EXHIBIT 2.1
SHARE-FOR-SHARE EXCHANGE AGREEMENT
SHARE-FOR-SHARE EXCHANGE AGREEMENT made this 5th day of May, 2005 by and among
CAPITAL SOLUTIONS I, INC. a Delaware corporation (the "Corporation") and BEDROCK
HOLDINGS, INC., a Florida Corporation ("Bedrock"), together with each of the
Bedrock Shareholders (as hereinafter defined).
RECITALS:
A. The Corporation has offered to issue 300,000,000 shares of its common stock,
$.0000001 par value (the "Common Stock), to the holders of shares of the capital
stock of Bedrock (the "Bedrock Shareholders") in exchange for their contribution
to the Corporation of all of the issued and outstanding capital stock of Bedrock
(the "Bedrock Shares") and to certain other individuals who have offered and
continue to offer valuable services to Bedrock and the Corporation (the "Service
Providers").
B. The respective Boards of Directors of the Corporation and Bedrock have
determined that, subject to the terms, conditions, agreements, representations
and warranties set forth herein, the exchange contemplated herein will serve the
general welfare and advantage of their respective businesses.
C. Subject to the terms and conditions set forth herein, the Bedrock
Shareholders desire to contribute all of the shares of Bedrock capital stock for
shares of Common Stock in the manner hereinafter set forth herein.
D. Subject to the terms and conditions set forth herein, the Service Providers
agree to accept shares of the Corporation's common stock as full and final
payment for services offered up to and including the day of Closing.
E. The exchange is intended to comply with the requirements of Section 368 of
the Internal Revenue Code of 1986, as amended, the Treasury Regulations
promulgated thereunder and the interpretive rulings issued pursuant thereto.
NOW, THEREFORE, in consideration of the foregoing recitals, as well as the
mutual covenants hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
EXCHANGE PROVISIONS
1.1 CONTRIBUTION.
Subject to the terms and conditions hereinafter set forth:
-1-
(a) Each Bedrock Shareholder agrees to contribute, transfer,
assign and convey at Closing all of their Bedrock Shares to the Corporation,
together with all other rights, claims and interests he or she may have with
respect to Bedrock or its respective assets, and all claims he may have against
its officers and directors, including, but not limited to, all rights to unpaid
dividends and all claims and causes of action arising from or in connection with
the ownership of Bedrock Shares or its issuance, excluding any right, claim or
interest of same arising under this Agreement or in connection with the
transaction contemplated by this Agreement. Each Bedrock Shareholder shall
deliver to Bedrock all of his stock certificates representing the Bedrock
Shares, together with a stock power therefore, duly executed in blank, to be
held by Bedrock for delivery at Closing; and
(b) The Corporation agrees to issue to each Bedrock
Shareholder at Closing certain shares of newly-issued Common Stock for each
share of Bedrock capital stock transferred to the Corporation pursuant to
Section 1.1(a).
(c) The Corporation agrees to issue to each Service Provider
at Closing certain shares of newly-issued Common Stock in exchange for a release
of all claims for payment which is due or may be due for services rendered to
Bedrock through and including the day of Closing.
Schedule 1.1 sets forth the name of each Bedrock Shareholder, the number of
shares each owns as of the date of this Agreement and the name of each Service
Provider and the number of shares of Common Stock each Bedrock Shareholder and
Service Provider will receive at Closing.
1.2 NO REGISTRATION.
(a) Each of the Bedrock Shareholders and each of the Service
Providers acknowledges and agrees that:
(i) The Common Stock to be issued to the Bedrock
Shareholders (the "Exchanged Corporation Stock") and to the Service Providers is
being issued to Bedrock Shareholders and Service Providers without registration
under applicable federal and state securities laws in reliance upon certain
exemptions from registration under such securities laws;
(ii) He has had the opportunity to ask questions of
and receive answers from the Corporation, Bedrock and their respective executive
officers concerning their businesses and the Exchanged Corporation Stock and all
such inquiries have been completed to his satisfaction;
-2-
(iii) Each certificate representing shares of the
Exchanged Corporation Stock will bear a legend restricting its transfer, sale,
conveyance or hypothecation, unless such Exchanged Corporation Stock is either
registered under applicable securities laws or an exemption from such
registration is applicable, and provided that if an exemption from registration
is claimed, the Corporation may require an opinion of legal counsel that, as a
result of such exemption, registration under the securities laws is not required
to transfer, sell, convey or hypothecate such Exchanged Corporation Stock;
(iv) He shall not transfer any Exchanged Corporation
Stock except in compliance with all applicable securities laws;
(v) He has a pre-existing personal or business
relationship with Bedrock or its officers, directors, agents or controlling
persons, or with the Corporation, its officers, directors, agents or controlling
persons, and has relied, if at all, on the advice of such persons in electing to
participate in the transaction herein contemplated and not on any
representations of the Corporation other than those expressly set forth herein,
or by reason of his business or financial experience could be reasonably assumed
to have the capacity to protect his own interest in connection with the
transaction;
(vi) He is acquiring the Exchanged Corporation Stock
for his own account, for investment purposes only and not with a view to the
sale or distribution thereof;
(vii) He has not received any general solicitation or
general advertising regarding the acquisition of the Exchanged Corporation
Stock; and
(viii) He is capable of evaluating the merits and
risks of an investment in the Common Stock because he is a sophisticated
investor by virtue of his prior investments and has experience in investments
similar in nature to the Common Stock, including investments in unlisted and
unregistered securities, and has knowledge and experience in financial and
business matters in general.
(b) The Corporation acknowledges and agrees that:
(i) The Bedrock capital stock is being transferred to
the Corporation without registration under applicable securities laws in
reliance upon certain exemptions from registration from such securities laws;
(ii) All certificates representing the Bedrock
capital stock bear legends restricting its transfer, sale, conveyance or
hypothecation, unless such Bedrock capital stock is either registered under the
applicable securities laws, or an exemption from such registration is
applicable;
-3-
(iii) The Corporation shall not transfer any Bedrock
capital stock except in compliance with all applicable securities laws; and
(iv) The Corporation is acquiring the Bedrock capital
stock for its own account for investment purposes only and not with a view to
the sale or distribution thereof.
1.3 CLOSING. Consummation of the contemplated transaction shall take
place on the date that all the conditions set forth herein are satisfied or
waived by the appropriate parties at the offices of the Corporation or its
counsel or at another time or date that is mutually agreeable to the parties
hereto, or on such other date at such other time as may be mutually agreed upon
in writing by the parties hereto (the "Closing").
ARTICLE II
THE CORPORATION'S REPRESENTATIONS AND WARRANTIES
The Corporation hereby makes the following representations and warranties to the
Service Providers, Bedrock Shareholders and Bedrock, each of which the
Corporation represents to be true and correct on the date hereof and (except as
the Corporation may notify Bedrock in writing prior to the Closing) shall be
deemed made again as of the Closing and represented by the Corporation to be
true and correct at the time of the Closing.
2.1 ORGANIZATION. The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is not required to be qualified or licensed as a foreign corporation in any
other jurisdiction. The Corporation has the full power and authority to conduct
the business in which it will engage upon completion of the transaction
contemplated herein. The Corporation does not have any subsidiary or equity
interest in any entity. Accurate, current and complete copies of the Articles of
Incorporation and Bylaws of the Corporation are attached hereto as Schedule 2.1.
2.2 STOCK OWNERSHIP. The authorized capital stock of the Corporation
consists of Twenty Billion (20,000,000,000) shares of Common Stock, Four Hundred
and Eighty Three Million, Six Hundred and Sixty Seven Thousand and Seventy Two
(483,667,072) shares of which are issued and outstanding (excluding the
Exchanged Corporation Stock).
-4-
All the issued and outstanding shares of capital stock of the Corporation are
duly authorized, validly issued, fully paid and nonassessable. Upon the issuance
of the Exchanged Corporation Stock, the Common Stock included in the Exchanged
Corporation Stock shall, on a fully diluted basis, constitutes Thirty Eight
percent (38%) of all the issued and outstanding Common Stock. Upon tender of the
Bedrock capital stock to the Corporation in the manner contemplated in Section
1.1 hereof, legal and beneficial ownership of the Exchanged Corporation Stock
shall be transferred to and vested in the Bedrock Shareholders and Service
Providers free and clear of all encumbrances, and all the Exchanged Corporation
Stock shall be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding bonds, debentures, notes or other indebtedness or other
securities of the Corporation having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Corporation may vote. Except as set forth above, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Corporation is
a party or by which it is bound obligating the Corporation to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of the Corporation or obligating the
Corporation to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations, commitments, understandings or
arrangements of the Corporation to repurchase, redeem or otherwise acquire or
make any payment in respect of any shares of capital stock of the Corporation.
Notwithstanding any of the above, the Corporation refers to its current filings
with the Securities and Exchange Commission, including potential obligations
related to certain debenture holders.
2.3 AUTHORITY AND APPROVAL OF AGREEMENT.
(a) The execution and delivery of this Agreement by the
Corporation and the performance of all the Corporation's obligations hereunder
have been duly authorized and approved by all requisite corporate action on the
part of the Corporation pursuant to applicable law. The Corporation has the
power and authority to execute and deliver this Agreement and to perform all its
obligations hereunder.
(b) This Agreement and any other documents, instruments and
agreements executed by the Corporation in connection herewith constitute the
valid and legally binding agreements of the Corporation, enforceable against the
Corporation in accordance with their terms, except that (i) enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
-5-
moratorium or similar laws of general application affecting the enforcement of
the rights and remedies of creditors; and (ii) the availability of equitable
remedies may be limited by equitable principles.
2.4 NO VIOLATIONS. Neither the execution, delivery nor performance of
this Agreement or any other documents, instruments or agreements executed by the
Corporation in connection herewith, nor the consummation of the transactions
contemplated hereby: (i) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of the Corporation, any provision of any contract to which the
Corporation may be bound, any judgment or any law; or (ii) will or could result
in the creation or imposition of any encumbrance upon, or give to any third
person any interest in or right to, the Exchanged Corporation Stock or any other
capital stock of the Corporation; or (iii) will or could result in the loss or
adverse modification of, or the imposition of any fine or penalty with respect
to, any license, permit or franchise granted or issued to, or otherwise held by
or for the use of, the Corporation.
2.5 FINANCIAL STATEMENTS. Available for review at xxx.xxx.xxx in the
XXXXX filing system are audited financial statements of the Corporation
("Financial Statements"), including balance sheets, statements of operations,
statements of changes in shareholders' equity and statements of cash flows for
the fiscal year ended May 31, 2004 and the quarters ended August 31, 2004 and
November 30, 2004 and February 28, 2005. For purposes hereof the "Balance Sheet"
shall refer to the balance sheet for the quarter ended February 28, 2005. The
Financial Statements and Balance Sheet are true, correct and complete, were
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated, and accurately reflect
the Corporation's financial condition and the results of the Corporation's
operations for the periods and as of the dates which they purport to cover.
2.6 CONDUCT SINCE DATE OF BALANCE SHEET. Except as otherwise set forth
herein), none of the following has occurred since the date of the Balance Sheet:
(a) Any material adverse change in the financial condition,
obligations, capitalization, business, prospects or operations of the
Corporation, nor are there any circumstances known to the Corporation which
might result in such a material adverse change or such an effect;
(b) Any increase of indebtedness of the Corporation other than
in the ordinary course of business;
-6-
(c) Any settlement or other resolution of any dispute or
proceeding other than in the ordinary course of business;
(d) Any cancellation by the Corporation, without payment in
full, of any obligation to the Corporation of any shareholder, director, officer
or employee of the Corporation (or any member of their respective families), or
any entity in which any shareholder, director or officer of the Corporation (or
any member of their respective families) has any direct or indirect interests;
(e) Any obligation incurred by the Corporation other than in
the ordinary course of business;
(f) Any payment, discharge or satisfaction of any obligation
or judgment, other than in the ordinary course of business; or
(g) Any agreement obligating the Corporation to do or take any
of the actions referred to in this Section 2.7 outside the ordinary course of
business.
2.7 CONTRACTS. The Corporation's periodic reports available on the
XXXXX filing system contain an accurate, current and complete list and
description of each contract and agreement, whether written or oral
("Contract"), (other than this Agreement) to which the Corporation is a party or
by which the Corporation or any of its assets are bound. An accurate, current
and complete copy of each Contract has been or will be made available to Bedrock
for inspection and copying.
2.8 OFFERS. There are no outstanding offers, bids, proposals or
quotations made by the Corporation which, if accepted, would create a Contract
with the Corporation.
2.9 OFFICERS, DIRECTORS, AGENTS, ETC. Xxxxxxxxxxx Xxxxxx and Xxxxxxx
Xxxxxx are the sole officers and directors of the Corporation. Neither
individual has an employment agreement.
2.10 LABOR MATTERS. The Corporation has approved an Equity Incentive
Plan for up to 50,000,000 shares of common stock. The underlying common stock
has been registered by the Company on Form S-8. Other than the Equity Incentive
Plan, the Corporation is not and has never been a party to: (i) any profit
sharing, pension, retirement, deferred compensation, bonus, stock option, stock
purchase, retainer, consulting, health, welfare or incentive plan or agreement
or other employee benefit plan, whether legally binding or not; or (ii) any plan
providing for "fringe benefits" to its employees, including, but not limited to,
vacation, disability, sick leave, medical, hospitalization and life insurance
and other insurance plans, or related benefits; or
-7-
(iii) any employment agreements. No former employee of the Corporation has any
claim against the Corporation (whether under federal or state law, any
employment agreement or otherwise) on account of or for: (i) overtime pay; (ii)
wages or salary for any period; (iii) vacation, time-off or pay in lieu of
vacation or time-off; or (iv) any violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work. No person or
party (including, but not limited to, governmental agencies of any kind) has any
claim or basis for any action or proceeding against the Corporation arising out
of any statute, ordinance or regulation relating to discrimination in employment
or to employment practices or occupational safety and health standards.
2.11 ENVIRONMENTAL MATTERS. The Corporation has not generated any
hazardous wastes or engaged in activities which are or could be interpreted to
be potential violations of laws or judicial decrees in any manner regulating the
generation or disposal of hazardous waste. There are no on-site or off-site
locations where the Corporation has stored, disposed or arranged for the
disposal of chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum or petroleum products; there are no underground storage tanks located
on property owned or leased by the Corporation, and no polychlorinated biphenyls
are used or stored at any property owned or leased by the Corporation.
2.12 BOOKS AND RECORDS. The Corporation's books and records are and
have been properly prepared and maintained in form and substance adequate for
preparing audited financial statements in accordance with generally accepted
accounting principles, and fairly and accurately reflect all of the
Corporation's assets, obligations and accruals, and all transactions (normally
reflected in books and records in accordance with generally accepted accounting
principles) to which the Corporation is or was a party or by which the
Corporation or any of its assets are or were affected.
2.13 TAXES. Except as otherwise disclosed in this Agreement, all taxes
due, owing and payable by the Corporation have been fully paid. The amounts set
up as provision for taxes on the Balance Sheet are sufficient for the payment of
all accrued and unpaid taxes of the Corporation, whether or not disputed. The
amount set up as provision for taxes on the Corporation's books and records for
the current fiscal year through the Closing shall be sufficient for the payment
of all accrued and unpaid taxes of the Corporation, whether or not disputed, for
such period. No claim for any tax due from or assessed against the Corporation
is being contested by the Corporation. None of the Corporation's tax returns or
reports has been audited by the Internal Revenue Service or any state or local
tax authority, and the Corporation has not received any notice of deficiency or
other
-8-
adjustment from the Internal Revenue Service or any state or local tax
authority. There are no agreements, waivers or other arrangements providing an
extension of time with respect to the assessment of any tax against the
Corporation, nor are there any tax proceedings now pending or threatened against
the Corporation. No state of facts exists or has existed, nor has any event
occurred, which would constitute grounds for the assessment of any further tax
against the Corporation.
2.14 LITIGATION. The Corporation is not a party to, the subject of, or
threatened with any litigation nor, to the best of the Corporation's knowledge,
is there any basis for any litigation. The Corporation is not contemplating the
institution of any litigation.
2.15 OTHER LIABILITIES. No claim of breach of contract, tort, product
liability or other claim, contingent or otherwise, has been asserted or
threatened against the Corporation nor, to the best of the Corporation's
knowledge, is capable of being asserted by any employee, creditor, claimant or
other person against the Corporation. No state of facts exists or has existed,
nor has any event occurred, which could give rise to the assertion of any such
claim by any person.
2.16 CONSENTS. The execution, delivery and performance by the
Corporation of this Agreement and the consummation by the Corporation of the
transactions contemplated hereby do not require any consent that has not been
received prior to the date hereof.
2.17 JUDGMENTS. There is no outstanding judgment against the
Corporation. There is no health or safety problem involving or affecting the
Corporation. There are no open workers compensation claims against the
Corporation, or any other obligation, fact or circumstance which would give rise
to any right of indemnification on the part of any current or former
shareholder, director, officer, employee or agent of the Corporation, or any
heir or personal representative thereof, against the Corporation or any
successor to the businesses of the Corporation.
2.18 IMPROPER PAYMENTS. Neither the Corporation, nor any of its current
or former shareholders, directors, officers or employees or agents, nor any
person acting on behalf of the Corporation, has, directly or indirectly, made
any bribe, kickback or other payment of a similar or comparable nature, whether
lawful or not, to any person, public or private, regardless of form, whether in
money, property or services, to obtain favorable treatment for business secured
or special concessions already obtained. No funds or assets of the Corporation
were donated, lent or made available directly or indirectly for the benefit of,
or for the purpose of supporting or opposing, any government or sub-
division thereof, political party, candidate or committee, either domestic or
foreign. The Corporation has not maintained and does not maintain a bank
account, or any other account of any kind, whether domestic or foreign, which
account was not or is not reflected in the Corporation's books and records, or
which account was not listed, titled or identified in the name of the
Corporation.
2.19 FULL DISCLOSURE. All the representations and warranties made by
the Corporation herein or in any Schedule, and all of the statements, documents
or other information pertaining to the transaction contemplated herein made or
given by the Corporation, its agents or representatives, are complete and
accurate, and do not omit any information required to make the statements and
information provided, in light of the transaction contemplated herein,
non-misleading, accurate and meaningful.
ARTICLE III
BEDROCK'S REPRESENTATIONS AND WARRANTIES
Bedrock hereby makes the following representations and warranties to the
Corporation, each of which Bedrock represents to be true and correct on the date
hereof and (except as Bedrock may notify the Corporation in writing prior to the
Closing) shall be deemed made again as of the Closing and represented by Bedrock
to be true and correct at the time of the Closing.
3.1 ORGANIZATION. Bedrock is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and is not
required to be qualified or licensed as a foreign corporation in any other
jurisdiction. Bedrock has the full power and authority to own all its assets and
to conduct its business as and where its business is presently conducted.
Accurate, current and complete copies of the Articles of Incorporation and
Bylaws of Bedrock are attached hereto as Schedule 3.1. Bedrock has no
subsidiaries or equity interest in any entity.
3.2 STOCK OWNERSHIP. The authorized capital stock of Bedrock consists
of Five Hundred (500) shares of common stock, Five Hundred (500) of which will
be outstanding at Closing. All the issued and outstanding capital stock of
Bedrock is duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding bonds, debentures, notes or other indebtedness or other
securities of Bedrock having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of Bedrock may vote. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Bedrock
-10-
is a party or by which it is bound obligating Bedrock to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of Bedrock or obligating Bedrock to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations, commitments, understandings or arrangements of Bedrock
to repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of Bedrock.
3.3 AUTHORITY AND APPROVAL OF AGREEMENT.
(a) The execution and delivery of this Agreement by Bedrock
and the performance of all Bedrock's obligations hereunder have been duly
authorized and approved by all requisite corporate action on the part of Bedrock
pursuant to applicable law. Bedrock has the power and authority to execute and
deliver this Agreement and to perform all its obligations hereunder.
(b) This Agreement and each of the other documents,
instruments and agreements executed by Bedrock in connection herewith constitute
the valid and legally binding agreements of Bedrock, enforceable against Bedrock
in accordance with their terms, except that: (i) enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting the enforcement of the rights and remedies of
creditors; and (ii) the availability of equitable remedies may be limited by
equitable principles.
3.4 NO VIOLATIONS. Neither the execution, delivery nor performance of
this Agreement or any other documents, instruments or agreements executed by
Bedrock in connection herewith, nor the consummation of the transactions
contemplated hereby: (i) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of Bedrock, any provision of any Contract to which Bedrock or its assets
may be bound, any judgment to which Bedrock is bound or any law applicable to
Bedrock; or (ii) result in the creation or imposition of any encumbrance upon,
or give to any third person any interest in or right to, any other capital stock
of Bedrock or any of the assets of Bedrock; or (iii) result in the loss or
adverse modification of, or the imposition of any fine or penalty with respect
to, any license, permit or franchise granted or issued to, or otherwise held by
or for the use of, Bedrock.
3.5 CONSENTS. The execution, delivery and performance by Bedrock of
this Agreement and the consummation by Bedrock of the transactions contemplated
hereby do not require any consent that has not been received prior to the date
hereof.
-11-
3.6 BEDROCK FINANCIAL STATEMENTS. Bedrock does not have currently
prepared financial statements. However, prior to the Closing of the transaction,
Bedrock shall provide full, complete and accurate financial disclosure to the
Corporation, and the Corporation shall be entitled to conduct such review and
ask such questions as it deems necessary and appropriate regarding the financial
condition of Bedrock and other material matters. Bedrock shall obtain audited
financial statements no later than 72 days from the close hereof in accordance
with SEC rules and regulations.
3.7 CONDUCT SINCE DATE OF FINANCIAL DISCLOSURE. Except as otherwise set
forth herein, none of the following have occurred since the date of the Bedrock
financial disclosure:
(a) Any material adverse change in the financial condition,
obligations, capitalization, business, prospects or operations of Bedrock, nor
are there any circumstances known to Bedrock which might result in such a
material adverse change or such an effect;
(b) Any increase of indebtedness of Bedrock other than in the
ordinary course of business;
(c) Any settlement or other resolution of any dispute or
proceeding including Bedrock other than in the ordinary course of business;
(d) Any cancellation by Bedrock, without payment in full, of
any obligation to Bedrock of any shareholder, partner, director, officer or
employee of Bedrock (or any member of their respective families), or any person
in which any shareholder, partner, director or officer of Bedrock (or any member
of their respective families) has any direct or indirect interest;
(e) Any obligation incurred by Bedrock other than in the
ordinary course of business;
(f) Any payment, discharge or satisfaction of any obligation
or judgment of or against Bedrock, other than in the ordinary course of
business; or
(g) Any Contract obligating Bedrock to do or take any of the
actions referred to in this Section 3.7 outside the ordinary course of business.
3.8 CONTRACTS. An accurate, current and complete copy of each material
Contract has been furnished to the Corporation. Xxxxx Xxxxx and Xxxxxx Xxxxxx
shall take all action necessary to cause that certain line of credit agreement
with Regents Bank to
-12-
be paid off and closed prior to the Closing hereof. As an additional alternative
Xxxxx Xxxxx and Xxxxxx Xxxxxx shall take the necessary action to transfer such
line of credit into their personal names, or another entity name, and shall
cause Regents Bank to issue and release of liability to Bedrock prior to
Closing.
3.9 OFFERS. There are no outstanding offers, bids, proposals or
quotations made by Bedrock which, if accepted, would create a Contract with
Bedrock.
3.10 OFFICERS, DIRECTORS, AGENTS, ETC. Xxxxx Xxxxx and Xxxxxx Xxxxxx
are the sole officers and directors of Bedrock.
3.11 LABOR MATTERS. Bedrock is not and has never been a party to: (i)
any profit sharing, pension, retirement, deferred compensation, bonus, stock
option, stock purchase, retainer, consulting, health, welfare or incentive plan
or agreement or other employee benefit plan, whether legally binding or not; or
(ii) any plan providing for "fringe benefits" to its employees, including, but
not limited to, vacation, disability, sick leave, Bedrock, hospitalization and
life insurance and other insurance plans, or related benefits; or (iii) any
employment agreement. No former employee of Bedrock has any claim against
Bedrock (whether under federal or state law, any employment agreement or
otherwise) on account of or for: (i) overtime pay; (ii) wages or salary for any
period; (iii) vacation, time-off or pay in lieu of vacation or time-off; or (iv)
any violation of any statute, ordinance or regulation relating to minimum wages
or maximum hours of work. No person or party (including, but not limited to,
governmental agencies of any kind) has any claim or basis for any action or
proceeding against Bedrock arising out of any statute, ordinance or regulation
relating to discrimination in employment or to employment practices or
occupational safety and health standards.
3.12 ENVIRONMENTAL MATTERS. Bedrock has not generated any hazardous
wastes or engaged in activities which are or could be interpreted to be
potential violations of laws or judicial decrees in any manner regulating the
generation or disposal of hazardous waste. There are no on-site or off-site
locations where Bedrock has stored, disposed or arranged for the disposal of
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or
petroleum products; there are no underground storage tanks located on property
owned or leased by Bedrock.
3.13 BOOKS AND RECORDS. Bedrock's books and records are and have been
properly prepared and maintained in form and substance adequate for preparing
audited financial statements in accordance with generally accepted accounting
principles, and fairly and accurately reflect all of Bedrock's assets,
obligations and accruals, and all transactions (normally reflected in
-13-
books and records in accordance with generally accepted accounting principles)
to which Bedrock is or was a party or by which Bedrock or any of its assets are
or were affected.
3.14 TAXES. Except as otherwise disclosed in this Agreement, all taxes
due, owing and payable by Bedrock have been fully paid. The amounts set up as
provision for taxes on the Bedrock Balance Sheet are sufficient for the payment
of all accrued and unpaid taxes of Bedrock, whether or not disputed. The amount
set up as provision for taxes on Bedrock's books and records for the current
fiscal year through the Closing shall be sufficient for the payment of all
accrued and unpaid taxes of Bedrock, whether or not disputed, for such period.
No claim for any tax due from or assessed against Bedrock is being contested by
Bedrock. None of Bedrock's tax returns or reports has been audited by the
Internal Revenue Service or any state or local tax authority, and Bedrock has
not received any notice of deficiency or other adjustment from the Internal
Revenue Service or any state or local tax authority. There are no agreements,
waivers or other arrangements providing an extension of time with respect to the
assessment of any tax against Bedrock, nor are there any tax proceedings now
pending or threatened against Bedrock. No state of facts exists or has existed,
nor has any event occurred, which would constitute grounds for the assessment of
any further tax against Bedrock. Bedrock has filed for and been granted an
extension for the filing of its 2004 tax returns.
3.15 LITIGATION. Bedrock is not a defendant in or threatened with any
litigation nor, to the best of Bedrock's knowledge, is there any basis for any
litigation. Bedrock is one of several Plaintiffs in a case pending in the 15th
Judicial Circuit in and for Palm Beach County against Gulf Insurance Company
seeking an aggregate return, on behalf of all Plaintiffs in the amount of
$1,871,122.00
3.16 OTHER LIABILITIES. No claim of breach of contract, tort, product
liability or other claim (whether arising from Bedrock's business operations or
otherwise), contingent or otherwise, has been asserted or threatened against
Bedrock nor, to the best of Bedrock's knowledge, is capable of being asserted by
any employee, creditor, claimant or other person against Bedrock. No state of
facts exists or has existed, nor has any event occurred, which could give rise
to the assertion of any such claim by any person.
3.17 CONSENTS. The execution, delivery and performance by Bedrock of
this Agreement and the consummation by Bedrock of the transactions contemplated
hereby do not require any consent that has not been received prior to the date
hereof.
3.18 JUDGMENTS. There is no outstanding judgment against
-14-
Bedrock. There is no health or safety problem involving or affecting Bedrock.
There are no open workers compensation claims against Bedrock, or any other
obligation, fact or circumstance which would give rise to any right of
indemnification on the part of any current or former shareholder, partner,
director, officer, employee or agent of Bedrock, or any heir or personal
representative thereof, against Bedrock or any successor to the business of
Bedrock.
3.19 COMPLIANCE WITH LAWS. Bedrock and its business are in full
compliance with all laws.
3.20 IMPROPER PAYMENTS. Neither Bedrock, nor any of its current or
former shareholders, partners, directors, officers or employees or agents, nor
any person acting on behalf of Bedrock, has, directly or indirectly, made any
bribe, kickback or other payment of a similar or comparable nature, whether
lawful or not, to any person, public or private, regardless of form, whether in
money, property or services, to obtain favorable treatment for business secured
or special concessions already obtained. No funds or assets of Bedrock were
donated, lent or made available directly or indirectly for the benefit of, or
for the purpose of supporting or opposing, any government or subdivision
thereof, political party, candidate or committee, either domestic or foreign.
Bedrock has not maintained and does not maintain a bank account, or any other
account of any kind, whether domestic or foreign, which account was not or is
not reflected in the Bedrock corporate books and records, or which account was
not listed, titled or identified in the name of Bedrock.
3.21 FULL DISCLOSURE. All the representations and warranties made by
Bedrock herein or in any Schedule hereto, and all of the statements, documents
or other information pertaining to the transaction contemplated herein made or
given by Bedrock, its agents or representatives are complete and accurate, and
do not omit any information required to make the statements and information
provided, in light of the transaction contemplated herein, non-misleading,
accurate and meaningful.
ARTICLE IV
BEDROCK SHAREHOLDERS' AND SERVICE PROVIDERS' REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
Each Bedrock Shareholder and where applicable each Service Provider hereby makes
the following representations and warranties to the Corporation, each of which
such Bedrock Shareholder and where applicable Service Provider represents to be
true and correct on the date hereof and (except as such Bedrock Shareholder or
Service Provider may notify the Corporation in writing prior to the Closing)
shall be deemed made again as of the Closing and
-15-
represented by such Bedrock Shareholder and Service Provider to be true and
correct at the time of the Closing.
4.1 TITLE TO STOCK. He is the sole owner, legally and beneficially, of
the Bedrock capital stock set forth on Schedule 1.1 hereto opposite his name,
the consideration payable by him therefore has been paid and such stock is fully
paid and nonassessable and free and clear of all encumbrances of every kind. He
has full legal right, power and authority to enter into this Agreement and to
sell, assign and transfer such stock to the Corporation. The delivery to the
Corporation of such stock pursuant to the provisions of this Agreement will
transfer to the Corporation valid title thereto, free and clear of all
encumbrances of every kind except any created by the Corporation. The Bedrock
capital stock represents his entire interest in Bedrock. He has no other rights,
claims or interest to, against or in Bedrock, or its officers and directors.
4.2 ENFORCEABILITY. This Agreement and each of the other documents,
instruments and agreements executed by him in connection herewith constitute the
valid and legally binding agreements of him, enforceable against him in
accordance with their terms, except that: (i) enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the enforcement of the rights and remedies of
creditors; and (ii) the availability of equitable remedies may be limited by
equitable principles.
4.3 BROKERAGE FEES. There is no person acting on behalf of him who is
entitled to or has any claim for any brokerage or finder's fee or commission in
connection with the execution of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE V
INTERPRETATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
5.1 INTERPRETATION. Each warranty and representation made by a party in
this Agreement or pursuant hereto is independent of all other warranties and
representations made by the same party in this Agreement or pursuant hereto
(whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any such
warranty or representation shall not be construed as exceptions or
qualifications to any other warranty or representation.
5.2 SURVIVAL. All representations and warranties made in this Agreement
or pursuant hereto shall survive the date hereof, the Closing, the consummation
of the transaction contemplated
-16-
hereby and any investigation.
ARTICLE VI
OBLIGATIONS PRIOR TO CLOSING
6.1 CONDUCT OF THE CORPORATION AND BEDROCK PENDING CLOSING. During the
period from the date hereof until the Closing Date, except with the express
prior written consent of the other party, the Corporation and Bedrock hereby
covenant and agree that:
(a) each shall maintain its existence in good standing in the
state of its incorporation and each other jurisdiction where it is required to
be licensed or qualified as a foreign corporation, and shall not alter or amend
its Articles of Incorporation or Bylaws;
(b) each shall duly and timely file all returns and reports
required by any law to be filed by it, shall promptly pay when due all taxes
assessed against it or any of its assets, and shall conform to and fully comply
with all the laws pertaining to its assets or the conduct of its business; and
(c) each shall not take any action, or enter into any
agreement that would cause a breach of any of the representations and warranties
made herein by the Corporation or Bedrock, as applicable.
ARTICLE VII
CONDITIONS PRECEDENT TO BEDROCK'S AND THE
BEDROCK SHAREHOLDERS' OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, Bedrock's and each of the Bedrock Shareholders' respective
obligations to consummate the transaction contemplated by this Agreement shall
be subject to the satisfaction of each of the conditions set forth in this
Article VII, except to the extent that such satisfaction is waived in writing by
Bedrock and a majority in interest of the Bedrock Shareholders.
7.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. All
representations and warranties made by the Corporation in this Agreement and the
Schedules hereto shall be true and correct in all respects on the date hereof,
and shall be true and correct in all respects at the time of the Closing as
though such representations were again made, without exception or deviation, at
the time of the Closing.
-17-
7.2 PERFORMANCE OF THIS AGREEMENT. The Corporation shall have duly
performed or complied with all the obligations under this Agreement to be
performed or complied with by the Corporation on or prior to the Closing.
7.3 ABSENCE OF LITIGATION. No litigation shall have been instituted on
or before the time of the Closing by any person, the result of which did or
could prevent or make illegal the consummation of the transaction contemplated
by this Agreement, or which had or could have a material adverse effect on the
business of the Corporation.
7.4 DELIVERIES AT CLOSING. At or prior to Closing, in addition to all
other deliveries to be made by the Corporation, the Corporation shall deliver or
cause to be delivered to Bedrock and the Bedrock Shareholders a certificate
signed by Xxxxxxxxxxx Xxxxxx, President of the Corporation, dated the Closing,
certifying that: (a) all of the terms and conditions of this Agreement to be
satisfied or performed by the Corporation on or before the time of the Closing
have been satisfied or performed; (b) no litigation has been instituted or, to
the best of Xxxxxxxxxxx Xxxxxx'x knowledge, threatened on or before the time of
the Closing by any person (other than Bedrock), the result of which did or could
prevent or make illegal the consummation of the transaction contemplated by this
Agreement, or which had or could have a material adverse effect on the business
of the Corporation; and (c) there has not been any material adverse change in or
affecting the Corporation between the date of this Agreement and the time of the
Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
CORPORATION'S OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, the Corporation's obligations to consummate the transaction
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Article VIII, except to the extent that such
satisfaction is waived by the Corporation in writing.
8.1 REPRESENTATIONS AND WARRANTIES OF BEDROCK AND THE BEDROCK
SHAREHOLDERS. All representations and warranties made by Bedrock and the Bedrock
Shareholders contained in this Agreement and the Schedules hereto shall be true
and correct in all respects on the date hereof, and shall be true and correct in
all respects at the time of the Closing as though such representations were
again made, without exception or deviation, at the
-18-
time of the Closing.
8.2 PERFORMANCE OF THIS AGREEMENT. Bedrock and the Bedrock Shareholders
shall have duly performed or complied with all of the covenants and obligations
under this Agreement to be performed or complied with by them on or prior to the
Closing.
8.3 ABSENCE OF LITIGATION. No litigation shall have been instituted on
or before the time of the Closing by any person, the result of which did or
could prevent or make illegal the consummation of the transaction contemplated
by this Agreement.
8.4 DELIVERIES AT CLOSING. At Closing, in addition to all other
deliveries to be made to the Corporation hereunder, the Corporation shall
receive a certificate signed by Xxxxx Xxxxx, the President of Bedrock, dated as
of the Closing, certifying that: (a) all of the terms and conditions of this
Agreement to be satisfied or performed by Bedrock on or before the time of the
Closing have been satisfied or performed; (b) no litigation has been instituted
or, to the best of Xxxxx Xxxxx'x knowledge, threatened on or before the time of
the Closing by any person (other than the Corporation), the result of which did
or could prevent or make illegal the consummation of the transaction
contemplated by this Agreement, or which had or could have a material adverse
effect on the business of Bedrock; and (c) there has not been any material
adverse change in or affecting Bedrock between the date of this Agreement and
the time of the Closing.
ARTICLE IX
OBLIGATIONS AT CLOSING
9.1 OBLIGATIONS OF THE CORPORATION TO BEDROCK, THE BEDROCK SHAREHOLDERS
AND THE SERVICE PROVIDERS AT CLOSING. The Corporation hereby covenants and
agrees to deliver or cause to be delivered to Bedrock, the Bedrock Shareholders
and the Service Providers at the Closing the following:
(a) Duly issued certificates (legended as provided in Section
1.5(a)(iii) hereof) representing all the Exchanged Corporation Stock, together
with any documentary stamps required in connection with such transfer and such
other appropriate documents and instruments of transfer as Bedrock may
reasonably request.
(b) An Active Status Certificate for the Corporation, dated no
earlier than ten (10) days before the Closing, from the State of Delaware.
(c) A copy of the resolutions adopted by the Board of
-19-
Directors of the Corporation, certified by its corporate secretary, which
resolutions authorize it to execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby.
9.2 BEDROCK'S OBLIGATIONS TO THE CORPORATION AT CLOSING. Bedrock agrees
to deliver or cause to be delivered to the Corporation at the Closing the
following:
(a) A Good Standing Certificate for Bedrock dated no earlier
than ten (10) days before the Closing, from the State of Florida.
(b) A copy of the resolutions adopted by the Board of
Directors of Bedrock, certified by its corporate secretary, which resolutions
authorize it to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby.
(c) All outstanding Bedrock capital stock certificates to be
exchanged for shares of Exchanged Corporation Stock free and clear of all
encumbrances, together with all certificates evidencing the same and stock
powers therefore, in a form acceptable to the Corporation, duly executed in
blank.
9.3 BEDROCK SHAREHOLDERS' OBLIGATIONS TO THE CORPORATION AT CLOSING.
Each Bedrock Shareholder hereby covenants and agrees to deliver to the
Corporation at the Closing the following:
(a) If not previously delivered to Bedrock for such purposes,
all his Bedrock capital stock certificates, free and clear of all encumbrances,
together with all certificates evidencing same and stock powers therefore, in a
form acceptable to the Corporation, duly executed in blank.
(b) Such other documents and instruments as counsel to the
Corporation may reasonably request.
ARTICLE X
TERMINATION
10.1 TERMINATION ON DEFAULT. If, prior to the Closing, a party hereto
shall materially breach or default in the full and timely performance and
satisfaction of any of its representations and warranties or obligations under
this Agreement, and such breach or default is not cured on or before the fifth
(5th) day after the date notice is given by the non-defaulting party to the
defaulting party specifying the nature of such breach or default (or at or
before the time of the Closing if sooner), then the
-20-
non-defaulting party may terminate this Agreement immediately upon notice to the
defaulting party; provided, however, that no Bedrock Shareholder may terminate
this Agreement.
10.2 TERMINATION AT CLOSING. If any of the conditions set forth in
Article VII hereof are not satisfied at or before the time of the Closing, then
Bedrock may terminate this Agreement by notifying the Corporation at the
Closing. If any of the conditions set forth in Article VIII hereof are not
satisfied at or before the time of the Closing, then the Corporation may
terminate this Agreement by notifying Bedrock and all the Bedrock Shareholders
at the Closing.
ARTICLE XI
MISCELLANEOUS
11.1 NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered personally or sent by registered or certified
mail, postage prepaid, and addressed as set forth below:
If to the Corporation: Xxxxxxxxxxx Xxxxxx,
President
0000 Xxx Xxxx
#000
Xxxxx Xxxxxx, XX 00000
If to Bedrock or the Xxxxx Xxxxx, President
Bedrock Shareholders:
----------------------
----------------------
11.2 ENTIRE AGREEMENT. This Agreement, including the Schedules attached
hereto and the documents delivered pursuant hereto, sets forth all the promises,
covenants, agreements, conditions and understandings among the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements or conditions, expressed
or implied, oral or written, except as herein contained. No changes of or
modifications or additions to this Agreement shall be valid unless same shall be
in writing and signed by the parties hereto.
11.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
the parties hereto, their beneficiaries, heirs and
-21-
administrators. No party may assign or transfer its interests herein, or
delegate its duties hereunder, without the written consent of the other parties.
11.4 AMENDMENT. The parties hereby irrevocably agree that no attempted
amendment, modification or change (collectively, "Amendment") of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such Amendment.
11.5 NO WAIVER. No waiver of any provision of this Agreement shall be
effective unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
11.6 GENDER AND USE OF SINGULAR AND PLURAL. All pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the party or parties or their personal representatives, successors
and assigns may require.
11.7 COUNTERPARTS. This Agreement and any Amendments may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
11.8 HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
11.9 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Florida.
11.10 FURTHER ASSURANCES. The parties hereto shall execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
11.11 LITIGATION. If any party hereto is required to engage in
litigation or arbitration against any other party hereto, either as plaintiff or
as defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such litigation results in a final judgment in favor of such
party (the "Prevailing Party"), then the party or parties against whom said
final judgment is obtained shall reimburse the Prevailing Party for all direct,
indirect or incidental expenses incurred by the Prevailing Party in so enforcing
or defending its or his rights hereunder, including, but not limited to, all
attorneys' fees, paralegals' fees, court costs and other expenses incurred
throughout all negotiations, trials or appeals undertaken in
-22-
order to enforce the Prevailing Party's rights hereunder.
11.12 CONFIDENTIALITY. Except for discussions of the transactions
contemplated by this Agreement among the parties hereto and their respective
representatives and counsel participating in this transaction, and except as may
be required of the Corporation pursuant to federal securities laws, each party
hereto shall, unless all other parties hereto shall otherwise agree, keep
confidential and not, directly or indirectly, disclose to any person the
existence of this Agreement, the transaction contemplated by this Agreement or
any of the terms thereof, or the fact that the Corporation and Bedrock have
entered into discussions or negotiations for any purpose whatsoever, and each
party hereto shall use its good faith efforts to cause its employees, agents,
officers, directors and representatives to abide by the foregoing restrictions
on disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date and year set forth above.
CAPITAL SOLUTIONS 1, INC.
_________________________ By: _______________________________
Name: _____________________________
Title: ____________________________
BEDROCK HOLDINGS, INC.
_________________________ By: _______________________________
Name: _____________________________
Title: ____________________________
BEDROCK SHAREHOLDERS:
___________________________________
___________________________________
___________________________________
-23-
SERVICE PROVIDERS:
___________________________________
Westchester Holdings, Inc.
___________________________________
Horseshoe Investments, Inc.
___________________________________
Harbourside Corporation Pty Limited
___________________________________
Xxxxxxx Corporation Pty Limited
___________________________________
Moreton Bay Group Pty Limited
___________________________________
Bayshore Capital Pty Limited
-24-
SCHEDULE 1.1
BEDROCK SHAREHOLDERS:
Xxxxx Xxxxx and Xxxxxx Xxxxxx together owners of 394 shares of Bedrock Holdings
(197 each) shall together receive Sixty Seven Million Five Hundred Thousand
(67,500,000) shares of Capital Solutions I, Inc.
Xxxxx Xxxxx and Xxxxxx Xxxxxx direct their shares of Capital Solutions I, Inc.
be issued as follows:
Federal One, Inc. - 20,000,000 shares;
North American Capital - 25,000,000 shares; and
Nothing Personal Just Business, Inc. - 22,500,000 shares;
Serac Holdings, Inc., the owner of 206 shares of Bedrock Holdings shall receive
a total of One Hundred and Twenty Five Million (125,000,000) shares of Capital
Solutions I, Inc. and hereby direct that its shares be issued in the name of
Serac Holdings, Inc.
SERVICE PROVIDERS:
Westchester Holdings, Inc. shall receive Twenty Million (20,000,000) shares of
Capital Solutions I, Inc.;
Horseshoe Investments, Inc. shall receive Twenty Million (20,000,000) shares of
Capital Solutions I, Inc.;
Harbourside Corporation Pty Limited shall receive Twenty Million (20,000,000)
shares of Capital Solutions I, Inc.;
Xxxxxxx Corporation Pty Limited shall receive Twenty Million (20,000,000) shares
of Capital Solutions I, Inc.;
Moreton Bay Group Pty Limited shall receive Twenty Million (20,000,000) shares
of Capital Solutions I, Inc.;
Bayshore Capital Pty Limited shall receive Seven Million Five Hundred Thousand
(7,500,000) shares of Capital Solutions I, Inc.
-25-
SCHEDULE 2.1
------------
-26-
SCHEDULE 3.1
------------
-27-
