resolutions. TRWC and Parent shall have delivered to
the Company copies of resolutions adopted by the board of directors of Parent on
its own behalf and as the sole shareholder of TRWC, satisfactory to the Company,
approving this Agreement and the consummation of the transactions contemplated
hereby and waiving any conflicts of interest associated with such transactions.
(g) Transaction Document Deliveries. TRWC or Parent, as applicable,
shall have delivered to the Company or the TRB Members, as applicable, executed
originals of the following:
(i) this Agreement;
(ii) the Investor Rights Agreement attached hereto as Exhibit 3.4; and
(iii) the Release and Waiver attached hereto as Exhibit 3.5.
(h) Certificates of Existence. Parent and TRWC shall each have
delivered to the Company a certificate of the Secretary of State dated not more
than ten days before the Closing Date, stating that Parent or TRWC, as the case
may be, is a corporation in existence and good standing under the laws of such
state.
(i) Other Documents. TRWC and Parent shall have delivered to the
Company such other documents as are reasonably necessary or as the Company or
its counsel may reasonably request in order to consummate the transactions
contemplated hereby.
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ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by TRWC. Subject to the limitations set forth in this
Article 8, TRWC hereby agrees to indemnify and hold harmless, to the fullest
extent permitted by law, the TRB Members, their respective heirs, successors and
assigns (each, a "TRB Indemnitee" and collectively, the "TRB Indemnitees") from,
against and in respect of any and all Adverse Consequences arising from, or
otherwise related to, directly or indirectly, any material breach of any
representation or warranty made by TRWC or any material breach or default in
performance by TRWC of any covenant, obligation or other agreement in this
Agreement or the Transaction Documents delivered by TRWC.
8.2 Indemnification by Parent. Subject to the limitations set forth in this
Article 8, Parent hereby agrees to indemnify and hold harmless, to the fullest
extent permitted by law, the TRB Indemnitees from, against and in respect of any
and all Adverse Consequences arising from, or otherwise related to, directly or
indirectly, any material breach of any representation or warranty made by Parent
or any material breach or default in performance by Parent of any covenant,
obligation or other agreement in this Agreement or the Transaction Documents
delivered by Parent and to which it is a party.
8.3 Indemnification of TRWC and Parent. Subject to the limitations set
forth in this Article 8, the TRB Members hereby agree to indemnify and hold
harmless, to the fullest extent permitted by law, TRWC and Parent or their
Affiliates, and each of their respective officers, directors, partners,
employees and trustees (collectively, the "TRWC Indemnitees") from, against and
in respect of any and all Adverse Consequences arising from, or otherwise
related to, directly or indirectly, any of the following:
(a) Any material breach of any representation or warranty made by
the Company or by TRB Members in this Agreement or the Transaction Documents
delivered by the Company or TRB Members.
(b) Any material breach or default in performance by the Company
of any covenant, obligation or other agreement in this Agreement or the
Transaction Documents delivered by Company.
(c) Any material breach or default in performance by the TRB Mem-
bers, or any material breach by TRB Members of any representation, warranty,
covenant, obligation or other agreement in this Agreement or the Transaction
Documents delivered by the TRB Members.
(d) Allocation of any setoff against the Holdback in accordance
with instruction from TRB Indemnifying Parties as provided in Section 8.5 below.
8.4 Survival of Indemnification. The representations and warranties
contained in this Agreement and the indemnification obligations set forth in
this Article 8 with respect to such representations and warranties shall survive
the Closing Date, as follows:
29
(a) Fraudulent Breach of Representations. In the case of a claim
based upon the inaccuracy or material breach of a representation or warranty
made in this Agreement or the Transaction Documents which was made fraudulently,
indefinitely;
(b) Specified Representations. In the case of a claim based upon
the inaccuracy or breach of the representations and warranties set forth in
Section 4.1(Organization, Standing and Power); Section 4.2 (Authorization and
Approval); and Section 4.5 (Equity Interests) indefinitely. In the case of a
claim based upon the inaccuracy or breach of the representations and warranties
set forth in Section 4.14 (Tax Matters) and Section 4.19 (Environmental
Matters), until the expiration of all statutes of limitation applicable to any
claims relating to or arising from the matters described in such representations
and warranties; and
(c) All Other Claims. In the case of all other claims, for a
period of thirty-six months following the Closing Date commencing on the date of
this Agreement and ending on September 14, 2013. No claim for recovery of
Adverse Consequences may be asserted after the expiration of the applicable time
period described in the foregoing sentence; provided, however, that any claim
first asserted by the giving of a Notice of Claim within such survival period
shall neither be abated nor barred.
8.5 Payment and Setoff; Order of Recovery. Amounts needed to cover any
indemnification claims resolved in favor of any TRWC Indemnitee against the TRB
Members will be paid to TRWC first out of the Holdback, and TRWC may set off all
claims that are resolved by agreement of the Parties or by binding Order of
court or arbitrator against the Holdback; provided, however, that the foregoing
shall in no way be construed to limit the TRWC Indemnitee's right to
indemnification from the TRB Members to the amount of the Holdback. Subject to
the limitations set forth in this Article 8, the TRB Members will be jointly and
severally liable for all claims under Section 8.3; provided that in the event
that the TRB Indemnifying Parties notify TRWC in writing of a determination by
agreement of the TRB Indemnifying Parties or by binding Order of court or
arbitrator that any claim shall be setoff pro rata against the Individual
Consideration of only the TRB Members determined to be at fault with respect to
such claim, TRWC shall use commercially reasonable efforts to allocate any such
setoff as requested in writing by the TRB Indemnifying Parties but in no event
shall TRWC be liable to any Person for such allocation and setoff and the
instructing TRB Indemnifying Parties shall indemnify and hold harmless TRWC with
respect to any claim or action arising from or related to any such allocation
pursuant to Section 8.3. For purposes of this Agreement, the value of the
Holdback shall be an amount equal to ten percent (10%) of the total Stock
Consideration determined by multiplying one dollar ($1.00) by the number of
shares of Parent Stock each TRB Member is entitled to receive upon consummation
of the Merger. The Holdback will be reduced dollar for dollar by the amount
needed to cover indemnification claims resolved in favor of any TRWC Indemnitee
against the TRB Members, and the Individual Consideration payable to each TRB
Member shall be deemed adjusted by the amount of such reduction, apportioned
among the TRB Members in accordance with this Section 8.5. The duly executed
stock powers delivered by TRB Members pursuant to Section 3.2(a) and (b) shall
be deemed acceptable for transfer on the books of Parent any shares transferred
from the Holdback in order to cover any indemnification claims pursuant to this
Article 8.
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8.6 Indemnification Procedures and Third Party Claims. The procedures to be
followed with respect to the defense and settlement of any claim made by a third
party which, if true, would give rise to a right on the part of an Indemnified
Party to be indemnified against the resulting Adverse Consequences in whole or
in part, under this Article 8 (a "Claim") shall be as follows:
(a) Promptly after receipt by a Person entitled to indemnification
hereunder (the "Indemnified Party") of written notice of the assertion of a
claim or the commencement of any litigation with respect to any matter within
the scope of Sections 8.1, 8.2 or 8.3, but in any event before the expiration of
the applicable survival period provided in Section 8.4, the Indemnified Party
shall give written notice thereof, specifying to the extent practicable the
nature of such claim or demand and the amount or the estimated amount thereof to
the extent then feasible (which estimate shall not be conclusive of the final
amount of such claim or demand) (the "Claim Notice"), to the parties from whom
indemnification is sought pursuant hereto (the "Indemnifying Party"). The
Indemnifying Party shall have 30 calendar days after its receipt of the Claim
Notice (the "Notice Period") to notify the Indemnified Party (i) whether or not
the Indemnifying Party disputes its liability to the Indemnified Party hereunder
with respect to such claim or demand, and (ii) subject to subsections (b) and
(c) of this Section 8.6, whether or not it desires, at its sole cost and
expense, to defend the Indemnified Party against such claim or demand; provided,
however, that the Indemnified Party is authorized prior to and during the Notice
Period to file any motion, answer or other pleading that it shall deem necessary
or appropriate to protect its interests; provided further, that the Indemnified
Party shall use its reasonable efforts to provide the Indemnifying Party with
notice of any such filing and an opportunity to comment thereon. The omission by
an Indemnified Party to promptly deliver to any Indemnifying Party a Claim
Notice or any other notice required under this Section 8.6(a) will not relieve
such Indemnifying Party from any liability that it may have to such Indemnified
Party in connection therewith, except to the extent the Indemnifying Party is
prejudiced by such delay.
(b) Unless, in the reasonable judgment of the Indemnified Party,
(i) there is a conflict between the positions of the Indemnifying Party and the
Indemnified Party in conducting the defense of such Claim or (ii) legitimate
legal or business considerations would require the Indemnified Party to defend
or respond to such Claim in a manner different from that recommended by the
Indemnifying Party, the Indemnifying Party shall, by giving written notice
thereof to the Indemnified Party confirming the Indemnifying Party's obligation
under this Article 8 to indemnify the Indemnified Party in respect of such
Claim, be entitled to assume and control such defense with counsel chosen by it.
The Indemnified Party shall be entitled to participate therein after such
assumption, but the costs of such participation (other than the costs of
providing witnesses or documents at the request of the Indemnifying Party or in
response to legal process) following such assumption shall be at the expense of
the Indemnified Party. Upon assuming such defense, the Indemnifying Party shall
have full access to all documents and other information it reasonably deems
necessary to conduct its defense, which documents or information are in the
possession of the Indemnified Party, as well as access to any employees as well
as the full right to enter into any compromise or settlement that is dispositive
of the matter involved; provided that, except for the settlement of a Claim that
involves no obligation of the Indemnified Party other than the payment of money
for which indemnification is provided hereunder, the Indemnifying Party shall
not settle or compromise any Claim without the prior written consent of the
Indemnified Party, which consent will not be unreasonably withheld, delayed or
31
conditioned; and provided, further, that the Indemnifying Party may not consent
to entry of any judgment or enter into any settlement in respect of a Claim that
does not include an unconditional release of the Indemnified Party from all
liability in respect of such Claim.
(c) With respect to a Claim as to which the Indemnifying Party (i)
does not have the right to assume the defense under Section 8.6(b) or (ii) shall
not have exercised its right to assume the defense, the Indemnified Party shall
assume and control the defense of and contest such Claim with counsel chosen by
it, and the Indemnifying Party shall be obligated to pay all reasonable
attorneys' fees and expenses of the Indemnified Party incurred in connection
with such defense. The Indemnifying Party shall be entitled to participate in
the defense of such Claim at its own expense. Notwithstanding the foregoing, the
Indemnified Party shall not be required to defend any Claim under this Section
8.6(c) unless (i) the Indemnifying Party confirms its obligation under Section
8.6(b) to indemnify the Indemnified Party in respect of such Claim by written
notice to the Indemnified Party, and (ii) if requested by the Indemnified Party,
the Indemnifying Party provides reasonable assurance to the Indemnified Party of
the Indemnifying Party's financial ability to indemnify the Indemnified Party
against the costs of defense and any liability that may result from such Claim,
including providing a bond or other security therefor if reasonably requested by
the Indemnified Party. If the Indemnified Party is not required to defend any
Claim under the immediately preceding sentence, it shall owe no duties to the
Indemnifying Party with respect to such Claim, and may defend, fail to defend or
settle such Claim without affecting its right to indemnity hereunder.
(d) The Indemnified Party may compromise or settle any Claim
against it at any time; provided, however, that the Indemnified Party shall not
settle or compromise any Claim without the prior written consent of the
Indemnifying Party, which consent will not be unreasonably withheld, delayed or
conditioned; and provided, further, that if in the reasonable judgment of the
Indemnified Party it would be materially harmed or otherwise prejudiced by not
entering into a proposed settlement or compromise and the Indemnifying Party
withholds consent to such settlement or compromise, the Indemnified Party may
enter into such settlement or compromise, but such settlement or compromise
shall not be conclusive as to the existence or amount of the liability of the
Indemnifying Party to the Indemnified Party or any third party.
(e) Both the Indemnifying Party and the Indemnified Party shall
cooperate fully with one another in connection with the defense, compromise or
settlement of any Claim, including without limitation making available to the
other all pertinent information and witnesses within its control at reasonable
intervals during normal business hours.
8.7 Exclusive Remedy. Except for equitable remedies (including injunctive
relief) and remedies, if any, under the Transaction Documents other than this
Agreement, and in the absence of fraud, the parties hereto acknowledge and agree
that the sole and exclusive remedy of the Parties to this Agreement from and
after the Closing Date with respect to any Losses or Adverse Consequences
whatsoever and any and all claims for breach or liability under this Agreement
shall be solely in accordance with, and limited by, the indemnification
provision set forth in this Article 8. For purposes of clarification, the
parties acknowledge and agree that such exclusion of remedies and limitations do
not apply (a) to any claim for intentional misrepresentation or other fraud by
32
any Party in the context of the transactions contemplated hereby, or (b) to any
claim any Party may have under the Transaction Documents other than this
Agreement.
8.8 Limitations. Except to the extent of a breach of any representation,
warranty, covenant, agreement or any other obligation contained herein, the
indemnification provisions of Article 8 shall not apply to any claim or
liability released under the Release and Waiver.
ARTICLE 9
ADDITIONAL COVENANTS
9.1 Post-Merger Existence of TRWC. Subject to the terms and conditions of
this Agreement and consummation of the transactions contemplated hereby, Parent
shall not resolve to voluntarily liquidate or otherwise wind up the business and
affairs of and dissolve TRWC for a period of twelve months commencing on the
Closing Date and terminating on September 14, 2011.
9.2 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the Parties, at and after the Effective Time, upon the
reasonable request from time to time of any other Party and without further
consideration (other than the reimbursement of reasonable out-of-pocket
expenses), shall do each and every act and thing as may be necessary or
reasonably desirable to consummate the transactions contemplated hereby and to
effect an orderly consummation of the Merger in accordance with the provisions
of this Agreement, including: (a) executing, acknowledging and delivering such
assurances, assignments, powers of attorney and other documents and instruments
as may be reasonably requested; (b) furnishing information and copies of
documents, books and records; (c) filing reports, returns, applications, filings
and other documents and instruments with Governmental Authorities; (d) assisting
in good faith in any Litigation, threatened Litigation or claim and cooperating
therein with other parties and their advisors and representatives, including
providing relevant documents and evidence and maintaining confidentiality in
connection with such Litigation or threatened Litigation or claims against the
party from whom such cooperation is requested; (e) assisting in the preparation
of financial statements for the Surviving Corporation; and (f) cooperating with
the other Parties (at such other Parties' expense except as provided in this
Agreement) in exercising any right or pursuing any claim, whether by Litigation
or otherwise, other than rights and claims running against the party from which
such cooperation is requested.
9.3 Expenses. Each party shall be responsible for paying its own costs and
expenses in connection with the transactions contemplated by this Agreement. All
expenses of the Company and the TRB Members in connection with the transactions
contemplated by this Agreement must be paid on or before Closing or the TRB
Members shall have provided for the personal and individual payment of such
expenses.
9.4 Confidentiality.
(a) The Parties covenant and agree that no press release or
other public statement shall be made regarding this Agreement and the
transactions contemplated by this Agreement without the prior written agreement
of the Company, TRWC and Parent.
33
(b) As of and following the date of this Agreement, no party
shall disclose to third parties, nor use for its own account, any trade secrets,
business secrets, other non-public information relating to Parent, TRWC, the
Company or the TRB Members, or any non-public information that it has obtained
from any other party in connection with this Agreement with respect to such
other party (the "Confidential Information"); provided however, that (a) a party
may use and disclose any such information once it has been publicly disclosed
(other than by such party in breach of its obligations under this Section) or
which rightfully has come into the possession of such party (other than from the
other party), and (b) to the extent that it may become compelled by legal
requirements to disclose any of such information, such party may disclose such
information if it has afforded the other party a reasonable opportunity to
obtain an appropriate protective order or other satisfactory assurance of
confidential treatment for the information compelled to be disclosed; and
provided further that as of and following the Effective Time, TRWC or Parent
shall be free to use and copy all Company Confidential Information in its sole
discretion.
9.5 Filings; Other Actions; Notifications.
(a) The Company, TRWC, Parent and the TRB Members shall cooperate
with each other and use (and shall cause their respective Affiliates to use) all
commercially reasonable efforts (i) to do or cause to be done all things
necessary, proper or advisable on its part under this Agreement and applicable
Laws to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including, without
limitation, preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings; and (ii) to obtain as
promptly as practicable all consents and permits necessary or advisable to be
obtained from any third party or any Governmental Authority in connection with,
as a result of, or in order to consummate the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that nothing in
this Section 9.5 shall require, or be construed to require, TRWC or Parent to
take any action which could, in the reasonable judgment of the board of
directors of TRWC or Parent, respectively materially and adversely impact the
economic or business benefits to TRWC or Parent of the transactions contemplated
by this Agreement.
(b) The Company, TRWC, Parent and the TRB Members each shall keep
the other apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by the Company, TRWC or
Parent, as the case may be, from any third party or Governmental Authority with
respect to the Merger or the other transactions contemplated by this Agreement.
9.6 Tax Matters.
(a) Final Tax Returns. The Surviving Corporation shall be respons-
ible for the preparation of drafts of all Tax Returns, consistent with past
practices, that are required to be filed with respect to the income, assets or
operations of the Company or the Surviving Corporation for Tax periods ending on
or prior to the Closing Date ("Final Tax Returns"). The Final Tax Returns (i)
shall be signed on behalf of the Company by one or more of the TRB Members as
34
appropriate in their official capacities with the Company as of the day
immediately preceding the Closing Date, and (ii) shall be filed by the Surviving
Corporation.
(b) Payments. The Tax Member, on behalf of the TRB Members, shall
pay or cause to be paid all Taxes that are required to be paid, with respect to
the income, assets or operations of the Company for Tax periods ending on or
before the Closing Date. For Tax periods that begin before the Closing Date but
end after the Closing Date with respect to the income, assets or operations of
the Company, the Tax Member, on behalf of the TRB Members, shall pay or cause to
be paid all Taxes attributable to the portion of such Tax period prior to the
Closing Date. For Tax periods that begin before the Closing Date but end after
the Closing Date with respect to the income, assets or operations of the
Company, the Surviving Corporation shall make all determinations and elections
and pay or cause to be paid all Taxes attributable to the portion of the Tax
period on or after the Closing Date.
(c) Tax Periods Ending After the Closing Date. The Surviving Corp-
oration, shall file or cause to be filed (including, without limitation, through
its Parent on a consolidated tax return) all Tax Returns that are required to be
filed, and shall pay or cause to be paid all Taxes that are required to be paid,
by or with respect to the income, assets or operations of the Surviving
Corporation for Tax periods ending after the Closing Date. Payments of Taxes
attributable to such periods shall be made in accordance with Section 9.6(b)
above.
(d) Contests.
(i) The Surviving Corporation shall have the exclusive
authority to control any audit or examination by any authority, initiate any
claim for refund, amend any Tax Return and contest, resolve and defend against
any assessment for Taxes, notice of Tax deficiency or other adjustment of Taxes
of or relating to any liability of the Company for Taxes for any Tax period (or
portion thereof) ending on or before the Closing Date. Subject to the foregoing,
the Surviving Corporation shall allow the Tax Member, on behalf TRB Members, to
participate at its expense in any such contest which could have an effect on any
Tax liabilities for which the TRB Members are liable under this Agreement after
the Closing Date or could result in any adjustment to a Tax Return of the
Company for any other period. The Surviving Corporation shall not settle any
such audit or examination in a manner which would adversely affect the TRB
Members without the prior written consent of Tax Member, on behalf of the TRB
Members, which consent shall not unreasonably be withheld.
(ii) The Surviving Corporation shall have the
exclusive authority to control any audit or examination by any taxing authority,
initiate any claim for refund, amend any Tax Return and contest, resolve and
defend against any assessment for Taxes, notice of Tax deficiency or other
adjustment of Taxes of or relating to any liability of the Surviving Corporation
or any successor thereto for Taxes for any Tax period ending on or after the
Closing Date.
(e) Tax Certificates and Cooperation. The Surviving Corporation and
the Tax Member, on behalf of the TRB Members, shall agree, upon reasonable
request, to use commercially reasonable efforts to obtain any certificate or
other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
35
(including, but not limited to, with respect to the transactions contemplated
hereby). The Parties agree to cooperate with each other as necessary to allow
them to carry out their responsibilities under Article 9.
9.7 Plan of Merger; Reservation of Shares of Parent Stock At the Effective
Time, the Merger shall be effected in accordance with this Agreement.
(a) In connection therewith, Parent acknowledges that it (i) will
cause TRWC to take all actions required of it to consummate the Merger
hereunder, and (ii) will issue or release or cause to be issued or released as
provided in this Agreement the Stock Consideration. Parent has reserved for
issuance such number of shares of Parent Stock as shall be necessary to satisfy
its obligations hereunder with respect to the issuance and delivery of the Stock
Consideration and shall not take any action that would cause the aggregate
number of authorized shares of Parent Stock available for issuance hereunder not
to be sufficient to effect the Merger. If at any time the aggregate number of
shares of Parent Stock reserved for issuance hereunder is not sufficient to
effect the Merger, Parent shall take all appropriate action as may be required
to increase the number of shares of Parent Stock reserved for such purpose.
(b) If there is any change in the outstanding shares of Parent
Stock because of a merger, consolidation or reorganization involving the Parent
or a related entity, or if the board of directors of the Parent declares a stock
dividend, stock split distributable in shares of Parent Stock or reverse stock
split, or if there is a similar change in the capital stock structure of the
Parent affecting the Parent Stock generally, the number of shares of Parent
Stock constituting the Stock Consideration shall be correspondingly adjusted,
and any relevant provisions of this Agreement shall be correspondingly adjusted
to the extent appropriate to reflect such adjustment in the number of shares of
Parent Stock constituting the Stock Consideration, including, as applicable, the
Parent Stock Price and Article 8.
ARTICLE 10
TERMINATION
10.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the adoption hereof by the TRB Members, by written consent of
the Parties.
10.2 Termination by Either the Company or TRWC. This Agreement may be
terminated and the Merger may be abandoned (a) by action of the TRB Members or
the sole shareholder of TRWC if the Merger shall not have been consummated by
September 30, 2010 whether such date is before or after the date of adoption
hereof by the TRB Members (the "Termination Date"), or (b) by action of the TRB
Members or the sole shareholder of TRWC if any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Merger shall become final
and non-appealable (whether before or after the adoption hereof by the TRB
Members); provided, that the right to terminate this Agreement shall not be
available to any Party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure of the Merger to be consummated on or before the
Termination Date.
36
10.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, by action of
the TRB Members if there has been a material breach by TRWC or Parent of any
representation, warranty, covenant or agreement contained in this Agreement
that, together with all such breaches, would prevent any of the conditions set
forth in Article 7 from being satisfied (other than by waiver) prior to the
Termination Date and that is not curable or, if curable, is not cured within 10
days after written notice of such breach is given by the Company to TRWC.
10.4 Termination by TRWC. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after the adoption hereof by the sole shareholder, by action of the board of
directors of TRWC:
(a) If there has been a material breach by the TRB Members or the
Company or any of them of any representation, warranty, covenant, obligation or
agreement contained in this Agreement that, together with all such breaches,
would prevent any of the conditions set forth in Article 7 from being satisfied
(other than by waiver) prior to the Termination Date and that is not curable or,
if curable, is not cured within 10 days after written notice of such breach is
given by TRWC to the Company; or
(b) If the approval of this Agreement by the holders of at least a
super-majority-in-interest of the Company Units shall not have been obtained by
the TRB Members in accordance with the Company's operating agreement; or
(c) If a Company Material Adverse Effect has occurred.
10.5 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article 10,
this Agreement (other than as set forth in Section 9.3), including the release
and waiver and all other Transaction Documents, shall become void and of no
effect with no liability on the part of any party hereto (or of any of its
directors, officers, managers, members, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability resulting from any willful breach of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Amendment. This Agreement may not be amended or modified, without the
prior written consent of each of the Parties hereto.
11.2 Waiver. Failure to insist upon strict compliance with any of the terms
or conditions of this Agreement at any one time shall not be deemed a waiver of
such term or condition at any other time; nor shall any waiver or relinquishment
of any right or power granted herein at any time be deemed a waiver or
relinquishment of the same or any other right or power at any other time.
11.3 Governing Law; Consent to Jurisdiction.
37
(a) Notwithstanding the place where this Agreement may be executed
by any of the Parties, the Parties expressly agree that this Agreement shall in
all respects be governed by, and construed in accordance with, the laws of the
State of Colorado, without regard for its conflict of laws doctrine.
(b) The Parties irrevocably consent and submit to the exclusive
jurisdiction of the Courts of the State of Colorado and the United States
District Courts located in the City and County of Denver, Colorado, and waive
any objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement, any related agreement or in any
way connected with or related or incidental to the dealings of the Parties
hereto in respect of this Agreement or any of the transactions related hereto
and agree that any dispute with respect to any such matters shall be heard only
in the courts described above.
11.4 Notices. Any notice or other communication to be given hereunder shall
be in writing and shall be deemed sufficient when (i) mailed by United States
certified mail, return receipt requested, (ii) mailed by overnight express mail,
(iii) sent by facsimile or telecopy machine, followed by confirmation mailed by
first-class mail or overnight express mail, or (iv) delivered in person, at the
address set forth below, or such other address as a Party may provide to the
other in accordance with the procedure for notices set forth in this Section
11.4:
If to Parent:
Two Rivers Water Company
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to TRWC:
TRWC, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
38
If to the Company prior to the Effective Time:
Two Rivers Basin, LLC
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ________________
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
11.5 Invalid Provision. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties in a manner acceptable to the Parties.
11.6 Assignment. Neither this Agreement nor any rights or obligations, may
be assigned or delegated by any Party without the prior written consent of all
other Parties.
11.7 Binding Effect; Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
permitted successors and assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
11.8 Payments in U.S. Dollars. All amounts required to be determined under
this Agreement shall be denominated in United States Dollars.
11.9 Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.
11.10 Person and Gender. For purposes of this Agreement, references to the
masculine gender shall include the feminine and neuter genders and the singular
shall include the plural.
39
11.11 Entire Agreement. This Agreement, together with its Schedules and
Exhibits, constitutes the entire agreement of the Parties with respect to
matters set forth in this Agreement, and supersede any prior understanding or
agreement, oral or written, with respect to such matters including without
limitation that certain Letter of Intent dated June 14, 2010 between TRWC and
the Company. To the extent that the provisions of this Agreement may be
inconsistent, the provisions of this Agreement shall control. The Schedules and
Exhibits to this Agreement shall be deemed an integral part of this Agreement.
11.12 Interpretations. No ambiguity herein shall be construed or resolved
against any Party hereto, whether under any rule of construction or otherwise.
No Party shall be considered the draftsman. On the contrary, this Agreement has
been reviewed, negotiated and accepted by all Parties and their lawyers and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all Parties
hereto. All references in this Agreement to Articles, Sections, subsections,
Exhibits or Schedules shall be deemed to refer to Articles, Sections,
subsections, Exhibits or Schedules of this Agreement unless otherwise expressly
stated. The words "include," "includes" and "including" as used herein mean
include, includes and including "without limitation."
11.13 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by facsimile, each of which shall be an original, and
all such counterparts shall constitute one and the same Agreement, binding on
all the Parties notwithstanding that all the Parties are not signatories to the
same counterpart.
11.14 No Tax Advice. No Party hereto makes any representation with respect
to the Tax liability that may arise as a result of the Merger or any other
transaction contemplated by this Agreement. Each party acknowledges that any tax
advice express or implicit in the provisions of this Agreement is not intended
or written to be used, and cannot be used, by any taxpayer for the purpose of
avoiding penalties that may be imposed on any taxpayer by the IRS. Each Party
should seek advice based on its particular circumstances from an independent tax
advisor.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Parties have executed this Agreement and Plan
of Merger as of the day and year first above written.
TRWC, INC.
By: ________________________________________
Name:_______________________________________
Title:______________________________________
TWO RIVERS BASIN LLC
By: ________________________________________
Name:_______________________________________
Title:______________________________________
TWO RIVERS WATER COMPANY
By: ________________________________________
Name:_______________________________________
Title:______________________________________
41
SCHEDULE A
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
TRB Members Number of Company Number of Shares of
Units Held Parent Stock to be Issued
▇▇▇▇ ▇. ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇ ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇ Roerhrich 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,049,980 524,990
SCHEDULE 4.3
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
None.
SCHEDULE 4.4
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. The approval of a Supermajority in Interest of the TRB Members is necessary
to consummate the Merger.
SCHEDULE 4.8(a)
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. The Company has liabilities to the law firm of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇, P.C.
2. The Company is a party to (i) Stock Purchase Agreements, (ii) Promissory
Notes, and Stock Pledge Agreements with TRWC, Parent and the persons listed
on Exhibit A, pursuant to which the Company has incurred liabilities and
Debts and granted liens on assets to secure its obligations including the
payment of such Debt.
SCHEDULE 4.8(b)
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. The Company is a party to (i) Stock Purchase Agreements, (ii) Promissory
Notes, and Stock Pledge Agreements with TRWC, Parent and the persons listed
on Exhibit A, pursuant to which the Company is liable for the liability of
HCIC and Parent.
SCHEDULE 4.9
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. Parent, TRWC and/or certain of its officers or directors have alleged
claims against the Company related to or arising out of the contributions
to and the operation of HCIC.
2. In connection with the dissolution of Accord Resources, LLC, the Company
Units previously owned by Accord Resources, LLC were distributed to the
members of Accord Resources, LLC and such members were admitted as members
of the Company and executed agreements to be bound by the Company Operating
Agreement.
3. In connection with the consummation of the Merger, the Company and the TRB
Members will enter into the Release and Waiver.
4. The Company is a party to (i) Stock Purchase Agreements, (ii) Promissory
Notes, and Stock Pledge Agreements with TRWC, Parent and the persons listed
on Exhibit A, pursuant to which the Company has incurred liabilities and
Debts and granted liens on assets to secure its obligations including the
payment of such Debt.
SCHEDULE 4.12(a)
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
Material Contracts
o The Company Amended and Restated Operating Agreement.
o Operating Agreement of HCIC Holdings, LLC dated August 17, 2009.
o Contribution Agreement, effective as of August 17, 2009, by and among Two
Rivers Water Company, TRB, the members of TRB, the members of Accord
Resources, LLC and HCIC Holdings, LLC.
o Assignment and Assumption of Share Purchase Agreements and Real Property
Options, effective as of August 17, 2009, by and between TRB and Accord
Resources, LLC.
o Assignment and Assumption of Share Purchase Agreements and Real Property
Options, effective as of August 17, 2009, by and between TRB and HCIC
Holdings, LLC.
o Various Engagement Agreements by and betweent he Company and the law firm
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, P.C. which, in consideration of the
assumption by the TRB Members to pay any unpaid legal fees and as of the
Effective Time shall be terminated and the company shall have no further
obligation for the payment of any unpaid legal fees.
o The Company is a party to (i) Stock Purchase Agreements, (ii) Promissory
notes, and Stock Pledge Agreements with TRWC, Parent and the persons listed
on Exhibit A.
Parent, TRWC and/or certain of its officers and directors have alleged
non-compliance with the Operating Agreement of HCIC Holdings, LLC against the
company related to or arising out of the contributions to and the operation of
HCIC.
SCHEDULE 4.14
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. The Company has filed no Tax Return.
2. Pursuant to the application of Section 382 of the Internal Revenue Code,
the Company's net operating losses may be limited after the Closing.
SCHEDULE 4.17
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
1. Parent, TRWC and/or certain of its officers and directors have threatened
litigation against the Company related to or arising out of the
contributions to and the operation of HCIC.
SCHEDULE 4.19
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
None.
SCHEDULE 4.24
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
The Company has no (i) bank or other account maintained at any financial
institution, or (ii) powers of attorney.
SCHEDULE 7.2
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
None.
SCHEDULE 5.4
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
The approval of Parent is required to consummate the Merger.
SCHEDULE 5.5
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
None.
SCHEDULE 6.4
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
The approval of Parent's board of directors is required to consummate the
Merger.
SCHEDULE 6.7
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
Parent Litigation
I. Threatened Litigation.
---------------------
Letter dated June 3, 2010 from Felt, ▇▇▇▇▇▇, & Culichia, LLC
representing ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Hudlers") asserting
claims against Parent as the majority interest holder of Huerfano
Cucharas Irrigation Company arising from the Hudlers' 4% ownership
thereof and special assessments related thereto. Parent intends to
vigorously defend these claims.
SCHEDULE 7.2
to
Agreement and Plan of Merger
dated as of September 14, 2010
by and among
Two Rivers Water Company, TRWC and
Two Rivers Basin, LLC
None.
EXHIBIT A
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
J & J ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ III
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
LPOP
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ (102 shares)
▇▇▇▇▇▇
SouthernColorado Land
St. ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
ASI Holdings, LLC
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Exhibit 1.1
Document processing fee
If document is filed on paper $150.00
If document is filed electronically Currently Not Available
Fees & forms/cover sheets are
subject to change.
To file electronically, access instructions
for this form/cover sheet and other
information or print copies of filed
documents, visit ▇▇▇.▇▇▇.▇▇▇▇▇.▇▇.▇▇
and select Business Center.
Paper documents must be typewritten or machine printed.
Statement of Merger
(Surviving Entity is a Domestic Entity)
filed pursuant to Section 7-0--203.7 of the Colorado Revised Statutes (C.R.S.)
1. For each merging entity, its ID number (if applicable), entity name or true
name, form of entity, jurisdiction under the law of which it is formed, and
principal address are
ID Number 20081507400
---------------------
(Colorado Secretary of State ID number)
Entity name or true name Two Rivers Basic LLC
Form of entity Limited Liability Company
Jurisdiction Colorado
Street address 13 Pedregal
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mailing address
(leave blank if same as street address)
--------------------------------------------------------------------------------
ID Number -----------------------
(Colorado Secretary of State ID number)
Entity name or true name
Form of entity
MERGE_COM Page 1 of 4 Rev. 5/29/2007
Jurisdiction
Street address --------------------------------
Mailing address --------------------------------
(leave blank if same as street address)
(If the following statement applies, adopt the statement by marking the box and
include any attachment.)
[_] There are more than three merging entities and the ID number (if
applicable), entity name or true name, form of entity, jurisdicition
under the law of which it is formed, and the principal address of
each additional merging entity is stated in an attachment.
2. For the surviving entity, its entity ID number (ifa pplicable),
entity name or true name, form of entity, jurisdiction under the law
of which it is formed, and principal address are
MERGE_COM Page 2 of 4 Rev. 5/29/2007
ID Number 20091398146
---------------------
(Colorado Secretary of State ID number)
Entity name or true name TRBC, Inc.
Form of entity Corporation
Jurisdiction Colorado
Street address ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mailing address ---------------------------------
(leave blank if same as street address)
3. Each merging entity has been merged into the surviving entity.
4. (If the following statement appliced, adopt the statement by
marking the box.)
[_] The plan of merger provides for amendments to a constituent filed
document of the surviving entity and an appropriate statement of change
or other document effecting the amendments will be delivered to the
Secretary of State for filing pursuant to Part 3 of Article 90 of Title
7, C.R.S.
5. (If the following statement applies, adopt the statement by marking
the box and state the appropriate document number(s).)
[_] One or more of the merging entities is a registrant of a trademark
described in a filed document in the records of the secretary of state
and the document number of each filed document is
Document number ___________________________
Document number ___________________________
Document number ___________________________
(If the following statement applies, adopt the statement by
marking the box and include an attachment.)
[_] This document contains additional information as provided by
law.
6. (If applicable, adopt the following statement by marking the box and
include an attachment.)
[_] This document contains additional information as provided by law.
7. (Caution: Leave blank if the document does not have a delayed
effective date. Stating a delayed effective date has significant
legal consequences. Read instructions before entering a date.)
(If the following statemetn applies, adopt the statement by entering
a date and, if applicable, time using the required format.)
The daylayed effective date and, if applicable, time of this document
are __________________. (mm/dd/yyyy hour:minuted am/pm)
MERGE_COM Page 3 of 4 Rev. 5/29/2007
Notice:
Causing this document to be delivered to the Secretary of State for
filing shall constitute the affirmation or acknowledgment of each
individual causing such delivery, under penalties of perjury, that
such document is such individual's act and deed, or that such
individual in good faith believes such document is the act and deed
of the person on whose behalf such individual is causing such document
to be delivered for filing, taken in conformity with the requirements
of part 3 of article 90 of title 7, C.R.S. and, if applicable, the
constituent documents and the organic statutes, and that such individual
in good faith believes the facts stated in such document are true and
such document complies with the requirements of that Part, the
constituent documents, and the organic statutes.
This perjury notice applies to each individual who causes this document
to be delivered to the Secretary of State, whether or not such individual
is identified in this document as one who has caused it to be delivered.
8. The true name and mailing address of the individual causing this
document to be delivered for use
▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(If applicable, adopt the following statement by marking the box and
include an attachment.)
[_] This document contains the true name and mailing address of one
or more additional individuals causing the document to be delivered
for filing.
Disclaimer:
This form/cover sheet, and any related instructions, are not intended
to provide legal, business or tax advice, and are furnished without
representation or warranty. While this form/cover sheet is believed to
satisfy minimum legal requirements as of its revision date, compliance
with applicable law, as the same may be amended from time to time,
remains the responsibility of the user of this form/cover sheet.
Questions should be addressed to the user's legal business or tax
advisor(s).
MERGE_COM Page 4 of 4 Rev. 5/29/2007
Documents must be filed electronically. Paper documents will not be accepted.
Document prossessing fee $50.00
Fees & forms/cover sheets
are subject to change.
To access other information or print
copies of filed documents,
visit ▇▇▇.▇▇▇.▇▇▇▇▇.▇▇.▇▇ and
Select Business Center.
Articles of Incorporation for a Profit Corporation
filed pursuant to Section ▇-▇▇▇-▇▇▇ and Section 7-102 of the Colorado
Revised Statutes (C.R.S.)
1. The domestic entity name for the corporation is
Two Rivers Water Company
----------------------------------------
(The name of a corporation must contain the term
or abbrevisation "corporation," "incorporated,"
"company," limited," "corp.," "Inc," "CO," or
"LTD." See ▇▇▇▇▇▇▇ ▇-▇▇- ▇▇▇, ▇.▇.▇. If the
corporation is professional or special purpose
corporation, other law may apply.)
(Caution: The use of certain terms or abbreviations are restricted by law.
Read instructions for more informaiton.)
Street address ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mailing address
(leave blank if same as sstreet address)
3. The registered agent name and registered agent address of the corporation's
initial registered agent are
Name ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
(if an individual)
OR
(if an entity)
(Caution: Do not provide both an indiviual and an entity name.)
Street address ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARTINC_PC Page 1 of 3 Rev. 02/28/2008
Mailing address
(leave blank if same as sstreet address)
(The following statement is adopted by marking the box.)
[X] The person appointed as registered agent above has consented to being so
appointed.
4. The true name and mailing address of the incorporator
are
Name ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
(if an individual)
OR
(if an entity)
(Caution: Do not provide both an indiviual and an entity name.)
Street address ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(If the following statement applies, adopt the statement by marking the box and
include an attachment.)
[_] The corporation has one ore more additional incorporators and the name and
mailing address of each additional incorporator are stated in an attachment.
5. The classes of shares and number of shaers of each class
that the corporation is authorized to issue are as follows.
(If the following statement applies, adopt the statement by marking the
box and enter the number of shares.
[_] The corporation is authorized to issue 100,000,000 common shares
that shall have unlimited voting rights and are entitled to receive the
net assets of the corporation upon dissolution.
(If the following statement applies, adopt the statement by marking the
box and include an attachment.)
[_] Additional information regarding shares as required
by section ▇-▇▇▇-▇▇▇. C.R.S., is included in an
attachment.
(Caution: At least one box must be marked. both boxes may be
marked, if applicable.)
6. (If the following statement applies, adopt the statement
by marking the box and include an attachment.)
[_] This document contains additional information as provided by la.
7. (Caution: Leave blank if the document does not have a delayed
effective date. Stating a delayed effective date has significant
legal consequences. Read instructions before entering a date.)
(If the following statement applies, adopt the statement by entering a date and,
if applicable, time using the required format.)
The delayed effective date and, if applicable, time of this document is/are
_______________________ (mm/dd/yyyy hour: minute am/pm).
ARTINC_PC Page 2 of 3 Rev. 02/28/2008
Notice:
Causing this document to be delivered to the Secretary of State for filing shall
constitute the affirmation or acknowledgment of each individual causing such
delivery, under penalties of perjury, that such document is such individual's
act and deed, or that such individual in good faith believes such document is
the act and deed of the person on whose behalf such individual is causing such
document to be delivered for filing, taken in conformity with the requirements
of part 3 of article 90 of title 7, C.R.S. and, if applicable, the constituent
documents and the organic statutes, and that such individual in good faith
believes the facts stated in such document are true and such document complies
with the requirements of that Part, the constituent documents, and the organic
statutes.
This perjury notice applies to each individual who causes this document to be
delivered to the Secretary of State, whether or not such individual is
identified in this document as one who has caused it to be delivered.
8. The true name and mailing address of the individual causing this
document to be delivered for use
▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(If applicable, adopt the following statement by marking the box and include an
attachment.)
[_] This document contains the true name and mailing address of one or more
additional individuals causing the document to be delivered for filing.
Disclaimer:
This form/cover sheet, and any related instructions, are not intended to provide
legal, business or tax advice, and are furnished without representation or
warranty. While this form/cover sheet is believed to satisfy minimum legal
requirements as of its revision date, compliance with applicable law, as the
same may be amended from time to time, remains the responsibility of the user of
this form/cover sheet. Questions should be addressed to the user's legal
business or tax advisor(s).
ARTINC_PC Page 3 of 3 Rev. 02/28/2008
Document processing fee
If document is filed on paper $150.00
If document is filed electronically $ 25.00
Fees & forms/cover sheets are
subject to change.
To file electronically, access instructions
for this form/cover sheet and other
information or print copies of filed
documents, visit ▇▇▇.▇▇▇.▇▇▇▇▇.▇▇.▇▇
and select Business Center.
Paper documents must be typewritten or machine printed.
Articles of Amendment
filed pursuant to Section 7-90-301 and Section ▇-▇▇▇-▇▇▇ of the Colorado
Revised Statutes (C.R.S.)
ID number: 20091398146
1. Entity name: Two Rivers Water Company
---------------------------------------
(If changing the name of the corporation,
indicate name BEFORE the name change.)
2. New Entity name: TRWC, Inc.
(If applicable)
3. Use of Restricted Words
(If any of these terms are [_] "bank" or "trust" or any derivative thereof
contained in an entity name, [_] "credit union" [_] "savings and loan"
true name of an entity, trade [_] "insurance," "casualty," mutual," or "surety"
name or trademark stated in
this document, ▇▇▇▇ the
applicable box):
4. Other amendments, if any, are attached.
5. If the amendment provides for an exchange, reclassification or cancellation
of issued shares, the attachment states the provisions for implementing the
amendment.
6. If the corporation's period of duration
as amended is less than perfpetual, state
the date on which the period of duration ---------------------
expires: (mm/dd/yyyy)
OR
If the corporation's period of duration as amended is perpetual, ▇▇▇▇ this box:
[X]
7. (Optional) Delayed effective date:
------------------
(mm/dd/yyyy)
Notice:
Causing this document to be delivered to the Secretary of State for
filing shall constitute the affirmation or acknowledgment of each
individual causing such delivery, under penalties of perjury, that
such document is such individual's act and deed, or that such
individual in good faith believes such document is the act and deed
of the person on whose behalf such individual is causing such document
to be delivered for filing, taken in conformity with the requirements
of part 3 of article 90 of title 7, C.R.S. and, if applicable, the
constituent documents and the organic statutes, and that such individual
in good faith believes the facts stated in such document are true and
such document complies with the requirements of that Part, the
constituent documents, and the organic statutes.
AMD_PC Page 1 of 2 Rev. 11/15/2005
This perjury notice applies to each individual who causes this document
to be delivered to the Secretary of State, whether or not such individual
is identified in this document as one who has caused it to be delivered.
8. Name(s) and address(es)
of the individual(s) causing
this document to be delivered
for filing: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(The document need not state the true name and address of more than
one individual. However, if you wish to state the name and address
of any additional individuals causing this document to be delivered
for filing, ▇▇▇▇ this box [ ] and include an attachment stating the
nature and address of such individuals.)
Disclaimer:
This form, and any related instructions, are not intended to provide
legal, business or tax advice, and are offered as a public service
without representationo r warranty. While this form is believe to
satisfy minimum legal requirements as of its revfision date, compliance
with applicable law, as the same may be amended from time to time,
remains the responsibility of the user of this form. questions should
be address to the user's attorney.
AMD_PC Page 2 of 2 Rev. 11/15/2005
Exhibit 2.5
AMENDED AND RESTATED BY-LAWS
of
Two Rivers Water Company
a Colorado Corporation
ARTICLE I
The initial principal office of the Corporation shall be at ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇. ▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇. The Corporation may have offices
at such other places within or without the State of Colorado as the Board of
Director(s) may from time to time establish.
ARTICLE II
CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken in
connection with corporate action, by any provisions of the statutes of the
Certificate of Incorporation, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who should have been entitled to vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. The business of the Corporation shall be
managed by the Board of Directors, except as otherwise provided by statute or by
the Certificate of Incorporation.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors shall
consist of up to seven (7) members. Except as provided in the Certificate of
Incorporation, this number can be increased only by the vote or written consent
of the holders of seventy (70) percent of the stock of the Corporation
outstanding and entitled to vote. The current number of Directors shall be
determined by the Board of Directors at its annual meeting. No Director need be
a stockholder.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected
annually by the stockholders, and shall hold office until their successors are
respectively elected and qualified.
Election of Directors need not be by ballot.
-1-
Section 4. COMPENSATION. The members of the Board of Directors shall be
paid a fee of $100.00 for attendance at all annual, regular, special and
adjourned meetings of the Board, or such other amount determined by the
Compensation Committee of the Board of Directors. No such fee shall be paid any
director if absent. Any director of the Corporation may also serve the
Corporation in any other capacity, and receive compensation there from in any
form. Members of special or standing committees may be allowed like compensation
for attending committee meetings.
Section 5. REMOVAL AND RESIGNATIONS. The stockholders may, at any
meeting called for the purpose, by vote of two-thirds of the capital stock
issued and outstanding, remove any directors from office, with or without cause;
provided however, that no director shall be removed in case the vote of a
sufficient number of shares are cast against his removal, which if cumulatively
voted at any election of directors would be sufficient to elect him, if
cumulative voting is allowed by the Articles of Incorporation.
The stockholders may, at any meeting, by vote of a majority of such
stock represented at such meeting accept the resignation of any director.
Section 6. VACANCIES. Any vacancy occurring in the office of director
may be filled by a majority of the directors then in office, though less than a
quorum, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and qualified, unless
sooner displaced.
When one or more directors resign from the Board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have powers to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations become effective.
ARTICLE IV
Meetings of Board of Directors
Section 1. REGULAR MEETINGS. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders or any special meeting of
the stockholders at such places within or without the State of Colorado and at
such times as the Board may by vote from time to time determine.
Section 2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held at any place whether within or without the State of Colorado at any
time when called by the Chief Executive Officer, President, Treasurer, Secretary
or two or more directors. Notice of the time and place thereof shall be given to
each director at least three (3) days before the meeting if by mail or at least
twenty-four hours if in person or by telephone or telegraph. A waiver of such
notice in writing, signed by the person or persons entitled to said notice,
either before or after the time stated therein, shall be deemed equivalent to
such notice. Notice of any adjourned meeting of the Board of Directors need not
be given.
-2-
Section 3. QUORUM. The presence, at any meeting, of one-third of the
total number of directors, but in no case less than one (1) director, shall be
necessary and sufficient to constitute a quorum for the transaction of business
except as otherwise required by statute or by the Certificate of Incorporation,
the act of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a quorum,
a majority of the directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum be present.
Section 4.a. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board or committee, and such written
consent is filed within the minutes of the Corporation.
b. The Board of Directors may hold regular or special meetings
by telephone conference call, provided that any resolutions adopted shall be
recorded in writing within 3 days of such telephone conference, and written
ratification of such resolutions by the directors shall be provided within 10
days thereafter.
ARTICLE V
Committees of Board of Directors
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of two
or more of the directors of the Corporation, which, to the extent provided in
the resolution, shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
The committees of the Board of Directors shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
ARTICLE VI
Officers
Section 1. NUMBER. The officers of the corporation shall include, if
and when designated by the Board of Directors, a Chief Executive Officer, a
President, one or more Vice Presidents, a Secretary and a Treasurer, and such
other officers, agents and factors as may be deemed necessary. One person may
hold any two offices except the offices of Chief Executive Officer and Vice
President, the offices of Chief Executive Officer and Secretary, the offices of
President and Vice President, or the offices of President and Secretary.
-3-
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The officers
specifically designated in Section 1 of this Article VI shall be chosen annually
by the Board of Directors and shall hold office until their successors are
chosen and qualified. Notwithstanding the above, a vacancy in any office,
however occurring, may be filled by the Board of Directors. No officer need be a
director.
Section 3. SUBORDINATE OFFICERS. The Board of Directors from time to
time may appoint other officers and agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold office
for such period, have such authority and perform such duties as are provided in
these By-Laws or as the Board of Directors from time to time may determine. The
Board of Directors may delegate to any office the power to appoint any such
subordinate officers, agents and factors and to prescribe their respective
authorities and duties.
Section 4. REMOVALS AND RESIGNATIONS. The Board of Directors may at any
meeting called for the purpose, by vote of a majority of their entire number,
remove from office any officer or agent of the Corporation, or any member of any
committee appointed by the Board of Directors.
The Board of Directors may at any meeting, by vote of a majority of the
directors present at such meeting, accept the resignation of any officer of the
Corporation.
Section 5. VACANCIES. Any vacancy occurring in the office of Chief
Executive Officer, President, Vice President, Secretary, Treasurer or any other
office by death, resignation, removal or otherwise shall be filled for the
expired portion of the term in the manner prescribed by these By-Laws for the
regular election or appointment to such office.
Section 6. THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall serve as the chief executive officer of the corporation and shall have
general and active management authority with respect to the business of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect; subject, however, to the right of the
directors to delegate specific powers, except those exclusively conferred by
statute on the Chief Executive Officer or the President, to any other officer or
officers of the corporation. He or she shall be authorized to execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation. He or she shall be EX OFFICIO a member of all committees.
Section 7. THE PRESIDENT. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless a
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to the office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
-4-
Section 8. THE VICE PRESIDENT. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
Section 9. THE SECRETARY. The Secretary shall:
a. Record all the proceedings of the meetings of the Corporation and
directors in a book to be kept for that purpose;
b. Have charge of the stock ledger (which may, however, be kept by any
transfer agent or agents of the Corporation under the direction of the
Secretary), an original or duplicate of which shall be kept at the principal
office or place of business of the Corporation in the State of Colorado;
c. Prepare and make, at least ten (10) days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order;
d. See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by statute;
e. Be custodian of the records of the Corporation and the Board of
Directors, and of the seal of the Corporation, and see that the seal is affixed
to all stock certificates prior to their issuance and to all documents, the
execution of which on behalf of the Corporation under its seal have been duly
authorized;
f. See that all books, reports, statements, certificates and the other
documents and records required by law to be kept or filed are properly kept or
filed; and
g. In general, perform all duties and have all powers incident to the
office of Secretary and perform such other duties and have such powers as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors, the Chief Executive Officer or the President.
Section 10. THE TREASURER. The Treasurer shall:
a. Have supervision over the funds, securities, receipts, and
disbursements of the Corporation;
b. Cause all monies and other valuable effects of the Corporation to be
deposited in its name and to its credit, in such depositories as shall be
selected by the Board of Directors or pursuant to authority conferred by the
Board of Directors.
c. Cause the funds of the Corporation to be disbursed by checks or
drafts upon the authorized depositories of the Corporation, when such
disbursements shall have been duly authorized;
-5-
d. Cause to be taken and preserved proper vouchers for all monies
disbursed;
e. Cause to be kept at the principal office of the Corporation correct
books of account of all its business and transactions;
f. Render to the Chief Executive Officer, the President or the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation and of his transactions as Treasurer;
g. Be empowered to require from the officers or agents of the
Corporation reports or statements giving such information as he my desire with
respect to any and all financial transactions of the Corporation; and
h. In general, perform all duties and have all powers incident to the
office of Treasurer and perform such other duties and have such power as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors, the Chief Executive Officer or the President.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers shall have such duties as from
time to time may be assigned to them by the Board of Directors, the Chief
Executive Officer or the President.
Section 12. SALARIES. The salaries of the officers of the Corporation
shall be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person the power to fix the salaries or
other compensation of any officers or agents appointed in accordance with the
provisions of Section 3 of this Article VI. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
Section 13. SURETY BOND. The Board of Directors may secure the fidelity
of any or all of the officers of the Corporation by bond or otherwise.
ARTICLE VII
Execution of Instruments
Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents or
writings of any nature shall be signed, executed, verified, acknowledged and
delivered by such officer or officers or such agent of the Corporation and in
such manner as the Board of Directors from time to time may determine.
Section 2. CHECKS, DRAFTS, ETC. All notes, drafts, acceptances, checks,
endorsements, and all evidence of indebtedness of the corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the Corporation in any of
its duly authorized depositories shall be made in such manner as the Board of
Directors from time to time may determine.
-6-
Section 3. PROXIES. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
Chief Executive Officer, President or Vice President and the Secretary or
Assistant Secretary of the Corporation or by any other person or persons duly
authorized by the Board of Directors.
ARTICLE VIII
Section 1. CERTIFICATES OF STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed in the name of the
Corporation by the Chief Executive Officer, the President or a Vice President,
and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him in
the Corporation; provided, however, that where such certificate is signed by a
transfer agent or an assistant transfer agent or by a transfer clerk acting on
behalf of the Corporation and a registrar, the signature of any such Chief
Executive Officer, President, Vice President, Treasurer, Assistant Treasurer,
Secretary, or Assistant Secretary may be facsimile. In case any officer or
officers who shall have signed, or whole facsimile signature or signatures shall
have been used thereon, any such certificate or certificates shall cease to be
such officer or officers of the Corporation, whether because of death,
resignation or otherwise, before such certificate or certificates shall have
been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person or persons who signed such certificate or certificates, or whose
facsimile signature or signatures shall have been used thereon, had not ceased
to be such officer or officers of the Corporation, and any such delivery shall
be regarded as an adoption by the Corporation of such certificate or
certificates.
Certificates of stock shall be in such form as shall, in conformity to
law, be prescribed from time to time by the Board of Directors.
Section 2. TRANSFER OF STOCK. Shares of stock of the Corporation shall
only be transferred on the books of the Corporation by the holder of record
thereof or by his attorney duly authorized in writing, upon surrender to the
Corporation of the certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and accompanied by all necessary stock transfer tax stamps. In that
event, it shall be the duty of the Corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the transaction
on its books.
Section 3. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS.
Prior to the surrender to the Corporation of the certificates for shares of
stock with a request to record the transfer of such shares, the Corporation may
treat the registered owner as the person entitled to receive dividends, to vote,
to receive notifications, and otherwise to exercise all the rights and powers of
an owner.
-7-
Section 4. CLOSING STOCK TRANSFER BOOK. The Board of Directors may
close the Stock Transfer Book of the Corporation for a period not exceeding
fifty (50) days preceding the date of any meeting of the stockholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect or for a period of not exceeding (50) days in connection with obtaining
the consent of stockholders for any purpose. However, in lieu of closing the
Stock Transfer Book, the Board of Directors may fix in advance a date, not
exceeding fifty (50) days preceding the date of any meeting of stockholders or
the date for the payment of any dividend or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders, and only
such stockholders as shall be stockholders of record on the date so fixed shall
be entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
Section 5. LOST, DESTROYED AND STOLEN CERTIFICATES. Where the owner of
a Certificate for shares claims that such certificate has been lost, destroyed
or wrongfully taken, the Corporation shall issue a new certificate in place of
the original certificate if the owner (a) so requests before the Corporation has
notice that the shares have been acquired by a bona fide purchaser; (b) files
with the Corporation a sufficient indemnity bond; and (c) satisfies such other
reasonable requirements, including evidence of such loss, destruction, or
wrongful taking, as may be imposed by the Corporation.
ARTICLE IX
Dividends
Section 1. SOURCES OF DIVIDENDS. The directors of the Corporation,
subject to any restrictions contained in the statutes and Certificate of
Incorporation, may declare and pay dividends upon the shares of the capital
stock of the Corporation either (a) out of its new assets in excess of its
capital, or (b) in case there shall be no such excess, out of its net profits
for the fiscal year then current or the current and preceding fiscal year.
Section 2. RESERVES. Before the payment of any dividend, the directors
of the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
directors may abolish any such reserve in the manner in which it was created.
-8-
Section 3. RELIANCE ON CORPORATE RECORDS. A director shall be fully
protected in relying in good faith upon the books of account of the Corporation
or statements prepared by any of its officials as to the value and amount of the
assets, liabilities and net profits of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid.
Section 4. MANNER OF PAYMENT. Dividends may be paid in cash, in
property, or in shares of the capital stock of the Corporation at par.
ARTICLE X
Seal
The Corporate seal, subject to alteration by the Board of Directors,
shall be in the form of a circle and shall bear the name of the Corporation and
shall indicate its formation under the laws of the State of Colorado. Such seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE XI
Fiscal Year
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE XII
Amendments
Section 1. BY THE STOCKHOLDERS. Except as otherwise provided in the
Certificate of Incorporation or in these By-Laws, these By-Laws may be amended
or repealed, or new By-Laws may be made and adopted by a majority vote of all
the stock of the Corporation issued and outstanding and entitled to vote at any
annual or special meeting of the stockholders, provided that notice of intention
to amend shall have been contained in the notice of meeting.
Section 2. BY THE DIRECTORS. Except as otherwise provided in the
Certificate of Incorporation or in these By-Laws, these By-Laws, including
amendments adopted by the stockholders, may be amended or repealed by a majority
vote of the whole Board of Directors at any regular or special meeting of the
Board, provided that the stockholders may from time to time specify particular
provisions of the By-Laws which shall not be amended by the Board of Directors.
-9-
ARTICLE XIII
Indemnification
The Board of Directors hereby adopt the provision of C.R.S. 7-3-101 S
(as it may be amended from time to time) relating to Indemnification and in
corporate such provisions by this reference as fully as if set forth herein.
-10-
EXHIBIT 2.8
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
HCIC HOLDINGS, LLC
This Amended and Restated Operating Agreement ("Agreement") is made
effective as of September 14, 2010, notwithstanding the date of execution, by
the sole Member of HCIC Holdings, LLC (the "Company") and sets forth provisions
for the administration and regulation of the affairs of the Company:
1. Formation. The Company was formed on August 18, 2009 by filing Articles
of Organization with the Colorado Secretary of State pursuant to the Colorado
Limited Liability Company Act (the "Act"). TRWC, Inc. acquired 100% of the
Ownership Interests in the Company, effective as of the date and time of filing
of a Statement of Merger with the Colorado Secretary of State, pursuant to which
Two Rivers Basin, LLC, a Colorado corporation, merged with and into TRWC, Inc.
with TRWC, Inc. being the surviving corporation and resulting in the Company
becoming a wholly-owned subsidiary of TRWC, Inc.
2. Company Name. The business of the Company will be conducted under the
name "HCIC Holdings, LLC," or any other name or tradename determined by the
Manager in accordance with applicable law.
3. Registered Office and Agent. The registered office of the Company in
Colorado is located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and its registered agent is ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company may subsequently change its registered
office or registered agent in Colorado in accordance with the Act. After
formation of the Company under the Act, the Company will apply for any required
certificate of authority to do business in any other state or jurisdiction where
it conducts business, as appropriate.
4. Term. The Company's original Articles of Organization were filed with
the Colorado Secretary of State on August 18, 2009 and the Company will continue
in perpetuity, unless and until a dissolution occurs and a statement of
dissolution has been filed with the Colorado Secretary of State.
5. Sole Member. The sole member of the Company is TRWC, Inc. (the "Member"
or "TRWC").
6. Purpose. Subject to any provisions of law governing or regulating such
business, the Company may engage in any lawful business.
7. Ownership Interest. An ownership interest ("Ownership Interest") in the
Company includes the holder's rights to share profits, losses and distributions,
and to vote or consent with respect to any action subject to member approval, as
well as all obligations imposed upon a member under the Act or this Agreement.
The Member holds 100% of the Ownership Interests in the Company.
8. Transferees. The Member may freely transfer all or any part of such
Member's Ownership Interest. The transferee will, without further act, succeed
to all of the benefits and burdens of such Ownership Interest as a member (to
the extent of the interest transferred). Each transferee of an Ownership
Interest becomes admitted to the Company as a member under the Act. If, after
the transfer, there are two or more members, subject to Section 10, [a] any
decision by the Company will be made by members owning a majority of the
Ownership Interests, [b] any profits or losses will be allocated, and any
distribution will be made, to the members in proportion to their Ownership
Interests, and [c] any reference in this Agreement to the Member will be deemed
to be a reference to the members.
9. Powers. The Company has all of the powers granted to a limited liability
company under the Act, as well as all powers necessary or convenient to achieve
its purposes and to further its business.
10. Management. All management rights and powers are vested in TRWC as the
"manager" for purposes of the Act (the "Manager"). If the Member is the only
member of the Company at the time that it transfers all of its Ownership
Interest, the transferee will become the Manager. As long as TRWC is a member,
it may remove the Manager at any time with or without cause and upon removal of
the Manager, TRWC will appoint a new Manager for the Company.
11. Authority. The Manager is an agent of the Company for the purpose of
its business. The act of the Manager binds the Company, including acts for
apparently carrying on in the usual way the business of the Company. No third
party dealing with the Company will be required to ascertain whether the Manager
is acting within the scope of the Manager's authority.
12. Indemnification. The Company will indemnify the Manager and the Member
to the fullest extent permitted under the Act but only, in the case of the
Manager, to the extent that the losses, costs, expenses and liabilities for
which the Manager seeks indemnification did not result from the gross negligence
or willful misconduct of the Manager.
13. Capital Contributions. The Member may transfer funds or property to the
Company from time to time as a capital contribution but no contributions of
capital will be required from the Member unless otherwise required by law. The
Member has no obligation to restore a deficit capital account at any time
(whether upon liquidation or otherwise). The Member is not entitled to the
return of any part of its capital contributions or to be paid interest in
respect of either its capital account or its capital contribution. An unrepaid
capital contribution is not a liability of the Company.
2
14. Capital Accounts. The Company will maintain a capital account for the
Member. Credits and charges to capital accounts will be made in accordance with
the Company's accounting method.
15. Profits and Losses. For each fiscal year of the Company, profits or
losses of the Company will be an amount equal to the Company's income or loss
determined in accordance with TRWC or it's parent's accounting method. Any such
profits or losses (including items of income, gain, loss and deduction for each
fiscal year) will be allocated to the Member.
16. Cash Reserves. The Manager may establish and maintain reasonable cash
reserves for any reason consistent with the purpose of the Company, including
for operating expenses, capital improvements and debt service. The amount of
such reserves will be as the Manager may determine.
17. Distributions. Distributions of cash or other property to the Member
will be made as the Manager may determine. Distributions may be made out of
profits (either current or accumulated) or capital, or both.
18. Distribution Limitation. Notwithstanding any other provision of this
Agreement, the Company will not make any distribution to the Member if, after
giving effect to the distribution, the liabilities of the Company would exceed
the fair value of the Company's assets. With respect to any property subject to
a liability for which the recourse of creditors is limited to the specific
property, such property will for this purpose be included in assets only to the
extent that the property's fair value exceeds its associated liability, and such
liability will be excluded from the Company's liabilities.
19. Limited Liability. Except as provided by the Act, the debts,
obligations, and liabilities of the Company, whether arising in contract, tort,
or otherwise, are solely the debts, obligations, and liabilities of the Company,
and neither the Member nor the Manager is personally obligated for any such
debt, obligation, or liability of the Company solely by reason of being a member
or acting as a manager of the Company. If the Member receives a distribution
from the Company, the Member will have no liability to return such distribution
except to the extent required under the Act or by other applicable law and
except to the extent that the distribution was made by mistake.
20. Action Without a Meeting. Any action required or permitted to be taken
at a meeting of members may be taken without a meeting if the action is
evidenced by the written consent describing the action taken, signed by the
Member.
21. Tax Status. As provided in the tax regulations under ss. 7701 of the
Internal Revenue Code, for federal income tax purposes the Company will be
disregarded as an entity separate from its owner as long as it has only one
member. At any time that the Company has two or more members, the Company will
be treated as a partnership for federal income tax purposes. The Company will
not elect to be classified as an association for federal income tax purposes
unless this Agreement is amended to provide specifically for such an election.
To the extent possible, similar provisions with respect to income tax status
will apply for state and local tax purposes.
3
22. Fiscal Year. For income tax and accounting purposes, the fiscal year of
the Company will end on December 31 of each calendar year (unless otherwise
required by the Code).
23. Accounting Method. For income tax and accounting purposes, the Company
will use the same accounting method as the Member (unless otherwise required by
the Code).
24. Reports. The Company books will be closed at the end of each fiscal
year and statements prepared showing the financial condition of the Company and
its profits or losses from operations. The Manager will provide the Member with
information sufficient to permit the Member to prepare and file all necessary
federal and state income tax returns for the Company and any other reports
requested by the Member.
25. Books and Records. The Company will keep, at its principal office, all
records required by the Act. Such records will be available for inspection and
copying by the Member, at its expense, during ordinary business hours. In
addition, the Member will be entitled to such information and accounting with
respect to the Company as provided in the Act.
26. Banking. The Company may establish one or more bank or financial
accounts and safe deposit boxes. The Manager may authorize one or more
individuals to sign checks on and withdraw funds from such bank or financial
accounts and to have access to such safe deposit boxes, and may place such
limitations and restrictions on such authority as the Manager deems advisable.
27. Dissolution. The Company will dissolve and its affairs will be wound up
on the first to occur of the following:
(a) the written consent of the Member;
(b) the expiration of the period fixed, if any, for the duration
of the Company set forth in its Articles of Organization; or
(c) entry of a decree of judicial dissolution of the Company under
the Act.
28. Liquidation and Termination. On dissolution of the Company the Member,
or such person as may be appointed by the Member, will be the liquidator. The
liquidator will proceed diligently to wind up the affairs of the Company and
make final distributions as provided herein and in the Act. The costs of
liquidation will be borne as a Company expense. Until final liquidation, the
liquidator will continue to operate the Company properties with all of the power
and authority of the Member and a manager. The steps to be accomplished by the
liquidator include the following:
(a) as promptly as possible after dissolution and again after final
liquidation, the liquidator will make or cause to be made a proper accounting of
the Company's assets, liabilities, and operations through the last day of the
calendar month in which the dissolution occurs or the final liquidation is
completed, as applicable;
4
(b) the liquidator will cause any notices required under the Act to
be mailed to each known creditor of and claimant against the Company in
accordance with the Act;
(c) the liquidator will pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company (including,
without limitation, all expenses incurred in liquidation and any advances
described in Section 33) or otherwise make adequate provision for payment and
discharge thereof (including, without limitation, the establishment of a cash
escrow fund for contingent liabilities in such amount and for such term as the
liquidator may reasonably determine); and
(d) all remaining assets of the Company will be distributed to the
Member.
All distributions in kind to the Member will be made subject to the liability of
each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of liquidation with
respect to such in-kind distribution, and those costs, expenses, and liabilities
will be allocated to the distributee pursuant to this Section 28. The
distribution of cash or property to the Member in accordance with this Section
28 constitutes a complete return to the Member of its capital contributions, a
complete distribution to the Member in respect of its Ownership Interest, and a
complete return of all the Company's property and constitutes a compromise.
29. Statement of Dissolution. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Manager (or such
other person or persons as the Act may require or permit) will file a statement
of dissolution with the Secretary of State of Colorado, cancel any other filings
to do business in any jurisdiction made pursuant to this Agreement, and take
such other actions as may be necessary to terminate the Company.
30. Binding Effect. Subject to any restrictions on transfers set forth in
this Agreement, this Agreement is binding upon, and inures to the benefit of,
the Member and his successors and assigns. All of the provisions of this
Agreement, including any relating to contribution rights or obligations, will
inure solely to the benefit of the Member and the Company, without conferring on
any other person, entity or governmental authority any rights of enforcement or
other rights.
31. Terms. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the person may require. The
singular or plural include the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative sense rather than a
limiting sense.
32. Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Colorado, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. Any conflict
(or apparent conflict) between this Agreement and the Act will be resolved in
5
favor of this Agreement except as otherwise required by the Act. Any matter not
specifically covered by this Agreement will be determined as provided in the
Act.
33. Advances by Member. If the Company does not have sufficient cash to pay
its obligations, the Member, at its sole discretion, may agree to advance all or
part of the needed funds to or on behalf of the Company. An advance described in
this Section 33 constitutes a loan from the Member to the Company, bears
interest at the rate agreed to with the Company at such time, from the date of
the advance until the date of payment, and is not a capital contribution. Upon
the Member's request, the Company will execute and deliver to the Member a
promissory note setting forth the terms and conditions of any advance.
34. Amendment. This Agreement may be amended or modified from time to time
only by a written instrument executed by the Member.
The initial Member/Manager has signed this Operating Agreement of HCIC
Holdings, LLC to be effective upon formation of the Company, notwithstanding the
actual date of signing.
HCIC Holdings, LLC
By: TRWC, Inc., its sole Member and Manager
By:_________________________________________
Name:
Title:
6
Exhibit 3.2
FORM OF STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer ____________________________________ (____________) shares of the
common stock of Two Rivers Water Company, a Colorado corporation (the
"Corporation"), which stock is standing in the name of the undersigned on the
books and records of the Corporation, to ______________________, and does hereby
irrevocably constitute and appoint _______________________ as attorney-in-fact
to transfer the said stock on the books of said Corporation, with full power of
substitution in the premises.
Dated October ____, 20__.
---------------------------------------------
Stockholder
Exhibit 3.4
================================================================================
INVESTOR RIGHTS AGREEMENT
dated as of __________________, 2010,
by and among
TWO RIVERS WATER COMPANY
AND THE
SHAREHOLDERS NAMED HEREIN
================================================================================
EXECUTION COPY
THIS INVESTOR RIGHTS AGREEMENT dated as of _____________, 2010
(this "IR Agreement"), by and among TWO RIVERS WATER COMPANY, a Colorado
corporation (the "Company"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual and shareholder of
the Company ("▇▇▇▇▇▇▇"), and the SHAREHOLDERS signatory hereto and identified
on Annex I hereto (each, a "Shareholder" and, collectively, the "Shareholders"
for so long as he or she beneficially holds any Company Stock).
WHEREAS, as of the date of this IR Agreement, the Company,
TRWC, Inc., a Colorado corporation and wholly-owned subsidiary of the Company
("TRWC"), and Two Rivers Basin, LLC, a Colorado limited liability company
("TRB"), have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to the terms and conditions of which and upon consummation
of the merger contemplated therein (the "Merger"), the Company has agreed to
issue to each Shareholder in exchange for the Company Units (as defined in the
Merger Agreement) held by such Shareholder, the number of shares of Company
Stock set forth opposite each Shareholder's name on Annex I hereto;
WHEREAS, as a condition to consenting to and consummating the
Merger and the transactions contemplated in the Merger Agreement, the
Shareholders have required and the Company has agreed to extend to the
Shareholders certain registration and Board member designation rights as set
forth herein;
WHEREAS, a condition to the delivery of Company Stock to the
Shareholders as contemplated by the Merger Agreement is the execution and
delivery of this IR Agreement, which specifies, among other things, the
designation of one member to the Company's Board of Directors (the "Board"),
restrictions on the terms of dispositions of the Stock held by each of the
Shareholders and certain registration and other rights to the Shareholders.
WHEREAS, upon the consummation of the Merger and delivery of
the Exchange Documents by each Shareholder as contemplated by the Merger
Agreement, each Shareholder will beneficially hold, the number of shares of
Company Stock set forth opposite such Shareholder's name on Annex I attached
hereto; and
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this IR
Agreement and the Merger Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein have the respective
meanings set forth in the Merger Agreement. As used herein, the following terms
shall have the following respective meanings:
"Articles of Incorporation" means the articles of
incorporation of the Company initially filed on December 20, 2002, as
they may be amended, supplemented or restated from time to time
-2-
"Board" has the meaning given to such term in the recitals.
"Business Day" means each day other than Saturday, Sunday, any
federal holiday or state recognized holiday in the State of Colorado.
"Bylaws" means the bylaws of the Company, as they may be
amended, supplemented or restated from time to time.
"Cause" with respect to removal of a director means (a)
willful and material dishonesty, fraud, or embezzlement on the part of the
director; (b) a material breach of, gross negligence with respect to, or the
willful failure or refusal by the director to perform and discharge his or her
duties, responsibilities, or obligations as a director (other than by reason of
illness, disability, or death) including his or her fiduciary duties and any
rules or standards adopted from time to time by the Board that is not corrected
within 15 days following written notice thereof to the director, such notice to
state with specificity the nature of the breach, failure, or refusal; (c) the
conviction of or the entry of a plea of nolo contendere by the director of any
felony; (d) a breach by the director of his or her duty of loyalty to the
Company; or (e) drug or alcohol abuse (legal or illegal) that materially impairs
the director's ability to perform his or her duties as a director.
"Company" has the meaning given to such term in the
introductory paragraph.
"Company Governing Documents" has the meaning given to such
term in Section 3.1.
"Company Stock" means the common stock, par value $0.001 per
share, of the Company.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
"Exchange Deliveries" has the meaning given to such term in
the Merger Agreement.
"Family Member" with respect to ▇▇▇▇▇▇▇, means ▇▇▇▇▇▇▇'▇
spouse, any direct descendant of ▇▇▇▇▇▇▇ or his spouse, or any entity, all of
the beneficial owners of which are ▇▇▇▇▇▇▇, his spouse, any direct descendant of
▇▇▇▇▇▇▇ or his spouse.
"IR Agreement" has the meaning given to such term in the
caption.
"Holdback" has the meaning given to such term in the Merger
Agreement.
"Liens" means security interests, liens, pledges, charges,
claims, restrictions, options, rights of first refusal, rights of first offer,
rights of co-sale, drag-along rights, preemptive rights, voting trusts, voting
agreements, other restrictions on Transfer or voting and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money,
but excluding any restrictions imposed by this IR Agreement.
-3-
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of ___________, 2010, by and among the Company and the parties named
therein, as it may be amended, supplemented or restated from time to time.
"Person" means a natural person, or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, partnership,
limited liability company, association, trust or unincorporated organization.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registration Expenses" will mean all expenses incurred by the
Company in complying with Section 4.1, including all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company,
reasonable fees and disbursements of counsel for the Shareholders, blue sky fees
and expenses, and the expense of any special audits incident to or required by
and such registration (but excluding the compensation of regular employees of
the Company which will be paid in any event by the Company).
"Securities Act" means the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect from time to
time.
"Selling Expenses" will mean all underwriting discounts and
selling commissions applicable to the sale.
"Shareholder Designee" has the meaning given to such term in
Section 5.2.
"Shareholders" has the meaning given to such term in the
introductory paragraph.
"Stock Consideration" has the meaning given to such term in
the Merger Agreement.
"Threshold Percentage" has the meaning given to such term in
Section 5.2.
"Transaction Documents" has the meaning given to such term in
the Merger Agreement.
"Transfer," as to any Stock, means to, directly or indirectly,
sell, assign, pledge, hypothecate, mortgage, or in any other way encumber or
otherwise dispose of, with or without consideration.
-4-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder hereby represents and warrants to the Company that the
statements contained in this Article II are correct and accurate as to such
Shareholder as of the date of this IR Agreement (except that in the case of
those statements that by their terms are limited to a specific date, as of such
date).
(a) Ownership of Shares. Such Shareholder, prior to the Effective
Time, is the owner of all right, title and interest (legal and
beneficial) in and to that number or percentage of Company Units set
forth opposite such Shareholder's name on Annex I hereto, free and
clear of any and all Liens of any nature whatsoever. The delivery to
the Company of the Company Units owned by such Shareholder transferred
to the Company valid title thereto, free and clear of any and all
Liens as of the Effective Time, and there are no Equity Rights
relating to the Company Units owned by such Shareholder. The Company
Units owned by such Shareholder have not been transferred in violation
of, and are not currently subject to, any right of first refusal or
similar right of any Person. The number of shares of Company Stock set
forth opposite each Shareholder's name on Annex I hereto represents
the total number of shares of Company Stock such Shareholder shall
receive in exchange for the surrender of the Company Units held by
such Shareholder upon (i) consummation of the Merger, and (ii)
delivery of the Exchange Documents as contemplated in Article 3 of the
Merger Agreement. No Person claiming by or through such Shareholder
has any agreement or option or any right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement or option
for the purchase of any of such shares to be issued pursuant to the
Merger at the Effective Time
(b) Capacity and Validity. Such Shareholder has all requisite
legal power and authority to enter into this IR Agreement, and to
perform his or her obligations hereunder. This IR Agreement has been
duly executed and delivered by such Shareholder and constitutes the
binding obligations of such Shareholder, enforceable against such
Shareholder in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles. Such
Shareholder has voted in favor of the Merger Agreement, this IR
Agreement and the transactions contemplated by each respectively. None
of the execution and delivery of the Merger Agreement, the other
Transaction Documents, nor this IR Agreement by the Shareholder, nor
the consummation of the transactions contemplated under each
respectively, will violate any provisions of any Contract, Law or
Order to which the Shareholder is subject.
(c) Consents. No consent or approval of or authorization or
declaration, filing or registration with, any Governmental Authority
or any other Person is required to be made or obtained by such
Shareholder in connection with such Shareholder's execution, delivery
-5-
and performance of any of the Merger Agreement, this IR Agreement, the
other Transaction Documents, nor the consummation of the transactions
contemplated under each respectively.
(d) No Brokers. Such Shareholder has not entered into any
agreement or incurred any obligation, directly or indirectly, for the
payment of any broker's or finder's fee or commission, or any other
similar payment to any Person in connection with any of the Merger
Agreement, this IR Agreement, the Transaction Documents, nor the
transactions contemplated under each respectively, and nor is such
Shareholder otherwise obligated to pay any such fee, commission or
other payment, and there is no basis for any claim by any Person for
the payment of such a fee, commission or other payment.
(e) Investor Qualifications. Such Shareholder acknowledges that
he or she can bear the economic risk of his or her investment, and has
such knowledge and experience in financial or business matters that he
or she is capable of evaluating the merits and risks of his or her
investment in the Company Stock. Such Shareholder further acknowledges
that the Company Stock is a speculative investment which involves a
risk of loss of the Shareholder's investment and that there is no
specified rate of return on an investment in the Company Stock nor has
any specified rate of return been promised or otherwise represented to
such Shareholder. Such Shareholder represents that he is an individual
and a bona fide resident of the State of Colorado, California, Nevada
or New Jersey.
(f) Purchase for Own Account. The Company Stock to be received by
such Shareholder as his or her proportionate share of the Stock
Consideration shall be acquired for investment for such Shareholder's
own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Shareholder has
no present intention of selling, granting any participation in or
otherwise distributing the same. Such Shareholder has no contract,
undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any other
Person, with respect to any of the shares of Company Stock. There is
no plan or intention by the Shareholder to sell, exchange or otherwise
dispose of a number of shares of the Stock Consideration that would
reduce the Shareholders' ownership of Parent Stock to a number of
shares having a value, as of the Closing Date of less than 50 percent
of the value of all formerly outstanding Company Units as of the
Closing Date.
(g) Disclosure of Information. Such Shareholder has received and
reviewed the Company's Form 10-Q for the quarter ended March 31, 2010,
Form 10-K for the fiscal year ended December 31, 2009, Proxy Statement
for November 19, 2009 Annual Meeting of Shareholders, and such other
documents of the Company as are publicly available relating to the
Company's business, finances and operations ("Current Filings"). Such
Shareholder has internet access through the ▇▇▇▇▇ System at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ to all past and future filings made by the Company
and agrees that each such filing shall be deemed to have been
delivered to such Shareholder. Such Shareholder further understands
that the Stock Consideration will be governed by the Company's
organizational documents, which such Shareholder has received and
reviewed and agrees to be legally bound. Such Shareholder has been
furnished any additional information that it considers necessary or
appropriate to enable such Shareholder to evaluate the merits and
-6-
risks of an investment in the Company Stock. Such Shareholder has had
an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Company
Stock and the business, properties, prospects and financial condition
of the Company, and all such questions have been answered to the full
satisfaction of such Shareholder.
(h) Restrictions. Such Shareholder acknowledges that the shares
of Company Stock constituting the Stock Consideration shall be subject
to the restrictions set forth in this IR Agreement. Such Shareholder
further acknowledges that the Company Stock subject to this IR
Agreement has not been registered under the Securities Act or the
securities laws of any state and cannot be offered, sold or otherwise
Transferred by the Shareholder unless subsequently so registered or
unless exemptions from the registration requirements of the Securities
Act and all applicable state securities laws are available for the
transaction.
(i) Statements True and Correct. No statement, certificate,
instrument, or document furnished or to be furnished by such
Shareholder pursuant to the Merger Agreement, this IR Agreement, any
Transaction Document or any other document, agreement, or instrument
referred to therein or herein contains or will contain any untrue
statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(j) No Tax Advice. The parties to the Merger have indicated their
intention that the Merger qualify as a tax-free reorganization
pursuant to the Code, however, no party hereto makes any
representation with respect to the Tax liability that may arise as a
result of the Merger or any other transaction contemplated by the
Merger Agreement, this IR Agreement or any of the transactions
contemplated under each respectively. Except to the extent that a
Shareholder is successful in a claim for indemnification under Article
8 of the Merger Agreement for a Tax liability resulting from any
breach by Parent or TRWC of any representation, warranty, covenant,
agreement or other obligation under the Merger Agreement, such
Shareholder understands and acknowledges that he or she (and not the
Company) shall be responsible for his or her own Tax liability that
may arise as a result of the Merger, any transaction contemplated by
the Merger Agreement and any other transaction contemplated by this IR
Agreement.
(k) Member Agent. Such Shareholder does not now nor will he have
at any time during the Restricted Period any engagement letter,
agreement or other arrangement with Member Agent (as defined in the
Merger Agreement) for legal representation of the such Shareholder.
For purposes of clarification, legal representation as used in this
context does not include escrow services provided by Member Agent.
-7-
ARTICLE III
RESTRICTIONS ON TRANSFER OF COMPANY STOCK
3.1 Restrictions on Transfers of Company Stock.
(a) Each Shareholder shall not effect any Transfer, public sale
or distribution of, or otherwise dispose of, any of the Company Stock
(other than those shares of Company Stock included in a registration
statement under the Securities Act pursuant to Article IV hereof and
such disposition is made in accordance with such registration
statement) for a period of eighteen months beginning on the Closing
Date and terminating ____________________ (the "Restricted Period"),
unless released or otherwise waived in writing by the Company. Each
Shareholder further agrees that during the Restricted Period, the
Company shall not be obligated to effect nor shall any Shareholder
submit any request or demand that the Company effect a registration
with respect to all or any part of the Company Stock owned by such
Shareholder other than as provided in Article IV.
(b) Following expiration of the Restricted Period of this IR
Agreement, no Shareholder shall Transfer any Company Stock unless:
(i) such Transfer is in accordance with the Securities Act,
the Exchange Act and all applicable state securities laws or any
rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law applicable to such
transaction or pursuant to an exemption therefrom; and
(ii) the Shareholder complies with all restrictions on the
transfer of shares of Company Stock imposed under the Company's
Articles of Incorporation and Bylaws or other Company document
governing restrictions on transfer of Company stock (the "Company
Governing Documents").
Any Transfer or attempted Transfer of any Company Stock in violation of any of
the provisions of this Article II shall be void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Company Stock as the owner of such Company Stock for any purpose. In furtherance
and not in limitation of the foregoing, no Transfer of Company Stock shall
become effective unless and until any and all conditions set forth in the
Company Governing Documents have been met.
3.2 Legend.
(a) Each certificate representing Company Stock shall (unless
otherwise permitted by the provisions of this IR Agreement be stamped
or otherwise imprinted with a legend in substantially the following
form:
-8-
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
AND, EXCEPT IN CERTAIN CIRCUMSTANCES, MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT.
THE SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR TRANSFER
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF the Company's
articles of incorporation, bylaws and that CERTAIN
INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE COMPANY AND
THE SHAREHOLDER dated SEPTEMBER 14, 2010 WHICH AGREEMENT
PROHIBITS THE SALE OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE ANY TIME PRIOR TO MARCH 14, 2012. ANY
PERSON ACCEPTING ANY INTEREST IN SUCH SHARES WILL BE
DEEMED TO AGREE TO AND WILL BECOME BOUND BY ALL THE
PROVISIONS OF SUCH AGREEMENT. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY."
(b) Subject to Section 3.2(e) below, the Company agrees that,
during the term of this IR Agreement, it will not remove, and will not
permit to be removed (upon registration of transfer, reissuance or
otherwise), such legend from any such certificate and will place or
cause to be placed such legend on any new certificate issued to
represent shares theretofore represented by a certificate carrying
such legend.
(c) Each Shareholder agrees that the Company may instruct its
transfer agent to impose stop-transfer instructions with respect to
shares of Company Stock represented by certificates bearing the legend
referred to in Section 3.2(a) above to enforce the provisions of this
IR Agreement until the expiration of the Restricted Period or unless
the restrictions set forth in this Article 3 are released or otherwise
waived in writing by the Company.
(d) Following the termination of this IR Agreement, the Company
will be obligated to reissue promptly unlegended certificates at the
request of any Holder thereof if the Holder will have obtained an
opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without
registration under the Securities Act (or pursuant to a valid
exemption therefrom), qualification or legend.
-9-
(e) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect
to such securities will be removed upon receipt by the Company of an
order of the appropriate blue sky authority authorizing such removal.
3.3 Additional Procedures for Transferring Company Stock.
If reasonably requested by the Company, any Shareholder seeking to
Transfer Company Stock shall deliver a written opinion, addressed to the
Company, of counsel for such Shareholder, stating that in the opinion of such
counsel (which opinion and counsel shall be reasonably satisfactory to the
Company), the proposed Transfer does not involve a transaction requiring
registration or qualification of such Company Stock under the Securities Act or
the Securities or "blue sky" laws of any state of the United States. Each
certificate or other instrument evidencing the Securities issued upon the
Transfer of any Company Stock (and each certificate or other instrument
evidencing any untransferred balance of such Stock) shall bear the legends set
forth in Section 3.2.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Piggyback Registration Rights.
(a) In the event, at any time during the Restricted Period, that
the Company determines to prepare and file with the Securities and
Exchange Commission, or participate in the filing of, a registration
statement or a prospectus supplement to an effective registration
statement registering under the Securities Act any Company Stock held
by ▇▇▇▇▇▇▇ or any of his Family Members, the Company shall notify each
Shareholder in writing of such determination (the "Registration
Notice"). During the Restricted Period, each Shareholder desiring to
include in any such registration statement all or any part of the
Company Stock held by such Shareholders will, within fifteen days
after the date of the Registration Notice, deliver to the Company a
written request stating the number of shares of Company Stock then
owned by such Shareholder and the number of shares requested by such
Shareholder to be registered. Notwithstanding anything to the contrary
herein, the rights provided to Shareholders in this Section 4.1(a)
shall be exercisable only during the Restricted Period and such rights
shall expire contemporaneously with the term of the Restricted Period.
(b) Underwriting. If the registration statement under which the
Company gives notice under this Section 4.1 is for an underwritten
offering, the Company will so advise the Shareholders. All
Shareholders proposing to distribute their shares of Company Stock
through such underwriting will enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. If any Shareholder disapproves of the
-10-
terms of any such underwriting, such Shareholder may elect to withdraw
therefrom by written notice to the Company and the underwriter,
delivered at least ten Business Days prior to the effective date of
the registration statement. Any shares of Company Stock excluded or
withdrawn from such underwriting will be excluded and withdrawn from
the registration.
(c) Right to Terminate Registration. The Company will have the
right to terminate or withdraw any registration initiated by it under
this Section 4.1 prior to the effectiveness of such registration
whether or not any Shareholder has elected to include securities in
such registration. The Registration Expenses of such withdrawn
registration will be borne by the Company in accordance with Section
4.1(d).
(d) Expenses of Registration. Except as specifically provided
herein, all Registration Expenses incurred in connection with any
registration under Section 4.1 will be borne by the Company. All
Selling Expenses incurred in connection with any registrations
hereunder will be borne by the holders of the securities so registered
pro rata on the basis of the number of shares so registered.
4.2 Delay of Registration; Furnishing Information.
(a) No Shareholder will have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article IV.
(b) It will be a condition precedent to the obligations of the
Company to take any action pursuant to Section 4.1 that the selling
Shareholders will furnish to the Company such information regarding
themselves, the shares of Company Stock held by them and the intended
method of disposition of such securities as will be required to effect
the registration of their shares of Company Stock.
4.3 Indemnification with Respect to Registration.
In the event any of the shares of Company Stock owned by a Shareholder
are included in a registration statement under Section 4.1 of this IR
Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Shareholder, any underwriter (as defined in the
Securities Act) for such Shareholder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law in connection with the
offering covered by such registration statement; and the Company will
pay as incurred to each such Shareholder for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
-11-
provided however, that the indemnity agreement contained in this
Section 4.3(a) will not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company, which consent will not be
unreasonably withheld, nor will the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished by
such Shareholder or underwriter of such Shareholder under an
instrument duly executed by such person and stated to be specifically
for use in connection with such registration.
(b) To the extent permitted by law, each Shareholder will, if
shares of Company Stock held by such Shareholder are included in the
securities as to which such registration qualifications or compliance
is being effected, indemnify and hold harmless the Company, each of
its directors, its officers and each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and
any other Shareholder selling securities under such registration
statement or any of such other Shareholder's partners, directors or
officers or any person who controls such Shareholder, against any
losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter
or other such Shareholder, or partner, director, officer or
controlling person of such other Shareholder may become subject under
the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished
by such Shareholder under an instrument duly executed by such
Shareholder and stated to be specifically for use in connection with
such registration; and each such Shareholder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other
Shareholder, or partner, officer, director or controlling person of
such other Shareholder in connection with investigating or defending
any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that
the indemnity agreement contained in this Section 4.3(b) will not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Shareholder, which consent will not be unreasonably withheld;
provided further, that in no event will any indemnity under this
Section 4.3 exceed the net proceeds from the offering received by such
Shareholder.
(c) Promptly after receipt by an indemnified party under this
Section 4.3 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 4.3, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party will have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party will have
the right to retain its own counsel, with the fees and expenses to be
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paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel
in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action, if materially prejudicial to its ability to defend such
action, will relieve such indemnifying party of any liability to the
indemnified party under this Section 4.3, but the omission so to
deliver written notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party otherwise
than under this Section 4.3.
(d) If the indemnification provided for in this Section 4.3 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, will to the extent
permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party will be determined by
a court of law by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, that in no
event will any contribution by a Shareholder hereunder exceed the net
proceeds from the offering received by such Shareholder.
(e) The obligations of the Company and Shareholder under this
Section 4.3 will survive completion of any offering of shares of
Company Stock in a registration statement and the termination of this
IR Agreement. No Indemnifying Party, in the defense of any such claim
or litigation, will, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
ARTICLE V
BOARD OF DIRECTORS
5.1 Number of Directors.
Immediately following the Merger, the Board shall consist of five (5)
directors. The number of directors may be modified in accordance with the
Company Governing Documents, subject to the terms of this Article V.
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5.2 Election.
(a) So long as the Shareholders executing this Agreement
collectively hold at least one-half of the aggregate number of shares
of the Stock Consideration issued in connection with and at the
Closing of the Merger, and such total number of shares of the Stock
Consideration then held by the Shareholders equals or exceeds ten
percent (10%) of the total number of shares of Company Stock issued
and outstanding (the "Threshold Percentage"), the Shareholders holding
a majority of the issued and outstanding Stock Consideration shall
have the right to designate one member of the Board as set forth
herein and in accordance with the Bylaws (the "Shareholder Designee").
The Company (including any appropriate committee thereof) shall,
subject only to such nomination not being in violation of the
fiduciary duties of members of the Board, nominate the Shareholder
Designee for election or re-election, as applicable, as a director of
the Company as part of the slate prepared by the Company. ▇▇▇▇▇▇▇
shall vote all of his shares of Company Stock and shall, as promptly
as practicable, take all other necessary or desirable actions within
his control (whether in his capacity as a shareholder of the Company
or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of written consents in lieu of meetings), and the Company
shall, as promptly as practicable, take all necessary and desirable
actions within its control (including, without limitation, calling
special Board and shareholder meetings) so that the slate of nominees
nominated for election to the Board by the Company in any definitive
proxy statement of the Company shall be elected at or as of the
meeting date and time set forth in such definitive proxy statement,
including the Shareholder Designee, who, as of the date of this
Agreement, shall be ▇▇▇▇ ▇▇▇▇▇. Each Shareholder shall either (i) vote
all of his shares of Company Stock and shall, as promptly as
practicable, take all other necessary or desirable actions within his
control (whether in his capacity as a shareholder of the Company or
otherwise, and including, without limitation, attendance at meetings
in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Company shall, as
promptly as practicable, take all necessary and desirable actions
within its control (including, without limitation, calling special
Board and shareholder meetings) so that the slate of nominees,
including the Shareholder Designee, nominated for election to the
Board by the Company in any definitive proxy statement of the Company
shall be elected at or as of the meeting date and time set forth in
such definitive proxy statement; or (ii) abstain from voting and take
no action in support or opposition of any candidate nominated for
election to the Board.
(b) The Shareholders shall deliver in writing to the Company the
name of one nominee within fifteen days of the date of any request by
the Company to submit the Shareholder Designee for election to the
Board as contemplated in 5.2(a) above. Any vacancy resulting from the
failure by the Shareholders to submit timely the Shareholder Designee
shall be filled at the next meeting held for such purpose pursuant to
5.3(a) below.
(c) The remaining Board members shall be elected and removed in
accordance with the Bylaws.
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(d) If the Shareholders cease to own at least the Threshold
Percentage of the Company Stock issued and outstanding on the date of
this IR Agreement, then such group shall cease to have the right to
designate the Shareholder Designee pursuant to this Section 5.2.
(e) With respect to each Shareholder Designee, the Shareholders
shall cause the Shareholder Designee to provide to the Company all
necessary assistance and information related to such Shareholder
Designee that is required under Regulation 14A under the Exchange Act
to be disclosed in solicitations of proxies or otherwise.
5.3 Vacancies and Removal.
(a) The Shareholder Designee will be elected at any annual or
special meeting of the shareholders of the Company (or by written
consent in lieu of a meeting of the shareholders of the Company) and
will serve until their successors are duly elected and qualified or
until their earlier resignation or removal.
(b) The removal from the Board without Cause of any Shareholder
Designee elected under Section 5.2(a) through (c) will be effective
only upon the written request of the party or parties entitled to
designate such representative pursuant to such Section. The removal
from the Board for Cause of any Shareholder Designee elected under
Section 5.2(a) through (c) shall be effected as provided in the
Bylaws, and any vacancy resulting therefrom shall be filled by a
director elected pursuant to Section 5.2 as promptly as practicable.
(c) In the event that the Shareholder Designee elected to the
Board pursuant to Section 5.2 for any reason ceases to serve as a
member of the Board during his or her term of office, the resulting
vacancy on the Board shall be filled by a director elected pursuant to
Section 5.2 as promptly as practicable.
(d) In the event that the Shareholders collectively elect not to
designate a director that they are entitled to designate in accordance
with Section 5.2 above, such vacancy shall be remain vacant until
filled as provided in Section 5.3(a) above.
(e) In the event that the Shareholders cease to have a right to
designate a member of the Board pursuant to Section 5.2 above, the
Board may remove the Shareholders' designee, and any vacancy on the
Board created by such removal or otherwise existing shall be filled as
provided in the Bylaws without regard to the rights set forth in this
Section 5.2 above.
5.4 Expenses and Insurance.
The director elected pursuant to Section 5.2 shall be entitled
to receive such fixed sum or stated salary for services as determined by the
Board. The Company may obtain and maintain director and officer indemnity
insurance coverage. Indemnification and exculpation of directors shall be as set
forth in the Company Governing Documents.
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ARTICLE VI
TERMINATION
6.1 Holdback; Indemnification Under Merger Agreement.
Each Shareholder acknowledges and agrees (i) that it is receiving the
Stock Consideration subject to all terms, provisions and conditions applicable
to a TRB Member under the Merger Agreement (including, without limitation,
Articles 3, 8, 9, and 10) and the Transaction Documents, which are enforceable
against the Shareholders and the Holdback as set forth in the Merger Agreement,
and (ii) to indemnify and hold harmless, to the fullest extent permitted by law,
the TRWC Indemnitees as set forth in Article 8 of the Merger Agreement.
6.2 Termination of Agreement.
This IR Agreement may be terminated in whole or part at any time by
mutual agreement in writing by all of the parties hereto. Notwithstanding
anything contained herein to the contrary, the Shareholders acknowledge and
agree that the binding provisions set forth in Articles 3 and 8 of the Merger
Agreement may survive termination of this IR Agreement, and in the event of a
conflict with the terms of this IR Agreement, the provisions of Articles 3 and 8
of the Merger Agreement shall govern.
ARTICLE VII
MISCELLANEOUS
7.1 Injunctive Relief.
It is acknowledged that it will be impossible to measure the damages
that would be suffered by the parties hereto if a party hereto fails to comply
with the provisions of this IR Agreement and that in the event of any such
failure, the parties hereto will be immediately and irreparably harmed and will
not have an adequate remedy at law. The parties hereto shall, therefore, be
entitled to obtain specific performance of each party's obligations hereunder
and to obtain immediate injunctive relief, without the obligation to post a
bond. The parties hereto shall not argue, as a defense to any proceeding for
such specific performance or injunctive relief, that the parties hereto have an
adequate remedy at law.
7.2 Successors and Assigns.
This IR Agreement shall be binding upon and inure to the benefit of the
Company and the Shareholders and their respective permitted successors and
assigns. Nothing in this IR Agreement, expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations or liabilities under or by reason of this IR
Agreement.
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7.3 Entire Agreement.
This IR Agreement (together with its Annexes), the Merger Agreement
(together with its Schedules and Exhibits), and the Transaction Documents
contain the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede all prior understanding or agreement,
oral or written with respect to such matters including, without limitation, that
certain Letter of Intent dated June 14, 2010 between TRWC and the Company.
7.4 Notices.
All notices, requests, demands, claims, consents and other
communications hereunder to any party shall be in writing and shall be deemed
sufficient when (i) mailed by United States certified mail, return receipt
requested, (ii) mailed by overnight express mail, (iii) sent by facsimile or
telecopy machine, followed by confirmation mailed by first-class mail or
overnight express mail, or (iv) delivered in person, or such other address as a
Party may provide to the other in accordance with the procedure for notices set
forth in Section 11.4 of the Merger Agreement.
7.5 Amendments; Waivers.
(a) Except as expressly set forth herein, the provisions of this
IR Agreement may not be amended or modified without the prior written
consent of (i) the Company, and (ii) the Shareholders.
(b) No course of dealing between the Company and the Shareholders
(or any of them) or any delay in exercising any rights hereunder will
operate as a waiver of any rights of any party to this IR Agreement.
Failure to insist upon strict compliance with any of the terms or
conditions of this IR Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any
waiver or relinquishment of any right or power granted herein at any
time be deemed a waiver or relinquishment of the same or any other
right or power at any other time.
7.6 Counterparts.
This IR Agreement may be executed in any number of counterparts and by
facsimile, each of which shall be an original, and all such counterparts shall
constitute one and the same Agreement, binding on all the Parties
notwithstanding that all the Parties are not signatories to the same
counterpart.
7.7 Headings.
The headings and captions contained in this IR Agreement are inserted
only as a matter of convenience and for reference and in no way define, limit,
extend or prescribe the scope of this IR Agreement or the intent of any
provision.
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7.8 Severability.
It is the desire and intent of the parties that the provisions of this
IR Agreement be enforced to the fullest extent permissible under the law and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any provision of this IR Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this IR Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this IR Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.
7.9 Governing Law; Dispute Resolution.
(a) Governing Law. Notwithstanding the place where this IR
Agreement may be executed by any of the Parties, the Parties expressly
agree that this IR Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the State of Colorado,
without regard for its conflict of laws doctrine.
(b) Dispute Resolution.
(i) Except as provided in Section 7.1 above, any
dispute arising between the Parties relating to this
Agreement will be submitted to binding arbitration under the
Commercial Arbitration Rules of the American Arbitration
Association under the United States Arbitration Act, and may
not be the subject of litigation in any forum. The
arbitration will be conducted in Denver, Colorado, before a
single arbitrator affiliated with the Judicial Arbiter
Group. If the Judicial Arbiter Group is unavailable to
conduct the arbitration, then it will be before another
arbitral body in such venue, selected by the parties, or if
they cannot agree on another arbitral body, the American
Arbitration Association. The arbitrator will have full
authority to order specific performance and award damages
and other relief available under this Agreement, but will
have no authority to add to, detract from, change or amend
the terms of this Agreement or existing law. All arbitration
proceedings, including settlements and awards, will be
confidential, except as required to be disclosed by law. The
decision of the arbitrator will be written and will be final
and binding and non-appealable, and judgment on the award by
the arbitrator may be entered in any court of competent
jurisdiction.
(ii) Except for equitable remedies (including
injunctive relief), in the absence of fraud, the parties
hereto acknowledge and agree that the sole and exclusive
remedy of the parties to this Agreement from and after the
Closing Date with respect to any Losses or Adverse
Consequences arising from claims for breach of
representations and warranties under this Agreement shall be
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solely in accordance with, and limited by, the
indemnification provision set forth in Article 8 of the
Merger Agreement. Notwithstanding the preceding sentence,
and except to the extent of a breach of any representation,
warranty, covenant, agreement or any other obligation
contained in the Merger Agreement or this Agreement, the
indemnification provisions of Article 8 shall not apply to
any claim or liability released under the Release and Waiver
(as defined in the Merger Agreement).
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IN WITNESS WHEREOF, the parties have executed and delivered
this IR Agreement on the date first above written.
THE COMPANY:
TWO RIVERS WATER COMPANY
By: ________________________________
Name:
SHAREHOLDERS:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
By: ________________________________
Name:
For the limited purposes set forth in Article V:
By: ________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Annex I
Shareholders
Shareholder Name Number of Company Number of Shares of
Company Stock to be Issued
Units Surrendered
-------------------- -------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇ ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇ ▇▇▇▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇ 1,992,860 996,430
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,049,980 524,990
Exhibit 3.5
MUTUAL RELEASE
This Mutual Release is entered into this __________, 2010, by and
between, on the one hand, Two Rivers Water Company, a Colorado corporation and
TRWC, Inc., a Colorado corporation ("Two Rivers" and "TRWC," respectively) and,
on the other hand, Two Rivers Basin, LLC, a Colorado limited liability company
("TRB"). Two Rivers, TRWC and TRB each is referred to herein as a "Party" and
collectively as the "Parties."
For and in consideration of the mutual obligations set forth in the
Merger Agreement of even date herewith, together with other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the Parties, each Party covenants and agrees as follows:
1. Release By Two Rivers and TRWC. Two Rivers and TRWC,
together with their respective successors, predecessors, assigns, executors,
administrators, agents and insurers (referred to collectively as the "TRWC
Releasors"), do hereby release, acquit and forever discharge TRB, together with
its agents, officers, directors, members, managers, shareholders, employees,
partners, representatives, attorneys, successors, predecessors, assigns and
insurers, and all persons acting by, through, under or in concert with TRB, and
also HCIC Holdings, LLC (each of the foregoing referred to collectively as the
"TRB Releasees"), of and from any and all claims, demands, complaints,
liabilities, causes of action, controversies, damages, charges, agreements,
promises, obligations, compensation, rights, actions, remedies, suits, injuries,
debts, expenses, sums of money, accounts, reckonings, bills, and claims for
attorneys' fees, of any kind or nature whatsoever, whether based on tort,
contract, statute or any other theory of recovery at law or in equity, whether
asserted or unasserted, whether known or unknown, and whether suspected or
unsuspected, which the TRWC Releasors ever had, now have or hereafter may claim
to have or have had against any of the TRB Releasees from the beginning of time
up to and including the date of this Release, arising under or in connection
with:
(A) the Contribution Agreement dated as of August 17, 2009,
among the TRB, TRWC and HCIC Holdings, LLC, a Colorado limited liability company
("HCIC"); (B) the HCIC Operating Agreement dated as of August 17, 2009; and (C)
the Assignment and Assumption of Share Purchase Agreements and Real Property
Options dated as of August 17, 2009, by and between TRB and HCIC.
2. Release By TRB. TRB, together with its successors,
predecessors, assigns, executors, administrators, agent and insurers (referred
to collectively as the "TRB Releasors"), does hereby release, acquit and forever
discharge Two Rivers, TRWC and their respective agents, officers, directors,
members, managers, shareholders, employees, partners, representatives,
attorneys, successors, predecessors, assigns and insurers, and all persons
acting by, through, under or in concert with Two Rivers or TRWC, and also HCIC
Holdings, LLC (each of the foregoing referred to collectively as the "TRWC
Releasees"), of and from any and all claims, demands, complaints, liabilities,
causes of action, controversies, damages, charges, agreements, promises,
obligations, compensation, rights, actions, remedies, suits, injuries, debts,
expenses, sums of money, accounts, reckonings, bills, and claims for attorneys'
fees, of any kind or nature whatsoever, whether based on tort, contract, statute
or any other theory of recovery at law or in equity, whether asserted or
unasserted, whether known or unknown, and whether suspected or unsuspected,
which the TRB Releasors ever had, now have or hereafter may claim to have or
have had against the TRWC Releasees from the beginning of time up to and
including the date of this Release, arising under or in connection with:
(A) the Contribution Agreement dated as of August 17, 2009,
among the TRB, TRWC and HCIC Holdings, LLC, a Colorado limited liability company
("HCIC"); (B) the HCIC Operating Agreement dated as of August 17, 2009; and (C)
the Assignment and Assumption of Share Purchase Agreements and Real Property
Options dated as of August 17, 2009, by and between TRB and HCIC.
This Release is executed by each of the Parties as of the date first
set forth above.
TRWC, INC.
By: ___________________________________________________________________
Name:__________________________________________________________________
Title:_________________________________________________________________
TWO RIVERS WATER COMPANY
By: ___________________________________________________________________
Name:__________________________________________________________________
Title:_________________________________________________________________
TWO RIVERS BASIN LLC
By: ___________________________________________________________________
Name:__________________________________________________________________
Title:_________________________________________________________________
2