AGREEMENT AND PLAN OF MERGER
BY AND AMONG BRANDS SHOPPING NETWORK, INC.,
BRANDS MERGER SUB, INC., AND
UNITED FUEL & ENERGY CORPORATION
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 6, 2004
AMONG
BRANDS SHOPPING NETWORK INC.
BRANDS UNITED MERGER SUB, INC.,
AND
UNITED FUEL & ENERGY CORPORATION
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of August
6, 2004, is entered into by and among Brands Shopping Network Inc., a Nevada
corporation ("BRANDS"), Brands United Merger Sub, Inc., a Texas corporation and
wholly-owned subsidiary of Brands ("MERGER SUBSIDIARY"), and United Fuel &
Energy Corporation, a Texas corporation ("UNITED"). Capitalized terms used in
this Agreement and not defined in context shall have the meanings ascribed to
them in Section 10.8 hereof.
WHEREAS, the respective Boards of Directors of Brands, Merger Subsidiary
and United have approved the merger of Merger Subsidiary with and into United,
with United being the surviving corporation as a wholly-owned subsidiary of
Brands (the "MERGER"), all upon the terms and subject to the conditions set
forth herein; and
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE");
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, Merger Subsidiary shall be merged with
and into United and the separate existence of Merger Subsidiary shall thereupon
cease. United shall continue as the surviving corporation in the Merger
(thereafter referred to as the "SURVIVING CORPORATION") under the laws of the
State of Texas as a wholly-owned subsidiary of Brands. Throughout this
Agreement, the term "UNITED" shall refer to such entity prior to the Merger and
the term "SURVIVING CORPORATION" shall refer to it in its status as the
surviving corporation in the Merger.
Section 1.2 Closing. The closing of the Transactions (the "CLOSING") will
take place as promptly as practicable (and in any event within two business
days) after satisfaction or waiver of the conditions set forth in Article VII
(other than conditions that require the delivery of documents, which may be
satisfied at the Closing). The Closing shall be held at such time and place as
agreed to in writing by the parties hereto. The date on which the Closing occurs
is referred to herein as the "CLOSING DATE". At the Closing each of Brands and
United shall deliver the agreements, certificates and other documents required
to be delivered and which have not been delivered prior to the Closing. At the
end of the Closing, United shall file with the Secretary of State of the State
of Texas a certificate of merger (the "CERTIFICATE OF MERGER") with respect to
the Merger pursuant to and in compliance with this Agreement and the Business
Corporation Act of the State of Texas (the "TEXAS LAW").
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Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Texas, or at such later time as specified therein. When
used in this Agreement, the term "EFFECTIVE TIME" shall mean the time at which
the Certificate of Merger becomes effective in accordance with Texas Law.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have all the effects provided by applicable Law. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in Law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation the title to any property or
rights of United or Merger Subsidiary, by reason or as a result of the Merger,
or otherwise to carry out the purposes of this Agreement, United and Merger
Subsidiary agree that the Surviving Corporation and its proper officers and
directors shall execute and deliver all such deeds, conveyances, assignments and
assurances in Law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights in the Surviving Corporation
and otherwise to carry out the purposes of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of each of United and Merger Subsidiary or otherwise to take any and all
such action.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation. The articles of incorporation of
United, as amended, shall continue as the articles of incorporation of the
Surviving Corporation until thereafter duly amended. Such articles will only be
amended to change the name of the Surviving Corporation to UFE Corporation.
Section 2.2 By-Laws. The by-laws of United shall continue after the
Effective Time as the by-laws of the Surviving Corporation until thereafter duly
amended.
Section 2.3 Board of Directors; Officers. The members of the Board of
Directors and the officers of the Surviving Corporation following the Merger
shall be the directors and officers of United immediately prior to the Effective
Time, and such directors and officers shall continue in office until the earlier
of their respective death, resignation or removal and the time that their
respective successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of any stockholder of United or Merger Subsidiary:
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(i) Each share of common stock, par value $.001 per share, of
Merger Subsidiary that is issued and outstanding immediately prior to the
Effective Time shall be automatically converted without any further action into
one fully paid and non-assessable share of common stock, no par value per share,
of the Surviving Corporation, and shall constitute the only issued and
outstanding capital stock of the Surviving Corporation following the Merger.
(ii) Each share of the common stock of United, no par value
("UNITED COMMON STOCK"), and preferred stock of United, par value $.001 per
share ("UNITED PREFERRED STOCK") that is owned by United as treasury stock and
any shares of United Common Stock that are owned by Brands shall be canceled and
shall cease to exist, and no stock of Brands or other consideration shall be
delivered in exchange therefor.
(iii) Subject to the provisions of this Section 3.1(a), the
shares of United Common Stock and United Preferred Stock, other than the shares
canceled pursuant to Section 3.1(a)(ii), issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holders thereof, be converted into the right to
receive validly issued, fully paid and non-assessable shares of Common Stock of
Brands, par value $.001 per share ("BRANDS COMMON STOCK"), at an exchange ratio
(the "EXCHANGE RATIO") of one share of Brands Common Stock for each share of
United Common Stock or United Preferred Stock (the "MERGER CONSIDERATION").
(iv) In connection with the Merger, all options to purchase
United Common Stock outstanding immediately prior to the Effective Time shall be
automatically converted without any further action into an option to purchase
one share of Brands Common Stock for each share of United Common Stock
underlying the option.
(b) Except as set forth on Schedule 3.1(b), if, at any time during
the period between the date of this Agreement and the Effective Time, United
changes the number of shares of United Common Stock or United Preferred Stock
issued and outstanding or Brands changes the number of shares of Brands Common
Stock issued and outstanding, in each case as a result of a stock split, reverse
stock split, stock dividend, recapitalization, redenomination of share capital
or other similar transaction with an effective date or record date, as
applicable, prior to the Effective Time, the Exchange Ratio and any other items
dependent thereon shall be appropriately adjusted.
Section 3.2 Stockholders' Rights at the Effective Time. On and after the
Effective Time, the certificates that immediately prior to the Effective Time
represented shares of United Common Stock and United Preferred Stock (the
"CERTIFICATES"), shall cease to represent any rights with respect to United
Common Stock and United Preferred Stock and shall only represent the right to
receive the Merger Consideration. As of the Effective Time, the holders of
United Common Stock and United Preferred Stock as of the Effective Time who are
entitled to receive shares of Brands Common Stock as Merger Consideration shall
be deemed to be record owners of such shares of Brands Common Stock as of the
Effective Time and shall thereupon be entitled to exercise any rights as a
holder of Brands Common Stock, including the right to vote such Brands Common
Stock, whether or not the Certificates are surrendered and exchanged pursuant to
this Agreement.
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Section 3.3 Surrender and Exchange of Share Certificates.
(a) Promptly after the Closing Date, Brands shall make available to
Pacific Stock Transfer Company, the transfer agent of Brands (the "PAYING
AGENT"), certificates evidencing such number of shares of Brands Common Stock as
will enable the Paying Agent to deliver the Brands Common Stock as Merger
Consideration pursuant to Section 3.1(a). The number of shares of Brands Common
Stock that each United stockholder will be entitled to receive will be
determined by multiplying the number of shares of United Common Stock and United
Preferred Stock held by such stockholder by the Exchange Ratio. Notwithstanding
any other provision of this Agreement, no fractional shares of Brands Common
Stock will be issued in connection with the Merger. Any United stockholder who
is entitled to receive a fractional share shall be entitled to receive, in lieu
thereof, cash in an amount equal to $4.00 multiplied by the fraction of the
share of Brands Common Stock the United stockholder would otherwise be entitled
to receive. In all cases where appropriate, the term Merger Consideration shall
mean both the shares of Brands Common Stock issued as Merger Consideration
together with the amount of cash payable in lieu of any fractional shares.
(b) At or after the Closing, each holder of a Certificate shall
surrender and deliver such Certificate to the Paying Agent together with a duly
completed and executed transmittal letter. Upon such surrender and delivery, the
holder shall receive the Merger Consideration. Until so surrendered and
exchanged, each Certificate formerly representing an outstanding share of United
Common Stock or United Preferred Stock shall, after the Effective Time, be
deemed for all purposes to evidence only the right to receive the Merger
Consideration as provided in Section 3.1(a)(iii).
(c) At the Effective Time, the stock transfer books of United shall
be closed and no transfer of shares of United Common Stock or United Preferred
Stock shall be recorded thereafter, other than transfers of shares of United
Common Stock or United Preferred Stock that have occurred prior to the Effective
Time. In the event that, after the Effective Time, Certificates are presented
for transfer to United, Merger Subsidiary or Brands, they shall be delivered to
the Paying Agent and exchanged for the Merger Consideration as provided for in
this Section 3.3.
(d) Any Merger Consideration that remains undistributed to the
stockholders of United as of the Effective Time after four months have elapsed
following the Effective Time shall be delivered to Brands by the Paying Agent,
upon demand, and any former stockholders of United who have not previously
complied with this Section 3.3 shall thereafter look only to Brands for payment
of their claim for the Merger Consideration or dividends or distributions with
respect to Brands Common Stock.
(e) Neither the Paying Agent, nor any of United, Merger Subsidiary
or Brands shall be liable to any holder of shares of United Common Stock or
United Preferred Stock with respect to any Merger Consideration (or dividends or
distributions with respect to Brands Common Stock) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
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(f) In the event any Certificates shall have been lost, stolen or
destroyed, the Paying Agent shall deliver the Merger Consideration and any
dividends or other distributions with respect to Brands Common Stock to which
such holder is entitled in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the record holder
thereof and the delivery of such bond as the Paying Agent may reasonably
require.
(g) No transfer taxes shall be payable by any stockholder of United
in respect of the issuance of the Brands Common Stock under this Section 3.3,
except that if any Brands Common Stock is to be issued in a name other than that
in which the Certificate surrendered has been registered, it shall be a
condition of such issuance that the Person requesting such issuance shall pay to
Brands any transfer taxes payable by reason thereof, or of any prior transfer of
such surrendered Certificate, or establish to the satisfaction of Brands that
such taxes have been paid or are not payable.
Section 3.4 No Further Rights. From and after the Effective Time, holders
of Certificates theretofore evidencing shares of United Common Stock or United
Preferred Stock shall cease to have any rights as stockholders of United, except
as provided herein or by Law.
Section 3.5 Resale Restrictions.
(a) The stockholders of United who received shares of Brands Common
Stock as Merger Consideration may not offer or sell any shares of Brands Common
Stock unless such offer or sale is made (i) pursuant to an effective
registration of such Brands Common Stock under the Securities Act, or (ii)
pursuant to an available exemption from the registration requirements of the
Securities Act. Brands shall refuse to register the transfer of any Brands
Common Stock not made in accordance with this Section 3.5 and for such purpose
may place stop order instructions with its transfer agent with respect to the
Brands Common Stock issued as Merger Consideration. A proposed transfer shall be
deemed to comply with this Section 3.5 if the applicable stockholder delivers to
Brands a legal opinion in form and substance satisfactory to Brands from counsel
reasonably satisfactory to Brands to the effect that such transfer complies with
this Section 3.5.
(b) During any time that a stockholder of United is not entitled to
sell the shares of Brands Common Stock received as Merger Consideration such
stockholder may not (i) offer, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer to dispose of, directly or
indirectly, any shares of Brands Common Stock or any securities convertible into
or exercisable or exchangeable for Brands Common Stock, or (ii) enter into any
swap or other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Brands Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Brands Common Stock or such other
securities, in cash or otherwise).
(c) Each certificate representing shares of Brands Common Stock
issued as Merger Consideration will bear the following legend or one
substantially similar thereto:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO RESTRICTIONS ON THE USE OF SUCH
SECURITIES IN HEDGING TRANSACTIONS PURSUANT TO THE TERMS OF A MERGER
AGREEMENT PURSUANT TO THE TERMS UNDER WHICH THEY WERE ISSUED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UNITED
United represents and warrants to Brands and Merger Subsidiary that,
except as disclosed in the United Disclosure Schedule which has been delivered
to Brands prior to the execution of this Agreement (the "UNITED DISCLOSURE
SCHEDULE"):
Section 4.1 Organization and Qualification. United is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas. United has the requisite corporate power and authority to carry on its
business as it is now being conducted and is duly qualified or licensed to do
business, and, if applicable, is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so organized, qualified, licensed or in good standing, or to have
such power and authority, when taken together with all other such failures would
not have an United Material Adverse Effect. United has heretofore made available
to Brands and Merger Subsidiary a complete and correct copy of the articles of
incorporation, by-laws or other governing documents, each as amended to the date
hereof, of United.
Section 4.2 Capitalization.
(a) The authorized capital stock of United consists of 11,000,000
shares of United Common Stock and 2,000,000 shares of United Preferred Stock. At
the time of Closing, United will have 8,650,000 shares of United Common Stock
and between 1,000,000 and 2,000,000 shares of United Preferred Stock issued and
outstanding, all of which will be validly issued, fully paid and non-assessable.
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(b) Except as set forth on Schedule 4.2(b) and options to purchase
no more than 500,000 shares of common stock granted to certain employees of
United, there are no preemptive or other outstanding rights, options, warrants,
conversion rights (including pursuant to convertible securities), stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind relating to the issued or
unissued capital stock of United or obligating United to issue or sell any
shares of capital stock of, or other equity interests in, United. As of the date
of this Agreement, there are no outstanding contractual obligations of United to
repurchase, redeem or otherwise acquire any shares of capital stock of United or
to provide material funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Person.
Section 4.3 Authority Relative to this Agreement and the Transactions.
United has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the Merger.
The execution and delivery by United of this Agreement, and the consummation by
United of the Transactions to which it is a party, have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of United are necessary to authorize the execution and delivery of
this Agreement or to consummate the Transactions to which it is a party other
than, with respect to the Merger, the adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
United Common Stock and United Preferred Stock and the filing and recordation of
appropriate merger documents as required by Texas Law. This Agreement has been
duly and validly executed and delivered by United and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of United, enforceable against United in
accordance with its terms.
Section 4.4 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by United does not,
and the performance of this Agreement and consummation of the Transactions by
United will not: (i) conflict with or violate the articles of incorporation or
by-laws of United, (ii) assuming the consents, approvals, authorizations and
waivers specified in Section 4.4(b) have been received, and any condition
precedent to such consent, approval, authorization, or waiver has been
satisfied, conflict with or violate any Law applicable to United or by which any
property or asset of United is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of United pursuant to, any
Contract to which United is a party or by which United or any property or asset
of United is bound or affected, except in the case of clauses (ii) and (iii) for
any such conflicts, violations, breaches, defaults or other occurrences of the
type referred to above which would not have an United Material Adverse Effect or
would not prevent or materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement by United does not,
and the performance of this Agreement by United will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic, foreign or supranational (a
"GOVERNMENTAL ENTITY"), except for applicable requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE Act"), the Securities Act of
1933, as amended (the "SECURITIES ACT"), state securities or "blue sky" laws
("BLUE SKY LAWS"), filing and recordation of the Certificate of Merger as
required by Texas Law, and applications for listing and other filings required
by the rules of the Nasdaq Bulletin Board or American Stock Exchange, except
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not have an United Material Adverse
Effect or would not prevent or materially delay the consummation of the Merger.
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Section 4.5 Status of United stockholders. Each stockholder of United is
an "accredited investor" as such term is defined in Rule 501 promulgated under
the Securities Act and has been advised that the shares of Brands Common Stock
that will be received by such stockholder in the Merger have not been registered
under the Securities Act, will be "restricted securities" as such term is
defined in Rule 144(a) promulgated under the Securities Act, and may not be sold
by such stockholder unless such shares are registered for resale or an exemption
from such registration is available.
Section 4.6 Brokers. No agent, broker, finder, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of United.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BRANDS
Brands represents and warrants to United that, except as disclosed in the
Brands Disclosure Schedule which has been delivered to United prior to the
execution of this Agreement (the "BRANDS DISCLOSURE SCHEDULE"):
Section 5.1 Organization and Qualification. Brands is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and Merger Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas. Brands has the
requisite corporate power and authority to carry on its business as it is now
being conducted and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary. Brands has heretofore made available to United a complete and correct
copy of the organizational documents, each as amended to the date hereof, of
Brands.
Section 5.2 Capitalization
(a) The authorized capital stock of Brands consists of 50,000,000
shares of Brands Common Stock and 5,000,000 shares of preferred stock, par value
$.001 per share ("Brands Preferred Stock"). As of the date of this Agreement,
Brands has 9,178,294 shares of Brands Common Stock issued and outstanding, all
of which have been duly authorized, validly issued, fully paid and
non-assessable. As of the Closing Date and immediately prior to the Effective
Time, there will be no more than 1,354,047 shares of Brands Common Stock issued
and outstanding, all of which have been duly authorized, validly issued, fully
paid and non-assessable. There are no shares of Brands Preferred Stock issued or
outstanding. The stockholders holding the Brands Common Stock and the number of
shares of Brands Common Stock held by each such stockholder is set forth on
Schedule 5.2 attached hereto. All of the issued and outstanding shares of Brands
Common Stock were issued in compliance with all applicable Laws including,
without limitation, the Securities Act, the Exchange Act and applicable Blue Sky
Laws. Except as set forth on Schedule 5.2, there are no preemptive or other
outstanding rights, options, warrants, conversion rights (including pursuant to
convertible securities), stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, calls, commitments or rights of any
kind relating to the issued or unissued capital stock of Brands or obligating
Brands to issue or sell any shares of capital stock of, or other equity
interests in, Brands. As of the date of this Agreement, there are no outstanding
contractual obligations of Brands to repurchase, redeem or otherwise acquire any
shares of capital stock of Brands or to provide material funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any Person.
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(b) The authorized capital stock of Merger Subsidiary consists of
100 shares of common stock, par value $.001 per share. There are 100 shares of
common stock of Merger Subsidiary issued and outstanding, all of which were
validly issued, fully paid and non-assessable. All of the outstanding shares of
Merger Subsidiary's common stock are held beneficially and of record by Brands,
free and clear of all liens or encumbrances of any kind. There are no preemptive
or other outstanding rights, options, warrants, conversion rights (including
pursuant to convertible securities), stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind relating to the issued or unissued capital stock of Merger
Subsidiary or obligating Merger Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Merger Subsidiary.
Section 5.3 Authority Relative to this Agreement. Each of Brands and the
Merger Subsidiary has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions to which each of them is a party. The execution and delivery of
this Agreement by Brands and Merger Subsidiary, and the consummation by Brands
and Merger Subsidiary of the Transactions have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Brands or Merger Subsidiary are necessary to authorize the execution and
delivery of this Agreement or to consummate the Transactions other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Texas Law. This Agreement has been duly and validly
executed and delivered by Brands and Merger Subsidiary and, assuming the due
authorization, execution and delivery hereof by United, constitutes a legal,
valid and binding obligation of Brands and Merger Subsidiary, enforceable
against Brands and Merger Subsidiary in accordance with its terms.
Section 5.4 No Conflicts, Required Filings and Consents
(a) The execution and delivery of this Agreement by Brands and the
Merger Subsidiary does not and will not, and the performance of this Agreement
and the consummation of the Transactions by Brands and Merger Subsidiary will
not: (i) conflict with or violate the articles of incorporation or by-laws of
Brands or the Merger Subsidiary (ii) assuming the consents, approvals,
authorizations and waivers specified in Section 5.4(b) have been received,
conflict with or violate any Laws applicable to Brands or by which any property
or asset of Brands is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Brands pursuant to, any
Contract to which Brands is a party or by which Brands or any property or asset
of Brands is bound or affected.
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(b) The execution and delivery of this Agreement by Brands or the
Merger Subsidiary does not and will not, and the performance of this Agreement
and the consummation of the Transactions by Brands and the Merger Subsidiary
will not, require any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Entity, except for applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, filing and
recordation of the Certificate of Merger as required by Texas Law and
applications for listing and other filings required by the rules of the Nasdaq
Bulletin Board.
Section 5.5 SEC Reports. The Registration Statement of Brands on Form
10-SB filed with the SEC (the "FORM 10") has become effective and has not been
withdrawn or suspended. The SEC has not issued a stop order with respect to the
Form 10 and, to the knowledge of Brands, no proceeding for such purpose is
pending or contemplated by the SEC. Brands has filed with the SEC all forms,
reports, schedules, registration statements and preliminary or definitive proxy
or information statements required to be filed by it with the SEC since the Form
10 became effective (such reports, together with the Form 10, the "BRANDS SEC
REPORTS"). As of their respective dates, the Brands SEC Reports complied as to
form in all material respects with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Brands SEC Reports. As of their respective dates,
the Brands SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Brands has filed all material contracts and agreements and
other documents or instruments required to be filed as exhibits to the Brands
SEC Reports.
Section 5.6 Scope of Operations; Compliance with Laws. The Brands SEC
Reports describe fairly and accurately all operations and material transactions
engaged in or conducted by Brands since its inception. Except as described in
the Brands SEC Reports, Brands does not own, lease or have the right to use, and
has never owned, leased or had the right to use, any real property or interest
therein. Brands does not have and has never had any ownership, equity or other
interest in any other Person. Brands has not guaranteed any obligation of any
other Person.
Section 5.7 Liabilities and Contracts. Brands does not have outstanding
any liability or obligation of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) except for debt owed
to the Persons set forth on Schedule 5.7 all of which will be satisfied or
otherwise extinguished or assumed by a third party pursuant to Section 6.9.
Brands is not and has not been a party to, nor are or were Brands' assets bound
or affected by, any Contract except for Contracts under which Brands has no
further rights or obligations because the Contract has been fully performed or
validly and irrevocably terminated.
Section 5.8 Litigation. Except as set forth on Schedule 5.8, there is no
suit, action or proceeding pending, threatened against or affecting Brands, nor
is there any judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against Brands.
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Section 5.9 Brokers. No agent, broker, finder, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of Brands.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by United Pending the Merger. From and
after the date hereof until the Closing Date, except as contemplated by this
Agreement or unless Brands shall otherwise agree in writing, United covenants
and agrees that it shall: (a) carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted or
presently contemplated to be conducted, (b) use all reasonable efforts to
preserve intact its present business organization, keep available the services
of its employees and consultants and preserve its relationships and goodwill
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with it, and (c) use commercially reasonable efforts to
protect its intellectual property rights to the end that its goodwill and
on-going businesses shall not be impaired in any material respect as of the
Closing Date. Without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement or unless Brands shall otherwise agree
in writing, prior to the Closing, United shall not:
(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; purchase, redeem or otherwise
acquire any shares of capital stock of United or any rights, warrants, or
options to acquire any such shares;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of United's capital stock, any other voting securities of
United or any securities convertible into, or any rights, warrants or options to
acquire, any such shares or voting securities (other than the issuance of up to
2,000,000 shares of United Preferred Stock at a price of at least $2.00 per
share), the issuance of United Common Stock upon the conversion of United
Preferred Stock, issuance of options to purchase no more than 500 shares of
common stock to employees pursuant to United's stock option plan or the issuance
of United Common Stock upon the exercise of such options) or amend the terms of
any such securities, rights, warrants or options or take any action to
accelerate the vesting thereof;
(iii) amend the articles of incorporation or by-laws of
United;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof, or any assets that are
material, individually or in the aggregate, to United, except, in any such case,
in the ordinary course of business;
(v) adopt a plan of complete or partial liquidation;
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(vi) incur or modify any indebtedness for borrowed money or
guarantee any such indebtedness of another Person; issue or sell any debt
securities of United; guarantee any debt securities of another Person;
(vii) except in the ordinary course of business, make any
loans, advances or capital contributions to, or investments in, any other Person
or settle or compromise any material claims or litigation;
(viii) take any action or omit to take any action that would
cause any of its representations and warranties herein to become untrue in any
material respect; or
(ix) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.2 Covenant of Brands. From and after the date hereof until the
Closing Date, except as contemplated by this Agreement or unless United shall
otherwise agree in writing, Brands covenants and agrees that it shall not, and
shall cause the Merger Subsidiary not to:
(a) declare, set aside, or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; purchase, redeem or otherwise acquire any
shares of its capital stock or any rights, warrants, or options to acquire any
such shares;
(b) enter into any Contract or amend, modify or waive any rights
under any Contract to which it is a party;
(c) except for the issuance of 1,125,000 shares of common stock
(post Reverse Stock Split) upon a conversion of a note, issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of its capital stock or
other securities, or any securities convertible into, or any rights, warrants or
options to acquire, any such shares or securities or amend the terms of its
outstanding capital stock;
(d) amend its articles of incorporation or by-laws, except for an
amendment to its articles of incorporation to effect the Reverse Stock Split (as
hereinafter defined) and to change its name to "United Fuel and Energy
Corporation";
(e) acquire any assets;
(f) adopt a plan of complete or partial liquidation;
(g) incur or, except as contemplated by Section 6.9, modify any
indebtedness for borrowed money or guarantee any such indebtedness of another
Person; issue or sell any debt securities; or guarantee any debt securities of
another Person;
(h) make any loans, advances or capital contributions to, or
investments in, any other Person;
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(i) take any action or omit to take any action that would cause any
of its representations and warranties herein to become untrue in any material
respect; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.3 Stockholder Approval. United, Brands and the Merger Subsidiary
shall each take all actions necessary, in accordance with applicable Law and its
respective articles of incorporation and by-laws, to cause as promptly as
reasonably practicable after the date hereof the stockholders of United and
Brands (and Brands in its capacity as the sole stockholder of the Merger
Subsidiary) to approve the Transactions. United's, Brands' and the Merger
Subsidiary's board of directors shall recommend such approval and shall take all
lawful action to solicit and obtain such approval.
Section 6.4 Further Action; Consents; Filings. Upon the terms and subject
to the conditions hereof, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate actions and do, or
cause to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective as promptly as practicable the
Transactions and to cooperate with each other in connection with the foregoing.
Without limiting the generality of the foregoing, each of the parties agrees to
take all appropriate actions to obtain from Governmental Entities any
Governmental Authorizations required to be obtained or made by Brands, United or
the Merger Subsidiary in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Transactions, and to make
all necessary filings, and thereafter make any other required submissions that
are required under the Exchange Act, the Securities Act, the Blue Sky Laws, or
any other applicable Law. The parties hereto shall cooperate with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing and,
if requested, by accepting all reasonable additions, deletions or changes
suggested in connection therewith.
Section 6.5 Plan of Reorganization. The Merger is intended to constitute a
"plan of reorganization" under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. From and after the date of this Agreement and until
the Closing, each party hereto shall use its reasonable best efforts to cause
the Merger to qualify, and will not knowingly take any action, cause any action
to be taken, fail to take any action or cause any action to fail to be taken
which action or failure to act could prevent the Merger from qualifying as a
reorganization under the provisions of Section 368(a) of the Code. Following the
Closing, neither Surviving Corporation, Brands nor any of their Affiliates shall
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken, which action or failure to act could
cause the Merger to fail to qualify as a reorganization under Section 368(a) of
the Code.
Section 6.6 Access to Information. From the date hereof until the Closing
or the earlier termination of this Agreement in accordance with its terms,
Brands shall afford to United and its accountants, counsel and other
representatives full and reasonable access during normal business hours (and at
such other times as the parties may mutually agree) to its books, Contracts,
commitments, records and personnel and, during such period, shall furnish
promptly to United (i) a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of the Exchange Act or the
Securities Act, and (ii) all other information concerning its business as United
may reasonably request. United shall conduct its review in a manner reasonably
calculated not to disrupt Brands' business and operations. No investigation
pursuant to this Section 6.6 and no knowledge obtained thereby or otherwise
shall limit any representation or warranty of Brands or impair any rights of a
United Indemnified Party as a result thereof.
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Section 6.7 Public Announcements. On or before the Closing Date, neither
Brands nor United shall (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other parties and such other
parties' review of and consent to any public announcement concerning the
Transactions, issue any press release or make any public announcement with
respect to Transactions during such period, and Brands and United shall, to the
extent practicable, allow the other parties reasonable time to review and
comment on such release or announcement in advance of its issuance and use
reasonable efforts in good faith to reflect the reasonable and good faith
comments of such other party; provided, however, no party shall be prevented
from making any disclosure required by Law at the time so required because of
any delay on the part of another party. The parties intend that the initial
announcement of the terms of the Transactions shall be made by a joint press
release of Brands and United.
Section 6.8 Notice of Breaches. United shall give prompt notice to Brands
and Brands shall give prompt notice to United, of (i) any representation or
warranty made by it contained in this Agreement which has become untrue or
inaccurate in any respect, or (ii) the failure by it to comply with or satisfy
any covenant, condition, or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that such notification shall not excuse
or otherwise affect the representations, warranties, covenants or agreements of
the parties or the conditions to the obligations of the parties under this
Agreement.
Section 6.9 Satisfaction of Obligations. Brands shall cause the
obligations and promissory notes of Brands set forth on Schedule 6.9 to be
satisfied or otherwise extinguished (and with respect to $32,279.61 of Brands'
debt listed on Schedule 5.7, to be assumed by Yulie, LLC, a Delaware limited
liability company), using documentation reasonably acceptable to United, so that
Brands has no further liability with respect thereto. In connection therewith,
Brands may cause the Promissory Note dated January 15, 2002 payable to Imagine
Capital Partners, Inc. to be convertible into 1,125,000 shares of Brands Common
Stock after the Reverse Stock Split has been effected but shall not otherwise
issue any capital stock or other securities in connection with the satisfaction
or extinguishment of such obligations and promissory notes. All transactions
contemplated by this Section 6.9 shall be completed prior to the Closing except
that the issuance of such Brands Common Stock upon conversion of such promissory
note may be completed at or prior to the Effective Time, so long as an
irrevocable notice of conversion shall be held in escrow by United's counsel
prior to the Closing.
Section 6.10 Reverse Stock Split; Articles of Amendment. Brands shall
cause a 40:1 reverse stock split of its common stock (the "Reverse Stock Split")
to be effected prior to the Closing. In connection therewith, Brands shall take
any and all actions necessary to cause an amendment to its articles of
incorporation which effects the Reverse Stock Split and changes the name of
Brands to "United Fuel and Energy Corporation". Such amendment shall be filed at
or prior to the Closing (and prior to the issuance of any shares of Brands
Common Stock permitted by Section 6.9 above).
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Section 6.11 Confidentiality. Prior to the Closing, Brands will, and will
instruct all of its employees, representatives, agents, and affiliates to, treat
all Confidential Material confidentially, not disclose it except in accordance
herewith and not use it for his or their own benefit or the benefit of any
person other than Brands or United; provided, that (a) any disclosure of
Confidential Material may be made with the prior written consent of United or,
after the Merger, Brands; and (b) Confidential Material may be disclosed without
liability hereunder to the extent required by law or by the order or decree of
any court or other governmental authority; provided, however, that the party
legally compelled to disclose the Confidential Material provides United with
prompt notice of that fact so that United may attempt to obtain a protective
order or other appropriate remedy. For purposes of this section, the term
"Confidential Material" means all information, documents and other materials
relating to the business, customers, products, services, prospects, plans or
other matters of United or Brands which is reasonably intended to be held
confidential; provided, however, that the term "Confidential Material" will not
include information that (i) becomes generally available to the public other
than as a result of a disclosure by Brands (prior to the Closing) or any of its
employees, representatives, agents, relatives or affiliates, or (ii) was made
available to Brands on a non-confidential basis from a source other than United,
or any of its agents, provided, that such source is not bound by a
confidentiality agreement restricting such disclosure. Section 6.12 Financial
Statements. Brands agrees to take all actions necessary to cause ▇▇▇ ▇▇▇▇▇▇▇▇▇
("▇▇. ▇▇▇▇▇▇▇▇▇") to cooperate with Brands and provide Brands such assistance as
Brands reasonably requests in connection with the preparation of Brands'
financial statements for all periods ending on or prior to June 30, 2004;
provided, ▇▇. ▇▇▇▇▇▇▇▇▇ shall not be obligated to pay any fees of Brands'
independent accountants. Without limiting the generality of the foregoing,
Brands agrees to take all actions necessary to cause ▇▇. ▇▇▇▇▇▇▇▇▇ to make
available to Brands and its accountants or advisors all account and other
financial information concerning Brands in the possession of ▇▇. ▇▇▇▇▇▇▇▇▇. In
addition, Brands agrees to take all actions necessary to cause ▇▇. ▇▇▇▇▇▇▇▇▇ to
provide to Brands certificates duly executed by ▇▇. ▇▇▇▇▇▇▇▇▇ in substantially
the form required by (a) Item 601(b)(31) of Regulation SB promulgated by the SEC
and (b) Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (collectively, "Accounting
Certificates"). The Accounting Certificates shall specifically state that the
officers of Brands required to make certifications pursuant to Item 601(b)(31)
of Regulation SB promulgated by the SEC or Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 may rely upon such Accounting Certificates. Brands agrees to take all
actions necessary to cause ▇▇. ▇▇▇▇▇▇▇▇▇ to provide such Accounting Certificates
with respect to all financial statements of Brands for any period ending on or
before June 30, 2004 which are included in any SEC filing made by Brands on or
after July 1, 2004. Brands agrees to take all actions necessary to cause ▇▇.
▇▇▇▇▇▇▇▇▇ to provide a separate Accounting Certificate for each SEC filing in
which covered financial statements are included, which Accounting Certificate
shall be dated no earlier than ten (10) days prior to the due date of the SEC
filing.
Section 6.13 Information Statement. Brands and United shall cooperate to
prepare a Preliminary Schedule 14C Information Statement ("Information
Statement") with respect to the Reverse Stock Split, the change of Brands'
corporate name to "United Fuel & Energy Corporation," election of directors and
the proposed merger. Following the expiration of the applicable waiting period
or after the date that the Securities & Exchange Commission has informed the
Company that there will be no comments to the Information Statement, Brands
shall file a Definitive Information Statement on Schedule 14C regarding the
matters approved by the Brands shareholders. The parties understand that United
shall provide any and all information necessary to prepare the Information
Statement including without limitation, United's audited financial statements.
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the holders of United Preferred Stock in the manner required by Law.
(b) The consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction.
Section 7.2 Conditions to Obligation of United to Effect the Merger. The
obligation of United to effect the Merger shall be subject to the fulfillment at
or before the Effective Time of the following additional conditions, unless
waived by United:
(a) The representations and warranties of Brands contained in this
Agreement shall be true and correct in all respects on the date hereof and as of
the Closing Date as if made on the Closing Date.
(b) Brands and Merger Subsidiary shall have performed or complied
with all agreements and covenants required to be performed by each of them under
this Agreement on or before the Closing Date.
(c) The issuance of the shares of Brands Common Stock in the Merger,
the articles of amendment effecting the Reverse Stock Split and the change of
name of Brands to United Fuel and Energy Corporation, and the election of
directors nominated by United shall have been approved and adopted by the
holders of Brands Common Stock in accordance with applicable Law and Brands
shall have approved the Transactions in its capacity as the sole stockholder of
the Merger Subsidiary.
(d) The obligations of Brands shall have been satisfied, assumed or
extinguished as contemplated by Section 6.9 and the Reverse Stock Split shall
have been effected.
(e) United shall have received copies of resignations of each of the
directors and officers of Brands which have been accepted by Brands.
(f) United shall have received an undertaking by ▇▇▇ ▇▇▇▇▇▇▇▇▇ that
he has taken or has agreed to take all actions required to be taken by him as
more fully described in Section 6.12.
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(g) A satisfaction of judgment shall have been filed documenting the
satisfaction of the judgment of RTTS Acquisition Corp. against Brands.
(h) United shall have received a certificate of an authorized
officer of Brands and Merger Subsidiary, on behalf of Brands and Merger
Subsidiary, that the conditions set forth in paragraphs (a) through (g) above
have been satisfied.
Section 7.3 Conditions to Obligations of Brands and Merger Subsidiary to
Effect the Merger. The obligations of Brands and Merger Subsidiary to effect the
Merger shall be subject to the fulfillment at or before the Effective Time of
the following additional conditions, unless waived by Brands:
(a) The representations and warranties of United contained in this
Agreement shall be true and correct in all respects on the date hereof and as of
the Closing Date as if made on the Closing Date.
(b) United shall have performed or complied in all material respects
with all agreements and covenants required to be performed by it under this
Agreement on or before the Closing Date.
(c) Brands shall have received a certificate of an authorized
officer of United, on behalf of United, that the conditions in paragraphs (a)
and (b) above have been satisfied.
ARTICLE VIII
SURVIVAL
Section 8.1 Survival of Representations, Warranties and Covenants. The
parties hereto hereby agree that the representations, warranties, covenants and
agreements contained in this Agreement shall automatically expire upon the
Closing hereunder.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of United:
(a) by mutual written consent of Brands and United;
(b) by United, upon a material breach of this Agreement on the part
of Brands or Merger Subsidiary which has not been cured and which would cause
the conditions set forth in Section 7.2 not to be satisfied at Closing;
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(c) by Brands, upon a material breach of this Agreement on the part
of United which has not been cured and which would cause the conditions set
forth in Section 7.3 not to be satisfied at Closing;
(d) by Brands or United if any court of competent jurisdiction shall
have issued, enacted, entered, promulgated or enforced any order, judgment,
decree, injunction or ruling which restrains, enjoins or otherwise prohibits the
Merger; or
(e) by Brands or United if the Merger shall not have been
consummated on or before September 30, 2004; provided, that the right to
terminate this Agreement under this Section 9.1(e) shall not be available to any
party whose failure to perform any material covenant or obligation under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith terminate
and there shall be no liability hereunder on the part of any of United, Brands
or Merger Subsidiary; provided, this Section 9.2, Section 9.3 (Fees and
Expenses); and Section 10.6 (Governing Law) shall survive the termination and
remain in full force and effect and; provided, further, that each party shall
remain liable for any breaches of or inaccuracies in such party's covenants,
representations and warranties hereunder which breach or inaccuracy occurred
prior to the termination of this Agreement.
Section 9.3 Fees and Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses; provided, all
fees and expenses of Brands incurred in connection with the Transactions shall
be paid from sources other than Brands' assets and shall not be an obligation of
the Surviving Corporation.
Section 9.4 Amendment. This Agreement may be amended by the parties hereto
at any time before or after approval hereof by the stockholders of United,
Brands and the Merger Subsidiary, but, after such approval, no amendment shall
be made which under applicable Law would require approval of United's or Brands'
stockholders without the further approval of such stockholders, as the case may
be. This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Closing, the parties hereto
may, to the extent permitted by applicable Law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to United:
United Fuel & Energy Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
President and CEO
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇ Peabody LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Brands or Merger Subsidiary:
Brands Shopping Network Inc.
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
.
and.
M1 Advisors, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 10.1.
Section 10.2 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at Law or in equity.
Section 10.3 Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
Section 10.4 Assignments; Parties in Interest. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties. Subject to the foregoing, this Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person not a party hereto any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, including to confer third party
beneficiary rights except that the stockholders of United are intended
third-party beneficiaries of the representations, warranties and covenants of
Brands.
Section 10.5 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Texas (without giving effect to the
provisions thereof relating to conflicts of Law).
Section 10.6 Headings; Disclosure. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Any disclosure by
United or Brands in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule to which
such disclosure reasonably relates on its face.
Section 10.7 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"AFFILIATE" as applied to any Person, shall mean any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person; for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities, by contract or
otherwise.
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"CONTRACT" means any contract, agreement, note, bond, mortgage, indenture,
credit agreement, lease, license, permit, franchise or other instrument,
obligation or understanding, whether written or oral.
"DEBT" means, with respect to any Person, all indebtedness of such Person
for borrowed money or the deferred purchase price of property or services
(excluding trade payables and other accrued current liabilities arising in the
ordinary course of business), obligations of such Person evidenced by bonds,
notes, indentures or similar instruments, obligations of such Person under
interest rate agreements, currency hedging agreements, commodity price
protection agreements or similar hedging instruments, capital lease obligations
of such Person, redeemable capital stock of such Person and any other
obligations of such Person classified as indebtedness under GAAP.
"LAWS" means any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree.
"PERSON" shall include individuals, corporations, partnerships, limited
liability companies, trusts, other entities and groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act).
"TAX" shall mean any federal, state, local, foreign or provincial income,
gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, employment, unemployment insurance,
workers' compensation, social security, alternative or added minimum, ad
valorem, value added, stamp, business license, occupation, premium,
environmental, windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or other
assessment or charge of any kind whatsoever, together with any interest, penalty
or addition to tax imposed by any Governmental Entity.
"TRANSACTIONS" shall mean the transactions contemplated by this Agreement,
including the Reverse Stock Split and the satisfaction and extinguishment of the
obligations of Brands contemplated by Section 6.9.
"UNITED MATERIAL ADVERSE EFFECT" shall be any circumstance, event or
occurrence that would be reasonably likely to have a material adverse effect on
the business, assets, operations, financial condition, revenues, results of
operations of United taken as a whole.
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires, references in
the singular include references in the plural and vice versa. References to a
party to this Agreement or to other agreements described herein means those
Persons executing such agreements.
(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the phrase "but not
limited to" in all places where such words appear in this Agreement. The word
"or" shall be deemed to be inclusive.
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(iii) This Agreement is the joint drafting product of Brands
and United, and each provision has been subject to negotiation and agreement and
shall not be construed for or against either party as drafter thereof.
(iv) In each case in this Agreement where this Agreement or a
Contract is represented or warranted to be enforceable will be deemed to include
as a limitation to the extent that enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar Laws affecting the enforcement of creditors' rights generally and to
general equitable principles, whether applied in equity or at Law.
Section 10.8 Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
Section 10.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the Transactions are not affected in any manner materially adverse
to any party. Upon determination that any term or other provision hereof is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible.
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IN WITNESS WHEREOF, Brands, Merger Subsidiary and United have signed this
Agreement or caused this Agreement to be signed by their respective officers
thereunto duly authorized all as of the date first written above.
Brands Shopping Network Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Brands United Merger Sub, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
United Fuel & Energy Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, President and Chief Executive Officer
LIST OF OMITTED SCHEDULES
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The Schedules listed below have been omitted from this filing. The Brands will
furnish supplementally to the Commission, upon request, a copy of any omitted
Schedule.
Schedule 3.1(b) Actions which will not trigger Exchange Ratio adjustment
Schedule 4.2(b) Capitalization of United
Schedule 5.2 Capitalization of Brands
Schedule 5.7 Liabilities and Contracts
Schedule 5.8 Litigation
Schedule 6.9 Satisfaction of Obligations