AGREEMENT AND PLAN OF SHARE EXCHANGE among UCS Fomento Commercial S.A, a
Brazilian corporation ("Fomento"), UCS FINANCIAL, INC., a Delaware corporation
("FINANCIAL") and Livorno Investments S.A. (referred to herein as the
"Shareholders"), being the owners of record of 99.94% of the issued and
outstanding stock of Fomento.
Whereas, UCS FINANCIAL wishes to acquire and the Shareholders wish to
transfer 99.94% of the issued and outstanding securities of FOMENTO in a
transaction intended to qualify as a reorganization within the meaning of
Section368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Exchange").
Now, therefore, FOMENTO, UCS FINANCIAL, and the Shareholders adopt this
plan of reorganization and agree as follows:
1. EXCHANGE OF STOCK
1.1. NUMBER OF SHARES. The Shareholders agree to transfer to UCS FINANCIAL
at the Closing 99.94% of the shares of FOMENTO which is currently 3,572,044
shares, in exchange for an aggregate of 17,860,220 shares of voting common stock
of UCS FINANCIAL, $.001 par value per share, to be issued to Shareholders or its
designees and assignees as set forth hereto as EXHIBIT A.
1.2. EXCHANGE OF CERTIFICATES. Each holder of an outstanding certificate
or certificates theretofore representing shares of FOMENTO shall transfer such
certificate(s) for ownership to UCS FINANCIAL, and shall receive, or its
designees shall receive, in exchange as follows: an aggregate of 17,860,220
shares of UCS FINANCIAL Common Stock (5 shares of UCS FINANCIAL for every one
share of FOMENTO). The transfer of FOMENTO ownership by the Shareholders shall
be effected by the delivery to UCS FINANCIAL at the closing of evidence that
such shares have been registered in Brazil with the required governmental
authorities.
1.4. FURTHER ASSURANCES. At the Closing and from time to time thereafter,
the Shareholders shall execute such additional instruments and take such other
action as UCS FINANCIAL may request in order more effectively to sell, transfer,
and assign the transferred stock to UCS FINANCIAL and to confirm UCS FINANCIAL's
title thereto.
2. CLOSING
2.1. DATE AND PLACE. The Closing contemplated herein shall be held at the
offices of the Company's attorney provided for herein without requiring the
meeting of the parties hereof. All proceedings to be taken and all documents to
be executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
The date of Closing may be accelerated or extended by agreement of the parties.
2.2. EXECUTION OF DOCUMENTS. Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission required by this
agreement or any signature required thereon may be used in lieu of an original
writing or transmission or signature for any and all purposes for which the
original could be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire original
writing or transmission or original signature.
4. REPRESENTATIONS AND WARRANTIES OF FOMENTO
The Shareholders of FOMENTO represent and warrant as follows:
4.1. CORPORATE ORGANIZATION AND GOOD STANDING. FOMENTO is a corporation
duly organized, validly existing, and in good standing under the laws of Brazil,
and is qualified to do business as a foreign corporation in each jurisdiction,
if any, in which its property or business requires such qualification.
4.2. CAPITALIZATION. FOMENTO 's authorized capital stock consists of
3,572,044 shares which are issued and outstanding to a total of two entities /
individuals.
4.3. ISSUED STOCK. All the outstanding shares of its shares are duly
authorized and validly issued, fully paid and non-assessable.
4.4. STOCK RIGHTS. Except as may be set out by attached schedule, there
are no stock grants, options, rights, warrants or other rights to purchase or
obtain FOMENTO shares.
4.5. FINANCIAL STATEMENTS. Copies of FOMENTO's financial statements for
the years ended December 31, 2002 and 2003 will have been delivered by FOMENTO
to UCS FINANCIAL fairly present the financial condition of FOMENTO as of the
date therein and the results of its operations for the periods then ended in
conformity with generally accepted accounting principles consistently applied.
4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or
reserved against in the FOMENTO Financial Statements, FOMENTO did not have at
that date any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily reflected in a corporate balance sheet
prepared in accordance with generally accepted accounting principles.
4.7. LITIGATION. Except as may be set out by attached schedule, there is
not, to the knowledge of the Shareholders of FOMENTO, any pending, threatened,
or existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against FOMENTO or against any of its
officers.
4.8. TITLE. Except as may be set out by attached schedule, FOMENTO has
good and marketable title to all the real property and good and valid title to
all other property included in the FOMENTO Financial Statements. Except as set
out in the balance sheet thereof, the properties of FOMENTO are not subject to
any mortgage, encumbrance, or lien of any kind except minor encumbrances that do
not materially interfere with the use of the property in the conduct of the
business of FOMENTO .
4.9. TAX RETURNS. EXCEPT AS SET FORTH IN THE ATTACHED SCHEDULE 4.9, all
required tax returns for federal, state, county, municipal, local, foreign and
other taxes and assessments have been properly prepared and filed by FOMENTO for
all years for which such returns are due unless an extension for filing any such
return has been filed. The provisions for federal and state taxes reflected in
the FOMENTO Financial Statements are adequate to cover any such taxes that may
be assessed against FOMENTO in respect of its business and its operations during
the periods covered by the FOMENTO Financial Statements and all prior periods.
4.10. NO VIOLATION. Consummation of the Exchange will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of FOMENTO is subject or by which FOMENTO is
bound.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and warrant as
follows:
5.1. TITLE TO SHARES. The Shareholders, and each of them, are the owners,
free and clear of any liens and encumbrances, of the number of FOMENTO shares
which are listed in the attached Exhibit A and which they have contracted to
exchange.
5.2. LITIGATION. EXCEPT AS SET FORTH IN THE ATTACHED SCHEDULE 5.2, there
is no litigation or proceeding pending, or to each Shareholder's knowledge
threatened, against or relating to shares of FOMENTO held by the Shareholders.
6. REPRESENTATIONS AND WARRANTIES OF ESHEL
UCS FINANCIAL represents and warrants as follows:
6.1. CORPORATE ORGANIZATION AND GOOD STANDING. UCS FINANCIAL is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
6.2. CAPITALIZATION. UCS FINANCIAL's authorized capital stock consists of
100,000,000 shares of common stock, $.001 par value per share, of which no
shares are issued and outstanding as of December 1, 2004, and no shares of
preferred stock.
6.3. ISSUED STOCK. All the outstanding shares of its common stock are duly
authorized and validly issued, fully paid and non-assessable.
6.4. STOCK RIGHTS. Except as may be set out by attached schedule, there
are no stock grants, options, rights, warrants or other rights to purchase or
obtain UCS FINANCIAL common or preferred stock issued or committed to be issued.
6.5. CORPORATE AUTHORITY. UCS FINANCIAL has all requisite corporate power
and authority to own, operate and lease its properties, to carry on its business
as it is now being conducted and to execute, deliver, perform and conclude the
transactions contemplated by this agreement and all other agreements and
instruments related to this agreement.
6.6. AUTHORIZATION. Execution of this agreement has been duly authorized
and approved by UCS FINANCIAL's board of directors.
6.7. SUBSIDIARIES. Except as may be set out by attached schedule, UCS
FINANCIAL has no subsidiaries.
6.8. LITIGATION. Except as may be set out by attached schedule, there is
not, to the knowledge of UCS FINANCIAL any pending, threatened, or existing
litigation, bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against UCS FINANCIAL or against any
of its officers.
6.9. CONTRACTS. Except as may be set out by attached schedule, UCS
FINANCIAL is not a party to any material contract not in the ordinary course of
business that is to be performed in whole or in part at or after the date of
this agreement.
6.10. TITLE. Except as may be set out by attached schedule, UCS FINANCIAL
has good and marketable title to all the real property and good and valid title
to all other property included in the UCS FINANCIAL Financial Statements. Except
as set out in the balance sheet thereof, the properties of UCS FINANCIAL are not
subject to any mortgage, encumbrance, or lien of any kind except minor
encumbrances that do not materially interfere with the use of the property in
the conduct of the business of UCS FINANCIAL.
6.11. NO VIOLATION. Consummation of the Exchange will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of UCS FINANCIAL is subject or by which UCS
FINANCIAL is bound.
7. CONDUCT OF FOMENTO PENDING THE CLOSING. FOMENTO covenants that between
the date of this agreement and the Closing:
7.1. No change will be made in FOMENTO 's certificate of incorporation or
bylaws.
7.2. FOMENTO will not make any change in its authorized or issued capital
stock, declare or pay any dividend or other distribution or issue, encumber,
purchase, or otherwise acquire any of its capital stock other than as provided
herein.
7.3. FOMENTO will use its best efforts to maintain and preserve its
business organization, employee relationships, and goodwill intact, and will not
enter into any material commitment except in the ordinary course of business.
8. CONDUCT PENDING THE CLOSING
UCS FINANCIALFOMENTO and the Shareholders covenant that between the date
of this agreement and the Closing as to each of them:
8.1. No change will be made in the charter documents, by-laws, or other
corporate documents of UCS FINANCIAL or FOMENTO.
8.2. FOMENTO and UCS FINANCIAL will use their best efforts to maintain and
preserve their business organization, employee relationships, and goodwill
intact, and will not enter into any material commitment except in the ordinary
course of business.
8.3. None of the Shareholders will sell, transfer, assign, hypothecate,
lien, or otherwise dispose or encumber the FOMENTO shares of common stock owned
by them.
9. CONDITIONS PRECEDENT TO OBLIGATION OF FOMENTO AND THE SHAREHOLDERS
FOMENTO 's and the Shareholders' obligation to consummate the Exchange
shall be subject to fulfillment on or before the Closing of each of the
following conditions, unless waived in writing or by acceptance of UCS
FINANCIAL's shares by the Shareholders:
9.1. ESHEL'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of UCS FINANCIAL set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
9.2. ESHEL'S COVENANTS. UCS FINANCIAL shall have performed all covenants
required by this agreement to be performed by it on or before the Closing.
9.3. BOARD OF DIRECTOR APPROVAL. This Agreement shall have been approved
by the Board of Directors of UCS FINANCIAL.
10. CONDITIONS PRECEDENT TO OBLIGATION OF ESHEL
UCS FINANCIAL's obligation to consummate the Exchange shall be subject to
fulfillment on or before the Closing of each of the following conditions, unless
waived in writing or by acceptance of FOMENTO's shares by UCS FINANCIAL:
10.1. UCS FINANCIAL AND THE SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES.
The representations and warranties of FOMENTO and the Shareholders set forth
herein shall be true and correct at the Closing as though made at and as of that
date, except as affected by transactions contemplated hereby.
10.2. UCS FINANCIAL AND THE SHAREHOLDERS' COVENANTS. FOMENTO and the
Shareholders shall have performed all covenants required by this agreement to be
performed by them on or before the Closing.
10.3. BOARD OF DIRECTOR APPROVAL. This Agreement shall have been approved
by the Board of Directors of FOMENTO.
10.4. SHAREHOLDER EXECUTION. This Agreement shall have been executed by
the required number of shareholders of FOMENTO.
10.5. SUPPORTING DOCUMENTS OF UCS FINANCIAL. FOMENTO shall have delivered
to UCS FINANCIAL supporting documents in form and substance reasonably
satisfactory to UCS FINANCIAL to the effect that:
(a) FOMENTO is a corporation duly organized, validly existing, and in good
standing;
(b) FOMENTO's capital stock is as set forth herein;
(c) Executed copies of the resolutions of the board of directors of
FOMENTO authorizing the execution of this agreement and the consummation hereof;
11. SHAREHOLDERS' REPRESENTATIVE. The Shareholders hereby irrevocably
designate and appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇ as their agent and attorney in fact
("Shareholders' Representative") with full power and authority until the Closing
to execute, deliver, and receive on their behalf all notices, requests, and
other communications hereunder; to fix and alter on their behalf the date, time,
and place of the Closing; to waive, amend, or modify any provisions of this
agreement, and to take such other action on their behalf in connection with this
agreement, the Closing, and the transactions contemplated hereby as such agent
or agents deem appropriate; provided, however, that no such waiver, amendment,
or modification may be made if it would decrease the number of shares to be
issued to the Shareholders hereunder or increase the extent of their obligation
to indemnify UCS FINANCIAL hereunder.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of FOMENTO , the Shareholders and UCS FINANCIAL set out herein shall
survive the Closing.
13. ARBITRATION
13.1. SCOPE. The parties hereby agree that any and all claims (except only
for requests for injunctive or other equitable relief) whether existing now, in
the past or in the future as to which the parties or any affiliates may be
adverse parties, and whether arising out of this agreement or from any other
cause, will be resolved by arbitration before the American Arbitration
Association within the District of Columbia.
13.2. CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The parties hereby
irrevocably consent to the jurisdiction of the American Arbitration Association
and the situs of the arbitration (and any requests for injunctive or other
equitable relief) within the District of Columbia. Any award in arbitration may
be entered in any domestic or foreign court having jurisdiction over the
enforcement of such awards.
13.3. APPLICABLE LAW. The law applicable to the arbitration and this
agreement shall be that of the State of Delaware, determined without regard to
its provisions which would otherwise apply to a question of conflict of laws.
13.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion,
allow the parties to make reasonable disclosure and discovery in regard to any
matters which are the subject of the arbitration and to compel compliance with
such disclosure and discovery order. The arbitrator may order the parties to
comply with all or any of the disclosure and discovery provisions of the Federal
Rules of Civil Procedure, as they then exist, as may be modified by the
arbitrator consistent with the desire to simplify the conduct and minimize the
expense of the arbitration.
13.5. RULES OF LAW. Regardless of any practices of arbitration to the
contrary, the arbitrator will apply the rules of contract and other law of the
jurisdiction whose law applies to the arbitration so that the decision of the
arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
13.6. FINALITY AND FEES. Any award or decision by the American Arbitration
Association shall be final, binding and non-appealable except as to errors of
law or the failure of the arbitrator to adhere to the arbitration provisions
contained in this agreement. Each party to the arbitration shall pay its own
costs and counsel fees except as specifically provided otherwise in this
agreement.
13.7. MEASURE OF DAMAGES. In any adverse action, the parties shall
restrict themselves to claims for compensatory damages and\or securities issued
or to be issued and no claims shall be made by any party or affiliate for lost
profits, punitive or multiple damages.
13.8. COVENANT NOT TO ▇▇▇. The parties covenant that under no conditions
will any party or any affiliate file any action against the other (except only
requests for injunctive or other equitable relief) in any forum other than
before the American Arbitration Association, and the parties agree that any such
action, if filed, shall be dismissed upon application and shall be referred for
arbitration hereunder with costs and attorney's fees to the prevailing party.
13.9. INTENTION. It is the intention of the parties and their affiliates
that all disputes of any nature between them, whenever arising, whether in
regard to this agreement or any other matter, from whatever cause, based on
whatever law, rule or regulation, whether statutory or common law, and however
characterized, be decided by arbitration as provided herein and that no party or
affiliate be required to litigate in any other forum any disputes or other
matters except for requests for injunctive or equitable relief. This agreement
shall be interpreted in conformance with this stated intent of the parties and
their affiliates.
13.10. SURVIVAL. The provisions for arbitration contained herein shall
survive the termination of this agreement for any reason.
14. GENERAL PROVISIONS.
14.1. FURTHER ASSURANCES. From time to time, each party will execute such
additional instruments and take such actions as may be reasonably required to
carry out the intent and purposes of this agreement.
14.2. WAIVER. Any failure on the part of either party hereto to comply
with any of its obligations, agreements, or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
14.3. BROKERS. Each party agrees to indemnify and hold harmless the other
party against any fee, loss, or expense arising out of claims by brokers or
finders employed or alleged to have been employed by the indemnifying party.
14.4. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to UCS FINANCIAL to:
UCS FINANCIAL INC.
If to FOMENTO, to:
If to the Shareholders, to:
Livorno Investments SA
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
14.5. GOVERNING LAW. This agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
14.6. ASSIGNMENT. This agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this agreement
without the written consent of the other party shall be void.
14.7. COUNTERPARTS. This agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
14.8. EXCHANGE AGENT AND CLOSING DATE. The Closing shall take place upon
the fulfillment by each party of all the conditions of the Closing required
herein, but not later than 15 days following execution of this agreement unless
extended by mutual consent of the parties.
14.9. REVIEW OF AGREEMENT. Each party acknowledges that it has had time to
review this agreement and, as desired, consult with counsel. In the
interpretation of this agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of, this agreement.
14.10. SCHEDULES. All schedules attached hereto, if any, shall be
acknowledged by each party by signature or initials thereon.
14.11. EFFECTIVE DATE. This effective date of this agreement shall be
December 10, 2004.
IN WITNESS WHEREOF, the parties have executed this Agreement.
UCS FINANCIAL, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LUPETTI
By
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LUPETTI
Title: President
UCS FOMENTO COMMERCIAL SA
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LUPETTI
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LUPETTI
Title: Executive Director
SHAREHOLDERS:
LIVORNO INVESTMENTS LTD.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By:
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Principal
SCHEDULE 4.9
TAX LIABILITIES
NONE
SCHEDULE 5.2
OUTSTANDING LITIGATION
NONE
EXHIBIT A
List of designees/ assignees of Livorno Investments, Ltd.