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AGREEMENT OF MERGER AND
PLAN OF REORGANIZATION
among
LIGHTEN UP ENTERPRISES INTERNATIONAL, INC.
LTUP ACQUISITION CORP. and
BIONOVO, INC.
April 6, 2005
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TABLE OF CONTENTS
PAGE
1. The Merger............................................................1
1.1 Merger.......................................................1
1.2 Effective Time...............................................2
1.3 Certificate of Incorporation, By-laws, Directors
and Officers...............................................2
1.4 Assets and Liabilities.......................................2
1.5 Manner and Basis of Converting Shares........................3
1.6 Surrender and Exchange of Certificates.......................3
1.7 Warrants and Options.........................................4
1.8 Parent Common Stock..........................................5
2. Representations and Warranties of the Company.........................5
2.1 Organization, Standing, Subsidiaries, Etc....................5
2.2 Qualification................................................5
2.3 Capitalization of the Company................................5
2.4 Company Stockholders.........................................5
2.5 Corporate Acts and Proceedings...............................6
2.6 Compliance with Laws and Instruments.........................6
2.7 Binding Obligations..........................................6
2.8 Broker's and Finder's Fees...................................6
2.9 Financial Statements.........................................6
2.10 Absence of Undisclosed Liabilities...........................7
2.11 Changes......................................................7
2.12 Employee Benefit Plans; ERISA................................7
2.13 Title to Property and Encumbrances...........................8
2.14 Litigation...................................................8
2.15 Patents, Trademarks, Etc.....................................8
2.16 Disclosure...................................................8
3. Representations and Warranties of Parent and Acquisition Corp.........8
3.1 Organization and Standing....................................9
3.2 Corporate Authority..........................................9
3.3 Broker's and Finder's Fees...................................9
3.4 Capitalization of Parent.....................................9
3.5 Acquisition Corp............................................10
3.6 Validity of Shares..........................................10
3.7 SEC Reporting and Compliance................................10
3.8 Financial Statements........................................11
3.9 Governmental Consents.......................................11
3.10 Compliance with Laws and Instruments........................11
3.11 No General Solicitation.....................................11
3.12 Binding Obligations.........................................12
3.13 Absence of Undisclosed Liabilities..........................12
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3.14 Changes.....................................................12
3.15 Tax Returns and Audits......................................13
3.16 Employee Benefit Plans; ERISA...............................13
3.17 Litigation..................................................13
3.18 Interested Party Transactions...............................13
3.19 Questionable Payments.......................................13
3.20 Obligations to or by Stockholders...........................14
3.21 Assets and Contracts........................................14
3.22 Employees...................................................15
3.23 Disclosure..................................................15
4. Additional Representations, Warranties and Covenants of
the Stockholders...................................................15
5. Conduct of Businesses Pending the Merger.............................15
5.1 Conduct of Business by the Company Pending the Merger.......15
5.2 Conduct of Business by Parent and Acquisition Corp.
Pending the Merger........................................16
6. Additional Agreements................................................17
6.1 Access and Information......................................17
6.2 Additional Agreements.......................................18
6.3 Publicity...................................................18
6.4 Appointment of Directors....................................19
6.5 Parent Name Change and Exchange Listing.....................19
6.6 Registration Rights Agreement...............................19
6.7 Stock Incentive Plan........................................19
6.8 Private Offering............................................19
6.9 Private Offering Registration Rights Agreement..............19
7. Conditions of Parties' Obligations...................................19
7.1 Company Obligations.........................................19
7.2 Parent and Acquisition Corp. Obligations....................21
8. Survival of Representations and Warranties...........................23
9. Amendment of Agreement...............................................24
10. Definitions..........................................................24
11. Closing..............................................................28
12. Termination Prior to Closing.........................................28
12.1 Termination of Agreement....................................28
12.2 Termination of Obligations..................................29
13. Miscellaneous........................................................29
13.1 Notices.....................................................29
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13.2 Entire Agreement............................................30
13.3 Expenses....................................................30
13.4 Time........................................................30
13.5 Severability................................................30
13.6 Successors and Assigns......................................30
13.7 No Third Parties Benefited..................................30
13.8 Counterparts................................................30
13.9 Governing Law...............................................30
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
A Certificate of Merger
B Certificate of Incorporation of the Company
C By-laws of the Company
D Directors and Officers of the Surviving Corporation
E Letter of Transmittal
F Registration Rights Agreement
G Private Offering Registration Rights Agreement
H Form of Opinion of Company's Counsel
I Form of Opinion of Parent's Counsel
J Form of Release of Parent Officers and Directors
COMPANY DISCLOSURE SCHEDULES
1.5 Company Stockholders to Receive Parent Common Stock
1.7(a)(i) Treatment of Company Warrants
1.7(a)(ii) Treatment of Company Options
2.4 Company Stockholders
2.9 Financial Statements
2.10 Undisclosed Liabilities
2.11 Changes/Indebtedness
2.12 Schedule of Employee Benefit Plans
2.13 Title to Properties and Encumbrances
2.14 Litigation
2.15 Patents, Trademarks, Etc.
PARENT DISCLOSURE SCHEDULES
3.21 Schedule of Parent Bank Accounts
3.22 Obligations and Liabilities to Officers, Etc. of Parent
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION is made
and entered into on April 6, 2005, by and among LIGHTEN UP ENTERPRISES
INTERNATIONAL, INC., a Nevada corporation ("PARENT"), LTUP ACQUISITION CORP., a
Delaware corporation ("ACQUISITION CORP."), which is a wholly-owned subsidiary
of Parent, and BIONOVO, INC., a Delaware corporation (the "COMPANY").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Board of Directors of each of Acquisition Corp.,
Parent and the Company have each determined that it is fair to and in the best
interests of their respective corporations and shareholders for Acquisition
Corp. to be merged with and into the Company (the "MERGER") upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of Acquisition Corp. and the
Board of Directors of the Company have approved the Merger in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), and upon the
terms and subject to the conditions set forth herein and in the Certificate of
Merger (the "CERTIFICATE OF MERGER") attached as EXHIBIT A hereto; and the Board
of Directors of Parent has also approved this Agreement and the Certificate of
Merger;
WHEREAS, the requisite Stockholders (as such term is defined
in Section 10 hereof) have approved, by written consent pursuant to Sections 228
and 251 of the DGCL, this Agreement and the Certificate of Merger and the
transactions contemplated hereby and thereby, including without limitation, the
Merger, and Parent, as the sole stockholder of Acquisition Corp., has approved
this Agreement, the Certificate of Merger and the transactions contemplated and
described hereby and thereby, including without limitation, the Merger; and
WHEREAS, immediately prior to the Closing (as such term is
defined herein), the Company will sell shares of its common stock, par value
$.001 per share, in a private offering (the "PRIVATE OFFERING") to accredited
investors, pursuant to the terms of a Confidential Private Offering Memorandum,
dated March 1, 2005, as it may be supplemented from time to time (the
"MEMORANDUM"), for the purpose of financing the ongoing business and operations
of the Surviving Corporation (as defined below) following the Merger.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants hereinafter set forth, the parties hereto agree as follows:
1. THE MERGER.
1.1 MERGER. Subject to the terms and conditions of this
Agreement and the Certificate of Merger, Acquisition Corp. shall be merged with
and into the Company in accordance with Section 251 of the DGCL. At the
Effective Time (as hereinafter defined), the separate legal existence of
Acquisition Corp. shall cease, and the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "SURVIVING
CORPORATION") and shall continue its corporate existence under the laws of the
State of Delaware under the name
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Bionovo, Inc. As a result of the merger, the Surviving Corporation will be a
wholly-owned subsidiary of the Parent.
1.2 EFFECTIVE TIME. The Merger shall become effective on
the date and at the time the Certificate of Merger is filed with the Secretary
of State of the State of Delaware in accordance with Section 251 of the DGCL.
The time at which the Merger shall become effective as aforesaid is referred to
hereinafter as the "EFFECTIVE TIME."
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS AND
OFFICERS.
(a) The Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, attached as
EXHIBIT B hereto, shall be the Certificate of Incorporation of the Surviving
Corporation from and after the Effective Time until further amended in
accordance with applicable law.
(b) The By-laws of the Company, as in effect
immediately prior to the Effective Time, attached as EXHIBIT C hereto, shall be
the By-laws of the Surviving Corporation from and after the Effective Time until
amended in accordance with applicable law, the Certificate of Incorporation of
the Surviving Corporation and such By-laws.
(c) The directors and officers listed in EXHIBIT
D hereto shall be the directors and officers of the Surviving Corporation, and
each shall hold his or her respective office or offices from and after the
Effective Time (except, in the case of directors, as described in Section 6.4)
until his successor shall have been elected and shall have qualified in
accordance with applicable law, or as otherwise provided in the Certificate of
Incorporation or By-laws of the Surviving Corporation.
1.4 ASSETS AND LIABILITIES. At the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of Acquisition Corp. and the
Company (collectively, the "CONSTITUENT CORPORATIONS"); and all the rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to any of the
Constituent Corporations on whatever account, as well as all other things in
action or belonging to each of the Constituent Corporations, shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate vested by
deed or otherwise in either of such Constituent Corporations shall not revert or
be in any way impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
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1.5 MANNER AND BASIS OF CONVERTING SHARES.
(a) At the Effective Time:
(i) each share of common stock, par
value $.01 per share, of Acquisition Corp. that shall be outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
ten (10) shares of common stock, par value $.001 per share, of the Surviving
Corporation, so that at the Effective Time, Parent shall be the holder of all of
the issued and outstanding shares of the Surviving Corporation;
(ii) the shares of common stock, par
value $.001 per share, of the Company (the "COMPANY COMMON STOCK"), which shares
at the Closing will constitute all of the issued and outstanding shares of
capital stock of the Company, beneficially owned by the Stockholders listed in
SCHEDULE 2.4 (other than shares of Company Common Stock as to which appraisal
rights are perfected pursuant to the applicable provisions of the DGCL and not
withdrawn or otherwise forfeited), shall, by virtue of the Merger and without
any action on the part of the holders thereof, be converted into the right to
receive the number of shares of Parent Common Stock specified in SCHEDULE 1.5
for each of the Stockholders, which shall be equal to one (1) share of Parent
Common Stock for each share of Company Common Stock; and
(iii) each share of Company Common Stock
held in the treasury of the Company immediately prior to the Effective Time
shall be cancelled in the Merger and cease to exist.
(b) After the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time.
1.6 SURRENDER AND EXCHANGE OF CERTIFICATES. Promptly
after the Effective Time and upon (i) surrender of a certificate or certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time or an affidavit and indemnification in form
reasonably acceptable to counsel for the Parent stating that such Stockholder
has lost its certificate or certificates or that such have been destroyed and
(ii) delivery of a Letter of Transmittal (as described in Section 4 hereof),
Parent shall issue to each record holder of the Company Common Stock
surrendering such certificate or certificates and Letter of Transmittal, a
certificate or certificates registered in the name of such Stockholder
representing the number of shares of Parent Common Stock that such Stockholder
shall be entitled to receive as set forth in Section 1.5(a)(ii) hereof. Until
the certificate, certificates or affidavit is or are surrendered together with
the Letter of Transmittal as contemplated by this Section 1.6 and Section 4
hereof, each certificate or affidavit that immediately prior to the Effective
Time represented any outstanding shares of Company Common Stock shall be deemed
at and after the Effective Time to represent only the right to receive upon
surrender as aforesaid the Parent Common Stock specified in SCHEDULE 1.5 hereof
for the holder thereof or to perfect any rights of appraisal which such holder
may have pursuant to the applicable provisions of the DGCL.
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1.7 WARRANTS AND OPTIONS.
(a) (i) At the Effective Time, all
outstanding warrants issued by the Company to purchase shares of Company Common
Stock (the "COMPANY WARRANTS") that have not been surrendered by the holder
thereof in exchange for Company Common Stock, will, at the Effective Time, be
deemed to be a warrant (the "PARENT WARRANTS") to acquire the same number of
shares of Parent Common Stock as the holder of such Company Warrants would have
been entitled to receive pursuant to the Merger had such holder exercised such
Company Warrants in full immediately prior to the Effective Time at a price per
share of Parent Common Stock equal to the exercise price for the shares of
Company Common Stock otherwise purchasable pursuant to such Company Warrant.
SCHEDULE 1.7(a)(i) attached hereto sets forth the name of each holder of Company
Warrants, the aggregate number of shares of Company Common Stock that each such
person may purchase pursuant to the exercise of his or her Company Warrants and
the aggregate number of shares of Parent Common Stock that each such person may
purchase upon exercise of Parent Warrants acquired pursuant to this Section
1.7(a)(i). By its signature hereunder, Parent expressly assumes the obligation
to issue Parent Common Stock to the holders of Parent Warrants upon exercise
thereof, in accordance with the provisions of this Section 1.7(a)(i).
(ii) At the Effective Time, all
outstanding stock options issued by the Company pursuant to its Stock Incentive
Plan or otherwise, to purchase shares of Company Common Stock (the "COMPANY
OPTIONS") that have not been exercised by the holder thereof in exchange for
Company Common Stock, will, at the Effective Time, be deemed to be a stock
option (the "PARENT OPTIONS") to acquire the same number of shares of Parent
Common Stock as the holder of such Company Options would have been entitled to
receive pursuant to the Merger had such holder exercised such Company Options in
full immediately prior to the Effective Time at a price per share of Parent
Common Stock equal to the exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Option. SCHEDULE 1.7(a)(ii)
attached hereto sets forth the name of each holder of Company Options, the
aggregate number of shares of Company Common Stock that each such person may
purchase pursuant to the exercise of his or her Company Options and the
aggregate number of shares of Parent Common Stock that each such person may
purchase upon exercise of Parent Options acquired pursuant to this Section
1.7(a)(ii). By its signature hereunder, Parent expressly assumes the obligation
to issue Parent Common Stock to the holders of Parent Options upon exercise
thereof, in accordance with the provisions of this Section 1.7(a)(ii).
(iii) Without limiting the generality of
the foregoing, the Company and the Parent shall take all corporate actions as
may be necessary and desirable in order to effectuate the transactions
contemplated by this Section 1.7(a).
(b) Parent shall take all action necessary and
appropriate, on or prior to the Effective Time, to authorize and reserve a
number of shares of Parent Common Stock sufficient for issuance upon the
exercise of Parent Warrants and Parent Options following the Effective Time as
contemplated by this Section 1.7.
(c) Other than the Company Warrants and Company
Options, all options, warrants and rights to purchase Company Common Stock
outstanding as of the Effective Date will be exercised or terminated prior to or
effective upon the Effective Time, and
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neither Parent nor Acquisition Corp. shall assume or have any obligation with
respect to such options, warrants or rights.
1.8 PARENT COMMON STOCK. Parent agrees that it will cause
the Parent Common Stock into which the Company Common Stock is converted at the
Effective Time pursuant to Section 1.5(a)(ii) to be available for such purpose.
Parent further covenants that immediately prior to the Effective Time there will
be no more than 4,000,000 shares of Parent Common Stock issued and outstanding,
and that no other common or preferred stock or equity securities or any options,
warrants, rights or other agreements or instruments convertible, exchangeable or
exercisable into common or preferred stock or other equity securities shall be
issued or outstanding.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent and Acquisition Corp. as follows:
2.1 ORGANIZATION, STANDING, SUBSIDIARIES, ETC.
(a) The Company is a corporation duly organized
and existing in good standing under the laws of the State of Delaware, and has
all requisite power and authority (corporate and other) to carry on its
business, to own or lease its properties and assets, to enter into this
Agreement and the Certificate of Merger and to carry out the terms hereof and
thereof. Copies of the Certificate of Incorporation and By-laws of the Company
that have been delivered to Parent and Acquisition Corp. prior to the execution
of this Agreement are true and complete and have not since been amended or
repealed.
(b) The Company has no subsidiaries or direct or
indirect interest (by way of stock ownership or otherwise) in any firm,
corporation, limited liability company, partnership, association or business.
2.2 QUALIFICATION. The Company is duly qualified to
conduct business as a foreign corporation and is in good standing the State of
California and in each other jurisdiction wherein the nature of its activities
or its properties owned or leased makes such qualification necessary, except
where the failure to be so qualified would not have a material adverse effect on
the condition (financial or otherwise), properties, assets, liabilities,
business operations or results of operations of the Company taken as a whole
(the "CONDITION OF THE COMPANY").
2.3 CAPITALIZATION OF THE COMPANY. The authorized capital
stock of the Company consists of 58,000,000 shares of Company Common Stock, and
the Company has no authority to issue any other capital stock. There are
37,842,448 shares of Company Common Stock issued and outstanding, and such
shares are duly authorized, validly issued, fully paid and nonassessable. Except
as disclosed in SCHEDULE 1.7(a)(i) and SCHEDULE 1.7(a)(ii), the Company has no
outstanding warrants, stock options, rights or commitments to issue Company
Common Stock or other Equity Securities of the Company, and there are no
outstanding securities convertible or exercisable into or exchangeable for
Company Common Stock or other Equity Securities of the Company.
2.4 COMPANY STOCKHOLDERS. SCHEDULE 2.4 hereto contains a
true and complete list of the names and addresses of the record owner of all of
the outstanding shares of Company Common Stock and other Equity Securities of
the Company, together with the number of
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securities held. To the knowledge of the Company, except as described in
SCHEDULE 2.4, there is no voting trust, agreement or arrangement among any of
the beneficial holders of Company Common Stock affecting the exercise of the
voting rights of Company Common Stock.
2.5 CORPORATE ACTS AND PROCEEDINGS. The execution,
delivery and performance of this Agreement and the Certificate of Merger
(together, the "MERGER DOCUMENTS") have been duly authorized by the Board of
Directors of the Company and have been approved by the requisite vote of the
Stockholders, and all of the corporate acts and other proceedings required for
the due and valid authorization, execution, delivery and performance of the
Merger Documents and the consummation of the Merger have been validly and
appropriately taken, except for the filing of the Certificate of Merger referred
to in Section 1.2.
2.6 COMPLIANCE WITH LAWS AND INSTRUMENTS. To the
knowledge of the Company, the business, products and operations of the Company
have been and are being conducted in compliance in all material respects with
all applicable laws, rules and regulations, except for such violations thereof
for which the penalties, in the aggregate, would not have a material adverse
effect on the Condition of the Company. The execution, delivery and performance
by the Company of the Merger Documents and the consummation by the Company of
the transactions contemplated by this Agreement: (a) will not require any
authorization, consent or approval of, or filing or registration with, any court
or governmental agency or instrumentality, except such as shall have been
obtained prior to the Closing, (b) will not cause the Company to violate or
contravene in any material respect (i) any provision of law, (ii) any rule or
regulation of any agency or government, (iii) any order, judgment or decree of
any court, or (iv) any provision of the Certificate of Incorporation or By-laws
of the Company, (c) will not violate or be in conflict with, result in a breach
of or constitute (with or without notice or lapse of time, or both) a default
under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other contract, agreement or instrument to which the
Company is a party or by which the Company or any of its properties is bound or
affected, except as would not have a material adverse effect on the Condition of
the Company, and (d) will not result in the creation or imposition of any
material Lien upon any property or asset of the Company.
2.7 BINDING OBLIGATIONS. The Merger Documents constitute
the legal, valid and binding obligations of the Company and are enforceable
against the Company in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
2.8 BROKER'S AND FINDER'S FEES. The Company has no, and
will not have any, liability or obligation to pay any fees or commissions to any
broker or finder with respect to the transactions contemplated herein for which
Parent, Acquisition Corp. or LLC could become liable or obligated, except as set
forth in the section of the Memorandum entitled "Compensation to Placement Agent
and Advisor."
2.9 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.9
are the Company's unaudited Balance Sheet, Profit & Loss and Statement of Cash
Flows as of and for the years ended December 31, 2003 and December 31, 2004 (the
"BALANCE SHEET DATE"). Such financial statements (i) are in accordance with the
books and records of the Company, (ii) present fairly in all material respects
the financial condition of the Company at the dates therein specified and the
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results of its operations and changes in financial position for the periods
therein specified and (iii) have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent with prior
accounting periods, except that they do not contain footnotes required by GAAP
and are subject to year-end audit adjustments. The Company agrees to deliver its
audited financial statements (balance sheet, profit & loss and statement of cash
flows) as of and for the years ended December 31, 2003 and December 31, 2004 on
or before April 15, 2005. The Company warrants that it is not aware of any facts
that could reasonably be expected to cause such audited financial statements to
differ materially from the financial statements set forth on SCHEDULE 2.9,
except for the addition of footnotes and the application of normal year-end
audit adjustments.
2.10 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has
no material obligation or liability (whether accrued, absolute, contingent,
liquidated or otherwise, whether due or to become due), arising out of any
transaction entered into at or prior to the Closing, except (a) as disclosed in
SCHEDULE 2.10 and/or SCHEDULE 2.11 hereto, (b) to the extent set forth on or
reserved against in the Balance Sheet, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary course of
business since the Balance Sheet Date, none of which (individually or in the
aggregate) has had or will have a material adverse effect on the Condition of
the Company and (d) by the specific terms of any written agreement, document or
arrangement identified in the Schedules to this Agreement.
2.11 CHANGES. Since the Balance Sheet Date, except as
disclosed in SCHEDULE 2.11 hereto, the Company has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except for fees, expenses and liabilities incurred in
connection with the Merger and related transactions and current liabilities
incurred in the usual and ordinary course of business, (b) discharged or
satisfied any Liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the Balance Sheet and current
liabilities incurred since the Balance Sheet Date, in each case in the usual and
ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of
its assets, tangible or intangible, other than in the usual and ordinary course
of business, (d) sold, transferred or leased any of its assets, except in the
usual and ordinary course of business, (e) cancelled or compromised any debt or
claim, or waived or released any right, of material value, (f) suffered any
physical damage, destruction or loss (whether or not covered by insurance)
materially and adversely affecting the Condition of the Company, or (g) entered
into any transaction other than in the usual and ordinary course of business.
2.12 EMPLOYEE BENEFIT PLANS; ERISA. SCHEDULE 2.12 lists
all: (i) "employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained or
contributed to by the Company and covering employees of the Company, including
(i) any such plans that are "employee welfare benefit plans" as defined in
Section 3(1) of ERISA and (ii) any such plans that are "employee pension benefit
plans" as defined in Section 3(2) of ERISA (collectively, the "COMPANY BENEFIT
PLANS"); and (ii) life and health insurance, hospitalization, savings, bonus,
deferred compensation, incentive compensation, holiday, vacation, severance pay,
sick pay, sick leave, disability, tuition refund, service award, company car,
scholarship, relocation, patent award, fringe benefit and other employee benefit
plans, contracts (other than individual employment, consultancy or severance
contracts), policies or practices of the Company providing employee or executive
compensation or benefits to its employees, other than the Company Benefit Plans
(collectively,
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the "BENEFIT ARRANGEMENTS"). Each Company Benefit Plan and Benefit Arrangement
has been maintained and administered in all material respects in accordance with
applicable law and will be noted on the Company's audited financial statements
delivered pursuant to SECTION 2.9, to the extent such plan or arrangement was in
effect during the periods covered thereby, in accordance with and to the extent
required by GAAP.
2.13 TITLE TO PROPERTY AND ENCUMBRANCES. Except as
disclosed in SCHEDULE 2.13 hereto, the Company has good, valid and indefeasible
marketable title to all properties and assets used in the conduct of its
business (except for property held under valid and subsisting leases which are
in full force and effect and which are not in default) free of all Liens and
other encumbrances, except Permitted Liens and such ordinary and customary
imperfections of title, restrictions and encumbrances as do not, individually or
in the aggregate, materially detract from the value of the property or assets or
materially impair the use made thereof by the Company in its business. Without
limiting the generality of the foregoing, the Company has good and indefeasible
title to all of its properties and assets reflected in the Balance Sheet, except
for property disposed of in the usual and ordinary course of business since the
Balance Sheet Date and for property held under valid and subsisting leases which
are in full force and effect and which are not in default.
2.14 LITIGATION. Except as set forth on SCHEDULE 2.14,
there is no legal action, suit, arbitration or other legal, administrative or
other governmental proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company or its properties, assets or
business, and after reasonable investigation, the Company is not aware of any
incident, transaction, occurrence or circumstance that might reasonably be
expected to result in or form the basis for any such action, suit, arbitration
or other proceeding. The Company is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or any
governmental agency or instrumentality or arbitration authority.
2.15 PATENTS, TRADEMARKS, ETC. SCHEDULE 2.15 sets forth a
list of all United States and foreign patents, trademarks, trade names,
copyrights, and applications therefor used by the Company exclusively in and
material to the conduct of its business (the "PATENT AND TRADEMARK RIGHTS").
Except as disclosed in the SCHEDULE 2.15, (a) the Company owns or possesses
adequate licenses or other valid rights to use all Patent and Trademark Rights;
and (b) to the Company's knowledge, the conduct of its business as now being
conducted does not conflict with any valid patents, trademarks, trade names or
copyrights of others in any way which has a material adverse effect on the
business or financial condition of the Company or its business.
2.16 DISCLOSURE. There is no fact relating to the Company
that the Company has not disclosed to Parent that materially and adversely
affects or, insofar as the Company can now foresee, will materially and
adversely affect, the condition (financial or otherwise), properties, assets,
liabilities, business operations or results of operations of the Company. No
representation or warranty by the Company herein and no information disclosed in
the schedules or exhibits hereto by the Company contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.
Parent and Acquisition Corp. jointly and severally represent and warrant to the
Company, as follows:
8
3.1 ORGANIZATION AND STANDING. Parent is a corporation
duly organized and existing in good standing under the laws of the State of
Nevada. Acquisition Corp. is a corporation duly organized and existing in good
standing under the laws of the State of Delaware. Parent and Acquisition Corp.
have heretofore delivered to the Company complete and correct copies of their
respective Articles or Certificates of Incorporation and By-laws as now in
effect. Parent and Acquisition Corp. have full corporate power and authority to
carry on their respective businesses as they are now being conducted and as now
proposed to be conducted and to own or lease their respective properties and
assets. Other than Lighten Up Enterprises, LLC, a Utah limited liability company
("LLC"), neither Parent nor Acquisition Corp. has any subsidiaries (except
Parent as the sole stockholder of Acquisition Corp.) or direct or indirect
interest (by way of stock ownership or otherwise) in any firm, corporation,
limited liability company, partnership, association or business. Parent owns all
of the issued and outstanding capital stock of Acquisition Corp. and membership
interests of LLC free and clear of all Liens, and Acquisition Corp. and LLC have
no outstanding options, warrants or rights to purchase capital stock or other
equity securities of Acquisition Corp. or LLC, other than the capital stock or
membership interests owned by Parent. Unless the context otherwise requires, all
references in this Section 3 to the "Parent" shall be treated as being a
reference to the Parent, Acquisition Corp. and LLC taken together as one
enterprise.
3.2 CORPORATE AUTHORITY. Each of Parent and/or
Acquisition Corp. (as the case may be) has full corporate power and authority to
enter into the Merger Documents and the other agreements to be made pursuant to
the Merger Documents, and to carry out the transactions contemplated hereby and
thereby. All corporate acts and proceedings required for the authorization,
execution, delivery and performance of the Merger Documents and such other
agreements and documents by Parent and/or Acquisition Corp. (as the case may be)
have been duly and validly taken or will have been so taken prior to the
Closing. Each of the Merger Documents constitutes a legal, valid and binding
obligation of Parent and/or Acquisition Corp. (as the case may be), each
enforceable against them in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by general
principles of equity.
3.3 BROKER'S AND FINDER'S FEES. Except for the firms
engaged by the Company described in Section 2.8, no person, firm, corporation or
other entity is entitled by reason of any act or omission of Parent or
Acquisition Corp. to any broker's or finder's fees, commission or other similar
compensation with respect to the execution and delivery of this Agreement or the
Certificate of Merger, or with respect to the consummation of the transactions
contemplated hereby or thereby. Parent and Acquisition Corp. jointly and
severally indemnify and hold Company harmless from and against any and all loss,
claim or liability arising out of any such claim from any other Person who
claims it introduced Parent or Acquisition Corp. to, or assisted them with, the
transactions contemplated by or described herein.
3.4 CAPITALIZATION OF PARENT. The authorized capital
stock of Parent consists of (a) 50,000,000 shares of common stock, par value
$.0001 per share (the "PARENT COMMON STOCK"), of which not more than 4,000,000
shares will be, prior to the Effective Time, issued and outstanding, after
taking into consideration the cancellation of Parent Common Stock as indicated
in Section 7.2(f)(7)(iii) hereof, and (b) 10,000,000 shares of preferred stock,
par value $.0001 per share, of which no shares are issued or outstanding. Parent
has no outstanding options, rights or commitments to issue shares of Parent
Common Stock or any other Equity Security of Parent, Acquisition Corp. or LLC,
and there are no outstanding securities convertible or exercisable into or
exchangeable for shares of Parent Common Stock or any other Equity
9
Security of Parent, Acquisition Corp. or LLC. There is no voting trust,
agreement or arrangement among any of the beneficial holders of Parent Common
Stock affecting the nomination or election of directors or the exercise of the
voting rights of Parent Common Stock. All outstanding shares of the capital
stock of Parent are validly issued and outstanding, fully paid and
nonassessable, and none of such shares have been issued in violation of the
preemptive rights of any Person.
3.5 ACQUISITION CORP. Acquisition Corp. is a wholly-owned
subsidiary of Parent that was formed specifically for the purpose of the Merger
and that has not conducted any business or acquired any property, and will not
conduct any business or acquire any property prior to the Closing Date, except
in preparation for and otherwise in connection with the transactions
contemplated by this Agreement, the Certificate of Merger and the other
agreements to be made pursuant to or in connection with this Agreement and the
Certificate of Merger.
3.6 VALIDITY OF SHARES. The 37,842,448 shares of Parent
Common Stock to be issued at the Closing pursuant to Section 1.5(a)(ii) hereof,
when issued and delivered in accordance with the terms hereof and of the
Certificate of Merger, shall be duly and validly issued, fully paid and
nonassessable. Based in part on the representations and warranties of the
Stockholders as contemplated by Section 4 hereof and assuming the accuracy
thereof, the issuance of the Parent Common Stock upon the Merger pursuant to
Section 1.5(a)(ii) will be exempt from the registration and prospectus delivery
requirements of the Securities Act and from the qualification or registration
requirements of any applicable state blue sky or securities laws.
3.7 SEC REPORTING AND COMPLIANCE. (a) Parent filed a
registration statement on Form 10-SB under the Exchange Act which became
effective on November 7, 2002. Since that date, Parent has filed with the
Commission all reports required to be filed by companies registered pursuant to
Section 12(g) of the Exchange Act.
(b) Parent has delivered to the Company true and
complete copies of all annual reports on Form 10-KSB, quarterly reports on Form
10-QSB, current reports on Form 8-K and other statements reports and filings
(collectively, the "PARENT SEC DOCUMENTS") filed by the Parent with the
Commission. None of the Parent SEC Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements contained therein not misleading.
(c) Parent has not filed, and nothing has
occurred with respect to which Parent would be required to file, any report on
Form 8-K since February 25, 2005. Prior to and until the Closing, Parent will
provide to the Company copies of any and all amendments or supplements to the
Parent SEC Documents filed with the Commission since January 1, 2005 and any and
all subsequent statements, reports and filings filed by the Parent with the
Commission or delivered to the stockholders of Parent. Parent agrees to timely
file a Current Report with the Commission on Form 8-K in which it will report
the execution and delivery of this Agreement.
(d) Parent, to its best knowledge and belief, is
not an investment company within the meaning of Section 3 of the Investment
Company Act.
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(e) The shares of Parent Common Stock are quoted
on the Over-the-Counter (OTC) Bulletin Board under the symbol "LTUP.OB," and
Parent is in compliance in all material respects with all rules and regulations
of the OTC Bulletin Board applicable to it and the Parent Stock. The OTC
Bulletin Board has cleared the Form 211 filed by Alpine Securities Corporation
pursuant to Rule 15c2-11(a)(5) of the Exchange Act.
(f) Between the date hereof and the Closing
Date, Parent shall continue to satisfy the filing requirements of the Exchange
Act and all other requirements of applicable securities laws and the OTC
Bulletin Board.
(g) To the best knowledge of Parent, Parent has
otherwise complied with the Securities Act, Exchange Act and all other
applicable federal and state securities laws.
3.8 FINANCIAL STATEMENTS. The balance sheets, and
statements of operations, statements of changes in shareholders' equity and
statements of cash flows contained in the Parent SEC Documents (the "PARENT
FINANCIAL STATEMENTS") (i) have been prepared in accordance with GAAP applied on
a basis consistent with prior periods (and, in the case of unaudited financial
information, on a basis consistent with year-end audits), (ii) are in accordance
with the books and records of the Parent, and (iii) present fairly in all
material respects the financial condition of the Parent at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified. The financial statements included in the
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, are
audited by, and include the related report of Xxxxxx & Associates, CPA's Inc.,
Parent's independent certified public accountants.
3.9 GOVERNMENTAL CONSENTS. All consents, approvals,
orders, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority on the
part of Parent or Acquisition Corp. required in connection with the consummation
of the Merger shall have been obtained prior to, and be effective as of, the
Closing.
3.10 COMPLIANCE WITH LAWS AND INSTRUMENTS. The execution,
delivery and performance by Parent and/or Acquisition Corp. of this Agreement,
the Certificate of Merger and the other agreements to be made by Parent or
Acquisition Corp. pursuant to or in connection with this Agreement or the
Certificate of Merger and the consummation by Parent and/or Acquisition Corp. of
the transactions contemplated by the Merger Documents will not cause Parent
and/or Acquisition Corp. to violate or contravene (i) any provision of law, (ii)
any rule or regulation of any agency or government, (iii) any order, judgment or
decree of any court, or (iv) any provision of their respective articles or
certificate of incorporation or by-laws as amended and in effect on and as of
the Closing Date, and will not violate or be in conflict with, result in a
breach of or constitute (with or without notice or lapse of time, or both) a
default under any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other agreement or contract to which Parent or Acquisition
Corp. is a party or by which Parent and/or Acquisition Corp. or any of their
respective properties is bound.
3.11 NO GENERAL SOLICITATION. In issuing Parent Common
Stock in the Merger hereunder, neither Parent nor anyone acting on its behalf
has offered to sell the Parent Common Stock by any form of general solicitation
or advertising.
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3.12 BINDING OBLIGATIONS. The Merger Documents constitute
the legal, valid and binding obligations of the Parent and Acquisition Corp.,
and are enforceable against the Parent and Acquisition Corp., in accordance with
their respective terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
3.13 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Parent
nor Acquisition Corp. has any obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or
reserved against in the audited balance sheet of Parent as of December 31, 2004
(the "PARENT BALANCE SHEET") or the Notes to the Parent Financial Statements,
(c) current liabilities incurred and obligations under agreements entered into
in the usual and ordinary course of business since December 31, 2004 (the
"PARENT BALANCE SHEET DATE"), none of which (individually or in the aggregate)
materially and adversely affects the condition (financial or otherwise),
properties, assets, liabilities, business operations, results of operations or
prospects of the Parent or Acquisition Corp., taken as a whole (the "CONDITION
OF THE PARENT"), and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC Documents.
3.14 CHANGES. Since the Parent Balance Sheet Date, except
as disclosed in the Parent SEC Documents, the Parent has not (a) incurred any
debts, obligations or liabilities, absolute, accrued or, to the Parent's
knowledge, contingent, whether due or to become due, except for current
liabilities incurred in the usual and ordinary course of business, (b)
discharged or satisfied any Liens other than those securing, or paid any
obligation or liability other than, current liabilities shown on the Parent
Balance Sheet and current liabilities incurred since the Parent Balance Sheet
Date, in each case in the usual and ordinary course of business, (c) mortgaged,
pledged or subjected to Lien any of its assets, tangible or intangible, other
than in the usual and ordinary course of business, (d) sold, transferred or
leased any of its assets, except in the usual and ordinary course of business,
(e) cancelled or compromised any debt or claim, or waived or released any right
of material value, (f) suffered any physical damage, destruction or loss
(whether or not covered by insurance) which could reasonably be expected to have
a material adverse effect on the Condition of the Parent, (g) entered into any
transaction other than in the usual and ordinary course of business, (h)
encountered any labor union difficulties, (i) made or granted any wage or salary
increase or made any increase in the amounts payable under any profit sharing,
bonus, deferred compensation, severance pay, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement, other than in the
ordinary course of business consistent with past practice, or entered into any
employment agreement, (j) issued or sold any shares of capital stock, bonds,
notes, debentures or other securities or granted any options (including employee
stock options), warrants or other rights with respect thereto, (k) declared or
paid any dividends on or made any other distributions with respect to, or
purchased or redeemed, any of its outstanding capital stock, (l) suffered or
experienced any change in, or condition affecting, the financial condition of
the Parent other than changes, events or conditions in the usual and ordinary
course of its business, none of which (either by itself or in conjunction with
all such other changes, events and conditions) could reasonably be expected to
have a material adverse effect on the Condition of the Parent, (m) made any
change in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted, (n) made or
permitted any amendment or termination of any material
12
contract, agreement or license to which it is a party, (o) suffered any material
loss not reflected in the Parent Balance Sheet or its statement of income for
the year ended on the Parent Balance Sheet Date, (p) paid, or made any accrual
or arrangement for payment of, bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer, director,
employee, stockholder or consultant, (q) made or agreed to make any charitable
contributions or incurred any non-business expenses in excess of $5,000 in the
aggregate, or (r) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
3.15 TAX RETURNS AND AUDITS. All required federal, state
and local Tax Returns of the Parent have been accurately prepared in all
material respects and duly and timely filed, and all federal, state and local
Taxes required to be paid with respect to the periods covered by such returns
have been paid to the extent that the same are material and have become due,
except where the failure so to file or pay could not reasonably be expected to
have a material adverse effect upon the Condition of the Parent. The Parent is
not and has not been delinquent in the payment of any Tax. The Parent has not
had a Tax deficiency assessed against it. None of the Parent's federal income
tax returns nor any state or local income or franchise tax returns has been
audited by governmental authorities. The reserves for Taxes reflected on the
Parent Balance Sheet are sufficient for the payment of all unpaid Taxes payable
by the Parent with respect to the period ended on the Parent Balance Sheet Date.
There are no federal, state, local or foreign audits, actions, suits,
proceedings, investigations, claims or administrative proceedings relating to
Taxes or any Tax Returns of the Parent now pending, and the Parent has not
received any notice of any proposed audits, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns.
3.16 EMPLOYEE BENEFIT PLANS; ERISA. There are no "employee
benefit plans" (within the meaning of Section 3(3) of ERISA) nor any other
employee benefit or fringe benefit arrangements, practices, contracts, policies
or programs other than programs merely involving the regular payment of wages,
commissions, or bonuses established, maintained or contributed to by the Parent.
3.17 LITIGATION. There is no legal action, suit,
arbitration or other legal, administrative or other governmental proceeding
pending or, to the knowledge of the Parent, threatened against or affecting the
Parent or Acquisition Corp. or their properties, assets or business. To the
knowledge of the Parent, neither Parent nor Acquisition Corp. is in default with
respect to any order, writ, judgment, injunction, decree, determination or award
of any court or any governmental agency or instrumentality or arbitration
authority.
3.18 INTERESTED PARTY TRANSACTIONS. Except as disclosed in
the Parent SEC Documents, no officer, director or stockholder of the Parent or
any Affiliate or "associate" (as such term is defined in Rule 405 under the
Securities Act) of any such Person or the Parent has or has had, either directly
or indirectly, (a) an interest in any Person that (i) furnishes or sells
services or products that are furnished or sold or are proposed to be furnished
or sold by the Parent or (ii) purchases from or sells or furnishes to the Parent
any goods or services, or (b) a beneficial interest in any contract or agreement
to which the Parent is a party or by which it may be bound or affected.
3.19 QUESTIONABLE PAYMENTS. Neither the Parent,
Acquisition Corp. nor to the knowledge of the Parent, any director, officer,
agent, employee or other Person associated with
13
or acting on behalf of the Parent or Acquisition Corp., has used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payments to government officials or employees from corporate funds; established
or maintained any unlawful or unrecorded fund of corporate monies or other
assets; made any false or fictitious entries on the books of record of any such
corporations; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
3.20 OBLIGATIONS TO OR BY STOCKHOLDERS. Except as
disclosed in the Parent SEC Documents, the Parent has no liability or obligation
or commitment to any stockholder of Parent or any Affiliate or "associate" (as
such term is defined in Rule 405 under the Securities Act) of any stockholder of
Parent, nor does any stockholder of Parent or any such Affiliate or associate
have any liability, obligation or commitment to the Parent.
3.21 ASSETS AND CONTRACTS. Except as expressly set forth
in a schedule to this Agreement, the Parent Balance Sheet or the notes thereto,
the Parent is not a party to any written or oral agreement not made in the
ordinary course of business that is material to the Parent. Parent does not own
any real property. Parent is not a party to or otherwise barred by any written
or oral (a) agreement with any labor union, (b) agreement for the purchase of
fixed assets or for the purchase of materials, supplies or equipment in excess
of normal operating requirements, (c) agreement for the employment of any
officer, individual employee or other Person on a full-time basis or any
agreement with any Person for consulting services, (d) bonus, pension, profit
sharing, retirement, stock purchase, stock option, deferred compensation,
medical, hospitalization or life insurance or similar plan, contract or
understanding with respect to any or all of the employees of Parent or any other
Person, (e) indenture, loan or credit agreement, note agreement, deed of trust,
mortgage, security agreement, promissory note or other agreement or instrument
relating to or evidencing Indebtedness for Borrowed Money or subjecting any
asset or property of Parent to any Lien or evidencing any Indebtedness, (f)
guaranty of any Indebtedness, (g) lease or agreement under which Parent is
lessee of or holds or operates any property, real or personal, owned by any
other Person, (h) lease or agreement under which Parent is lessor or permits any
Person to hold or operate any property, real or personal, owned or controlled by
Parent, (i) agreement granting any preemptive right, right of first refusal or
similar right to any Person, (j) agreement or arrangement with any Affiliate or
any "associate" (as such term is defined in Rule 405 under the Securities Act)
of Parent or any present or former officer, director or stockholder of Parent,
(k) agreement obligating Parent to pay any royalty or similar charge for the use
or exploitation of any tangible or intangible property, (1) covenant not to
compete or other restriction on its ability to conduct a business or engage in
any other activity, (m) distributor, dealer, manufacturer's representative,
sales agency, franchise or advertising contract or commitment, (n) agreement to
register securities under the Securities Act, (o) collective bargaining
agreement, or (p) agreement or other commitment or arrangement with any Person
continuing for a period of more than two months from the Closing Date that
involves an expenditure or receipt by Parent in excess of $1,000. The Parent
maintains no insurance policies and insurance coverage of any kind with respect
to Parent, its business, premises, properties, assets, employees and agents.
SCHEDULE 3.21 contains a true and complete list and description of each bank
account, savings account, other deposit relationship and safety deposit box of
Parent, including the name of the bank or other depository, the account number
and the names of the individuals having signature or other withdrawal authority
with respect thereto. Except as disclosed on SCHEDULE 3.21, no consent of any
bank or other depository is required to maintain any bank account, other deposit
relationship or safety deposit box of Parent in effect following
14
the consummation of the Merger and the transactions contemplated hereby. Parent
has furnished to the Company true and complete copies of all agreements and
other documents disclosed or referred to in SCHEDULE 3.21 or the Parent Balance
Sheet or the notes thereto, as well as any additional agreements or documents,
requested by the Company.
3.22 EMPLOYEES. Except as set forth on SCHEDULE 3.22,
other than pursuant to ordinary arrangements of employment compensation, Parent
is not under any obligation or liability to any officer, director, employee or
Affiliate of Parent.
3.23 DISCLOSURE. There is no fact relating to Parent that
Parent has not disclosed to the Company in writing that materially and adversely
affects nor, insofar as Parent can now foresee, will materially and adversely
affect, the condition (financial or otherwise), properties, assets, liabilities,
business operations, results of operations or prospects of Parent. No
representation or warranty by Parent herein and no information disclosed in the
schedules or exhibits hereto by Parent contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
STOCKHOLDERS. Promptly after the Effective Time, Parent shall cause to be mailed
to each holder of record of Company Common Stock that was converted pursuant to
Section 1.5 hereof into the right to receive Parent Common Stock a letter of
transmittal ("LETTER OF TRANSMITTAL"), in substantially the form attached hereto
as EXHIBIT E, which shall contain additional representations, warranties and
covenants of such Stockholder, including, without limitation, that (i) such
Stockholder has full right, power and authority to deliver such Company Common
Stock and Letter of Transmittal, (ii) the delivery of such Company Common Stock
will not violate or be in conflict with, result in a breach of or constitute a
default under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other agreement or instrument to which such Stockholder is
bound or affected, (iii) such Stockholder has good, valid and marketable title
to all shares of Company Common Stock indicated in such Letter of Transmittal
and that such Stockholder is not affected by any voting trust, agreement or
arrangement affecting the voting rights of such Company Common Stock, (iv) such
Stockholder is an "accredited investor," as such term is defined in Regulation D
under the Securities Act and that such Stockholder is acquiring Parent Common
Stock for investment purposes, and not with a view to selling or otherwise
distributing such Parent Common Stock in violation of the Securities Act or the
securities laws of any state, and (v) such Stockholder has had an opportunity to
ask and receive answers to any questions such Stockholder may have had
concerning the terms and conditions of the Merger and the Parent Common Stock
and has obtained any additional information that such Stockholder has requested.
Delivery shall be effected, and risk of loss and title to the Parent Common
Stock shall pass, only upon delivery to the Parent (or an agent of the Parent)
of (x) certificates evidencing ownership thereof as contemplated by Section 1.6
hereof (or affidavit of lost certificate), and (y) the Letter of Transmittal
containing the representations, warranties and covenants contemplated by this
Section 4.
5. CONDUCT OF BUSINESSES PENDING THE MERGER.
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. Prior to the Effective Time, unless Parent or Acquisition Corp. shall
otherwise agree in writing or as otherwise contemplated by this Agreement:
15
(a) the business of the Company shall be
conducted only in the ordinary course;
(b) the Company shall not (i) directly or
indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of its capital stock; (ii) amend its Certificate of
Incorporation or By-laws; or (iii) split, combine or reclassify the outstanding
Company Common Stock or declare, set aside or pay any dividend payable in cash,
stock or property or make any distribution with respect to any such stock;
(c) the Company shall not (i) issue or agree to
issue any additional shares of, or options, warrants or rights of any kind to
acquire any shares of, Company Common Stock; (ii) acquire or dispose of any
fixed assets or acquire or dispose of any other substantial assets other than in
the ordinary course of business; (iii) incur additional Indebtedness or any
other liabilities or enter into any other transaction other than in the ordinary
course of business; (iv) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing; or (v) except as contemplated
by this Agreement, enter into any contract, agreement, commitment or arrangement
to dissolve, merge, consolidate or enter into any other material business
combination;
(d) the Company shall use its best efforts to
preserve intact the business organization of the Company, to keep available the
service of its present officers and key employees, and to preserve the good will
of those having business relationships with it;
(e) the Company will not, nor will it authorize
any director or authorize or permit any officer or employee or any attorney,
accountant or other representative retained by it to, make, solicit, encourage
any inquiries with respect to, or engage in any negotiations concerning, any
Acquisition Proposal (as defined below). The Company will promptly advise Parent
orally and in writing of any such inquiries or proposals (or requests for
information) and the substance thereof. As used in this paragraph, "ACQUISITION
PROPOSAL" shall mean any proposal for a merger or other business combination
involving the Company or for the acquisition of a substantial equity interest in
it or any material assets of it other than as contemplated by this Agreement.
The Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person conducted heretofore
with respect to any of the foregoing; and
(f) except for the employment agreements
contemplated by SECTION 7.1(g)(5), the Company will not enter into any new
employment agreements with any of its officers or employees or grant any
increases in the compensation or benefits of its officers and employees other
than increases in the ordinary course of business and consistent with past
practice or amend any employee benefit plan or arrangement.
5.2 CONDUCT OF BUSINESS BY PARENT AND ACQUISITION CORP.
PENDING THE MERGER. Prior to the Effective Time, unless the Company shall
otherwise agree in writing or as otherwise contemplated by this Agreement:
(a) the business of Parent and Acquisition Corp.
shall be conducted only in the ordinary course; PROVIDED, HOWEVER, that Parent
shall take the steps necessary to have
16
discontinued its existing business without liability to Parent or Acquisition
Corp. as of the Closing Date;
(b) except for adopting a resolution to sell the
cookbook publishing and marketing business and the related website, including
the outstanding membership interests of LLC and cancel the shares of Parent
registered to Xxxx Xxxxx and Xxxx Xxxx, to become effective at the Effective
Time, neither Parent nor Acquisition Corp. shall (A) directly or indirectly
redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares of its capital stock; (B) amend its articles or certificate
of incorporation or by-laws; or (C) split, combine or reclassify its capital
stock or declare, set aside or pay any dividend payable in cash, stock or
property or make any distribution with respect to such stock; and
(c) neither Parent nor Acquisition Corp. shall
(A) issue or agree to issue any additional shares of, or options, warrants or
rights of any kind to acquire shares of, its capital stock; (B) acquire or
dispose of any assets other than in the ordinary course of business (except for
dispositions in connection with Section 5.2(a) hereof); (C) incur additional
Indebtedness or any other liabilities or enter into any other transaction except
in the ordinary course of business; (D) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing, or (E) except as
contemplated by this Agreement, enter into any contract, agreement, commitment
or arrangement to dissolve, merge; consolidate or enter into any other material
business contract or enter into any negotiations in connection therewith.
(d) neither Parent nor Acquisition Corp. will,
nor will they authorize any director or authorize or permit any officer or
employee or any attorney, accountant or other representative retained by them
to, make, solicit, encourage any inquiries with respect to, or engage in any
negotiations concerning, any Acquisition Proposal (as defined below for purposes
of this paragraph). Parent will promptly advise the Company orally and in
writing of any such inquiries or proposals (or requests for information) and the
substance thereof. As used in this paragraph, "ACQUISITION PROPOSAL" shall mean
any proposal for a merger or other business combination involving the Parent or
Acquisition Corp. or for the acquisition of a substantial equity interest in
either of them or any material assets of either of them other than as
contemplated by this Agreement. Parent will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any person
conducted heretofore with respect to any of the foregoing; and
(e) neither the Parent nor Acquisition Corp.
will enter into any new employment agreements with any of their officers or
employees or grant any increases in the compensation or benefits of their
officers or employees.
6. ADDITIONAL AGREEMENTS.
6.1 ACCESS AND INFORMATION. The Company, Parent and
Acquisition Corp. shall each afford to the other and to the other's accountants,
counsel and other representatives full access during normal business hours
throughout the period prior to the Effective Time of all of its properties,
books, contracts, commitments and records (including but not limited to tax
returns) and during such period, each shall furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request; PROVIDED, that no investigation pursuant to this
Section 6.1 shall affect any representations or
17
warranties made herein. Each party shall hold, and shall cause its employees and
agents to hold, in confidence all such information (other than such information
which (i) is already in such party's possession or (ii) becomes generally
available to the public other than as a result of a disclosure by such party or
its directors, officers, managers, employees, agents or advisors, or (iii)
becomes available to such party on a non-confidential basis from a source other
than a party hereto or its advisors, provided that such source is not known by
such party to be bound by a confidentiality agreement with or other obligation
of secrecy to a party hereto or another party until such time as such
information is otherwise publicly available; PROVIDED, HOWEVER, that (A) any
such information may be disclosed to such party's directors, officers, employees
and representatives of such party's advisors who need to know such information
for the purpose of evaluating the transactions contemplated hereby (it being
understood that such directors, officers, employees and representatives shall be
informed by such party of the confidential nature of such information), (B) any
disclosure of such information may be made as to which the party hereto
furnishing such information has consented in writing, and (C) any such
information may be disclosed pursuant to a judicial, administrative or
governmental order or request; PROVIDED, HOWEVER, that the requested party will
promptly so notify the other party so that the other party may seek a protective
order or appropriate remedy and/or waive compliance with this Agreement and if
such protective order or other remedy is not obtained or the other party waives
compliance with this provision, the requested party will furnish only that
portion of such information which is legally required and will exercise its best
efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the information furnished). If this
Agreement is terminated, each party will deliver to the other all documents and
other materials (including copies) obtained by such party or on its behalf from
the other party as a result of this Agreement or in connection herewith, whether
so obtained before or after the execution hereof.
6.2 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts to satisfy the conditions precedent to the obligations of any
of the parties hereto to obtain all necessary waivers, and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible). In order to obtain any necessary
governmental or regulatory action or non-action, waiver, consent, extension or
approval, each of Parent, Acquisition Corp. and the Company agrees to take all
reasonable actions and to enter into all reasonable agreements as may be
necessary to obtain timely governmental or regulatory approvals and to take such
further action in connection therewith as may be necessary. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and/or directors of
Parent, Acquisition Corp. and the Company shall take all such necessary action.
6.3 PUBLICITY. No party shall issue any press release or
public announcement pertaining to the Merger that has not been agreed upon in
advance by Parent and the Company, except as Parent reasonably determines to be
necessary in order to comply with the rules of the Commission or of the
principal trading exchange or market for Parent Common Stock; PROVIDED, that in
such case Parent will use its best efforts to allow the Company to review and
reasonably approve any press release or public announcement prior to its
release.
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6.4 APPOINTMENT OF DIRECTORS. Parent shall accept the
resignation of the current officers and directors of Parent as provided by
Section 7.2(f)(7) hereof, and shall cause the persons listed as directors in
EXHIBIT D hereto to be elected to the Board of Directors of Parent, in each case
immediately upon the Effective Time, except that the resignation and appointment
of certain directors shall be delayed until compliance with Section 14(f) of the
Exchange Act and rules promulgated thereunder, as set forth in Section 7.2(f)(7)
hereof. At the first annual meeting of Parent stockholders and thereafter, the
election of members of Parent's Board of Directors shall be accomplished in
accordance with the by-laws of Parent.
6.5 PARENT NAME CHANGE AND EXCHANGE LISTING. At the
Effective Time, Parent shall take all required legal actions, including the
filing of an Information Statement on Schedule 14C under the Exchange Act, to
change its corporate name to Bionovo, Inc. Promptly following the Effective
Time, Parent shall take all required actions to, upon satisfaction of the
original listing requirements, list the Parent Common Stock for trading on the
American Stock Exchange or Nasdaq SmallCap Market.
6.6 REGISTRATION RIGHTS AGREEMENT. As of the Effective
Time, Parent shall enter into a Registration Rights Agreement on substantially
the terms set forth in the form of agreement attached as EXHIBIT F with the
Stockholder addressees thereon.
6.7 STOCK INCENTIVE PLAN. As of the Effective Time, in
addition to the Company Options under the Company's Stock Incentive Plan deemed
to be Parent Options pursuant to Section 1.7(a)(ii) the Company shall assign and
Parent shall assume the Stock Incentive Plan of the Company, as amended (the
"PARENT INCENTIVE PLAN"), and any and all of the Company's rights and
obligations thereunder.
6.8 PRIVATE OFFERING. The Company shall cause the Private
Offering to be consummated immediately prior to the Effective Time.
6.9 PRIVATE OFFERING REGISTRATION RIGHTS AGREEMENT. As of
the Effective Time, Parent shall enter into a Registration Right Agreement with
the Private Offering Investors on substantially the terms set forth in the form
of agreement attached as EXHIBIT G.
7. CONDITIONS OF PARTIES' OBLIGATIONS.
7.1 COMPANY OBLIGATIONS. The obligations of Parent and
Acquisition Corp. under this Agreement and the Certificate of Merger are subject
to the fulfillment at or prior to the Closing of the following conditions, any
of which may be waived in whole or in part by Parent.
(a) NO ERRORS, ETC. The representations and
warranties of the Company under this Agreement shall be deemed to have been made
again on the Closing Date and shall then be true and correct in all material
respects.
(b) COMPLIANCE WITH AGREEMENT. The Company shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it on
or before the Closing Date.
(c) NO DEFAULT OR ADVERSE CHANGE. There shall
not exist on the Closing Date any Default or Event of Default on the part of the
Company or any event or
19
condition that, with the giving of notice or lapse of time, or both, would
constitute a Default or Event of Default on the part of the Company, and since
the Balance Sheet Date, there shall have been no material adverse change in the
Condition of the Company.
(d) CERTIFICATE OF OFFICER. The Company shall
have delivered to Parent and Acquisition Corp. a certificate dated the Closing
Date, executed on its behalf by Xxxxx Xxxxx, President of the Company,
certifying the satisfaction of the conditions specified in paragraphs (a), (b)
and (c) of this Section 7.1.
(e) OPINION OF THE COMPANY'S COUNSEL. Parent and
Acquisition Corp. shall have received from Xxxxxxxxx Traurig, LLP, New York, New
York, counsel for the Company, a favorable opinion dated the Closing Date to the
effect set forth in EXHIBIT H hereto.
(f) NO RESTRAINING ACTION. No action or
proceeding before any court, governmental body or agency shall have been
threatened, asserted or instituted to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the Certificate of Merger
or the carrying out of the transactions contemplated by the Merger Documents.
(g) SUPPORTING DOCUMENTS. Parent and Acquisition
Corp. shall have received the following:
(1) Copies of resolutions of the Board
of Directors and the Stockholders of the Company, certified by the Secretary of
the Company, authorizing and approving the execution, delivery and performance
of the Merger Documents and all other documents and instruments to be delivered
pursuant hereto and thereto.
(2) A certificate of incumbency
executed by the Secretary of the Company certifying the names, titles and
signatures of the officers authorized to execute any documents referred to in
this Agreement and further certifying that the Certificate of Incorporation and
By-laws of the Company delivered to Parent and Acquisition Corp. at the time of
the execution of this Agreement have been validly adopted and have not been
amended or modified.
(3) A certificate, dated the Closing
Date, executed by the Company's President, certifying that, except for the
filing of the Certificate of Merger: (i) all consents, authorizations, orders
and approvals of, and filings and registrations with, any court, governmental
body or instrumentality that are required for the execution and delivery of this
Agreement and the Certificate of Merger and the consummation of the Merger shall
have been duly made or obtained, and all material consents by third parties that
are required for the Merger have been obtained; and (ii) no action or proceeding
before any court, governmental body or agency has been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the Certificate of Merger or the carrying out of the
transactions contemplated by the Merger Documents.
(4) Evidence as of a recent date of the
good standing and corporate existence of the Company issued by the Secretary of
State of the State of Delaware and evidence that the Company is qualified to
transact business as a foreign corporation and is in good standing in California
and each other state of the United States and in each other
20
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary.
(5) Such additional supporting
documentation and other information with respect to the transactions
contemplated hereby as Parent and Acquisition Corp. may reasonably request.
(h) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings and actions taken in connection with the transactions
contemplated hereby and all certificates, opinions, agreements, instruments and
documents mentioned herein or incident to any such transactions shall be
reasonably satisfactory in form and substance to Parent and Acquisition Corp.
The Company shall furnish to Parent and Acquisition Corp. such supporting
documentation and evidence of the satisfaction of any or all of the conditions
precedent specified in this Section 7.1 as Parent or its counsel may reasonably
request.
7.2 PARENT AND ACQUISITION CORP. OBLIGATIONS. The
obligations of the Company under this Agreement and the Certificate of Merger
are subject to the fulfillment at or prior to the Closing of the conditions
precedent specified in paragraph (f) of Section 7.1 hereof and the following
additional conditions:
(a) NO ERRORS, ETC. The representations and
warranties of Parent and Acquisition Corp. under this Agreement shall be deemed
to have been made again on the Closing Date and shall then be true and correct
in all material respects.
(b) COMPLIANCE WITH AGREEMENT. Parent and
Acquisition Corp. shall have performed and complied in all material respects
with all agreements and conditions required by this Agreement and the
Certificate of Merger to be performed or complied with by them on or before the
Closing Date.
(c) NO DEFAULT OR ADVERSE CHANGE. There shall
not exist on the Closing Date any Default or Event of Default on the part of
Parent or Acquisition Corp. or any event or condition, that with the giving of
notice or lapse of time, or both, would constitute a Default of Event of Default
on the part of Parent or Acquisition Corp., and since the Parent Balance Sheet
Date, there shall have been no material adverse change in the Condition of the
Parent.
(d) CERTIFICATE OF OFFICER. Parent and
Acquisition Corp. shall have delivered to the Company a certificate dated the
Closing Date, executed on their behalf by their respective President, certifying
the satisfaction of the conditions specified in paragraphs (a), (b), and (c) of
this Section 7.2.
(e) OPINION OF PARENT'S COUNSEL. The Company
shall have received from Xxxxx X. Xxxxxx of Salt Lake City, Utah, counsel for
Parent, a favorable opinion dated the Closing Date to the effect set forth in
EXHIBIT I hereto.
(f) SUPPORTING DOCUMENTS. The Company shall have
received the following:
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(1) Copies of resolutions of Parent's
and Acquisition Corp.'s respective boards of directors and the sole shareholder
of Acquisition Corp., certified by their respective Secretaries, authorizing and
approving, to the extent applicable, the execution, delivery and performance of
this Agreement, the Certificate of Merger and all other documents and
instruments to be delivered by them pursuant hereto and thereto.
(2) A certificate of incumbency
executed by the respective Secretaries of Parent and Acquisition Corp.
certifying the names, titles and signatures of the officers authorized to
execute the documents referred to in paragraph (1) above and further certifying
that the articles or certificates of incorporation and by-laws of Parent and
Acquisition Corp. appended thereto have not been amended or modified.
(3) A certificate, dated the Closing
Date, executed by the President of each of the Parent and Acquisition Corp.,
certifying that, except for the filing of the Certificate of Merger: (i) all
consents, authorizations, orders and approvals of, and filings and registrations
with, any court, governmental body or instrumentality that are required for the
execution and delivery of this Agreement and the Certificate of Merger and the
consummation of the Merger shall have been duly made or obtained, and all
material consents by third parties required for the Merger have been obtained;
and (ii) no action or proceeding before any court, governmental body or agency
has been threatened, asserted or instituted to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the Certificate of
Merger or the carrying out of the transactions contemplated by any of the Merger
Documents.
(4) A certificate of Interwest Transfer
Company, Inc., Parent's transfer agent and registrar, certifying as of the
business day prior to the Closing Date, and before taking into consideration the
cancellation of Parent Common Stock as indicated in Section 7.2(f)(7)(iii)
hereof, a true and complete list of the names and addresses of the record owners
of all of the outstanding shares of Parent Common Stock, together with the
number of shares of Parent Common Stock held by each record owner.
(5) A letter from Interwest Transfer
Company, Inc., Parent's transfer agent and registrar setting forth that the
number of shares of Parent Common Stock that would be issued and outstanding as
of the Closing Date after taking into consideration the cancellation of Parent
Common Stock as indicated in Section 7.2(f)(7)(iii) hereof, but prior to the
closing of the Merger, is no more than 4,000,000 shares of Parent Common Stock.
(6) An agreement in writing from Xxxxxx
& Associates, CPA's Inc., in form and substance reasonably satisfactory to the
Company, to deliver copies of the audit opinions and audit reports with respect
to any and all financial statements of Parent that had been audited by such
firm.
(7) (i) The executed resignations of
Xxxx X. Xxxx as the sole director and officer of Parent, with the officer
resignation to take effect at the Effective Time and with the director
resignation to take effect upon compliance with Section 14(f) of the Exchange
Act and rules promulgated thereunder, (ii) executed release from Xxxx X. Xxxx,
and an indemnity by the Company of Xx. Xxxx relating to the time period between
the Effective Time and compliance with Section 14(f) of the Exchange Act and
rules promulgated thereunder, in the form attached hereto as EXHIBIT J, and
(iii) stock powers executed in blank by Xxxx X. Xxxx and
22
Xxxx Xxxxx evidencing the cancellation of an aggregate of 21,040,000 shares of
Parent Common Stock owned by them in consideration for the agreement described
in clause (8) below.
(8) An agreement in writing from
Parent, in form and substance reasonably satisfactory to the Company, to sell
its cookbook publishing and marketing business, including the outstanding
membership interests of LLC, to Xxxx X. Xxxx or her designee promptly after the
Effective Time.
(9) Evidence in form and substance
reasonably satisfactory to the Company of the termination as of or prior to the
Effective Time of all of Parent's obligations under agreements with (i) Xxxxx
Xxxxxxx Publishing Service, (ii) Xxxxx Books and (iii) Parent's Internet website
service provider.
(10) Evidence as of a recent date of the
good standing and corporate existence of the Parent made available to the
Company by the Secretary of State of Nevada and evidence that the Parent is
qualified to transact business as a foreign corporation and is in good standing
in each state of the United States and in each other jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary.
(11) Evidence as of a recent date of the
good standing and corporate existence of Acquisition Corp. issued by the
Secretary of State of Delaware.
(12) Such additional supporting
documentation and other information with respect to the transactions
contemplated hereby as the Company may reasonably request.
(13) Parent shall assume the Company's
obligations under the Employment Agreements between the Company and each of
Xxxxx Xxxxx and Xxxx Xxxxxxxxxxx, which assumption shall be effective as of the
Closing Date.
(14) Evidence in form and substance
reasonably satisfactory to the Company of the cancellation as of or prior to the
Effective Time of all Indebtedness of Parent to Xxxx Xxxxx and Xxxx X. Xxxx,
respectively.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings and actions taken in connection with the transactions
contemplated hereby and all certificates, opinions, agreements, instruments and
documents mentioned herein or incident to any such transactions shall be
satisfactory in form and substance to the Company. Parent and Acquisition Corp.
shall furnish to the Company such supporting documentation and evidence of
satisfaction of any or all of the conditions specified in this Section 7.2 as
the Company may reasonably request.
The Company and Parent may waive compliance with any of the conditions
precedent specified in this Section 7.2.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties made in Sections 2 and 3 of this
Agreement (including the Schedules to the Agreement which are hereby
incorporated by reference) shall survive for six months beyond the
23
Effective Time. This Section 8 shall not limit any claim for fraud or any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
9. AMENDMENT OF AGREEMENT. This Agreement and the Certificate of
Merger may be amended or modified at any time in all respects by an instrument
in writing executed (i) in the case of this Agreement by the parties hereto and
(ii) in the case of the Certificate of Merger by the parties thereto.
10. DEFINITIONS. Unless the context otherwise requires, the terms
defined in this Section 10 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined.
"ACQUISITION CORP." means LTUP Acquisition Corp., a Delaware
corporation.
"ACQUISITION PROPOSAL" shall have the meaning assigned to such
term in each of Section 5.1(e) and Section 5.2(d) hereof, as applicable.
"AFFILIATE" shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person.
"AGREEMENT" shall mean this Agreement of Merger and Plan of
Reorganization.
"BALANCE SHEET" and "BALANCE SHEET DATE" shall have the
meanings assigned to such terms in Section 2.9 hereof.
"BENEFIT ARRANGEMENTS" shall have the meaning assigned to it
in Section 2.12 hereof.
"CERTIFICATE OF MERGER" shall have the meaning assigned to it
in the second recital of this Agreement.
"CLOSING" and "CLOSING DATE" shall have the meanings assigned
to such terms in Section 11 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMISSION" shall mean the U.S. Securities and Exchange
Commission.
"COMPANY" shall mean Bionovo, Inc., a Delaware corporation.
"COMPANY COMMON STOCK" shall have the meaning assigned to it
in Section 1.5(a)(ii).
"COMPANY BENEFIT PLANS" shall have the meaning assigned to it
in Section 2.12 hereof.
"COMPANY OPTIONS" shall have the meaning assigned to it in
Section 1.7(a) hereof.
24
"COMPANY WARRANTS" shall have the meaning assigned to it in
Section 1.7(a) hereof.
"CONDITION OF THE COMPANY" shall have the meaning assigned to
it in Section 2.2 hereof.
"CONDITION OF THE PARENT" shall have the meaning assigned to
it in Section 3.13 hereof.
"CONSTITUENT CORPORATIONS" shall have the meaning assigned to
it in Section 1.4 hereof.
"DEFAULT" shall mean a default or failure in the due
observance or performance of any covenant, condition or agreement on the part of
the referenced party hereto to be observed or performed under the terms of this
Agreement or the Certificate of Merger, if such default or failure in
performance shall remain unremedied for five (5) days.
"DGCL" shall have the meaning assigned to it in the second
recital hereof.
"EFFECTIVE TIME" shall have the meaning assigned to it in
Section 1.2 hereof.
"EQUITY SECURITY" shall mean any stock or similar security of
an issuer or any security (whether stock or Indebtedness for Borrowed Money)
convertible, with or without consideration, into any stock or similar equity
security, or any security (whether stock or Indebtedness for Borrowed Money)
carrying any warrant or right to subscribe to or purchase any stock or similar
security, or any such warrant or right.
"ERISA" shall have the meaning assigned to it in Section 2.12
hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"EVENT OF DEFAULT" shall mean (a) the failure of the
referenced party hereto to pay any of its Indebtedness for Borrowed Money, or
any interest or premium thereon, within five (5) days after the same shall
become due, whether such Indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, (b) an event of
default under any agreement or instrument evidencing or securing or relating to
any such Indebtedness, or (c) the failure of the referenced party hereto to
perform or observe any material term, covenant, agreement or condition on its
part to be performed or observed under any agreement or instrument evidencing or
securing or relating to any such Indebtedness when such term, covenant or
agreement is required to be performed or observed.
"GAAP" shall have the meaning assigned to it in Section 2.9
hereof.
"INDEBTEDNESS" shall mean any obligation of the referenced
party hereto which under generally accepted accounting principles is required to
be shown on the balance sheet of such party as a liability. Any obligation
secured by a Lien on, or payable out of the proceeds of production from,
property of the referenced party hereto shall be deemed to be Indebtedness of
such party even though such obligation is not assumed by such party.
25
"INDEBTEDNESS FOR BORROWED MONEY" shall mean (a) all
Indebtedness of the referenced party hereto in respect of money borrowed
including, without limitation, Indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing money
or using available funds to pay such amounts and not constituting an account
payable or expense accrual incurred or assumed in the ordinary course of
business of the Company, (b) all Indebtedness of the referenced party hereto
evidenced by a promissory note, bond or similar written obligation to pay money,
and (c) all such Indebtedness guaranteed by the referenced party hereto or for
which such party is otherwise contingently liable.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act
of 1940, as amended.
"KNOWLEDGE" and "KNOW" means, when referring to any person or
entity, the actual knowledge of such person or entity of a particular matter or
fact, and what that person or entity would have reasonably known after due
inquiry. An entity will be deemed to have "knowledge" of a particular fact or
other matter if any individual who is serving, or who has served, as an
executive officer of such entity has actual "knowledge" of such fact or other
matter, or had actual "knowledge" during the time of such service of such fact
or other matter, or would have had "knowledge" of such particular fact or matter
after due inquiry.
"LETTER OF TRANSMITTAL" shall have the meaning assigned to it
in Section 4 hereof.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other law.
"LLC" shall mean Lighten Up Enterprises, LLC, a Utah limited
liability company.
"MEMORANDUM" shall have the meaning assigned to it in the
fourth recital hereof.
"MERGER" shall have the meaning assigned to it in the first
recital hereof.
"MERGER DOCUMENTS" shall have the meaning assigned to it in
Section 2.5 hereof.
"PARENT" shall mean Lighten Up Enterprises International,
Inc., a Nevada corporation.
"PARENT BALANCE SHEET" and "PARENT BALANCE SHEET DATE" shall
have the meanings assigned to them in Section 3.13 hereof.
"PARENT COMMON STOCK" shall have the meaning assigned to it in
Section 3.4 hereof.
"PARENT FINANCIAL STATEMENTS" shall have the meaning assigned
to it in Section 3.8 hereof.
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"PARENT INCENTIVE PLAN" shall have the meaning assigned to it
in Section 6.7 hereof.
"PARENT OPTIONS" shall have the meaning assigned to it in
Section 1.7(a) hereof.
"PARENT SEC DOCUMENTS" shall have the meaning assigned to it
in Section 3.7(b) hereof.
"PARENT WARRANTS" shall have the meaning assigned to it in
Section 1.7(a) hereof.
"PATENT AND TRADEMARK RIGHTS" shall have the meaning assigned
to it in Section 2.15 hereof.
"PERMITTED LIENS" shall mean (a) Liens for taxes and
assessments or governmental charges or levies not at the time due or in respect
of which the validity thereof shall currently be contested in good faith by
appropriate proceedings; (b) Liens in respect of pledges or deposits under
workmen's compensation laws or similar legislation, carriers', warehousemen's,
mechanics', laborers' and materialmens' and similar Liens, if the obligations
secured by such Liens are not then delinquent or are being contested in good
faith by appropriate proceedings; and (c) Liens incidental to the conduct of the
business of the Company that were not incurred in connection with the borrowing
of money or the obtaining of advances or credits and which do not in the
aggregate materially detract from the value of its property or materially impair
the use made thereof by the Company in its business.
"PERSON" shall include all natural persons, corporations,
business trusts, associations, limited liability companies, partnerships, joint
ventures and other entities and governments and agencies and political
subdivisions.
"PRIVATE OFFERING" shall have the meaning assigned to it in
the fourth recital hereof.
"PRIVATE OFFERING INVESTORS" shall mean those Persons who have
purchased Company Common Stock in the Private Offering.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"STOCKHOLDERS" shall mean all of the stockholders of the
Company.
"SURVIVING CORPORATION" shall have the meaning assigned to it
in Section 1.1 hereof.
"TAX" or "TAXES" shall mean (a) any and all taxes,
assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and
other governmental charges of any kind whatsoever (including, but not limited
to, taxes on or with respect to net or gross income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added, transfer, real property
transfer, transfer gains, transfer taxes, inventory, capital stock, license,
payroll, employment, social security, unemployment, severance, occupation, real
or personal property, estimated taxes, rent, excise, occupancy, recordation,
bulk transfer, intangibles, alternative minimum, doing business, withholding and
stamp), together with any interest thereon, penalties, fines, damages costs,
fees,
27
additions to tax or additional amounts with respect thereto, imposed by the
United States (federal, state or local) or other applicable jurisdiction; (b)
any liability for the payment of any amounts described in clause (a) as a result
of being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferor or successor liability, including, without
limitation, by reason of Regulation section 1.1502-6; and (c) any liability for
the payments of any amounts as a result of being a party to any Tax Sharing
Agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described in
clause (a) or (b).
"TAX RETURN" shall include all returns and reports (including
elections, declarations, disclosures, schedules, estimates and information
returns (including Form 1099 and partnership returns filed on Form 1065)
required to be supplied to a Tax authority relating to Taxes.
11. CLOSING. The closing of the Merger (the "CLOSING") shall occur
concurrently with the Effective Time (the "CLOSING DATE"). The Closing shall
occur at the offices of Xxxxxxxxx Xxxxxxx, LLP referred to in Section 13.1
hereof. At the Closing, Parent shall present for delivery to each Stockholder
the certificate representing the Parent Common Stock to be issued pursuant to
Section 1.5(a)(ii) hereof to them pursuant to Sections 1.6 and 4 hereof. Such
presentment for delivery shall be against delivery to Parent and Acquisition
Corp. of the certificates, opinions, agreements and other instruments referred
to in Section 7.1 hereof, and the certificates representing all of the Company
Common Stock issued and outstanding immediately prior to the Effective Time.
Parent will deliver at such Closing to the Company the officers' certificate and
opinion referred to in Section 7.2 hereof. All of the other documents,
certificates and agreements referenced in Section 7 will also be executed as
described therein. At the Effective Time, all actions to be taken at the Closing
shall be deemed to be taken simultaneously.
12. TERMINATION PRIOR TO CLOSING.
12.1 TERMINATION OF AGREEMENT. This Agreement may be
terminated at any time prior to the Closing:
(a) By the mutual written consent of the
Company, Acquisition Corp. and Parent;
(b) By the Company, if Parent or Acquisition
Corp. (i) fails to perform in any material respect any of its agreements
contained herein required to be performed by it on or prior to the Closing Date,
(ii) materially breaches any of its representations, warranties or covenants
contained herein, which failure or breach is not cured within thirty (30) days
after the Company has notified Parent and Acquisition Corp. of its intent to
terminate this Agreement pursuant to this paragraph (b);
(c) By Parent and Acquisition Corp., if the
Company (i) fails to perform in any material respect any of its agreements
contained herein required to be performed by it on or prior to the Closing Date,
(ii) materially breach any of its representations, warranties or covenants
contained herein, which failure or breach is not cured within thirty (30) days
after Parent or Acquisition Corp. has notified the Company of its intent to
terminate this Agreement pursuant to this paragraph (c);
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(d) By either the Company, on the one hand, or
Parent and Acquisition Corp., on the other hand, if there shall be any order,
writ, injunction or decree of any court or governmental or regulatory agency
binding on Parent, Acquisition Corp. or the Company, which prohibits or
materially restrains any of them from consummating the transactions contemplated
hereby; PROVIDED, that the parties hereto shall have used their best efforts to
have any such order, writ, injunction or decree lifted and the same shall not
have been lifted within ninety (90) days after entry, by any such court or
governmental or regulatory agency; or
(e) By either the Company, on the one hand, or
Parent and Acquisition Corp., on the other hand, if the Closing has not occurred
on or prior to April 15, 2005 for any reason other than delay or nonperformance
of the party seeking such termination.
12.2 TERMINATION OF OBLIGATIONS. Termination of this
Agreement pursuant to this Section 12 shall terminate all obligations of the
parties hereunder, except for the obligations under Sections 6.1, 13.3 and 13.9;
PROVIDED, HOWEVER, that termination pursuant to paragraphs (b) or (c) of Section
12.1 shall not relieve the defaulting or breaching party or parties from any
liability to the other parties hereto.
13. MISCELLANEOUS.
13.1 NOTICES. Any notice, request or other communication
hereunder shall be given in writing and shall be served either personally by
overnight delivery or delivered by mail, postage prepaid, certified return
receipt and addressed to the following addresses:
If to Parent
or Acquisition Corp.: Lighten Up Enterprises International, Inc.
0000 Xxxxx 0000 Xxxx
Xxx, Xxxx 00000
Attention: Xxxx X. Xxxx, President
With a copy to: Xxxxx X. Xxxxxx, Esq.
Bank Xxx Xxxxx
Xxxxx 000
00 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
If to the Company: Bionovo, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxx Xxxxx, Chairman
With a copy to: Xxxxxxxxx Traurig, LLP
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
29
Notices shall be deemed received at the earlier of actual receipt or
three (3) business days following mailing. Counsel for a party (or any
authorized representative) shall have authority to accept delivery of any notice
on behalf of such party.
13.2 ENTIRE AGREEMENT. This Agreement, including the
schedules and exhibits attached hereto and other documents referred to herein,
contains the entire understanding of the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior agreements and
undertakings between the parties with respect to such subject matter.
13.3 EXPENSES. Each party shall bear and pay all of the
legal, accounting and other expenses incurred by it in connection with the
transactions contemplated by this Agreement.
13.4 TIME. Time is of the essence in the performance of
the parties' respective obligations herein contained.
13.5 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.6 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and heirs.
13.7 NO THIRD PARTIES BENEFITED. This Agreement is made
and entered into for the sole protection and benefit of the parties hereto,
their successors, assigns and heirs, and no other Person shall have any right or
action under this Agreement.
13.8 COUNTERPARTS. This Agreement may be executed and
delivered in one or more counterparts and by facsimile, with the same effect as
if all parties had signed the same document. Each such counterpart shall be an
original, but all such counterparts together shall constitute a single
agreement.
13.9 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware.
The parties to this Agreement agree that any breach of any term or condition of
this Agreement or the transactions contemplated hereby shall be deemed to be a
breach occurring in the State of Delaware by virtue of a failure to perform an
act required to be performed in the State of Delaware. The parties to this
Agreement irrevocably and expressly agree to submit to the jurisdiction of the
courts of the State of Delaware for the purpose of resolving any disputes among
the parties relating to this Agreement or the transactions contemplated hereby.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby, or any judgment entered by any court in
respect hereof brought in State of Delaware, and further irrevocably waive any
claim that any suit, action or proceeding brought in State of Delaware has been
brought in an inconvenient forum. With respect to any action before the above
courts, the parties hereto agree to service of process by certified or
registered United States mail, postage prepaid, addressed to the party in
question.
30
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement of Merger and Plan of Reorganization to be binding and effective as of
the day and year first above written.
PARENT:
LIGHTEN UP ENTERPRISES INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx
President
ACQUISITION CORP.:
LTUP ACQUISITION CORP.
By: /s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx
President
THE COMPANY:
BIONOVO, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Chairman and President
