EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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By and Between
EMPIRE GLOBAL CORP.,
a Delaware corporation;
and
EXCEL EMPIRE LIMITED
a British Virgin Islands corporation
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Dated As Of November 4, 2005
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EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
TABLE OF CONTENTS
PAGE
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ARTICLE 1. DEFINITIONS
1.1 Defined Terms.............................................. 6
1.2 Other Defined Terms........................................ 10
ARTICLE 2. DESCRIPTION OF THE EXCEL MERGER TRANSACTION
2.1 Merger of the Excel Company into the Parent................ 12
2.2 Effect of the Excel Merger................................. 12
2.3 Closing; Effective Time.................................... 12
2.4 Certificate of Incorporation and Bylaws; Directors and
Officers................................................... 12
2.5 Effect of the Excel Merger on Company Common Stock......... 12
2.6 Excel Merger Consideration................................. 13
2.7 Closing of the Excel Company's Transfer Books.............. 13
2.8 Exchange of Certificates................................... 13
2.9 Tax Consequences........................................... 14
2.10 Accounting Treatment....................................... 14
2.11 Further Action............................................. 14
2.12 Certain Other Agreements................................... 14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE PARENT
3.1 SEC Filings; Financial Statements.......................... 15
3.2 Authority; Binding Nature of Agreement..................... 15
3.3 Valid Issuance............................................. 15
3.4 Organization; Subsidiaries................................. 16
3.5 Non-Contravention; Consents................................ 16
3.6 Business................................................... 16
3.7 Litigation................................................. 16
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE EXCEL COMPANY
4.1 Due Organization; No Subsidiaries; Etc..................... 17
4.2 Articles of Organization and Bylaws; Records............... 17
4.3 Capitalization, Etc........................................ 18
4.4 Financial Statements....................................... 18
4.5 Absence of Changes......................................... 19
4.6 Title to Assets............................................ 20
4.7 Bank Accounts; Receivables................................. 20
4.8 Equipment; Leasehold....................................... 21
4.9 Contracts.................................................. 21
4.10 Liabilities................................................ 23
4.11 Compliance with Legal Requirements......................... 23
4.12 Governmental Authorizations................................ 23
4.13 Tax Matters................................................ 23
4.14 Environmental Matters...................................... 24
4.15 Insurance.................................................. 25
4.16 Related Party Transactions................................. 25
4.17 Legal Proceedings; Orders.................................. 25
4.18 Authority; Binding Nature of Agreement..................... 25
4.19 Non-Contravention; Consents................................ 26
4.20 Full Disclosure............................................ 26
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
TABLE OF CONTENTS
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ARTICLE 5. CERTAIN COVENANTS OF THE EXCEL COMPANY AND THE PARENT
5.1 Access and Investigation................................... 27
5.2 Operation of the Company's Business........................ 27
5.3 Notification and Updates .................................. 28
5.4 No Negotiation............................................. 29
5.5 Covenants of the Parent.................................... 29
ARTICLE 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 Filings and Consents....................................... 30
6.2 Public Announcements....................................... 30
6.3 Purchase Method............................................ 31
6.4 Foreign Investment Real Property Tax Act ("FIRPTA") Matters 31
6.5 Tax Election............................................... 31
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARENT
7.1 Accuracy of Representations................................ 31
7.2 Performance of Covenants................................... 32
7.3 Consents................................................... 32
7.4 Agreements and Documents................................... 32
7.5 No Restraints.............................................. 32
7.6 No Material Adverse Change................................. 32
7.7 No Governmental Litigation................................. 32
7.8 No Other Litigation........................................ 33
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXCEL COMPANY
8.1 Accuracy of Representations................................ 33
8.2 Performance of Covenants................................... 33
8.3 Documents.................................................. 33
8.4 No Restraints.............................................. 33
8.5 No Material Adverse Change................................. 34
8.6 No Governmental Litigation................................. 34
8.7 No Other Litigation........................................ 34
8.8 Completion of the 501 Merger............................... 34
ARTICLE 9. TERMINATION
9.1 Termination Events......................................... 34
9.2 Termination Procedures..................................... 35
9.3 Effect of Termination...................................... 35
9.4 In the Event of Termination................................ 36
ARTICLE 10. INDEMNIFICATION, ETC
10.1 Survival of Representations, Etc........................... 36
10.2 Indemnification By the Excel Company....................... 37
10.3 Indemnification By The Parent.............................. 37
10.4 Limitations................................................ 37
10.5 No Contribution............................................ 38
10.6 Interest................................................... 38
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
TABLE OF CONTENTS
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ARTICLE 10. INDEMNIFICATION, ETC (CONTINUED)
10.7 Defense of Third Party Claims (Parent)..................... 38
10.8 Defense of Third Party Claims (Excel Company).............. 38
10.9 Exercise of Remedies by Indemnitees Other Than The Parent.. 39
ARTICLE 11. MISCELLANEOUS PROVISIONS
11.1 Further Assurances......................................... 39
11.2 Fees and Expenses.......................................... 39
11.3 Brokers.................................................... 40
11.4 Attorneys' Fees............................................ 40
11.5 Notices.................................................... 40
11.6 Confidentiality............................................ 41
11.7 Time of the Essence........................................ 41
11.8 Headings................................................... 41
11.9 Counterparts............................................... 41
11.10 Governing Law.............................................. 41
11.11 Successors and Assigns..................................... 41
11.12 Remedies Cumulative; Specific Performance.................. 42
11.13 Waiver..................................................... 42
11.14 Amendments................................................. 42
11.15 Severability............................................... 42
11.16 Parties in Interest........................................ 42
11.17 Entire Agreement........................................... 42
11.18 Construction............................................... 42
SIGNATURES ............................................................. 44
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
INDEX TO EXHIBITS
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EXHIBIT A Restated Certificate of Incorporation and Bylaws - Parent
EXHIBIT B Directors and Officers - Surviving Corporation - Parent
EXHIBIT C Listing of Foreign Jurisdictions - Excel Company
EXHIBIT D Directors and Officers - Excel Company
EXHIBIT E Articles of Incorporation - Excel Company
EXHIBIT F Financial Statements - Excel Company
EXHIBIT G Asset Listing - Excel Company
EXHIBIT H Company Contracts - Excel Company
EXHIBIT I Insurance Policies - Excel Company
EXHIBIT J Related parties - Excel Company
EXHIBIT K Closing Certificate of - Excel Company
EXHIBIT L Certificate of Merger - Parent
EXHIBIT M Closing Certificate of - Parent
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement") is
made and entered into as of November 4, 2005, by and between EMPIRE GLOBAL
CORP., a Delaware corporation (the "Parent"); and Excel Empire Limited, a
corporation organized under the laws of the British Virgin Islands (the "Excel
Company"). Certain other capitalized terms used in this Agreement are defined
in ARTICLE 1.
RECITALS
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WHEREAS, the Parent, and the Excel Company intend to effect a merger of
the Parent with the Excel Company in accordance with this Agreement, and in
accordance with the Delaware General Corporation Law (the "DGCL")(the "Excel
Merger"). Upon consummation of the Excel Merger, the Excel Company will
continue to exist and operate as a wholly owned subsidiary of the Parent, and
the Parent will retain the name EMPIRE GLOBAL CORP. and operate as the Parent.
AND WHEREAS, it is intended that the Excel Merger qualify as a tax free
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). For accounting purposes, it is intended
that the Excel Merger business combination be treated using the purchase
method.
AND WHEREAS, the Boards of Directors of each of the Parent and the Excel
Company determined that it would be advisable and in the respective best
interests of each such corporation and its shareholder(s) that: (i) the Parent
be merged with the Excel Company, with the Parent as the surviving entity; and
(ii) the shareholders of the Excel Company (the "Excel Shareholders"), who,
together own 100% of the issued and outstanding shares of capital stock of the
Excel Company (the "Excel Company Shares"), will have the right to receive that
certain number of shares of common stock of Parent (the "Parent Shares") on a
pro rata basis determined by the percentage ownership of Excel Company Shares,
as provided in Article 2 below.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1.
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DEFINITIONS
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1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
AFFILIATE. "Affiliate" shall have the meaning set forth in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization, as it may be amended from time to time.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(A) the sale, license, disposition or acquisition of all or a
material portion of the Excel Company's business or assets;
(B) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of the Excel Company, (ii) any option, call,
warrant or right (whether or not immediately exercisable) to acquire any
capital stock or other equity security of the Excel Company, or (iii) any
security, instrument or obligation that is or may become convertible into or
exchangeable for any capital stock or other equity security of the Excel
Company; or
(C) any merger, consolidation, business combination, reorganization
or similar transaction involving the Excel Company.
CLOSING DATE. "Closing Date" shall mean the date of this Agreement or
such other date as Parent and the Excel Company shall mutually agree upon.
COMPANY CONTRACT. "Company Contract" shall mean any Contract:
(A) to which the Excel Company is a party;
(B) by which the Excel Company or any of their assets is or may
become bound or under which the Excel Company has, or may become subject to,
any obligation; or
(C) under which the Excel Company has or may acquire any right or
interest.
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, note, loan, evidence of indebtedness, purchase order contract,
subcontract, lease, franchise agreement, understanding, instrument, note,
warranty, insurance policy, letter of credit, charge of mortgage, benefit plan
or legally binding commitment or undertaking of any nature obligation or
commitment to which the Parent and/or Excel Company is a party or is bound.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
DAMAGES. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on
the voting of any security, any restriction on the transfer of any security or
other asset, any restriction on the receipt of any income derived from any
asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "Entity" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EFFECTIVE TIME. "Effective Time" shall mean the date and time of receipt
of the Certificates of Merger for filing with the Secretary of State of the
State of Delaware, unless a delayed effective time is specified therein.
FINANCIAL STATEMENTS. "Financial Statements" shall mean the compiled
balance sheets and related statements of income of the Excel Company up to
December 31, 2004 and for the nine months ended September 30, 2005. The
definition of Financial Statements shall also include an updated balance sheet
and income statement of the Parent and the Excel Company as of September 30,
2005.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(A) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement; or
(B) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(A) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(B) federal, state, provincial, local, municipal, foreign or other
government.
(C) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, ministry,
agency, bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, unit, body or Entity and any
court or other tribunal);
(D) multi-national organization or body; or
(E) individual, Entity or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.
INDEMNITEES. "Indemnitees" shall mean the following Persons:
(A) the Parent;
(B) the Parent's current and future affiliates (including the
Surviving Corporation);
(C) the respective Representatives of the Persons referred to in
clauses "(A)" and "(B)" above; and
(D) the respective successors and assigns of the Persons referred to
in clauses "(A)", "(B)" and "(C)" above;
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November 4, 2005.
provided, however, that the Parent shall not be deemed to be an "Indemnitee".
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
provincial, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy, circumstance
or other matter will be deemed to have a "Material Adverse Effect" if such
event, violation, inaccuracy, circumstance or other matter (considered together
with all other matters that would constitute exceptions to the representations
and warranties set forth in the Agreement but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) could be reasonably
expected to have a Material Adverse Effect or change in the condition
(financial or other), business, results of operations, assets, liabilities or
operations of the Parent or Excel Company, as applicable, taken as a whole, or
on the ability of the Parent or Excel Company, as applicable, to consummate the
transactions contemplated hereby, or any event or condition which would, with
the passage of time, constitute a "Material Adverse Effect" or "Material
Adverse Change".
PERMITS. "Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
governmental authority, whether foreign, federal, state or local, or any other
person, necessary or desirable for the past, present or anticipated conduct of,
or relating to, the operation of the business of each Entity.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any:
(A) exclusive contract or rights, patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, service mark (whether registered or
unregistered), service mark application, copyright (whether registered or
unregistered), copyright application, trade secret, know-how, customer list,
franchise, system, computer software, computer program, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or
(B) right to use or exploit any of the foregoing.
RELATED PARTY. "Related Party" shall mean any Person or Entity
identified in EXHIBIT J and:
(A) a shareholder of the Excel Company;
(B) each individual who is, or who has at any time been, an officer
of the Excel Company;
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
(C) each member of the immediate family of each of the individuals
referred to in clauses "(A)" and "(B)" above; and
(D) any trust or other Entity (other than the Excel Company) in
which any one of the individuals referred to in clauses "(A)", "(B)" and "(C)"
above holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity interest.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
TAX. "Tax" shall mean any tax (including any income tax, capital tax,
franchise tax, capital gains tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, withholding tax or payroll tax), levy, assessment,
reassessment, tariff, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest),
imposed, assessed or collected by or under the authority of any Governmental
Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
set forth in the indicated ARTICLES. Certain other capitalized terms are
defined elsewhere in this Agreement.
TERM ARTICLE
Excel Company Preamble
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Excel Company Closing Certificate 7.4(IV)
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Excel Company Common Stock 2.6
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Excel Company Financial Statements 4.4(A)
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Excel Company Returns 4.13(A)
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Excel Company Unaudited Consolidated
Balance Sheet 4.4(A)(II)
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Excel Company Shares Recitals
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Excel Company Stock Certificate 2.7
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Excel Merger Recitals
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Excel Merger Consideration 2.6
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Affidavit of Lost Excel Company Certificate 2.8
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November 4, 2005.
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Closing 2.3
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Code Recitals
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Confidential Information 5.1 (B)
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DGCL Recitals
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Environmental Law 4.14
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FIRPTA 6.4
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Materials of Environmental Concern 4.14
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OBCA Recitals
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OTCBB 3.5
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Parent Preamble
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Parent Closing Certificate 8.3(B)
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Parent Common Stock 2.5(A)
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Parent SEC Documents 3.1(A)
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Parent Shares Recitals
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Pre-Closing Period 5.1
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Scheduled Closing Time 2.3
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Surviving Corporation 2.1
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Surviving Corporation Common Stock 2.5(B)
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November 4, 2005.
ARTICLE 2.
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DESCRIPTION OF THE EXCEL MERGER TRANSACTION
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2.1 MERGER OF THE EXCEL COMPANY INTO THE PARENT. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time
(as defined in ARTICLE 2.3), the Excel Company shall be merged with the Parent
and become a wholly owned subsidiary. The Parent will retain the name EMPIRE
GLOBAL CORP. and the Parent will continue contemporaneously as the surviving
corporation in the Excel Merger (the "Surviving Corporation").
2.2 EFFECTS OF THE EXCEL MERGER. The Excel Merger shall have the
effects set forth in Section 259 of the DGCL. Without limiting the generality
of the foregoing, and the Excel Merger thereto, at the Effective Time, except
as otherwise provided herein, all of the property, rights, privileges, powers
and franchises of the Excel Company and Parent shall rest in the Surviving
Corporation, and all debts, liabilities and duties of the Excel Company and the
Parent shall become the debts, liabilities and duties of the Surviving
Corporation.
2.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the office
of the Parent at Suite 300, 123 Commerce Valley Drive East, Thornhill, Ontario,
L3T 7W8, at 5:00 P.M. Eastern Standard Time (the "Scheduled Closing Time") on
November 4, 2005 ("the Closing Date"). Contemporaneously with or as promptly as
practicable after the Closing, a properly executed certificate or agreement of
merger shall be filed with the Secretary of State of the State of Delaware and
the Registrar of the Territory of the British Virgin Islands. The Excel Merger
shall become effective at such time as the certificate of merger is filed with
the Secretary of State of the State of Delaware and shall be hereinafter
referred to as (the "Effective Time").
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by the Parent and the Excel Company immediately
prior to the Effective Time:
(A) the Certificate of Incorporation and Bylaws of the Parent shall
be the Certificate of Incorporation and Bylaws for the Surviving Corporation
until thereafter changed or amended as of the Effective Time to conform to
EXHIBIT A; and
(B) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
EXHIBIT B.
2.5 EFFECT OF THE EXCEL MERGER ON EXCEL COMPANY COMMON STOCK. Subject
to ARTICLE 2.8, at the Effective Time, by virtue of the Excel Merger and
without any action on the part of the Parent, or the Board of Directors of the
Parent, or the Excel Company, all of the Excel Company Shares held by the Excel
Company and the shareholder(s) of the Excel Company shall be converted into the
right to receive, on a pro rata basis, the Excel Merger Consideration (herein
after defined) as follows:
(A) Each share of the Excel Company Common Stock (hereinafter
defined) outstanding immediately prior to the Effective Time shall be converted
into the right to receive seven hundred and twenty eight (728) shares of the
capital stock (par value of USD $0.0001) of the Parent ("Parent Common Stock");
and
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
(B) Each share of Parent Common Stock outstanding immediately prior
to the Effective Time shall be converted into one share of capital stock of the
Surviving Corporation (the "Surviving Corporation Common Stock")
2.6 EXCEL MERGER CONSIDERATION. The Excel Company and shareholder(s)
of the Excel Company shall transfer to the Parent all of the Excel Company
Shares owned by the Excel Company and the shareholder(s) of the Excel Company
less any Dissenting Excel Company Common Stock, which in total shall equal 100%
of the issued and outstanding Excel Company Common Stock (the "Excel Company
Common Stock"), in exchange for the right to receive a maximum of 36,400,000 of
the issued and outstanding shares of the Surviving Corporation Common Stock
(the "Excel Merger Consideration").
2.7 CLOSING OF THE EXCEL COMPANY'S TRANSFER BOOKS. At the Effective
Time, holders of certificates representing shares of Excel Company Common Stock
that were outstanding immediately prior to the Effective Time shall cease to
have any rights as shareholders of the Excel Company, and the stock transfer
books of the Excel Company shall be closed with respect to all shares of such
Excel Company Common Stock outstanding immediately prior to the Effective Time.
Immediately after the Effective Time, the Excel Company will continue as a
Wholly Owned Subsidiary of the Surviving Corporation. If, after the Effective
Time, a valid certificate previously representing any of such shares of the
Excel Company Common Stock (an "Excel Company Stock Certificate") is presented
to the Surviving Corporation or Parent, such Excel Company Stock Certificate
shall be canceled and shall be exchanged as provided in ARTICLE 2.8.
2.8 EXCHANGE OF CERTIFICATES. At the Closing, the Excel Company, on
behalf of the Excel Company shareholders, shall surrender certificate(s)
evidencing Excel Company Common Stock duly endorsed in blank for transfer or
accompanied by a stock power duly executed in blank in a form reasonably
requested by the Parent to evidence the acknowledgement of and consent to the
sale of the Excel Company Common Stock in exchange for certificates
representing Parent Common Stock. Upon surrender of an Excel Company Stock
Certificate to the Parent for exchange, the holder of such an Excel Company
Stock Certificate shall be entitled to receive in exchange, therefore at the
Effective Date or as soon thereafter as reasonably practicable, a certificate
representing the number of whole shares of Parent Common Stock that such holder
has the right to receive pursuant to the provisions of ARTICLE 2.5 and Excel
Company Stock Certificate so surrendered shall thereafter be cancelled and will
cease to represent any interest in the Excel Company. Immediately after the
Effective Time, the Parent shall deliver (or cause its transfer agent to
deliver) to the Excel Company, on a pro rata basis, the Parent Common Stock in
exchange for the certificates representing the Excel Company Common Stock.
Until surrendered as contemplated by this ARTICLE 2.8, each Excel Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive upon such surrender a certificate representing shares
of Parent Common Stock as contemplated by this ARTICLE 2.8. If any Excel
Company Stock Certificate(s) shall have been lost, stolen or destroyed, the
Parent may, in its discretion and as a condition precedent to the issuance of
any certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Excel Company Stock Certificate(s) to provide an
appropriate affidavit (an "Affidavit of Lost Excel Certificate") and to deliver
a bond (in such sum as the Parent may reasonably direct) as indemnity against
any claim that may be made against the Parent or the Surviving Corporation with
respect to such Excel Company Stock Certificate(s).
(A) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Excel Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, until such
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
holder surrenders such Excel Company Stock Certificate in accordance with this
ARTICLE 2.8 (at which time such holder shall be entitled to receive all such
dividends and distributions and such cash payment).
(B) No fractional shares of Parent Common Stock shall be issued in
connection with the Excel Merger, and no certificates for any such fractional
shares shall be issued. Notwithstanding anything in this Agreement to the
contrary, to the extent that any Excel Company's pro rata interest in any
Parent Common Stock deliverable pursuant to this Agreement results in a
fractional Parent Common Stock of 0.5 or greater, the Parent Common Stock
deliverable to such shareholder(s) of the Excel Company shall be rounded up to
the nearest whole Parent Common Stock, and to the extent that any Excel
Company's pro rata interest in any Parent Common Stock deliverable pursuant to
this Agreement results in a fractional Parent Common Stock of less than 0.5,
the Parent Common Stock deliverable to such shareholder(s) of the Excel Company
shall be rounded down to the nearest whole Parent Common Stock.
(C) The Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of Excel Company Common Stock pursuant to this
Agreement such amounts as the Parent or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid on behalf of the Person to whom such amounts
would otherwise have been paid.
(D) The Surviving Corporation shall be liable to any holder or
former holder of Excel Company Common Stock for any shares of Parent Common
Stock (or dividends or distributions with respect thereto), or for any cash
amounts, delivered to any public official pursuant to any applicable abandoned
property, escheat or similar law.
(E) Each certificate representing shares of Parent Common Stock to
be issued in the Excel Merger shall bear a legend substantially in the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (the "Act"), AND ARE RESTRICTED SECURITIES AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT, AND REQUIRES WRITTEN
RELEASE FROM EITHER ISSUNG COMPANY OR THEIR ATTORNEY PRIOR TO LEGEND
REMOVAL.
2.9 TAX CONSEQUENCES. For federal income tax purposes, the Excel
Merger is intended to constitute a reorganization within the meaning of Section
368 of the Code. The parties to this Agreement hereby adopt this Agreement as
a "plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
2.10 ACCOUNTING TREATMENT. For accounting purposes, the Excel Merger is
intended to be treated as a business combination using the purchase method.
2.11 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by the Parent to be necessary or desirable to
carry out the purposes of this Agreement or to vest the Parent or the Surviving
Corporation with full right, title and possession of and to all rights and
property of the Excel Company, the officers and directors of the Parent or the
Surviving Corporation shall be fully authorized (in the name of the Excel
Company and otherwise) to take such action.
2.12 CERTAIN OTHER AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, the Excel Company shall deliver to the Parent a
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November 4, 2005.
copy of documents evidencing title to assets and real property as referenced in
ARTICLE 4.6.
ARTICLE 3.
----------
REPRESENTATIONS AND WARRANTIES OF THE PARENT
--------------------------------------------
The Parent jointly and severally represents and warrants to the Excel
Company as follows, which representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(A) The Parent has delivered to the Excel Company accurate and
complete copies (excluding copies of exhibits) of each report (on a form other
than Form S-8) including, without limitation, the most recent annual report, if
any, to stockholders and Form 10-KSB and 10-QSB reports, proxy statements and
other periodic filings made with the SEC up to and including the date of this
Agreement (the "Parent SEC Documents"). As of the time it was filed with the
SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents were filed in a timely manner and complied in all material respects
with the applicable requirements of the Exchange Act and the rules and
regulations promulgated thereunder; and (ii) none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(B) The consolidated financial statements contained in the Parent
SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered, except as may be indicated
in the notes to such financial statements and (in the case of unaudited
statements) as permitted by Form 10-QSB of the SEC, and except that unaudited
financial statements may not contain footnotes and are subject to year-end
audit adjustments; and (iii) fairly present the consolidated financial position
of the Parent and its subsidiaries as of the respective dates thereof and the
consolidated results of operations of the Parent and its subsidiaries for the
periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. The Parent has the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance
by the Parent of this Agreement (including the contemplated issuance of Parent
Common Stock in the Excel Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of the Parent and its
respective board of directors. No vote of the Parent's shareholders is needed
to approve the Excel Merger. This Agreement constitutes the legal, valid and
binding obligation of the Parent, enforceable against the Parent in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.3 VALID ISSUANCE. Parent Common Stock to be issued in the Excel
Merger will, when issued in accordance with the provisions of this Agreement,
be validly issued, fully paid and non-assessable, without violation of any
preemptive or dissenter's rights and in full compliance with all applicable
securities laws.
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3.4 ORGANIZATION; SUBSIDIARIES. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
respective jurisdiction in which it is incorporated. The Parent has the
corporate power and authority to own and lease its properties and assets and to
carry on its business as now being conducted and is duly qualified or licensed
to do business as a corporation and is in good standing in each jurisdiction in
which the properties owned or leased by it or the nature of the business
conducted by it makes such qualification or licensure necessary, except where
the failure to be so qualified or licensed and in good standing would not have
a Material Adverse Effect on its business, results of operations or financial
condition of the Parent.
3.5 NON-CONTRAVENTION; CONSENTS. Except where occurrence of the
foregoing will not have a Material Adverse Effect on the Parent, the execution
and delivery of this Agreement and the consummation of any of the transactions
contemplated hereby by the Parent does not and will not:
(A) violate any provision of the Certificate of Incorporation or
Bylaws of the Parent;
(B) violate, or result with the passage of time in the violation of,
any provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the properties of
the Parent pursuant to any provision of any mortgage, lien, lease, agreement,
permit, indenture, license, instrument, law, order, arbitration award, judgment
or decree to which the Parent is a party or by which it or any of its
properties are bound;
(C) violate any law, order, judgment or decree to which the Parent
is subject;
(D) violate or conflict with any other restriction of any kind or
character to which the Parent is subject, or by which any of its assets may be
bound; or
(E) constitute an event permitting termination of an agreement to
which the Parent is subject, if in any such circumstances, individually or in
the aggregate with all other such events, such termination could have
consequences materially adverse to the Parent.
Except in connection with the organization of the Parent and other filings
necessary to effectuate the Excel Merger and notification of listing of
additional shares to the NASDAQ Over The Counter Bulletin Board (the "OTCBB"),
no consent, authorization, order or approval of, or filing or registration with
any governmental commission, board or other regulatory body is required for or
in connection with the execution, delivery and performance of this Agreement by
the Parent and the consummation by each of the parties of any of the
transactions contemplated hereby.
3.6 BUSINESS. The Parent has not engaged in any activities other than
those incident to its organization or as contemplated by the terms of this
Agreement.
3.7 LITIGATION. There is no action, suit, proceeding or investigation
pending, or, to the best knowledge of the Parent, threatened, against or
related to the respective properties or business of the Parent which will
materially adversely affect or prohibit consummation of the transactions
contemplated thereby.
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ARTICLE 4.
----------
REPRESENTATIONS AND WARRANTIES OF THE EXCEL COMPANY
---------------------------------------------------
The Excel Company and the shareholder(s) of the Excel Company jointly and
severally represent and warrant, to and for the benefit of the Indemnitees, the
following, which representations and warranties are, as of the date hereof, and
will be, as of the Closing Date, true and correct:
4.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(A) The Excel Company is a corporation duly organized, validly
existing and in good standing under the corporate laws of the jurisdiction of
its incorporation and has all necessary corporate power and authority: (i) to
conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
corporate Contracts.
(B) The Excel Company has not conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or any other name.
(C) The Excel Company is not, nor has been, required to be
qualified, authorized, registered or licensed to do business as a corporation
in any jurisdiction, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Excel Company. The Excel Company is in good standing as a corporation in
each of the jurisdictions identified in EXHIBIT C.
(D) EXHIBIT D accurately sets forth (i) the names of the members of
the Excel Company's board of directors, (ii) the names of the members of each
committee of the Excel Company's board of directors, and (iii) the names and
titles of the Excel Company's officers.
(E) The Excel Company does not own any controlling interest in any
Entity other than as listed in EXHIBIT G, nor has the Excel Company ever owned,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect equity interest in, any Entity other than as listed in EXHIBIT G. The
Excel Company has not agreed nor is obligated to make any future investment in
or capital contribution to any Entity. The Excel Company has not guaranteed nor
is responsible or liable for any obligation of any of the Entities in which it
owns or has owned any equity interest.
4.2 ARTICLES OF ORGANIZATION AND BYLAWS; RECORDS. The Excel Company has
delivered to the Parent accurate and complete copies, in all material respects,
of: (a) the Excel Company's Articles of organization/incorporation and bylaws,
including all amendments thereto (as to conform to EXHIBIT E); (b) the stock
records of the Excel Company; and (c) the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the shareholders of the Excel Company, the
board of directors of the Excel Company and all committees of the board of
directors of the Excel Company. Except as set forth in the minutes of the Excel
Company, there have been no formal meetings or other proceedings of the
shareholders of the Excel Company, the board of directors of the Excel Company
or any committee of the board of directors of the Excel Company that are not
reflected in all material respects in such and the Excel Company has not taken
any action that is inconsistent in any material respect with any resolution
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November 4, 2005.
adopted by the Excel Company's minutes or other records. There has not been any
violation of any of the provisions of the Excel Company's Articles of
organization/incorporation or bylaws, by the Excel Company's shareholders, the
Excel Company's board of directors or any committee of the Excel Company's
board of directors. The books of account, stock records, minute books and other
records of the Excel Company are accurate, up to date and complete in all
material respects, and have been maintained in accordance with prudent business
practices.
4.3 CAPITALIZATION, ETC.
(A) The authorized capital stock of the Excel Company consists of
one class and one series of common shares (USD $1.00 par value), of which fifty
thousand (50,000) shares of common stock has been issued and are outstanding
and owned beneficially and of record by the Excel Company as of the date of
this Agreement. All of the outstanding shares of Excel Company Common Stock
have been duly authorized and validly issued, and are fully paid and non
assessable.
(B) Except as contemplated by this Agreement, there is no: (i)
outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of the Excel Company; (ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Excel Company; (iii)
Contract under which the Excel Company is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or
(iv) condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled
to acquire or receive any shares of capital stock or other securities of the
Excel Company.
(C) All outstanding shares of Excel Company Common Stock have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all material requirements set
forth in applicable Contracts.
(D) The Excel Company has never repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities of the Excel
Company. All securities so reacquired by the Excel Company were reacquired in
compliance with (i) the applicable provisions of Excel Company's jurisdiction
and all other applicable Legal Requirements, and (ii) all material requirements
set forth in applicable restricted stock purchase agreements and other
applicable Contracts.
4.4 FINANCIAL STATEMENTS.
(A) The Excel Company shall deliver to the Parent the following
Financial Statements and notes (collectively, the "Excel Company Financial
Statements" as set forth in EXHIBIT F) within the required filing time
requirements of the SEC:
(I) The consolidated audited balance sheet of the Excel
Company as of December 31, 2004, and the related income statement,
statement of shareholder's equity and statement of cash flows of the Excel
Company for the year then ended, together with all footnotes thereto; and
(II) The consolidated unaudited balance sheet of the Excel
Company as of September 30, 2005 (the "Excel Company Unaudited
Consolidated Balance Sheet"), and the related interim income statement of
the Excel Company for the nine months then ended.
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November 4, 2005.
(B) The Excel Company Financial Statements are accurate and complete
in all material respects and present fairly the financial position of the Excel
Company as of the respective dates thereof and the results of operations and
(in the case of the financial statements referred to in ARTICLE 4.4(A)(I)) cash
flows of the Excel Company for the periods covered thereby. The Excel Company
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except (i) as the footnotes to the financial statements referred to in
ARTICLE 4.4(A)(I) may expressly indicate otherwise and (ii) that the financial
statements referred to in ARTICLE 4.4(A)(II) do not contain footnotes and are
subject to normal and recurring year-end audit adjustments, which adjustments
will not, individually or in the aggregate, be material).
4.5 ABSENCE OF CHANGES. Since December 31, 2004:
(A) There has not been any Material Adverse Change in the Excel
Company's business, condition, assets, liabilities, operations or financial
performance or, to the best knowledge of the Excel Company, prospects, and, to
the best of the knowledge of the Excel Company, no event has occurred that will
have a Material Adverse Effect on the Excel Company;
(B) There has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Excel Company's assets,
taken as a whole (whether or not covered by insurance);
(C) The Excel Company has not declared, accrued, set aside or paid
any dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(D) The Excel Company has not sold, issued or authorized the
issuance of (i) any capital stock or other security of the Excel Company, (ii)
any option or right to acquire any capital stock or any other security of the
Excel Company, or (iii) any instrument convertible into or exchangeable for any
capital stock or other security of the Excel Company;
(E) There has been no amendment to the Excel Company's Articles of
organization or bylaws, and the Excel Company has not effected or been a party
to any Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction other than those
transactions as contemplated per EXHIBIT G;
(F) The Excel Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity other those as listed per
EXHIBIT G;
(G) The Excel Company has not made any capital expenditure which,
when added to all other capital expenditures made on behalf of the Excel
Company since December 31, 2004 other those as contemplated by EXHIBIT G,
exceeds USD $100,000;
(H) The Excel Company has not (i) entered into or permitted any of
the assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in ARTICLE 4.9(A)), or (ii) amended
or prematurely terminated, or waived any material right or remedy under, any
such Material Contract;
(I) The Excel Company has not, other than as per EXHIBIT G, (i)
acquired, leased or licensed any right or other asset from any other Person,
(ii) sold or otherwise disposed of, or leased or licensed, any right or other
asset to any other Person other than leasing of property in the ordinary course
of business, or (iii) waived or relinquished any right, except for immaterial
rights or other immaterial assets acquired, leased, licensed or disposed of in
the ordinary course of business and consistent with the Excel Company's past
practices;
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(J) The Excel Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable
or other indebtedness except in the ordinary course of business where the
amount of such uncollected receivables exceeds USD $10,000 in the aggregate;
(K) The Excel Company has not made any pledge of any of its assets
or otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Excel Company's past practices;
(L) The Excel Company has not (i) lent money to any Person (other
than pursuant to routine travel advances made to employees in the ordinary
course of business), or (ii) incurred or guaranteed any indebtedness for
borrowed money;
(M) The Excel Company has not (i) established or adopted any
Employee Benefit Plan, (ii) paid any bonus or made any profit sharing or
similar payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hired any new employee;
(N) The Excel Company has not changed any of its methods of
accounting or accounting practices in any respect;
(O) The Excel Company has not made any Tax election;
(P) The Excel Company has not commenced or settled any Legal
Proceeding; and
(Q) The Excel Company has not entered into any material transaction
or taken any other material action outside the ordinary course of business or
inconsistent with its past practices;
4.6 TITLE TO ASSETS.
(A) The Excel Company owns, and has good, valid and marketable title
to, all assets purported to be owned by it, including: (i) all assets
reflected on the Excel Company Unaudited Consolidated Balance Sheet; (ii) all
assets and all of the Excel Company's rights under the Contracts; and (iii) all
other assets reflected in the Excel Company's books and records as being owned
by the Excel Company. All of said assets are owned by the Excel Company free
and clear of any liens or other Encumbrances, except for (a) any lien for
current taxes not yet due and payable, (b) security interests (if any)
identified in the Excel Company Unaudited Consolidated Balance Sheet or the
footnotes thereto, and (c) minor liens that have arisen in the ordinary course
of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of the Excel Company;
(B) The Excel Company shall provide to the Parent, a listing
(EXHIBIT G) which identifies all assets that are material to the business of
the Excel Company and that are being leased or licensed to and from the Excel
Company.
4.7 BANK ACCOUNTS; RECEIVABLES. All existing accounts receivable of
the Excel Company (including those accounts receivable reflected on the Excel
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November 4, 2005.
Company Unaudited Consolidated Balance Sheet that have not yet been collected
and those accounts receivable that have arisen since September 30, 2005 and
have not yet been collected) represent valid obligations of customers of the
Excel Company arising from bona fide transactions entered into in the ordinary
course of business. Such accounts receivable are collectible within 60 days
(net of an allowance for doubtful accounts) and are not subject to any contest,
claim or right of set-off other than refunds in the ordinary course of business
and consistent with past practice.
4.8 EQUIPMENT; LEASEHOLD. All material items of equipment and other
tangible assets owned by or leased to the Excel Company which have a value, in
the case of each item, of USD $10,000 or more are adequate for the uses to
which they are being put, are in good condition and repair (ordinary wear and
tear excepted) and are adequate for the conduct of the Excel Company's business
in the manner in which such business is currently being conducted
4.9 CONTRACTS.
(A) EXHIBIT H identifies:
(I) each Company Contract relating to the employment of, or
the performance of services by, any employee, consultant or independent
contractor;
(II) each Company Contract relating to the acquisition,
transfer, lease, use and development of any Property or Asset;
(III) each Company Contract imposing any restriction on the
Excel Company's right or ability (a) to compete with any other Person, (b)
to acquire any property or other asset or any services from any other
Person, to sell any property or other asset to or perform any services for
any other Person or to transact business or deal in any other manner with
any other Person, or (c) develop or dispose of any property or asset to
any other Person;
(IV) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(V) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(VI) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Excel Company;
(VII) each Company Contract involving or incorporating any
guarantee, any pledge, any performance or completion bond, any indemnity
or any surety arrangement;
(VIII) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses,
costs or liabilities;
(IX) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by
or for, any Related Party (as defined in ARTICLE 4.16);
(X) each Company Contract constituting or relating to a
Government Contract or Government Bid;
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November 4, 2005.
(XI) any other Company Contract that was entered into outside
the ordinary course of business or was inconsistent with the Excel
Company's past practices and which contemplates or involves (A) the
payment or delivery of cash or other consideration in an amount in excess
of USD $10,000 in the aggregate, or (B) the performance of services having
a value in excess of USD $10,000 in the aggregate;
(XII) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Excel Company (without
penalty) within 60 days after the delivery of a termination notice by the
Excel Company and which contemplates or involves (A) the payment or
delivery of cash or other consideration in an amount in excess of USD
$10,000 in the aggregate, or (B) the performance of services having a
value in excess of USD $10,000 in the aggregate; and
(XIII) any other Company Contract that contemplates or involves
(A) the payment or delivery of cash or other consideration in an amount or
having a value in excess of USD $50,000 in the aggregate, or (B) the
performance of services having a value in excess of USD $50,000 in the
aggregate.
(Contracts in the respective categories described in clauses "(I)" through
"(XIII)" above are referred to in this Agreement as "Material Contracts.")
(B) The Excel Company has delivered to the Parent accurate and
complete copies in all material respects of all written Contracts identified in
EXHIBIT H, including all amendments thereto. Each Contract identified in
EXHIBIT H is valid and in full force and effect, and, to the best of the
knowledge of the Excel Company, is enforceable by the Excel Company in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(C) Except as set forth in EXHIBIT H:
(I) the Excel Company has not violated or breached, or committed
any material default under, any Material Contract, and, to the best of the
knowledge of the Excel Company, no other Person has violated or breached,
or committed any material default under, any Material Contract;
(II) to the best of the knowledge of the Excel Company, no event
has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to,
(A) result in a violation or breach of any of the material provisions of
any Material Contract, (B) give any Person the right to declare a default
or exercise any remedy under any Material Contract, (C) give any Person
the right to accelerate the maturity or performance of any Material
Contract, or (D) give any Person the right to cancel, terminate or modify
any Material Contract;
(III) since December 31, 2004, the Excel Company has not
received any notice or other communication regarding any actual or
possible violation or breach of, or default under, any Material Contract;
and
(IV) the Excel Company has not waived any of its material rights
under any Material Contract.
(D) No Person is renegotiating, or has a right pursuant to the terms
of any Excel Company Contract to renegotiate, any amount paid or payable to the
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November 4, 2005.
Excel Company under any Material Contract or any other material term or
provision of any Material Contract.
(E) The Contracts identified in EXHIBIT H collectively constitute
all of the Contracts necessary to enable the Excel Company to conduct its
business in the manner in which its business is currently being conducted.
(F) EXHIBIT H identifies and provides a brief description of each
proposed Material Contract as to which any bid, offer, award, written proposal,
term sheet or similar document has been submitted or received by the Excel
Company since December 31, 2004, except for proposals relating to the
acquisition of the Excel Company.
(G) There are no backorders and no backlog of services due to the
Excel Company under Excel Company Contracts.
(H) There are no holdbacks and no construction liens under the Excel
Company Contracts.
4.10 LIABILITIES. The Excel Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Excel Company
Unaudited Consolidated Balance Sheet and the footnotes thereto; (b) accounts
payable or accrued salaries that have been incurred by the Excel Company since
December 31, 2004 in the ordinary course of business and consistent with the
Excel Company's past practices; (c) liabilities under the Excel Company
Contracts, to the extent the nature and magnitude of such liabilities can be
specifically ascertained by reference to the text of such Excel Company
Contracts; and (d) liabilities referenced in ARTICLE 4.17.
4.11 COMPLIANCE WITH LEGAL REQUIREMENTS. The Excel Company is, and has
at all times since January 7, 2004 been, in compliance with all applicable
Legal Requirements, except where the failure to comply with such Legal
Requirements has not had a Material Adverse Effect on the Excel Company. Since
January 7, 2004, the Excel Company has not received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
4.12 GOVERNMENTAL AUTHORIZATIONS. The Excel Company has delivered to
the Parent accurate and complete copies of all Governmental Authorizations. The
Excel Company is, and at all times since January 7, 2004 has been, in
substantial compliance with the terms and requirements of the respective
Governmental Authorizations. Since January 7, 2004, the Excel Company has not
received any notice or other communication from any Governmental Body regarding
(a) any actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification
of any Governmental Authorization.
4.13 TAX MATTERS.
(A) All Tax Returns required to be filed by or on behalf of the
Excel Company with any Governmental Body with respect to any taxable period
ending on or before the Closing Date (the "Excel Company Returns") (i) have
been filed on or before the applicable due date (including any extensions of
such due date), and (ii) have been accurately and completely prepared in all
material respects in compliance with all applicable Legal Requirements. All
amounts shown on the Excel Company Returns to be due on or before the Closing
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November 4, 2005.
Date have been or will be paid on or before the Closing Date. The Excel
Company has delivered to the Parent accurate and complete copies of all Excel
Company Returns filed since January 7, 2004 which have been requested by the
Parent.
(B) The Excel Company Financial Statements fully accrue all actual
and contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with generally accepted accounting principles. The
Excel Company will establish, in the ordinary course of business and consisten
with its past practices, reserves adequate for the payment of all Taxes for
the period from January 7, 2004 through the Closing Date, and the Excel Company
will disclose the dollar amount of such reserves to the Parent on or prior to
the Closing Date.
(C) No Excel Company Return relating to Taxes has ever been examined
or audited by any Governmental Body. There have been no examinations or audits
of any Excel Company Return. No extension or waiver of the limitation period
applicable to any of the Excel Company Returns has been granted (by the Excel
Company or any other Person), and no such extension or waiver has been
requested from the Excel Company.
(D) No claim or Proceeding is pending or, to the best knowledge of
the Excel Company has been threatened against or with respect to the Excel
Company in respect of any Tax. There are no unsatisfied liabilities for Taxes
(including liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by the Excel Company with respect to any Tax (other than liabilities
for Taxes asserted under any such notice of deficiency or similar document
which are being contested in good faith by the Excel Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Excel Company except liens for
current Taxes not yet due and payable.
(E) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Excel Company that, considered individually or
considered collectively with any other such Contracts, will, or could
reasonably be expected to, give rise directly or indirectly to the payment of
any amount that would not be deductible under the Code. The Excel Company is
not, and has never been a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
4.14 ENVIRONMENTAL MATTERS. The Excel Company is in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes the possession by the Excel Company of all permits and other
Governmental Authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. The Excel Company has not
received any notice or other communication (in writing or otherwise), whether
from a Governmental Body, citizens group, employee or otherwise, that alleges
that the Excel Company is not in compliance with any Environmental Law, and, to
the best of the knowledge of the Excel Company, there are no circumstances that
may prevent or interfere with the Excel Company's compliance with any
Environmental Law in the future. To the best of the knowledge of the Excel
Company, no current or prior owner of any property leased or controlled by the
Excel Company has received any notice or other communication (in writing or
otherwise), whether from a Government Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or the Excel Company
is not in compliance with any Environmental Law. For purposes of this ARTICLE
4.14: (i) "Environmental Law" means any federal, provincial or local Legal
Requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface
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November 4, 2005.
or subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is now or hereafter regulated
by any Environmental Law or that is otherwise a danger to health, reproduction
or the environment.
4.15 INSURANCE. EXHIBIT I identifies all insurance policies maintained
by, at the expense of or for the benefit of the Excel Company and identifies
any material claims made thereunder, and the Excel Company has delivered to the
Parent accurate and complete copies in all material respects of the insurance
policies identified on EXHIBIT I. Each of the insurance policies identified in
EXHIBIT I is in full force and effect. The Excel Company has not received any
notice or other communication regarding any actual or possible (a) cancellation
or invalidation of any insurance policy, (b) refusal of any coverage or
rejection of any claim under any insurance policy, or (c) material adjustment
in the amount of the premiums payable with respect to any insurance policy.
4.16 RELATED PARTY TRANSACTIONS. (a) no Related Party has any direct or
indirect interest in any material asset used in or otherwise relating to the
business of the Excel Company; (b) no Related Party is, or has at any time,
been indebted to the Excel Company; (c) no Related Party has entered into, or
has had any direct or indirect financial interest in, any material Contract,
transaction or business dealing involving the Excel Company; (d) no Related
Party is competing, directly or indirectly, with the Excel Company; and (e) no
Related Party has any claim or right against the Excel Company (other than
rights to receive compensation for services performed as an employee of the
Excel Company).
4.17 LEGAL PROCEEDINGS; ORDERS.
(A) There is no pending Legal Proceeding, and (to the best of the
knowledge of the Excel Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves the Excel Company or any of the assets owned or
used by the Excel Company or any Person whose liability the Excel Company has
or may have retained or assumed, either contractually or by operation of law;
or (ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the Excel Merger or any of the
other transactions contemplated by this Agreement. To the best of the
knowledge of the Excel Company, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that will, or that could reasonably be
expected to, give rise to or serve as a basis for the commencement of any such
Legal Proceeding.
(B) There is no order, writ, injunction, judgment or decree to which
the Excel Company, or any of the assets owned or used by the Excel Company, is
subject. To the best of the knowledge of the Excel Company, no officer or
other employee of the Excel Company is subject to any order, writ, injunction,
judgment or decree that prohibits such officer or other employee from engaging
in or continuing any conduct, activity or practice relating to the Excel
Company's business.
4.18 AUTHORITY; BINDING NATURE OF AGREEMENT. The Excel Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement; and the execution, delivery and
performance by the Excel Company of this Agreement have been duly authorized by
all necessary action on the part of the Excel Company and its board of
directors. This Agreement constitutes the legal, valid and binding obligation
of the Excel Company, enforceable against the Excel Company in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
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insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
4.19 NON-CONTRAVENTION; CONSENTS. Where occurrence will not have a
Material Adverse Effect, neither the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor the
consummation of the Excel Merger or any of the other transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time):
(A) Contravene, conflict with or result in a violation of (i) any of
the provisions of the Excel Company's Articles of organization or bylaws, or
(ii) any resolution adopted by the Excel Company's shareholders, the Excel
Company's board of directors or any committee of the Excel Company's board of
directors;
(B) Contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction,
judgment or decree to which the Excel Company, or any of the assets owned or
used by the Excel Company, is subject;
(C) Contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Excel Company or that otherwise relates to the Excel
Company's business or to any of the assets owned or used by the Excel Company;
(D) Contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Excel Company Contract that
is or would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Excel Company Contract,
(ii) accelerate the maturity or performance of any such Excel Company Contract,
or (iii) cancel, terminate or modify any such Excel Company Contract; or
(E) Result in the imposition or creation of any lien or other
encumbrance upon or with respect to any asset owned or used by the Excel
Company (except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Excel Company).
The Excel Company is not and will not be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection
with (a) the execution, delivery or performance of this Agreement or any of the
other agreements referred to in this Agreement, or (b) the consummation of the
Excel Merger or any of the other transactions contemplated by this Agreement.
4.20 FULL DISCLOSURE. This Agreement does not, (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact necessary
in order to make the representations, warranties and information contained
herein and to be contained therein (in the light of the circumstances under
which such representations, warranties and information were or will be made or
provided) not false or misleading.
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ARTICLE 5.
----------
CERTAIN COVENANTS OF THE EXCEL COMPANY AND THE PARENT
-----------------------------------------------------
5.1 ACCESS AND INVESTIGATION. During the Pre-Closing Period (the
"Pre-Closing Period") the Excel Company shall cause its Representatives to:
(A) Provide the Parent and the Parent's Representatives with reasonable access
to the Excel Company's Representatives, personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to the Excel Company; and
(B) Provide the Parent and the Parent's Representatives with copies of such
existing books, records, Tax Returns, work papers and other documents and
information relating to the Excel Company, and with such additional financial,
operating and other data and information regarding the Excel Company, as the
Parent may reasonably request. Except and to the extent required by law, each
of the parties hereto will not disclose or otherwise use, and will cause its
Representatives not to use or otherwise disclose, any Confidential Information
(as defined below) furnished by or on behalf of either the Parent or the Excel
Company at any time or in any manner other than in connection with the
transactions contemplated hereby. "Confidential Information" shall mean any
information (written or oral) (i) pertaining to either the Parent and the Excel
Company, (ii) is confidential and proprietary in nature, (iii) is furnished to
any of the parties hereto and their Representatives, and (iv) is conspicuously
marked, or identified as, "CONFIDENTIAL" at the time of its delivery; provided,
that notwithstanding the foregoing, "Confidential Information" shall not
include any information or material (a) that is already in the other party's
possession prior to November 4, 2005, (b) that is obtained by or that is or
becomes available to any of the parties hereto or their respective
Representatives from a source other than pursuant to this Agreement or in
breach of this ARTICLE 5.1, (c) that is obtained or is or becomes available
through the normal course of any business dealings between the parties hereto,
(d) that is in or enters the public domain or that otherwise is or becomes
generally available other than in breach of this ARTICLE 5.1, or (e) that is
independently developed by any of the parties hereto or their respective
Representatives.
5.2 OPERATION OF THE COMPANY'S BUSINESS. During the Pre-Closing Period:
(A) The Excel Company shall conduct its business and operations in
the ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(B) The Excel Company shall use reasonable efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Excel Company;
(C) The Excel Company shall keep in full force all insurance
policies;
(D) The Excel Company shall not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities;
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(E) The Excel Company shall not sell, issue or authorize the
issuance of (i) any capital stock or other security, (ii) any option or right
to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
(F) The Excel Company shall not amend or permit the adoption of any
amendment to the Excel Company's Articles of organization or bylaws, or effect
or permit the Excel Company to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(G) The Excel Company shall not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(H) The Excel Company shall not make any capital expenditure, except
for capital expenditures that, when added to all other capital expenditures
made on behalf of the Excel Company during the Pre-Closing Period, do not
exceed USD $10,000 per month;
(I) The Excel Company shall not (i) enter into, or permit any of the
assets owned or used by it to become bound by, any Contract that is or would
constitute a Material Contract, or (ii) amend or prematurely terminate, or
waive any material right or remedy under, any such Material Contract;
(J) Except for transactions in the ordinary course of business and
that do not exceed USD $5,000, individually or in the aggregate, the Excel
Company shall not (i) acquire, lease or license any right or other asset from
any other Person, (ii) sell or otherwise dispose of, or lease or license, any
right or other asset to any other Person, or (iii) waive or relinquish any
right, except for assets acquired, leased, licensed or disposed of by the Excel
Company pursuant to Contracts that are not Material Contracts;
(K) The Excel Company shall not (i) lend money to any Person (except
that the Excel Company may make routine travel advances to employees in the
ordinary course of business and may, consistent with its past practices, allow
employees to acquire the Company Common Stock in exchange for promissory notes
upon exercise of the Company Options), or (ii) incur or guarantee any
indebtedness for borrowed money;
(L) The Excel Company shall not (i) establish, adopt or amend any
Employee Benefit Plan, (ii) pay any bonus or make any profit sharing payment,
cash incentive payment or similar payment to, or increase the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees, or (iii)
hire any new employee whose aggregate annual compensation is expected to exceed
USD $50,000;
(M) The Excel Company shall not change any of its methods of
accounting or accounting practices in any material respect;
(N) The Excel Company shall not make any Tax election;
(O) The Excel Company shall not commence or settle any material
Legal Proceeding;
5.3 NOTIFICATION AND UPDATES.
(A) During the Pre-Closing Period, the Excel Company shall promptly
notify the Parent in writing of:
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(I) the discovery by the Excel Company of any event,
condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes a material
inaccuracy in or material breach of any representation or warranty made by
the Excel Company or the shareholder(s) of the Company in this Agreement;
(III) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a material inaccuracy in or breach of any representation or
warranty made by the Excel Company or the shareholder(s) of the Excel
Company in this Agreement if (a) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (b) such event, condition, fact
or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(IV) any breach of any material covenant or obligation of the
Excel Company or the shareholder(s) of the Excel Company; and
(V) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in ARTICLE
5 or ARTICLE 6 impossible or unlikely.
(B) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to ARTICLE 5.3(A) requires any change, or if any such
event, condition, fact or circumstance would require such a change, existence
or discovery of such event, condition, fact or circumstance, then the Excel
Company shall promptly notify the Parent in writing specifying such change.
5.4 NO NEGOTIATION. During the Pre-Closing Period, the Excel Company
shall not, directly or indirectly:
(A) Solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than the Parent) relating to a possible
Acquisition Transaction;
(B) Participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other
than Parent) relating to or in connection with a possible Acquisition
Transaction; or
(C) Accept any proposal or offer from any Person (other than the
Parent) relating to a possible Acquisition Transaction.
The Excel Company shall promptly notify the Parent in writing of any material
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Excel Company or the shareholder(s) of the Excel Company
during the Pre-closing Period.
5.5 COVENANTS OF THE PARENT. The Parent hereby covenants and agrees
with the Excel Company as follows:
(A) PRESERVATION OF BUSINESS ORGANIZATION. The Parent shall use all
reasonable efforts to cause to preserve without material impairment the
business of the Parent and its subsidiaries and their goodwill as to payors,
providers, suppliers, distributors, clients and others having business
relations with the Parent and its subsidiaries.
(B) CARRY ON IN REGULAR COURSE. The Parent shall carry on its
business in the ordinary and usual course in a manner consistent with its past
practices.
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(C) DOCUMENTS AND INFORMATION TO BE FURNISHED. The Parent shall
furnish to the Excel Company, promptly after filed with the SEC, its audited
year-end report in the form filed with the SEC on Form 10-KSB prescribed under
the Exchange Act, its unaudited quarterly financial reports in the form filed
with the SEC on Form 10-QSB prescribed under the Exchange Act and such other
reports, statements, documents and other items the Parent delivers, or is
required to deliver, to any of its shareholders.
(D) NOTICES OF CERTAIN EVENTS. During the Pre-Closing Period, the
Parent shall promptly notify the Excel Company of:
(I) the discovery by the Parent of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Parent in this Agreement;
(II) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty
made by the Parent in this Agreement if (a) such representation or
warranty had been made as of the time of the occurrence, existence or
discovery of such event, condition, fact or circumstance, or (b) such
event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(III) any breach of any covenant or obligation of the Parent;
and
(IV) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in ARTICLE
5 or ARTICLE 6 impossible or unlikely.
ARTICLE 6.
----------
ADDITIONAL COVENANTS OF THE PARTIES
-----------------------------------
6.1 FILINGS AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Excel Merger and the other transactions
contemplated by this Agreement, and (b) shall use all commercially reasonable
efforts to obtain all Consents (if any) required to be obtained (pursuant to
any applicable Legal Requirement or Material Contract, or otherwise) by such
party in connection with the Excel Merger and the other transactions
contemplated by this Agreement, except where the failure to obtain such Consent
would not, in the case of the Excel Company and, in the case of the Parent,
have a Material Adverse Effect on their respective business, financial
condition or results of operations. The Excel Company shall (upon request)
promptly deliver to the Parent a copy of each such filing made, each such
notice given and each such Consent obtained by the Excel Company during the
Pre-Closing Period. The Parent shall (upon request) promptly deliver to the
Excel Company a copy of each such filing made, each such notice given and each
such Consent obtained by the Parent during the Pre-Closing Period.
6.2 PUBLIC ANNOUNCEMENTS.
(A) During the Pre-Closing Period, the Excel Company shall not
permit their respective Representatives to issue any press release or make any
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November 4, 2005.
public statement regarding this Agreement or the Excel Merger, or regarding any
of the other transactions contemplated by this Agreement, without Parent's
prior written consent.
(B) The Parent shall not, and shall not permit any of its
Representatives to, issue any press release or otherwise publicly disseminate
any document or other written material relating to the Excel Merger or any of
the other transactions contemplated by this Agreement unless (i) the Excel
Company shall have approved such press release or written material (it being
understood that the Excel Company shall not unreasonably withhold its approval
of any such press release or written material), or (ii) the Parent shall have
been advised by its outside legal counsel that the issuance of such press
release or the dissemination of such written material is required by any
applicable law or regulation, and the Parent shall have consulted with the
Excel Company prior to issuing such press release or disseminating such written
material; provided, however, that notwithstanding anything to the contrary
contained in this ARTICLE 6.2, the Parent shall be entitled to file with the
SEC, after the execution and delivery of this Agreement, a Report on Form 8-K,
together with a copy of this Agreement (including the exhibits hereto) and the
press release (which shall have been approved by the Excel Company) announcing
this Agreement.
6.3 PURCHASE METHOD. Before and after the Closing, no party to this
agreement shall take any action that could reasonably be expected to have an
adverse effect on the ability of the Parent to account for the Excel Merger as
a business combination using the purchase method.
6.4 FOREIGN INVESTMENT REAL PROPERTY TAX ACT ("FIRPTA") MATTERS. At
the Closing, (a) the Excel Company shall deliver to the Parent a statement (in
such form as may be reasonably requested by counsel to the Parent) conforming
to the requirements of Section 1.897 - 2(h)(1)(i) of the United States Treasury
Regulations, and (b) the Excel Company shall deliver to the Internal Revenue
Service the notification required under Section 1.897 - 2(h)(2) of the United
States Treasury Regulations.
6.5 TAX ELECTION. After the Closing, the Parent and the Excel Company
shall make an election under Section 1377(a)(2) of the Code to treat the Parent
or Surviving Corporation as having two taxable years, the first of which will
be deemed to terminate on the Closing Date.
ARTICLE 7.
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARENT
-------------------------------------------------
The obligations of the Parent to effect the Excel Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Excel Company in this Agreement and in each of the other
agreements and instruments delivered to the Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that the Excel Company are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
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7.3 CONSENTS. All Consents required to be obtained in connection with
the Excel Merger and the other transactions contemplated by this Agreement
(including the Consents identified in ARTICLE 4.19) shall have been obtained
and shall be in full force and effect, except when failure to obtain such
Consent will not have a Material Adverse Effect on the Excel Company or the
Parent.
7.4 AGREEMENTS AND DOCUMENTS. The Parent shall have received from the
Excel Company the following agreements and documents, each of which shall be in
full force and effect:
(I) Audited Financial Statements of the Excel Company for at
least two years or since inception, and interim Financial Statements for the
Period ending September 30, 2005.
(II) All title, deeds to land and Buildings including a
listing of all such Land and Buildings as per ARTICLE 4.6.
(III) Confidential information and assignment agreements,
reasonably satisfactory in form and content to the Parent, executed by those
employees, officers or directors of the Excel Company listed in EXHIBIT D;
(IV) A certificate executed by the Excel Company and
containing the representation and warranty of the Excel Company that each of
the representations and warranties set forth in ARTICLE 4 is accurate in all
material respects as of the Closing Date as if made on the Closing Date and
that the conditions set forth in ARTICLES 7.1, 7.2 and 7.3 have been duly
satisfied (the "Excel Company Closing Certificate") (included herein as EXHIBIT
K); and
(V) Written resignations of all directors of the Excel
Company, effective as of the Effective Time.
7.5 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Excel
Merger shall have been issued by any court of competent jurisdiction and remain
in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Excel Merger that makes consummation of the Excel Merger
illegal.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change in the business, condition, assets, liabilities, operation or
financial performance, or, to the best knowledge of the Excel Company,
prospects of the Excel Company since December 31, 2004, except for (a) any such
Material Adverse Change that is demonstrated by the Excel Company to have
resulted from changes that occurred after the date of this Agreement in general
business conditions, and (b) any Material Adverse Change in the Excel Company's
financial performance that is temporary in nature and is demonstrated by the
Excel Company to have resulted directly from the public announcement or the
pendency of the Excel Merger.
7.7 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is
threatened to become a party or is otherwise involved: (a) challenging or
seeking to restrain or prohibit the consummation of the Excel Merger or any of
the other transactions contemplated by this Agreement; (b) relating to the
Excel Merger and seeking to obtain from the Excel Company or any of its
subsidiaries any damages that may be material to the Excel Company; (c) seeking
to prohibit or limit in any material respect the ability to vote, receive
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dividends with respect to or otherwise exercise ownership rights with respect
to the stock of the Surviving Corporation; or (d) which would materially and
adversely affect the right of the Parent, the Surviving Corporation or any
subsidiary of the Parent to own the assets or operate the business of the
Parent and the Excel Company.
7.8 NO OTHER LITIGATION. There shall not be pending or threatened to
commence any Legal Proceeding (a) challenging or seeking to restrain or
prohibit the consummation of the Excel Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Excel Merger and seeking to
obtain from the Excel Company or any of its subsidiaries any damages that may
be material to the Excel Company; (c) seeking to prohibit or limit in any
material respect the ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of the Parent, the
Surviving Corporation or any subsidiary of the Parent to own the assets or
operate the business of the Parent and the Excel Company.
ARTICLE 8.
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXCEL COMPANY
--------------------------------------------------------
The obligations of the Excel Company and shareholder(s) of the Excel
Company to effect the Excel Merger and otherwise consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or prior to
the Closing, of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Parent in this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in
all material respects as of the Scheduled Closing Time as if made at the
Scheduled Closing Time.
8.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that the Parent is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all material respects.
8.3 DOCUMENTS. The Excel Company shall have received from the Parent
the following documents:
(A) A Certificate of Merger executed by the Parent, dated as of the
Closing Date or as soon as practicable, in the form of EXHIBIT L.
(B) A certificate executed by the Parent containing the
representation and warranty of each entity that each of the representations and
warranties set forth in ARTICLE 3 is accurate in all respects as of the Closing
Date as if made on the Closing Date and that the conditions set forth in
ARTICLES 8.1 and 8.2 have been duly satisfied (the "Parent Closing
Certificate") (included herein as EXHIBIT M).
8.4 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Excel
Merger shall have been issued by any court of competent jurisdiction and remain
in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Excel Merger that makes consummation of the Excel Merger
illegal.
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
8.5 NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change in the Parent's business, condition, assets, liabilities,
operations or financial performance since the date of this Agreement, except
for (a) any such Material Adverse Change that is demonstrated by the Parent to
have resulted directly from changes that occurred after the date of this
Agreement in general business conditions, and (b) any Material Adverse Change
in the Parent's financial performance that is temporary in nature and is
demonstrated by the Parent to have resulted directly from the public
announcement or the pendency of the Excel Merger (it being understood that a
decline in the Parent's stock price shall not, in and of itself, constitute a
"Material Adverse Change in the Parent's business, condition, assets,
liabilities, operations or financial performance").
8.6 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is
threatened to become a party or is otherwise involved: (a) challenging or
seeking to restrain or prohibit the consummation of the Excel Merger or any of
the other transactions contemplated by this Agreement; (b) relating to the
Excel Merger and seeking to obtain from the Parent or any of its subsidiaries
any damages that may be material to the Parent; (c) seeking to prohibit or
limit in any material respect the ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the stock of
the Surviving Corporation; or (d) which would materially and adversely affect
the right of the Parent, the Surviving Corporation or any subsidiary of the
Parent to own the assets or operate the business of the Excel Company.
8.7 NO OTHER LITIGATION. There shall not be pending or threatened to
commence any Legal Proceeding (a) challenging or seeking to restrain or
prohibit the consummation of the Excel Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Excel Merger and seeking to
obtain from the Parent or any of its subsidiaries any damages that may be
material to the Parent; (c) seeking to prohibit or limit in any material
respect the ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of the Parent, the
Surviving Corporation or any subsidiary of the Parent to own the assets or
operate the business of the Excel Company.
8.8 COMPLETION OF THE 501 MERGER. The Parent shall have provided to
the Excel Company a copy of the merger agreement between the Parent and 501
Canada Inc, reasonably satisfactory to the Excel Company, to evidence the
completion of the merger of 501 Canada Inc. with the Parent. Pursuant to such
completion, neither of the Excel Company nor the Parent shall have any further
obligations, and shall not be subject to any liability, under such agreement as
amended.
ARTICLE 9.
----------
TERMINATION
-----------
9.1 TERMINATION EVENTS. This Agreement may be terminated at any time
prior to the Closing:
(A) By the Parent if the Parent reasonably determines that the
timely satisfaction of any condition set forth in ARTICLES 7 and 8 has become
impossible (other than as a result of any failure on the part of the Parent to
comply with or perform any covenant or obligation of the Parent set forth in
this Agreement);
(B) By the Excel Company if the Excel Company reasonably determines
that the timely satisfaction of any condition set forth in ARTICLE 7 and 8 has
become impossible (other than as a result of any failure on the part of the
Excel Company to comply with or perform any covenant or obligation set forth in
this Agreement or in any other agreement or instrument delivered to the Parent);
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
(C) By the Parent at or after the Scheduled Closing Time if any
condition set forth in ARTICLE 7 has not been satisfied by the Scheduled
Closing Time;
(D) By the Excel Company at or after the Scheduled Closing Time if
any condition set forth in ARTICLE 8 has not been satisfied by the Scheduled
Closing Time;
(E) By the Parent if the Closing has not taken place on or before
November 4, 2005 (other than as a result of any failure on the part of the
Parent to comply with or perform any covenant or obligation of the Parent set
forth in this Agreement);
(F) By the Excel Company if the Closing has not taken place on or
before November 4, 2005 (other than as a result of the failure on the part of
the Excel Company to comply with or perform any covenant or obligation set
forth in this Agreement or in any other agreement or instrument delivered to
the Parent); or
(G) By the mutual consent of the Parent and the Excel Company.
9.2 TERMINATION PROCEDURES. If the Parent wishes to terminate this
Agreement pursuant to ARTICLE 9.1(A), ARTICLE 9.1(C) or ARTICLE 9.1(E), the
Parent shall deliver to the Excel Company a written notice stating that the
Parent is terminating this Agreement and setting forth a brief description of
the basis on which the Parent is terminating this Agreement. If the Excel
Company wishes to terminate this Agreement pursuant to ARTICLE 9.1(B), ARTICLE
9.1(D), or ARTICLE 9.1(F), the Excel Company shall deliver to the Parent a
written notice stating that the Excel Company is terminating this Agreement and
setting forth a brief description of the basis on which the Excel Company is
terminating this Agreement. If the Parent and the Excel Company wish to
terminate this Agreement pursuant to ARTICLE 9.1(G), the Parent shall deliver
to the Excel Company and the Excel Company shall deliver to the Parent a
written notice stating that both the Parent and the Excel Company are
terminating this Agreement and setting forth a brief description of the basis
on which the Parent and the Excel Company are terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
ARTICLE 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(A) neither the Excel Company nor the Parent shall be relieved of
any obligation or liability arising from any prior breach by such party of any
provision of this Agreement;
(B) the parties shall, in all events, remain bound by and continue
to be subject to the provisions set forth in ARTICLE 11 (except ARTICLE 11.1);
and
(C) the Excel Company shall, in all events, remain bound by and
continue to be subject to ARTICLE 6.2.
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November 4, 2005.
9.4 IN THE EVENT OF TERMINATION. In the event of termination of this
Agreement:
(A) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(B) The provisions of the Confidential Letter of Intent (the
"Confidential Letter of Intent"), dated as of November 3, 2005, by and between
the Parent and the Excel Company shall be terminated and will not continue in
force and effect;
(C) No party hereto shall have any liability or further obligation
to any other party to this Agreement, except as stated in ARTICLE 9.3 of this
Agreement, except for any willful breach of this Agreement occurring prior to
the proper termination of this Agreement. The foregoing provisions shall not
limit or restrict the availability of specific performance or other injunctive
relief to the extent that specific performance or such other relief would
otherwise be available to a party hereunder.
ARTICLE 10.
-----------
INDEMNIFICATION, ETC.
---------------------
10.1 SURVIVAL OF REPRESENTATIONS, ETC.
(A) The representations and warranties made by the Excel Company
(including the representations and warranties set forth in ARTICLE 4 and the
representations and warranties set forth in the Excel Company Closing
Certificate) shall survive the Closing and shall expire one year after the
Closing Date; provided, further, that if, at any time prior to one year after
the Closing Date, any Indemnitee (acting in good faith) delivers to the Excel
Company a written notice alleging the existence of an inaccuracy in or a breach
of any of the representations and warranties made by the shareholder(s) of the
Excel Company (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting
a claim for recovery under ARTICLE 10.2 based on such alleged inaccuracy or
breach, then the claim asserted in such notice shall survive the first
anniversary of the Closing until such time as such claim is fully and finally
resolved.
(B) The representations, warranties, covenants and obligations of
the Excel Company, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or knowledge of, any
of the Indemnitees or any of their Representatives.
(C) For purposes of this Agreement, each statement or other item of
information set forth in this Agreement or in any update to this Agreement
shall be deemed to be a representation and warranty made by the Parent and the
Excel Company in this Agreement.
(D) The representations and warranties made by the Parent set forth
in ARTICLE 3 shall survive the Closing and shall expire on the date that is one
year after the filing of the Parent's first quarterly report on Form 10-QSB
filed with the SEC subsequent to the Closing Date; provided, however, that if,
at any time prior to such date, the shareholder(s) of the Excel Company (acting
36
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
in good faith) delivers to the Parent a written notice alleging the existence
of an inaccuracy in or a breach of any of the representations and warranties
made by the Parent (and setting forth in reasonable detail the basis for the
Excel Company's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under ARTICLE 10.3 based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive such
date until such time as such claim is fully and finally resolved.
10.2 INDEMNIFICATION BY THE EXCEL COMPANY.
(A) From and after the Effective Time (but subject to ARTICLES
10.1(A) and 10.4), the Excel Company, shall hold harmless and indemnify each of
the Indemnitees from and against, and shall compensate and reimburse each of
the Indemnitees for, any Damages which are directly or indirectly suffered or
incurred by any of the Indemnitees or to which any of the Indemnitees may
otherwise become subject (regardless of whether or not such Damages relate to
any third party claim) and which arise from or as a result of, or are directly
or indirectly connected with: (i) any inaccuracy in or breach of any
representation or warranty set forth in ARTICLE 4 or in the Excel Company
Closing Certificate); (ii) any breach of any covenant or obligation of the
Excel Company (including the covenants set forth in ARTICLES 5 and 6); or (iii)
any Legal Proceeding relating to any inaccuracy or breach of the type referred
to in clause "(i)" or "(ii)" above (including any Legal Proceeding commenced by
any Indemnitee for the purpose of enforcing any of its rights under this
ARTICLE 10).
(B) The Excel Company acknowledge and agree that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then the Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation,
to have incurred Damages as a result of and in connection with such inaccuracy
or breach (provided, however, the Parent and the Surviving Corporation together
shall not be entitled to recover more than once for the same Damages).
10.3 INDEMNIFICATION BY THE PARENT. From and after the Effective Time
(but subject to ARTICLES 10.1(D) AND 10.4), the Parent, shall hold harmless and
indemnify the Excel Company from and against, and shall compensate and
reimburse the Excel Company for, any Damages which are directly or indirectly
suffered or incurred by the Excel Company or to the Excel Company may otherwise
become subject (regardless of whether or not such Damages relate to any third
party claim) and which arise from or as a result of, or are directly or
indirectly connected with:
(A) Any inaccuracy in or breach of any representation or warranty
set forth in ARTICLE 3;
(B) Any breach of any covenant or obligation of the Parent; or
(C) Any Legal Proceeding relating to any inaccuracy or breach of the
type referred to in clause "(A)" or "(B)" above (including any Legal Proceeding
commenced by the Excel Company for the purpose of enforcing any of its rights
under this ARTICLE 10).
10.4 LIMITATIONS.
(A) Notwithstanding anything contained herein to the contrary, the
Excel Company shall not be required to make any indemnification payments to any
Indemnitee pursuant to this Agreement, including, without limitation
ARTICLE 10.2, until such time as the total amount of all Damages suffered or
incurred by the Indemnitees exceeds USD $50,000 at which time the Indemnitees
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
shall be entitled to be indemnified against all Damages in excess of USD
$50,000, provided that the Excel Company obligations under ARTICLE 10 shall not
exceed USD $100,000.
(B) Notwithstanding anything contained herein to the contrary, the
Parent shall not be required to make any indemnification payments to the Excel
Company pursuant to this Agreement, including without limitation ARTICLE 10.3,
until such time as the total amount of all Damages suffered or incurred by the
Excel Company exceeds USD $50,000 in the aggregate at which time the Excel
Company shall be entitled to be indemnified against all Damages in excess of
USD $50,000 in the aggregate, provided, that the Parent's obligations under
this ARTICLE 10 shall not exceed USD $100,000 in the aggregate.
10.5 NO CONTRIBUTION. The Excel Company waives, and acknowledges and
agrees that they shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
right or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which they may become
subject under or in connection with this Agreement or the Excel Company's
Closing Certificate.
10.6 INTEREST. Any Person who is required to hold harmless, indemnify,
compensate or reimburse any other Person (whether an Indemnitee or the Excel
Company) pursuant to this ARTICLE 10 with respect to any Damages shall also be
liable for interest on the amount of such Damages (for the period commencing as
of the date on which such Person first received notice of a claim for recovery
and ending on the date on which the liability of the indemnifying party is
fully satisfied) at a floating rate equal to the rate of interest publicly
announced by Bank of America, from time to time as its prime, base or reference
rate.
10.7 DEFENSE OF THIRD PARTY CLAIMS (THE PARENT). For purposes of this
ARTICLE 10.7, "the Parent" shall be deemed to mean each of the Surviving
Corporation and the Parent. In the event of the assertion or commencement by
any Person of any claim or Legal Proceeding (whether against the Parent or
against any other Person) with respect to which the Excel Company may become
obligated to hold harmless, indemnify, compensate or reimburse any Indemnitee
pursuant to this ARTICLE 10, the Parent shall have the right, at its election,
to proceed with the defense of such claim or Legal Proceeding on its own. If
the Parent so proceeds with the defense of any such claim or Legal Proceeding:
(A) All reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be borne and paid exclusively by the Excel Company;
(B) The Excel Company shall make available to the Parent any
documents and materials in the Excel Company's possession or control that may
be necessary to the defense of such claim or Legal Proceeding; and
(C) The Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Excel Company; provided,
however, that such consent shall not be unreasonably withheld.
(D) The Parent shall give the Excel Company prompt notice in writing
of the commencement of any such Legal Proceeding against the Parent; provided,
however, that any failure on the part of the Parent to so notify the Company
shall not limit any of the obligations of the Excel Company under this ARTICLE
10 (except to the extent such failure materially prejudices the defense of such
Legal Proceeding).
10.8 DEFENSE OF THIRD PARTY CLAIMS (THE Excel Company). In the event of
the assertion or commencement by any Person of any claim or Legal Proceeding
(whether against the Excel Company) with respect to which the Parent may become
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
obligated to hold harmless, indemnify, compensate or reimburse the Excel
Company pursuant to this ARTICLE 10, the Excel Company shall have the right, at
their election, to proceed with the defense of such claim or Legal Proceeding
on their own. If the Excel Company so proceeds with the defense of any such
claim or Legal Proceeding:
(A) All reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be borne and paid exclusively by the Parent;
(B) The Parent shall make available to the Excel Company any
documents and materials in the Parent's possession or control that may be
necessary to the defense of such claim or Legal Proceeding; and
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
(C) The Excel Company shall have the right to settle, adjust or
compromise such claim or Legal Proceeding with the consent of the Parent;
provided, however, that such consent shall not be unreasonably withheld.
(D) The Excel Company shall give the Parent prompt notice in writing
of the commencement of any such Legal Proceeding against the Excel Company;
provided, however, that any failure on the part of the Excel Company to so
notify the Parent shall not limit any of the obligations of the Parent under
this ARTICLE 10 (except to the extent such failure materially prejudices the
defense of such Legal Proceeding).
10.9 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN THE PARENT. The
Parent (or any successor thereto or assign thereof) shall be the only Persons
permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless the Parent (or any successor thereto or assign
thereof), as the case may be, shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
ARTICLE 11.
-----------
MISCELLANEOUS PROVISIONS
------------------------
11.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
11.2 FEES AND EXPENSES. The Parent shall bear and pay all fees, costs
and expenses (excluding legal fees and accounting fees incurred prior to the
Effective Time by the Excel Company) that have been incurred or that are
incurred by such party in connection with the transactions contemplated by this
Agreement, including all fees, costs and expenses incurred in connection with
or by virtue of:
(A) the investigation and review conducted by the Parent and its
Representatives with respect to the Excel Company's business (and the
furnishing of information to the Parent and its Representatives in connection
with such investigation and review),
(B) the negotiation, preparation and review of this Agreement and
all agreements, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the transactions contemplated
by this Agreement,
(C) the preparation and submission of any filing or notice required
to be made or given in connection with any of the transactions contemplated by
this Agreement, and the obtaining of any Consent required to be obtained in
connection with any of such transactions, and
(D) the consummation of the Excel Merger;
provided, however, that, to the extent the total amount of all such fees, costs
and expenses incurred by or for the benefit of all Parties (including all such
fees, costs and expenses incurred prior to the Effective Time of this Agreement
and including the amount of all special bonuses and other amounts that may
become payable to any officers of the Excel Company or other Persons in
connection with the consummation of the transactions contemplated by this
Agreement) does not exceed an amount of 10%, in the aggregate, of the total of
the issued and outstanding shares of the Surviving Corporation Common Stock
after the consummation of this Agreement on the Closing Date at the Effective
Time.
11.3 BROKERS. None of the parties hereto has agreed or become obligated
to pay, or has taken any action that might result in any party claiming to be
entitled to receive, any brokerage commission, finder's fee or similar
commission or fee in connection with any of the transactions contemplated by
this Agreement. The Excel Company agrees to indemnify and hold harmless the
Indemnitees from and against, and shall compensate and reimburse any of the
Indemnitees for, Damages suffered or incurred as a result of a breach of the
foregoing representation on behalf of the Excel Company. The Parent agrees to
indemnify and hold harmless the Excel Company from and against, and shall
compensate and reimburse the Excel Company for, Damages suffered or incurred as
a result of a breach of the foregoing representation on behalf of the Parent.
11.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
11.5 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
IF TO THE PARENT:
EMPIRE GLOBAL CORP.
c/o 123 Commerce Valley Dr.East, Suite 300
Thornhill, Ontario, CAN L3T 7W8
Tel: 905-882-0221
Fax: 905-882-0229
Attn: Kalson G.H. Jang
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
with a copy (not constituting notice) to:
Gary Blum, Esq.
LAW OFFICES OF GARY L. BLUM
Attn.: Gary L. Blum
3278 Wilshire Blvd., #603
Los Angeles, CA 90010
Tel: 213-381-7450
Fax: 213-384-1035
IF TO THE Excel Company:
EXCEL EMPIRE LIMITED
Room 805, 8/F Tai Yau Bldg
Road Wan Chai, Hong Kong
Attn: Ken Chu, President
11.6 CONFIDENTIALITY. Without limiting the generality of anything
contained in ARTICLE 6.2, on and at all times after the Closing Date, the
Parent, the Excel Company shall keep confidential, and shall not use or
disclose to any other Person, any non-public document or other non-public
information in such parties possession that relates to the business, financial
condition, results of operations or prospects of the Excel Company or the
Parent. In the event the Closing does not occur, the Parent shall continue to
abide by its obligations under ARTICLE 5.1.
11.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
11.8 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
11.10 GOVERNING LAW. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State
of Delaware (without reference to the choice of law provisions of Delaware
law), except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Excel Company and its successors and assigns (if any); the Excel Company's
respective personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); the Parent and its successors and assigns (if
any); the Parent's respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); the Parent and
its successors and assigns (if any); and the Parent's respective personal
representatives, executors, administrators, estates, heirs, successors and
assigns (if any). This Agreement shall inure to the benefit of: the Excel
Company; the Excel Company's shareholders (to the extent set forth in ARTICLE
2.5); the holders of assumed Excel Company Options (to the extent set forth in
ARTICLE 2.7); the Parent; the other Indemnitees (subject to ARTICLE 10.6); and
the respective successors and assigns (if any) of the foregoing. The Parent may
freely assign any or all of its rights under this Agreement (including its
indemnification rights under ARTICLE 10), in whole or in part, to any other
Person without obtaining the consent or approval of any other party hereto or
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
of any other Person; provided, however, that the Parent shall have no right to
assign its obligations under this Agreement.
11.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties
to this Agreement agree that, in the event of any breach or threatened breach
by any party to this Agreement of any covenant, obligation or other provision
set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance
or mandamus to enforce the observance and performance of such covenant,
obligation or other provision, and (b) an injunction restraining such breach or
threatened breach.
11.13 WAIVER.
(A) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(B) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11.14 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby.
11.15 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.16 PARTIES IN INTEREST. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
11.17 ENTIRE AGREEMENT. The Confidential Letter of Intent, the Share
Exchange Agreement, and this Agreement together with all exhibits and schedules
hereto and thereto constitutes and sets forth the entire agreement among the
parties pertaining to the Excel Merger hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties relating to the subject matter hereof and thereof.
11.18 CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(B) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(C) As used in this Agreement, the words "include" and "including
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(D) Except as otherwise indicated, all references in this Agreement
to "ARTICLES" and "EXHIBITS" are intended to refer to ARTICLES of this
Agreement and EXHIBITS to this Agreement.
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November 4, 2005.
SIGNATURES
----------
The parties hereto have caused this Agreement to be executed and delivered as
of November 4, 2005.
EMPIRE GLOBAL CORP.,
a Delaware corporation
Per: /s/ Kalson G.H. Jang
-------------------------
Kalson G.H. Jang
Chairman of the Board
Excel Empire Limited,
A BVI corporation
Per: /s/ Ken Chu
-------------------------
Ken Chu
President
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT A
---------
CERTIFICATE OF INCORPORATION AND BYLAWS:
----------------------------------------
PARENT
------
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT B
---------
DIRECTORS AND OFFICERS:
-----------------------
SURVIVING CORPORATION
---------------------
OFFICERS:
Name: Position Held:
- ----- --------------
Ken Chu Chief Executive Officer,
Chairman of the Board
To Be Determined President
Bing Xu Vice President
H. Ming Chan Chief Executive Director
Florence Tsun Chief Financial Officer
To Be Determined Secretary
To Be Determined Treasurer
DIRECTORS:
Name: Position Held:
- ----- --------------
Jiaosheng Guo Director
K.C. Tan Director
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Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT C
---------
LISTING OF FOREIGN JURISDICTIONS:
---------------------------------
EXCEL COMPANY
-------------
Jurisdictions Of Excel Empire Limited:
1. British Virgin Islands
2. The People's Republic of China
47
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT D
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DIRECTORS AND OFFICERS:
-----------------------
EXCEL COMPANY
-------------
OFFICERS:
Name: Position Held:
- ----- --------------
Ken Chu President
Jiaosheng Guo Vice General Manager
Ya Li Vice General Manager
Junping Qu Financial Manager
DIRECTORS:
Name: Position Held:
- ----- --------------
Bing Xu Executive Director
K.C. Tan Director
Jiaosheng Guo Director
48
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT E
---------
ARTICLES OF INCORPORATION:
--------------------------
EXCEL COMPANY
-------------
49
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT F
---------
FINANCIAL STATEMENTS:
---------------------
EXCEL COMPANY
-------------
50
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT G
---------
AFFILIATE AND ASSET LISTING:
----------------------------
EXCEL COMPANY
-------------
Excel Empire Limited Affiliate Listing
1. Jiaozuo Sunwin Real Estate Development Company Limited
(China Registered Company)
Reference: Excel Empire Limited Business Plan (Section 2.1 Page 7)
Excel Empire Limited Asset Listing
1. Sunwin Commercial Square
(Land and Square Property)
Reference: Excel Empire Limited Business Plan (Section 3.1 Page 11)
2. Jiaozuo Days Inn
(5 Star Hotel Property, 256 Rooms and
Restaurant Equipment)
Reference: Excel Empire Limited Business Plan (Section 3.1 Page 13)
3. Jiaozuo TV City
(148.9 acres of land and above building and
any property)
Reference: Excel Empire Limited Business Plan (Section 3.2 Page 14)
51
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT H
---------
COMPANY CONTRACTS:
------------------
EXCEL COMPANY
-------------
Excel Empire Limited Company Contracts
1. Jiaozuo Sunwin Real Estate Development Company Limited
Development of the Jiaozuo Sunwin Plaza Project
Reference: Excel Empire Limited Business Plan (Section 2.2 Page 8)
Excel Empire Limited Company Subcontracts
2. Sunwin Commercial Square
Management contract DTZ
(DEBENHAM TIE LEUNG LTD. - Property Management)
Reference: Excel Empire Limited Business Plan (Section 3.1 Page 12)
3. Jiaozuo Days Inn
(Days Inn Hotel Management)
Reference: Excel Empire Limited Business Plan (Section 3.1 Page 13)
4. Jiaozuo TV City
Reference: Excel Empire Limited Business Plan (Section 3.2 Page 14)
52
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT I
---------
INSURANCE POLICIES:
-------------------
EXCEL COMPANY
-------------
53
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT J
---------
RELATED PARTIES:
----------------
EXCEL COMPANY
-------------
Excel Empire Limited - Related Parties
- --------------------------------------
Billion Charm Group
Tribonus International Limited
Bin Xu (Executive Director, Major Shareholder, Person, China)
Junping Qu (Major Shareholder, Person, China)
Ken Chu (President, Person, China)
K.C. Tan (Director, Person, China)
Jiaosheng Guo (Director, Person, China)
54
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT K
---------
CLOSING CERTIFICATE OF:
-----------------------
EXCEL COMPANY
-------------
55
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT L
---------
CERTIFICATE OF MERGER:
----------------------
PARENT
------
56
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.
EXHIBIT M
---------
CLOSING CERTIFICATE OF PARENT
-----------------------------
57
EMPIRE GLOBAL CORP.
Agreement & Plan of Merger & Reorganization
November 4, 2005.