AGREEMENT AND PLAN OF MERGER BY AND BETWEEN MARWICH II, LTD. AND AMERICAN ETHANOL, INC. DATED AS OF JUNE 23, 2006
Draft
6/23/06
AGREEMENT
AND PLAN OF MERGER
BY
AND BETWEEN
MARWICH
II, LTD.
AND
AMERICAN
ETHANOL, INC.
DATED
AS OF JUNE 23, 2006
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
(together with the Disclosure Schedules attached hereto, this “Agreement”),
dated as of June 23, 2006, by and between Marwich II, Ltd., a Colorado
corporation (“Marwich”) and American Ethanol, Inc., a Nevada corporation
(“American”). Marwich and American are referred to collectively herein as the
“Parties.”
RECITALS
WHEREAS,
the
Board of Directors of each of Marwich and American have determined that it
is in
the best interests of each corporation and their respective stockholders that
Marwich and American combine into a single corporation through the merger of
American with and into Marwich (the “Merger”) and, in furtherance thereof, have
approved the Merger;
WHEREAS,
pursuant to the Merger, among other things, the outstanding shares of Common
Stock and Preferred Stock of American shall be converted into shares of Common
Stock of Marwich at the rate determined herein;
WHEREAS,
for
Federal income tax purposes, it is intended that the Merger shall qualify as
a
reorganization within the meaning of Section 368 of the Internal Revenue Code
of
1986, as amended (the “Code”); and
WHEREAS,
the
Parties desire to make certain representations, warranties, covenants and
agreements in connection with the Merger;
NOW,
THEREFORE,
in
consideration of the mutual representations, warranties, covenants and
agreements set forth herein, the Parties hereby agree as follows:
ARTICLE
I
The
Merger; Effective Time; Closing
1.1. The
Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, and in
accordance with the applicable provisions of the Nevada Corporate Law (the
“NCL”) and the Colorado Corporations and Associations Act (the “CCAA”), at the
Effective Time (as defined in Section 1.2), American shall be merged with and
into Marwich, the separate corporate existence of American shall thereupon
cease
and Marwich shall be the successor or surviving corporation. Marwich, as the
surviving corporation after the consummation of the Merger, is sometimes
hereinafter referred to as the “Surviving Corporation.”
1.2. Effective
Time.
Subject
to the provisions of this Agreement, the Parties shall cause the Merger to
be
consummated by filing an agreement of merger of Marwich and American (the
“Agreement of Merger”) with the Secretary of State of the State of Nevada in
such form as required by, and executed in accordance with, the relevant
provisions of the NCL, and with the Secretary of State of the State of Colorado
in such form as required by, and executed in accordance with, the relevant
provisions of the CCAA, as soon as practicable on or before the Closing Date
(as
defined in Section 1.3). The Merger shall become effective upon such filing
or
at such time thereafter as is provided in the Agreement of Merger (the
“Effective Time”).
1.3. Closing.
Unless
this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Article VIII, the closing
of
the Merger (the “Closing”) shall take place at 10:00 a.m., local time, at the
offices of counsel for American, on the second business day after the receipt
of
Requisite Stockholder Approval (as defined in Section 6.2), provided that on
or
prior thereto, all of the conditions to the obligations of the Parties to
consummate the Merger as set forth in Article VII have been satisfied or waived,
or such other date, time or place as is agreed to in writing by the Parties
(the
“Closing Date”).
1.4. Effect
of the Merger.
At the
Effective Time, the effect of the Merger shall be as provided in this Agreement
and the applicable provisions of the NCL and the CCAA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
of
the property, rights, privileges, powers and franchises of American shall vest
in the Surviving Corporation, and all debts, liabilities and duties of American
shall become the debts, liabilities and duties of the Surviving
Corporation.
ARTICLE
II
Articles
of Incorporation and By-Laws of the Surviving Corporation
2.1. Articles
of Incorporation; Name.
At the
Effective Time, the Articles of Incorporation of Marwich immediately prior
to
the Effective Time shall become the Articles of Incorporation of the Surviving
Corporation, and the name of the Surviving Corporation shall be American
Ethanol, Inc.
2.2. By-Laws.
At the
Effective Time, the By-Laws of Marwich in effect immediately prior to the
Effective Time shall become the By-Laws of the Surviving
Corporation.
ARTICLE
III
Directors
and Officers of the Surviving Corporation
3.1. Directors.
Subject
to Section 6.8, the directors of Marwich shall be the initial directors of
the
Surviving Corporation, until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation’s Articles of Incorporation and
By-Laws.
3.2. Officers.
Subject
to Section 6.8, the officers of Marwich shall be the initial officers of the
Surviving Corporation, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal
in
accordance with the Surviving Corporation’s Articles of Incorporation and
By-Laws.
ARTICLE
IV
Merger
Consideration; Conversion or Cancellation of Shares in the
Merger
4.1. Share
Consideration for the Merger: Conversion or Cancellation of Shares in the
Merger.
At the
Effective Time, the manner of converting or canceling shares of
American
shall be
as follows:
(a) Except
as
provided in subsection (e) of this Section 4.1, each share of Common Stock
of
American (collectively, the “American Common Shares”) issued and 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 automatically
into the right to receive one (1) share of Common Stock of
Marwich (collectively, the “Marwich Common Shares”). All American Common Shares
to be converted into Marwich Common Shares pursuant to this Section 4.1 shall,
by virtue of the Merger and without any action on the part of the holders
thereof, cease to be outstanding, be canceled and retired and cease to exist,
and each holder of a certificate representing any such American Common Shares
shall thereafter cease to have any rights with respect to such American Common
Shares, except the right to receive for each of his/her American Common Shares,
upon the surrender of the certificate therefor in accordance with Section 4.2,
the number of Marwich Common Shares specified above. The ratio of American
Common Shares per share of Marwich Common Shares is referred to as the “Common
Exchange Ratio.”
The
Common Exchange Ratio shall be appropriately adjusted to reflect any stock
split, reverse stock split, stock dividend or other similar change in the Common
and/or Preferred Stock of Marwich and/or American occurring on or prior to
the
Closing Date.
(b) Each
share of Preferred Stock of American (collectively, the “American Preferred
Shares”) issued and 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 automatically into the right to receive one (1) Marwich
Common Share. All American Preferred Shares to be converted into Marwich Common
Shares pursuant to this Section 4.1 shall, by virtue of the Merger and without
any action on the part of the holders thereof, cease to be outstanding, be
canceled and retired and cease to exist, and each holder of a certificate
representing any such American Preferred Shares shall thereafter cease to have
any rights with respect to such American Preferred Shares, except the right
to
receive for each of his/her American Preferred Shares, upon the surrender of
the
certificate therefor in accordance with Section 4.2, the number of Marwich
Preferred Shares specified above. The ratio of American Preferred Shares per
share of Marwich Preferred Shares is referred to as the “Preferred Exchange
Ratio.” The Preferred Exchange Ratio shall be appropriately adjusted to reflect
any stock split, reverse stock split, stock dividend or other similar change
in
the Common and/or Preferred Stock of Marwich and/or American occurring on or
prior to the Closing Date.
(c)
At the Effective Time, each warrant issued by
American to purchase shares of American Preferred Shares (each, an “American
Preferred Warrant”) which is outstanding and unexercised immediately prior
therto, whether vested of unvested, shall cease to represent a right to acquire
shares of American Preferred Shares and shall be assumed and shall be converted
into a warrant to acquire, on the same terms and conditions as were applicable
to the original American Preferred Warrant, that number of Marwich Common
Shares, as applicable, determined by multiplying the number of shares of
American Preferred Shares, as applicable, subject to such American Preferred
Warrant immediately prior to the Effective Time by the Preferred Exchange Ratio,
rounded down to the nearest whole share of American Preferred Stock, at a price
pre share (rounded up to the nearest one-hundredth of a cent) equal to the
per
share exercise price specified in such American Preferred Warrant divided by
the
Preferred Exchange Ratio.
(d)
At the Effective Time, each warrant issued by
American to purchase shares of American Common Stock (each, an
“American Common Warrant”) which is outstanding and unexercised immediately
prior thereto, whether vested or unvested, shall cease to represent a right
to
acquire shares of American Common Stock and shall be assumed and shall be
converted into a warrant to acquire, on the same terms and conditions as were
applicable to the original American Common Warrant, that number of Marwich
Common Shares determined by multiplying the number of shares of American Common
Stock subject to such American Common Warrant immediately prior to the Effective
Time by the Common Exchange Ratio, rounded down to the nearest whole share
of
American Common Stock, at a price per share (rounded up to the nearest
one-hundredth of a cent) equal to the per share exercise price specified in
such
American Common Warrant divided by the Common Exchange Ratio.
(e) All
shares of American owned by Marwich shall automatically cease to be outstanding,
shall be canceled and retired and shall cease to exist.
(f) All
shares of Marwich owned by American shall automatically cease to be outstanding,
shall be canceled and retired and shall cease to exist.
(g) Except
as
set forth in subsection (f) above, each stock certificate representing any
shares of Marwich shall continue to represent ownership of such shares of
capital stock of the Surviving Corporation.
4.2. Payment
for Shares in the Merger.
The
manner of making payment for American Common Shares and American Preferred
Shares (collectively, “American Shares”) in the Merger shall be as
follows:
(a) On
or
prior to the Closing Date, Marwich shall make available to Corporation
Stock Transfer (the “Exchange Agent”) for the benefit of the holders of
American Shares, a sufficient number of certificates representing the Marwich
Common Shares and Marwich Preferred Shares (collectively, the “Marwich Shares”)
required to effect the delivery of the aggregate consideration in Marwich Shares
and cash for the Fractional Securities Fund
(as
defined in Section 4.3) required to be issued pursuant to Section 4.1
(collectively, the “Share Consideration” and the certificates representing the
Marwich Shares comprising such aggregate Share Consideration being referred
to
hereinafter as the “Stock Merger Exchange Fund”). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Marwich Shares contemplated
to
be issued pursuant to Section 4.1 and effect the sales provided for in Section
4.3 out of the Stock Merger Exchange Fund. The Stock Merger Exchange Fund shall
not be used for any other purpose than as set forth herein.
(b) Promptly
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding American Shares (the “Certificates”) (i) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates for payment therefor. Upon surrender
of Certificates for cancellation to the Exchange Agent, together with such
letter of transmittal duly executed and any other required documents, the holder
of such Certificates shall be entitled to receive for each of American Shares
represented by such Certificates the Share Consideration, without interest,
and
the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, such Certificates shall represent solely the right to receive
the
Share Consideration and any cash in lieu of fractional Marwich Shares as
contemplated by Section 4.3 with respect to each of the American Shares
represented thereby.
(c) No
dividends or other distributions that are declared after the Effective Time
on
Marwich Shares and payable to the holders of record thereof after the Effective
Time will be paid to persons entitled by reason of the Merger to receive Marwich
Shares until such persons surrender
their Certificates as provided above. Upon such surrender, there shall be paid
to the person in whose name the Marwich Shares are issued any dividends or
other
distributions having a record date after the Effective Time and payable with
respect to such Marwich Shares between the Effective Time and the time of such
surrender. After such surrender there shall be paid to the person in whose
name
the Marwich Shares are issued any dividends or other distributions on such
Marwich Shares which shall have a record date after the Effective Time. In
no
event shall the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.
(d) If
any
certificate representing Marwich Shares is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered,
it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer
or
other taxes required by reason of the issuance of certificates for such Marwich
Shares in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
(e) Notwithstanding
the foregoing, neither the Exchange Agent nor any of the Parties shall be liable
to a holder of American Shares for any Marwich Shares or dividends thereon,
or,
in accordance with Section 4.3, cash in lieu of fractional Marwich Shares,
delivered to a public official pursuant to applicable escheat law. The Exchange
Agent shall not be entitled to vote or exercise
any rights of ownership with respect to the Marwich Shares held by it from
time
to time hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such Marwich Shares for the
account of the persons entitled thereto.
(f) Subject
to applicable law, any portion of the Stock Merger Exchange Fund and the
Fractional Securities Fund (as defined in Section 4.3) which remains unclaimed
by the former stockholders of American for one (1) year after the Effective
Time
shall be delivered to Marwich, upon demand of Marwich, and any former
stockholder of American shall thereafter look only to Marwich for payment of
their applicable claim for the Share Consideration for their American
Shares.
4.3. Cash
For Fractional Marwich Shares.
No
fractional Marwich Shares shall be issued in the Merger. Each holder of Marwich
Shares shall be entitled to receive in lieu of any fractional Marwich Shares
to
which such holder otherwise would have been entitled pursuant to Section 4.2
(after taking into account all Marwich Shares then held of record by such
holder) a cash payment in an amount equal to the product of (i) the fractional
interest of a Marwich Share to which such holder otherwise would have been
entitled and (ii) the fair market value of one (1) Marwich Share as determined
by Marwich’s Board of Directors in good faith (the cash comprising such
aggregate payments in lieu of fractional Marwich Shares being hereinafter
referred to as the “Fractional Securities Fund”).
4.4
Dissenting
Shares.
(a)
Notwithstanding anything in this Agreement to the contrary, in the event that
the applicable requirements of Sections 92A.380-92A.400 of the NCL have been
satisfied, shares of American which were outstanding on the date for the
determination of shareholders entitled to vote on the Merger and (i) which
were
not voted in favor of the Merger or consented thereto in writing (if such action
is taken by written consent), (ii) the holders of which have demanded that
the
Company purchase such shares at their fair market value in accordance with
Sections 92A.400-440 of the NCL and (iii) have submitted such shares for
endorsement in accordance with Section 92A.440 of the NCL and have not otherwise
failed to perfect or shall not have effectively withdrawn or lost their rights
to purchase for cash under the NCL (the "American Dissenting Shares") shall
not
be converted into Marwich Common Shares, but, instead, the holders thereof
shall
be entitled to have their shares purchased by the Company for cash at the fair
market value of such American Dissenting Shares as agreed upon or determined
in
accordance with the provisions of Section 92A.460 et seq. of the NCL; provided,
however, that if any such holder shall have failed to perfect or shall have
effectively withdrawn or lost his, her or its right to payment under the NCL,
such holder's shares of American Stock shall thereupon be deemed to have been
converted, at the Effective Time of the Merger, into the Marwich Common Shares
set forth in Section 4.1 hereof, without any interest thereon. American shall
give Marwich prompt notice of any demands pursuant to Section 92A.380 et seq.
of
the NCL received by American, withdrawals of such demands and any other
instruments served pursuant to the NCL and received by
American.
(b)
Notwithstanding anything in this Agreement to the contrary, in the event that
the applicable requirements of Sections 7-113-202-204 of the CCAA have been
satisfied, shares of Marwich which were outstanding on the date for the
determination of shareholders entitled to vote on the Merger and (i) which
were
not voted in favor of the Merger or consented thereto in writing (if such action
is taken by written consent), (ii) the holders of which have demanded that
Marwich purchase such shares at their fair market value in accordance with
Sections 0-000-000 of the CCAA and (iii) have submitted such shares for
endorsement in accordance with Section 0-000-000 or 205 of the CCAA and have
not
otherwise failed to perfect or shall not have effectively withdrawn or lost
their rights to purchase for cash under the CCAA (the "Marwich Dissenting
Shares") shall not remain outstanding, but, instead, the holders thereof shall
be entitled to have their shares purchased by Marwich for cash at the fair
market value of such Marwich Dissenting Shares as agreed upon or determined
in
accordance with the provisions of Section 0-000-000 et seq. of the CCAA;
provided, however, that if any such holder shall have failed to perfect or
shall
have effectively withdrawn or lost his, her or its right to payment under the
CCAA, such holder's shares of Marwich Common shall thereupon remain issued
and
outstanding. Marwich shall give American (i) prompt notice of any demands
pursuant to Section 0-000-000 et seq. of the CCAA received by Marwich,
withdrawals of such demands and any other instruments served pursuant to
the
CCAA and
received by Marwich and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands under Section 0-000-000 and 209 of the
CCAA.
Marwich
shall not, except with the prior written consent of American, make any payment
with
respect to any such demands for appraisal or offer to settle or settle any
such
demands.
4.5. Transfer
of Shares Prior to the Effective Time.
No
transfers of American Shares shall be made on the stock transfer books of
American after the close of business on the day immediately prior to the date
of
the Effective Time.
ARTICLE
V
Representations
and Warranties
5.1. Representations
and Warranties of Marwich.
Marwich
hereby represents and warrants to American that the statements contained in
this
Section 5.1 are true and correct, except to the extent set forth on the
disclosure schedule previously delivered by Marwich to American (the “Marwich
Disclosure Schedule”). The Marwich Disclosure Schedule shall be initialed by the
Parties and shall be arranged in sections and paragraphs corresponding to the
letter and numbered paragraphs contained in this Section 5.1.
(a) Organization;
Capitalization.
Marwich
is a corporation duly organized, validly existing and in good standing under
the
laws of the state of its incorporation and has all necessary power, legal
capacity and authority (i) to conduct its business in the manner in which its
business is currently being conducted and to own and use its assets in the
manner in which its assets are currently being utilized, (ii) is duly qualified
or licensed to do business as a foreign corporation, in good standing in every
jurisdiction in which the ownership and use of its property or the conduct
of
its business requires such qualification, except where the failure to so qualify
could not, individually or in the aggregate, reasonably be expected to have
a
material adverse affect; and (iii) has all requisite power and authority to
execute and deliver this Agreement and the other Documents to which Marwich
is a
party and perform its obligations hereunder and thereunder, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Documents to which Marwich is a party. Marwich has
heretofore delivered to American complete and correct copies of the
Organizational Documents of Marwich as presently in effect. “Documents” shall
mean and any documents, agreements or certificates contemplated by the
Transaction.
(b) Capitalization.
The
authorized capital stock of Marwich consists of 100,000,000 shares of Common
Stock, no par value per share, 3,785,664 shares of which are issued and
outstanding, and 1,000,000 shares of Preferred Stock, $.01 par value per share,
no shares of which are issued and outstanding. Except as set forth herein,
(i)
there are no equity securities of Marwich authorized, issued or outstanding,
(ii) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued equity securities of Marwich,
obligating Marwich to issue, transfer or sell or cause to be issued, transferred
or sold any equity securities of, Marwich or securities convertible into or
exchangeable or exercisable for such equity securities, or obligating Marwich
to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) there are no
outstanding contractual obligations of Marwich to repurchase, redeem or
otherwise acquire any equity securities of Marwich or any Person or to provide
funds to make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person. All outstanding shares of Marwich Stock have
been duly authorized, validly issued and are fully paid and nonassessable.
All
securities of Marwich have been issued in compliance with state and federal
securities laws. There are no voting trusts or other agreements or
understandings with respect to the voting of the equity securities of Marwich.
No legend or other reference to any purported Encumbrances appears upon any
certificate representing equity securities of Marwich. Marwich’s assets do not
include any capital stock of, or any other equity interest in, or securities
convertible into or exchangeable for any capital stock or other equity interest
in, any person, or any direct or indirect equity or ownership interest in any
other business. “Person” shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or other entity
or organization.
(c) Power
and Authority.
Marwich
has the power and authority to execute, deliver, and perform this Agreement
and
the other agreements and instruments to be executed and delivered by them in
connection with the transactions contemplated hereby, and Marwich has taken
all
necessary action to authorize the execution and delivery of this Agreement
and
such other agreements and instruments and the consummation of the transactions
contemplated hereby. This Agreement is, and the other agreements and instruments
to be executed and delivered by Marwich in connection with the transactions
contemplated hereby, when such other agreements and instruments are executed
and
delivered, shall be, the valid and legally binding obligations of Marwich
enforceable against it in accordance with their respective terms.
(d) No
Conflict.
Neither
the execution and delivery of this Agreement and the other agreements and
instruments to be executed and delivered in connection with the transactions
contemplated hereby, nor the consummation of the transactions contemplated
hereby, will violate or conflict with: (a) any U.S. Federal, state, or local
law, regulation, ordinance, zoning requirement, governmental restriction, order,
judgment or decree applicable to Marwich; (b) any provision of any charter,
bylaw or other governing or organizational instrument or agreement of Marwich;
or (c) any mortgage, indenture, license, instrument, trust, contract, agreement,
or other commitment or arrangement to which Marwich is a party or by which
it is
bound.
(e) SEC
Filings; Financial Statements.
Marwich
has filed or furnished, as applicable, with the Securities and Exchange
Commission (the “SEC”) each report, registration statement and definitive proxy
statement required to be filed by Marwich with the SEC between October 1, 2004
and the date of this Agreement (collectively, the “Marwich SEC Documents”). Each
of Marwich SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be);
and
(ii) none of Marwich SEC Documents at the time of filing contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The consolidated
financial statements contained in Marwich SEC Documents: (i) complied as to
form
in all material respects with the then applicable accounting requirements and
with the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with GAAP throughout the periods covered, except
as
may be indicated in the notes to such financial statements and (in the case
of
unaudited statements) as permitted by Form 10-Q or Form 10-QSB, as applicable,
and except that unaudited financial statements may not contain footnotes and
are
subject to year-end audit adjustments; and (iii) fairly presented the
consolidated financial position of Marwich and its subsidiaries as of the
respective dates thereof and the consolidated results of operations of Marwich
and its subsidiaries for the period covered thereby.
(f) No
Undisclosed Liabilities.
Marwich
has no material Liabilities, except (a) as reflected or reserved against on the
most recent balance sheet included in the most recent Form 10-KSB or Form
10-QSB, as applicable, filed by Marwich and (b) current liabilities incurred
since the date of the most recent balance sheet included in the most recent
Form
10-KSB or Form 10-QSB, as applicable, filed by Marwich in the ordinary course
of
business, which will as of the Closing not exceed $5,000. The reserves reflected
in the Financial Statements are adequate, appropriate and reasonable and have
been calculated in a consistent manner.
(g) Books
and Records.
The
books and records of Marwich are complete and correct in all material respects
and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. True
and
complete copies of all available minute books and all stock record books of
Marwich have heretofore been made available to the Buyer.
(h) Trading
of Securities.
Marwich’s common stock has been approved by the NASD for trading on the
Over-the-Counter Bulletin Board and there has not been any stop order suspending
the trading of Marwich’s common stock or the initiation of any proceedings for
that purpose.
(i) Absence
of Certain Changes.
Since
October 13, 2004, Marwich has conducted its business only in the normal and
ordinary course in a manner consistent with past practice and there has not
been
any:
(i) change
in
Marwich’s authorized or issued equity securities; grant of any option or right
to purchase equity securities of Marwich; issuance of any security convertible
into or exchangeable or exercisable for such equity securities; grant of any
registration rights; purchase, redemption, retirement, or other acquisition
by
Marwich of any equity securities; or declaration or payment of any dividend
or
other distribution or payment in respect of equity securities, other than the
issuance of shares to Pride Equities, Inc., the increase in the authorized
capital stock approved by Marwich’s stockholders on November 30, 2004, and the
300% stock dividend declared on June 2, 2006;
(ii) amendment
to Marwich’s articles or certificate of incorporation and bylaws other than an
amendment to increase the authorized capital stock, which was filed with the
Colorado Secretary of State on December 9, 2004;
(iii) adoption
of, or increase in the payments to or benefits under, any bonus, deferred
compensation, incentive compensation, stock purchase, stock option, stock
appreciation or other stock-based incentive, employment (including offer
letters), consulting, severance, change in control or termination pay,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program,
agreement or arrangement, and each other “employee benefit plan” (within the
meaning of Section 3(3) of ERISA), whether formal or informal, written or oral
and whether legally binding or not, that is sponsored, maintained or contributed
to or was sponsored, maintained or contributed to at any time by
Marwich;
(iv) change
in
the accounting methods or practices used by Marwich; or any new election or
change in any existing election relating to any taxes, settlement of any claim
or assessment relating to any taxes, consent to any claim or assessment relating
to any taxes, or waiver of the statute of limitations for any such claim or
assessment;
(v) write-down
or write-off as uncollectible any notes or accounts receivable;
(vi) disposal
or lapse of any Intellectual Property or the rights to use any Intellectual
Property, or disposal of or disclosure to any Person other than employees of
Marwich and representatives of Marwich of any trade secret;
(vii) granting
of any general increase in the compensation of officers or employees (including
any such increase pursuant to any bonus, pension, profit sharing or other plan
or commitment) or any increase in the compensation payable or to become payable
to any officer or employee;
(viii) agreement,
whether oral or written, by Marwich to do any of the foregoing.
(j) Required
Government Consents, Filings, etc.
Except
as have been or, prior to the Closing, will be obtained, no approval,
authorization, certification, consent, variance, permission, license, or permit
to or from, or notice, filing, or recording to or with, any U.S. Federal, state,
or local governmental authorities is necessary for the execution and delivery
of
this Agreement and the other agreements and instruments to be executed and
delivered by Marwich in connection with the transactions contemplated hereby,
or
the consummation by Marwich of the transactions contemplated
hereby.
(k) Other
Required Consents, Filings, etc.
Except
as have been or, prior to the Closing, will be obtained, no approval,
authorization, consent, permission, or waiver to or from, or notice, filing,
or
recording to or with, any person is necessary for the execution and delivery
of
this Agreement and the other agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby by Marwich,
or
the consummation by Marwich of the transactions contemplated
hereby.
(l) Title
to Assets.
Marwich
has good and marketable title to all of its assets, free and clear of any claims
or Encumbrances. “Encumbrance” means any mortgage, charge (whether fixed or
floating), security interest, pledge, right of first refusal, lien (including
any unpaid vendor’s lien), option, hypothecation, title retention or conditional
sale agreement, lease, option, restriction as to transfer or possession, or
subordination to any right of any other person.
(m) Intellectual
Property. Marwich
has no Intellectual Property. The term “Intellectual Property” includes all
patents and patent applications, trademarks, service marks, and trademark or
service xxxx registrations and applications, trade names, logos, designs, domain
names, web sites, slogans and general intangibles of like nature, together
with
all goodwill relating to the foregoing, copyrights, copyright registrations,
renewals and applications, software, databases, technology, trade secrets and
other confidential information, know-how, proprietary processes, formulae,
algorithms, models and methodologies, drawings, specifications, plans,
proposals, financing and marketing plans, advertiser, customer and supplier
lists and all other information relating to advertisers, customers and suppliers
(whether or not reduced to writing), licenses, agreements and all other
proprietary rights, which relate to Marwich’s business.
(n) Compliance
with Rules.
(i) Marwich
at all times has been and is currently in compliance with all Rules applicable
to Marwich and/or its business, except where such failure to comply would not
have a material adverse effect on Marwich or its operations. “Rule” means any
law, statute, rule, regulation, order, court decision, judgment or decree of
any
U.S. Federal, state, territorial, provincial or municipal authority.
(ii) Marwich
is in material compliance with, and have obtained all Permits and other
authorizations relating to Marwich which are required by any Rule, which has
been enacted to the date of this Agreement, except as would not have a material
adverse effect on Marwich or its operations. No governmental proceeding is
pending or threatened to cancel, amend, modify or fail to renew any such Permit.
“Permit” includes any approval, authorization, concession, grant, certificate of
convenience and necessity, qualification, consent, franchise, license, security
clearance, easement, order or other permit issued or granted by any governmental
entity.
(iii) Marwich
is not currently in material violation of any environmental or safety laws
nor
has Marwich received any notice of any current non-compliance therewith. There
is no civil, criminal or administrative action, suit, demand, claim, hearing,
notice, investigation or proceeding pending or threatened against Marwich
relating in any way to environmental and safety laws.
(o) Tax
Matters.
Marwich
has filed or caused to be filed all tax returns required to be filed pertaining
to Marwich. All such tax returns were correct and complete in all respects.
All
taxes owed by Marwich pertaining to Marwich, its business or its assets (whether
or not shown on any tax return) have been paid. Marwich is not the beneficiary
of any extension of time within which to file any tax return. No claim has
ever
been made by an authority in a jurisdiction where Marwich does not file tax
returns that Marwich is or may be subject to taxation by that jurisdiction.
There are no claims or Encumbrances on any of Marwich’s assets that arose in
connection with any failure (or alleged failure) to pay any tax.
(p) Contracts.
Except
as would not have a material adverse effect on Marwich or its operations, there
exists no event of default or occurrence, condition or act on the part of
Marwich or, to the best knowledge of Marwich, on the part of any other party
to
any contract to which Marwich is a party, which constitutes or would constitute
(with or without notice or lapse of time or both) a breach of or default under
any of such contracts, or cause or permit acceleration of any obligation of
Marwich or any other party. There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any amounts paid or payable
to
Marwich under any contract with any person having the contractual or statutory
right to demand or require such renegotiation and no such person has made
written demand for such renegotiation.
(q) Litigation.
Except
as would not have a material adverse effect on Marwich or its operations, there
is no legal, administrative or other action, claim, proceeding or governmental
investigation, domestic or foreign (“Litigation”), pending or threatened against
Marwich relating to Marwich, its business or its assets, or that challenges
or
reviews the execution, delivery or performance of this Agreement by Marwich
or
of the consummation of the transactions contemplated hereby, or that seeks
to
enjoin or obtain damages in respect of the consummation of any of the
transactions contemplated hereby. Marwich is not a party to, and is not bound
by, any order or any ruling or award of any other person that has resulted
in or
could reasonably be expected to result in, individually or in the aggregate,
a
material adverse effect on Marwich or which could reasonably be expected to
materially adversely affect the consummation of the transactions contemplated
hereby.
(r) Employees.
Marwich
currently has no employees, consultants or independent contractors other than
Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxxx. No amounts are due or owed to any previous
or current Marwich employee, consultant or independent contractor. There are
no
oral employment agreements, consulting agreements or other compensation
agreements currently in effect between Marwich and any person.
(s) Contracts.
Marwich
has no material contracts, commitments, arrangements, or understandings relating
to its business, operations, financial condition, prospects or otherwise. For
purposes of this Section 2.19, “material” means payment or performance of a
contract, commitment, arrangement or understanding, which is expected to involve
payments, individually or in the aggregate, in excess of $500.00.
(t) Broker’s
or Finder’s Fees.
Marwich
has not authorized any person to act as broker or finder or in any other similar
capacity in connection with the transactions contemplated by this Agreement.
(u) Disclosure.
No
representation, warranty, or statement made by Marwich in this Agreement or
in
any document or certificate furnished or to be furnished to American pursuant
to
this Agreement contains or will contain any untrue statement or omits or will
omit to state any fact necessary to make the statements contained herein or
therein not misleading. Marwich has disclosed to American all facts known or
reasonably available to Marwich that are material to the financial condition,
operation, or prospects of Marwich, its business and/or its assets.
5.2. Representations
and Warranties of American.
American
hereby represents and warrants to Marwich that the statements contained in
this
Section 5.2 are true and correct, except to the extent set forth on the
disclosure schedule previously delivered by American to Marwich (the “American
Disclosure Schedule”). The American Disclosure Schedule shall be initialed by
the Parties and shall be arranged in sections and paragraphs corresponding
to
the letter and numbered paragraphs contained in this Section 5.2.
(a) Corporate
Organization and Qualification.
American is a corporation duly organized, validly existing and in good standing
under the laws of Nevada and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where
failure to so qualify or be in good standing as a foreign corporation would
not
have a Material Adverse Effect (as defined in Section 9.10). American has all
requisite power and authority (corporate or otherwise) to own its properties
and
to carry on its business as it is now being conducted. American has heretofore
made available to Marwich complete and correct copies of its Articles of
Incorporation and By-Laws.
(b) Capitalization.
The
authorized capital stock of American consists of (i) 200,000,000 shares of
Common Stock, of which 74,600,000 shares were issued and outstanding on
June 23, 2006; and (ii) 25,000,000 shares of Preferred Stock, of which 5,000,000
shares of Series A Convertible Preferred Stock were issued and outstanding
on
June 23, 2006. All of the outstanding shares of capital stock of American have
been duly authorized and validly issued and are fully paid and nonassessable.
American has no outstanding stock appreciation rights, phantom stock or similar
rights. Except for Warrants exercisable for 800,000 shares of American Common
Stock and 200,000 shares of American Common Stock issuable pursuant to an option
agreement, there are no outstanding or authorized options, warrants, calls,
rights (including preemptive rights), commitments or any other agreements of
any
character which American is a party to, or may be bound by, requiring it to
issue, transfer, grant, sell, purchase, redeem or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock of American.
There are not as of the date hereof any stockholder agreements, voting trusts
or
other agreements or understandings to which American is a party or to which
it
is bound relating to the voting of any shares of the capital stock of American.
The American’s assets do not include any capital stock of, or any other equity
interest in, or securities convertible into or exchangeable for any capital
stock or other equity interest in, any person, or any direct or indirect equity
or ownership interest in any other business.
(c) Authority
Relative to this Agreement.
The
Board of Directors of American has declared the Merger advisable and American
has the requisite corporate power and authority to approve, authorize, execute
and deliver this Agreement and to consummate the transactions contemplated
hereby (subject to the approval of the Merger by the stockholders of American
in
accordance with the NCL). This Agreement and the consummation by American of
the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of American and no other corporate proceedings on the part
of
American are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the approval of the Merger by
the
stockholders of American in accordance with the NCL). This Agreement has been
duly and validly executed and delivered by American, and, assuming this
Agreement constitutes the valid and binding agreement of Marwich, constitutes
the valid and binding agreement of American, enforceable against American in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to
or affecting creditors’ rights and to general principles of equity.
(d) Present
Compliance with Obligations and Laws.
American is not: (i) in violation of its Articles of Incorporation or By-Laws;
(ii) in default in the performance of any obligation, agreement or condition
of
any debt instrument which (with or without the passage of time or the giving
of
notice, or both) affords to any person the right to accelerate any indebtedness
or terminate any right; (iii) in default under or breach of (with or without
the
passage of time or the giving of notice) any other contract to which it is
a
party or by which it or its assets are bound; or (iv) in violation of any law,
regulation, administrative order or judicial order, decree or judgment (domestic
or foreign) applicable to it or its business or assets, except where any
violation, default or breach under items (ii), (iii), or (iv) would not,
individually or in the aggregate, have a Material Adverse Effect.
(e) Consents
and Approvals, No Violation.
Neither
the execution and delivery of this Agreement nor the consummation by American
of
the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of its Articles of Incorporation (or other similar
documents) or By-Laws (or other similar documents); (ii) require any consent,
approval, authorization or permit of, or registration or filing with or
notification to, any governmental or regulatory authority, except (A) pursuant
to the applicable requirements of the Securities Act of 1933, and the rules
and
regulations promulgated thereunder, (B) the filing of the Certificate of Merger
pursuant to the NCL and the CCAA, and appropriate documents with the relevant
authorities of other states in which American is authorized to do business,
(C)
as may be required by any applicable state securities or takeover laws, (D)
such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, as set forth in Section 5.2(e) of the American Disclosure Schedule,
or (E) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the aggregate
have
a Material Adverse Effect or adversely affect the ability of American to
consummate the transactions contemplated hereby; (iii) result in a violation
or
breach of, or constitute (with or without notice or lapse of time or both)
a
default (or give rise to any right of termination, cancellation or acceleration
or lien or other charge or encumbrance) under any of the terms, conditions
or
provisions of any indenture, note, license, lease, agreement or other instrument
or obligation to which American or any of its assets may be bound, except for
such violations, breaches and defaults (or rights of termination, cancellation
or acceleration or lien or other charge or encumbrance) as to which requisite
waivers or consents have been obtained or which, in the aggregate, would not
have a Material Adverse Effect or adversely affect the ability of American
to
consummate the transactions contemplated hereby; (iv) cause the suspension
or
revocation of any authorizations, consents, approvals or licenses currently
in
effect which would have a Material Adverse Effect; or (v) assuming the consents,
approvals, authorizations or permits and filings or notifications referred
to in
this Section 5.2(e) are duly and timely obtained or made and the approval of
the
Merger and the approval of this Agreement by American’s stockholders has been
obtained, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to American or to any of its assets, except for violations
which would not in the aggregate have a Material Adverse Effect or adversely
affect the ability of American to consummate the transactions contemplated
hereby.
(f) Litigation.
There
are no actions, suits, investigations or proceedings pending or, to the
knowledge of American, threatened against American that, alone or in the
aggregate, (i) if adversely determined, would be reasonably likely to result
in
any claims against or obligations or liabilities of American that, alone or
in
the aggregate, would have a Material Adverse Effect, (ii) question the validity
of this Agreement or any action to be taken by American in connection with
the
consummation of the transactions contemplated hereby or (iii) would prevent
American from performing its obligations under this Agreement, or (iv) would
delay, limit or enjoin the transactions contemplated by this
Agreement.
(g) Financial
Statements.
(i) The
balance sheet dated as of March 31, 2006 and the related statements of
income, stockholders’ equity (deficit) and cash flows (including the related
notes thereto) of American previously delivered to Marwich (collectively,
“American Financial Statements”) have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the financial position
of American as of their respective dates, and the results of its operations
and
cash flows for the periods presented therein (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments). Since
its inception, there has not been any material change, or any application or
request for any material change, by American in accounting principles, methods
or policies for financial accounting purposes that have affected or will affect
the American Financial Statements or for tax purposes.
(ii) The
books
of account of American are complete and correct in all material respects and
have been maintained on a materially consistent basis.
(h) No
Liabilities; Absence of Certain Changes or Events.
American does not have any material indebtedness, obligations or liabilities
of
any kind (whether accrued, absolute, contingent or otherwise, and whether due
or
to become due or asserted or unasserted), and, to the knowledge of American,
there is no basis for the assertion of any claim or liability of any nature
against American, except for liabilities (i) which are fully reflected in,
reserved against or otherwise described in the American Financial Statements,
or
(ii) which have been incurred after [insert date of balance sheet] in the
ordinary course of business. The business of American has been carried on only
in the ordinary and usual course and there has not been any material adverse
change in its business, properties, operations, financial condition or prospects
and no event has occurred and no fact or set of circumstances has arisen which
has resulted in or could reasonably be expected to result in a Material Adverse
Effect with respect to American. To the knowledge of American, no material
customer or supplier of American intends to or has threatened to alter
materially its relationship with American.
(i) Brokers
and Finders.
American has not employed any investment banker, broker, finder, consultant
or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder’s or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
(j) Taxes.
(i) American
has timely filed all Federal, state, local and foreign returns, information
statements and reports relating to Taxes (“Returns”) required by applicable Tax
law to be filed by American, except for any such failures to file that could
not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the American. All Taxes owed by American to a taxing
authority, or for which American is liable, whether to a taxing authority or
to
other persons or entities under a Significant Tax Agreement, as of the date
hereof, have been paid and, as of the Effective Time, will have been paid,
except for any such failure to pay that could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on American.
American has made (A) accruals for Taxes on the American Financial Statements
and (B) with respect to periods after the date of the American Financial
Statements, provisions on a periodic basis consistent with past practice on
the
American’s books and records or financial statements, in each case which are
adequate to cover any Tax liability of American determined in accordance with
generally accepted accounting principles through the date of the American
Financial Statements or the date of the provision, as the case may be, except
where failures to make such accruals or provisions could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
American.
(ii) Except
to
the extent that any such failure to withhold could not reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect on American,
American has withheld with respect to its employees all Federal and state income
taxes, FICA, FUTA and other Taxes required to be withheld.
(iii) There
is
no Tax deficiency outstanding, proposed or assessed against American, except
any
such deficiency that, if paid, could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on American.
American has not executed or requested any waiver of any statute of limitations
on or extending the period for the assessment or collection of any Federal
or
material state Tax.
(iv) No
Federal or state Tax audit or other examination of American is presently in
progress, nor has American been notified in writing of any request for such
Federal or material state Tax audit or other examination, except in all cases
for Tax audits and other examinations which could not reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect on
American.
(v) American
has not filed any consent agreement under Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by
American.
(vi) American
is not a party to (A) any agreement providing for the allocation or payment
of
Tax liabilities or payment for Tax benefits with respect to a consolidated,
combined or unitary Return which Return includes or included American or (B)
any
Significant Tax Agreement other than any Significant Tax Agreement described
in
(A).
(vii) American
has never been a member of an affiliated group of corporations within the
meaning of Sections 1504 of the Code.
(viii) American
has not agreed to make nor is it required to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or
otherwise.
(ix) American
is not, and has not at any time been, a “United States Real Property Holding
Corporation” within the meaning of Section 897(c)(2) of the Code.
(k) Employee
Benefits.
(i) Except
for liabilities reflected in the accruals and reserves on the American Financial
Statements, none of American or any current or former Plan Affiliate of American
has at any time maintained, sponsored, adopted, made contributions to, obligated
itself or had any liability with respect to: any “employee pension benefit plan”
(as such term is defined in Section 3(2) of ERISA); any “employee welfare
benefit plan” (as such term is defined in Section 3(l) of ERISA); any personnel
or payroll policy (including vacation time, holiday pay, service awards, moving
expense reimbursement programs and sick leave) or material fringe benefit;
any
severance agreement or plan or any medical, hospital, dental, life or disability
plan; any excess benefit plan, bonus or incentive plan (including any equity
or
equity-based plan), tuition reimbursement, automobile use, club membership,
parental or family leave, top hat plan or deferred compensation plan, salary
reduction agreement, change-of-control agreement, employment agreement,
consulting agreement, collective bargaining agreement, indemnification
agreement, or retainer agreement; or any other benefit plan, policy, program,
arrangement, agreement or contract, whether or not written or terminated, with
respect to any employee, former employee, director, independent contractor,
or
any beneficiary or dependent thereof (all such plans, policies, programs,
arrangements, agreements and contracts, whether or not set forth in Section
5.2(k) of the American Disclosure Schedule are referred to in this Agreement as
“American Scheduled Plans”).
(ii) American
has delivered to Marwich a complete and accurate copy of each written American
Scheduled Plan, together with, if applicable, a copy of audited financial
statements, actuarial reports and Form 5500 Annual Reports (including required
schedules), if any, for the three (3) most recent plan years, the most recent
IRS determination letter or IRS recognition of exemption; each other material
letter, ruling or notice issued by a governmental body with respect to each
such
plan, a copy of each trust agreement, insurance contract or other funding
vehicle, if any, with respect to each such plan, the most recent PBGC Form
I
with respect to each such plan, if any, the current summary plan description
or
summary of material modifications with respect to each such plan, Form 5310
and
any related filings with the Pension Benefit Guaranty Corporation (“PBGC”) and
with respect to the last six Plan years for each Plan subject to Title IV of
ERISA, general notification to employees of their rights under Code Section
4980B and form of letter(s) distributed upon the occurrence of a qualifying
event described in Code Section 4980B, in the case of a Plan that is a “group
health plan” as defined in Code Section 162(i), and a copy or description of
each other general explanation or written or oral communication which describes
a material term of each such plan that has not previously been disclosed to
Marwich pursuant to this Section. Section 5.2(k) of the American Disclosure
Schedule contains a description of the material terms of any unwritten American
Scheduled Plan as comprehended to the Closing Date. There are no negotiations,
demands or proposals which are pending or threatened which concern matters
now
covered, or that would be covered, by the foregoing types of Plans.
(iii) Except
as
could not reasonably give rise, whether individually or in the aggregate, to
material liability to American:
(1) each
American Scheduled Plan (A) has been and currently complies in form and in
operation in all material respects with all applicable requirements of ERISA
and
the Code, and any other legal requirements; (B) has been and is operated and
administered in compliance with its terms (except as otherwise required by
law);
(C) has been and is operated in compliance with applicable legal requirements
in
such a manner as to qualify, where appropriate, for both Federal and state
purposes, for income tax exclusions to its participants, tax-exempt income
for
its funding vehicle, and the allowance of deductions and credits with respect
to
contributions thereto; and (D) where appropriate, has received a favorable
determination letter or recognition of exemption from the Internal Revenue
Service.
(2) with
respect to each American Scheduled Plan, there are no claims or other
proceedings pending or threatened with respect to the assets thereof (other
than
routine claims for benefits), and there are no facts which could reasonably
give
rise to any liability, claim or other proceeding against any American Scheduled
Plan, any fiduciary or plan administrator or other person dealing with any
American Scheduled Plan or the assets of any such plan.
(3) with
respect to each American Scheduled Plan, no person: (A) has entered into any
“prohibited transaction,” as such term is defined in ERISA or the Code and the
regulations, administrative rulings and case law thereunder; (B) has breached
a
fiduciary obligation or violated Sections 402, 403, 405, 503, 510 or 511 of
ERISA; (C) has any liability for any failure to act or comply in connection
with
the administration or investment of the assets of such plans; or (D) engaged
in
any transaction or otherwise acted with respect to such plans in such a manner
which could subject American, or any fiduciary or plan administrator or any
other person dealing with any such plan, to liability under Sections 409 or
502
of ERISA or Sections 4972 or 4976 through 4980B of the Code.
(4) each
American Scheduled Plan may be amended, terminated, modified or otherwise
revised by American, on and after the Closing, without further liability to
American, including any withdrawal liability under ERISA for any multi-employer
plan. For purposes of this paragraph, termination of a American Scheduled Plan
includes the requirement of a cessation of liability for claims incurred after
the termination date regardless of any status having been obtained or
achieved.
(5) none
of
American or any current or former American Plan Affiliate has at any time
participated in, made contributions to or had any other liability with respect
to any American Scheduled Plan which is a “multi-employer plan” as defined in
Section 4001 of ERISA, a “multi-employer plan” within the meaning of Section
3(37) of ERISA, a “multiple employer plan” within the meaning of Section 413(c)
of the Code or a “multiple employer welfare arrangement” within the meaning of
Section 3(40) of ERISA.
(6) none
of
American or any current or former American Plan Affiliate has at any time
maintained, contributed to or obligated itself or otherwise had any liability
with respect to any funded or unfunded employee welfare plan, whether or not
terminated, which provides medical, health, life insurance or other welfare-type
benefits for current or future retirees or current or future former employees,
their spouses or dependents or any other persons (except for limited continued
medical benefit coverage for former employees, their spouses and other
dependents as required to be provided under Section 4980B of the Code and Part
6
of Subtitle B of Title I of ERISA and the accompanying proposed regulations
or
state continuation coverage laws (“COBRA”)).
(7) no
American Scheduled Plan has incurred an “accumulated funding deficiency” as such
term is defined in Section 302 of ERISA or Section 412 of the Code, whether
or
not waived, or has posted or is required to provide security under Code Section
401(a)(29) or Section 307 of ERISA; no event has occurred which has or could
result in the imposition of a lien under Code Section 412 or Section 302 of
ERISA, nor has any liability to the PBGC (except for payment of premiums) been
incurred or reportable event within the meaning of Section 4043 of ERISA
occurred with respect to any such plan; and the PBGC has not threatened or
taken
steps to institute the termination of any such plan;
(8) the
requirements of COBRA have been satisfied with respect to each American
Scheduled Plan.
(9) all
contributions, payments, premiums, expenses, reimbursements or accruals for
all
periods ending prior to or as of the Closing for each American Scheduled Plan
(including periods from the first day of the then current plan year to the
Closing) shall have been made or accrued on American financial statements (in
accordance with generally applied accounting principal, including FAS 87, 88,
106 and 112) and each such plan otherwise does not have nor could have any
unfunded liability (including benefit liabilities as defined in Section
4001(a)(16) of ERISA) which is not reflected on American financial statements.
Any contribution made or accrued with respect to any American Scheduled Plan
is
fully deductible by American.
(10) neither
American nor a Plan Affiliate has any liability (A) for the termination of
any
single employer plan under Section ERISA §4062 of ERISA or any multiple employer
plan under Section ERISA §4063 of ERISA, (B) for any lien imposed under Section
§302(f) of ERISA or Section 412(n) of the Code, (C) for any interest payments
required under Section §302(e) of ERISA or Section 412(m) of the Code, (D) for
any excise tax imposed by Code Sections 4971, 4972, 4977, or 4979, or (E) for
any minimum funding contributions under Section §302(c)(11) of ERISA or Code
Section 412(c)(11).
(11) all
American Scheduled Plans to the extent applicable, are in compliance with
Section 1862(b)(1)(A)(i) of the Social Security Act and neither American nor
any
Plan Affiliate has any liability for any excise tax imposed by Code Section
5000.
(12) with
respect to any American Scheduled Plan which is a welfare plan as defined in
Section 3(l) of ERISA: (A) each such welfare plan which is intended to meet
the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements; (B) there is no disqualified benefit (as such
term
is defined in Code Section 4976(b)) which would subject American or any Plan
Affiliate to a tax under Code Section 4976(a); and (C) each and every such
welfare plan which is a group health plan (as such term is defined in Code
Section 162(i)(3)) complies and in each and every case has complied with the
applicable requirements of Code Section 4980B, Title XXII of the Public Health
Service Act and the applicable provisions of the Social Security
Act.
(iv) The
consummation of the transactions contemplated by this Agreement will not (A)
entitle any current or former employee of American to severance pay,
unemployment compensation or any other payment, (B) accelerate the time of
payment or vesting of any payment, forgive any indebtedness, or increase the
amount of any compensation due to any such employee or former employee, (C)
result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available, or (D) give
rise to the payment of any amount that would not be deductible pursuant to
the
terms of Section 28OG of the Code.
(v) As
used
in this Agreement, with respect to any person (“First Person”) the term “Plan
Affiliate” shall mean each other person or entity with whom the First Person
constitutes or has constituted all or part of a controlled group, or which
would
be treated or has been treated with the First Person as under common control
or
whose employees would be treated or have been treated as employed by the First
Person, under Section 414 of the Code and any regulations, administrative
rulings and case law interpreting the foregoing.
(l) American
Intangible Property.
(i) Section
5.2(l) of the American Disclosure Schedule sets forth a true, correct and
complete list of each patent, trademark, trade name, service xxxx, brand xxxx,
brand name, industrial design and copyright owned or used in business by
American, as well as all registrations thereof and pending applications
therefor, and each license or other contract relating thereto (collectively
with
any other intellectual property owned or used in the business by American,
and
all of the goodwill associated therewith, the “American Intangible Property”)
and indicates, with respect to each item of American Intangible Property listed
thereon, the owner thereof and, if applicable, the name of the licensor and
licensee thereof and the terms of such license or other contract relating
thereto. Except as set forth in Section 5.2(l) of the American Disclosure
Schedule, each of the foregoing is owned free and clear of any and all liens,
mortgages, pledges, security interests, levies, charges, options or any other
encumbrances of any kind whatsoever and American has not received any notice
to
the effect that any other entity has any claim of ownership with respect
thereto. To the knowledge of American, the use of the foregoing by American
does
not conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including any
intellectual property right, patent, trademark, trade name, service xxxx, brand
xxxx, brand name, computer program, industrial design, copyright or any pending
application therefor of any other person or entity. Except as set forth in
Section 5.2(l) of the American Disclosure Schedule, no claims have been made,
and American has not received any notice, nor does American have any knowledge
of any basis for any claims, that any of the foregoing is invalid, conflicts
with the asserted rights of other entities, or has been used or enforced (or
has
failed to be used or enforced) in a manner that would result in the abandonment,
cancellation or unenforceability of any item of the American Intangible
Property.
(ii) American
possesses all American Intangible Property, including all know-how, formulae
and
other proprietary and trade rights and trade secrets, necessary for the conduct
of its business as now conducted. American has not taken or failed to take
any
action that would result in the forfeiture or relinquishment of any such
American Intangible Property used in the conduct of its business as now
conducted.
(m) Certain
Contracts.
Section
5.2(m) of the American Disclosure Schedule lists all of the following contracts,
agreements and commitments, whether oral or written, to which American is a
party or by which it or any of its properties
or
assets may be bound (the “American Listed Agreements”): (i) all employment or
other contracts with any officer or director of American (or any company which
is controlled by any such individual) and employment agreements with any
employee which are not terminable at will without any payment upon termination;
(ii) union, guild or collective bargaining contracts relating to employees
of
American; (iii) instruments relating to credit or money borrowed (including
any
indentures, guarantees, loan agreements, sale and leaseback agreements, or
purchase money obligations incurred in connection with the acquisition of
property other than in the ordinary course of business); (iv) underwriting,
purchase or similar agreements entered into in connection with American’s
currently existing indebtedness; (v) agreements for acquisitions or dispositions
(by merger, purchase, liquidation or sale of assets or stock or otherwise)
of
material assets entered into within the last three (3) years, as to which the
transactions contemplated have been consummated or are currently pending; (vi)
joint venture, strategic alliance or similar partnership agreements; (vii)
material licensing, merchandising and distribution contracts; (viii) contracts
granting any person or other entity registration rights; (ix) guarantees,
suretyships, indemnification and contribution agreements; (x) material
agreements regarding the use, license or other disposition of intellectual
property; (xi) franchise agreements; (xii) agreements regarding the purchase
of
supplies, equipment, materials or components greater than $5,000 or one year
in
duration; (xiii) agreements for the sale of products greater than $5,000 or
one
year in duration; (xiv) agreements restricting competition; (xv) contracts
with
any governmental or quasi-governmental entity; (xvi) existing material leases
of
real or personal property and material contracts to purchase or sell real
property; and (xvii) other contracts which materially affect its business,
properties or assets, and are not otherwise disclosed in this Agreement or
which
were entered into other than in the ordinary course of business. Except as
set
forth on Section 5.2(m) of the American Disclosure Schedule, a true and complete
copy (including all amendments) of each American Listed Agreement, or a summary
of each oral contract, has been made available to American. American (i) is
not
in breach or default in any material respect under any of American Listed
Agreements and (ii) does not have any knowledge of any other material breach
or
default under any American Listed Agreement by any other party thereto or by
any
other person or entity bound thereby, except in the case of (i) or (ii) breaches
or defaults which would not, individually or in the aggregate, have a Material
Adverse Effect with respect to American.
(n) Environmental
Matters.
(i)
American and its operations, assets and properties are in material compliance
with all Environmental Laws (as defined in Section 5.1(n)); (ii) there are
no
judicial or administrative actions, suits, proceedings or investigations pending
or, to the knowledge of American, threatened against American alleging the
violation of any Environmental Law and American has not received notice from
any
governmental body or person alleging any violation of or liability under any
Environmental Laws, in either case which could reasonably be expected to result
in material Environmental Costs and Liabilities (as defined in Section 5.1(n));
(iii) to the knowledge of American, there are no facts, circumstances or
conditions relating to, arising from, associated with or attributable to
American or any real property currently or previously owned, operated or leased
by American that could reasonably be expected to result in material
Environmental Costs and Liabilities; and (iv) to the knowledge of American,
American has not ever generated, transported, treated, stored, handled or
disposed of any Hazardous Material (as defined in Section 5.1(n)) at any site,
location or facility in a manner that could create any material Environmental
Costs and Liabilities under any Environmental Law; and no such Hazardous
Material has been or is currently present on, in, at or under any real property
owned or used by American in a manner that could create any Environmental Costs
and Liabilities (including containment by means of any underground or
aboveground storage tank).
(o) Title
to Properties, Liens; Condition of Properties.
(i) American
has good and marketable title to, or a valid leasehold interest in, the real
and
personal property, located on its premises or shown on its most recent balance
sheet or acquired after the date thereof. None of the property owned or used
by
American is subject to any mortgage, pledge, deed of trust, lien (other than
for
taxes not yet due and payable), conditional sale agreement, security title,
encumbrance, or other adverse claim or interest of any kind. There has not
been
prior to Closing any sale, lease, or any other disposition or distribution
by
American of any of its material assets or properties, now owned or hereafter
acquired, except transactions in the ordinary and regular course of
business.
(ii) American
has delivered to Marwich true, correct and complete copies of all material
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
related to any of the real or personal property used by American in its
business. All such leases are valid, binding and enforceable in accordance
with
their terms against the parties thereto, and each such lease is subsisting
and
no default exists under any thereof. American has not received notice that
any
party to any such lease intends to cancel, terminate or refuse to renew the
same
or to exercise or decline to exercise any option or any right
thereunder.
(iii) All
buildings, machinery and equipment of American are in good condition, working
order and repair, normal wear and tear and excepted, and adequate for the uses
to which they are being put, have been well maintained, conform in all material
respects with all applicable ordinances, regulations and zoning, safety or
other
laws, and to the knowledge of American do not encroach on property of others.
As
of the date hereof, American has not received written notice of or otherwise
become aware of any pending or threatened change of any such ordinance,
regulation or zoning, safety or other law and there is no pending or, to
American’s knowledge, threatened condemnation of any such property.
(p) Inventories.
All
inventories of finished goods and work in process of American are as of the
date
hereof, and those existing at the Closing will be in all material respects,
good
and merchantable and of a quality and quantity salable in the ordinary course
of
the business of American at prevailing market prices without discounts, except
for inventory reserved against in accordance with GAAP. All inventory of raw
materials are of a quality and quantity usable in the ordinary course of
business. American’s purchase commitments for raw materials and parts are not in
excess of normal requirements, and none are at prices materially in excess
of
current market prices and no inventory items have been sold or disposed of
except through sales in the ordinary course of business and consistent with
past
practice at prices no less than prevailing market prices, and in no event less
than cost.
(q) Accounts
Receivable and Payable.
American’s accounts receivable have arisen in bona-fide arms length transactions
in the ordinary course of business and to American’s knowledge represent valid
and binding obligations of the account debtors and will be collected in the
ordinary course of business. To the extent required under GAAP, American’s
accounts payable reflect all amounts owed by American in respect of trade
accounts due and other.
(r) Labor
and Employee Relations.
(i) American
is not a party to any employment, consulting, non-competition, severance, golden
parachute, indemnification agreement or any other agreement providing for
payments or benefits or the acceleration of payments or benefits upon the change
of control of American (including any contract to which American is a party
involving employees of American).
(ii) (A)
None
of the employees of American is represented in his or her capacity as an
employee of such company by any labor organization; (B) American has not
recognized any labor organization nor has any labor organization been elected
as
the collective bargaining agent of any of its employees, nor has American signed
any collective bargaining agreement or union contract recognizing any labor
organization as the bargaining agent of any of its employees; and (C) to the
knowledge of American there is no active or current union organization activity
involving any of its employees, nor has there ever been union representation
involving any of its employees.
(iii) There
are
no complaints against American pending or, to the knowledge of American, overtly
threatened before the National Labor Relations Board or any similar foreign,
state or local labor agencies, or before the Equal Employment Opportunity
Commission or any similar foreign, state or local agency, or before any other
governmental agency or entity by or on behalf of any employee or former employee
of American.
(iv) American
does not have any material contingent liability for severance pay or similar
items. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or at law.
(v) American
has provided to American a description of all written and other material
employment policies under which American has operated.
(vi) American
is in compliance with all Federal, foreign (as applicable), and state laws
regarding employment practices, including laws relating to workers’ safety,
sexual harassment or discrimination, except where the failure to so be in
compliance, individually or in the aggregate, would not have a Material Adverse
Effect.
(vii) To
the
knowledge of American, no executive, key employee or group of employees has
any
plans to terminate his or her employment with American.
(s) Permits.
American holds all licenses, permits, registrations, orders, authorizations,
approvals and franchises which are required to permit it to conduct its business
as presently conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises would not,
individually or in the aggregate, have a Material Adverse Effect. All such
material licenses, permits, registrations, orders, authorizations, approvals
and
franchises are listed in Section 5.2(s) of the American Disclosure Schedule
and
are now, and will be after the Closing, valid and in full force and effect,
and
American shall have full benefit of the same, except where the failure to have
the benefit of any such license, permit, registration, order, authorization,
approval or franchise would not, individually or in the aggregate, have a
Material Adverse Effect. American has not received any notification of any
asserted present failure (or past and unremedied failure) by it to have obtained
any such license, permit, registration, order, authorization, approval or
franchise.
(t) Warranty
or Other Claims.
No
product manufactured, sold, leased or delivered by American is subject to any
guaranty, warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale or lease, which have been provided in
writing to American. There are no existing or, to the knowledge of American,
threatened claims or any facts upon which a claim could be based, against
American for services or merchandise which are defective or fail to meet any
service or product warranties which would, individually or in the aggregate,
have a Material Adverse Effect. No claim has been asserted against American
for
renegotiation or price redetermination of any business transaction, and American
has no knowledge of any facts upon which any such claim could be
based.
(u) Insurance.
Section
5.2(u) of the American Disclosure Schedule lists all insurance policies in
force
covering its business, properties and assets and all outstanding claims against
such policies. All such policies are currently in effect, and American has
not
received notice of cancellation or termination of, or material premium increase
with respect to, of any such insurance in effect on the date hereof or within
the past (2) years. All such policies are issued by an insurer that is financial
sound and reputable and provide adequate insurance coverage for the assets
and
operations of American for all risks customarily insured against by a person
or
entity engaged in a similar business as American.
(v) Corporate
Books and Records.
The
minute books and stock ledgers of American, copies of which have been made
available for inspection by American, have been kept in due course, accurately
record all material action taken by American’s stockholders, board of directors
and committees thereof and are complete in all material respects.
(w) Transactions
with Affiliates.
Except
transactions between the American and Marwich, American is not a party to any
affiliate transactions through the date of this Agreement and has no existing
commitments to engage in any affiliate transactions in the future.
(x) Disclosure.
No
representation or warranty by American in this Agreement and no statement
contained in the American Disclosure Schedule or any certificate delivered
by
American to American pursuant to this Agreement, contains any untrue statement
of a material fact or omits any material fact necessary to make the statements
herein or therein not misleading when taken together in light of the
circumstances in which they were made.
ARTICLE
VI
Additional
Covenants and Agreements
6.1. Conduct
of Business.
(a) Marwich
covenants and agrees that, during the period from the date of this Agreement
to
the Effective Time (unless the
Parties shall otherwise agree in writing and except as otherwise contemplated
by
this Agreement), Marwich will conduct its operations according to its ordinary
and usual course of business consistent with past practice.
(b) Without
limiting the generality of the foregoing, and except as otherwise permitted
in
this Agreement, prior to the Effective Time, Marwich will not, without the
prior
written consent of American:
(i) issue,
deliver, sell, dispose of, pledge or otherwise encumber, or authorize or propose
the issuance, sale, disposition or pledge or other encumbrance of (A) any
additional shares of capital stock of any class, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any
shares of capital stock, or any rights, warrants, options, calls, commitments
or
any other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable for,
or
evidencing the right to subscribe for, any shares of capital stock, or (B)
any
other securities in respect of, in lieu of, or in substitution for, shares
outstanding on the date hereof;
(ii) redeem,
purchase or otherwise acquire, or offer to redeem, purchase or otherwise
acquire, any of its outstanding securities;
(iii) split,
combine, subdivide or reclassify any shares of its capital stock or declare,
set
aside for payment or pay any dividend, or make any other actual, constrictive
or
deemed distribution in respect of any shares of its capital stock or otherwise
make any payments to stockholders in their capacity as such;
(iv) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization (other than the Merger
as provided for herein);
(v) adopt
any
amendments to its Articles of Incorporation or By-Laws;
(vi) make
any
acquisition, by means of merger, consolidation or otherwise, or disposition,
of
assets (except in the ordinary course of business) or securities;
(vii) other
than in the ordinary course of business consistent with past practice, incur
any
indebtedness for borrowed money or guarantee any such indebtedness or make
any
loans, advances or capital contributions to, or investments in, any other
person, other than
the
Merger;
(viii) make
or
revoke any material Tax election, settle or compromise any material Federal,
state, local or foreign Tax liability or change (or make a request to any taxing
authority to change) any material aspect of its method of accounting for Tax
purposes (except for Tax elections which are consistent with prior such
elections (in past years));
(ix) incur
any
liability for Taxes other than in the ordinary course of business;
or
(x) authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing.
(c) Between
the date hereof and the Effective Time, except as contemplated herein, neither
Party shall (without the prior written consent of the other Party) (A) grant
any
increases in the compensation of any of their directors or officers and, except
in the ordinary course of business and in accordance with its customary past
practices, grant increases to any key employees; (B) pay or agree to pay any
pension, retirement allowance or other employee benefit not required or
contemplated by any of the existing benefit, severance, pension or employment
plans, agreements or arrangements as in effect on the date hereof to any such
director, officer or key employee, whether past or present; (C) enter into
any
new or amend any existing employment or severance agreement with any such
director, officer or key employee; or (D) except as may be required to comply
with applicable law, become obligated under any new pension plan, welfare plan,
multi-employer plan, employee benefit plan, severance plan, benefit arrangement,
or similar
plan or arrangement, which was not in existence on the date hereof, or amend
any
such plan or arrangement in existence on the date hereof if such amendment
would
have the effect of enhancing any benefits thereunder.
6.2. Proxy
Statement. Subject
to receipt from American of the requisite audited and unaudited financial
statements to be included in the Proxy Statement, as promptly as reasonably
practicable after the execution of this Agreement, American and Marwich shall
prepare, and Marwich shall file with the SEC in preliminary form, the Proxy
Statement. The Proxy Statement shall related to the approval by the Marwich’s
stockholders of the matters listed in Exhibit
A
to this
Agreement, in addition to such other matters as Marwich may deem appropriate.
Each of American and Marwich shall use its reasonable best efforts to respond
as
promptly as reasonably practicable to any comments of the SEC with respect
thereto. Marwich shall use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders as promptly as reasonably practicable
after filing with or, if necessary, clearance from the SEC. American shall
furnish all information as may be required to comply in all material respects
with all applicable requirements of the Exchange Act and the rules and
regulations promulgated thereunder. If at any time prior to receipt of Marwich
Stockholder Approval, any information relating to American, any Subsidiary,
or
Marwich, or any of their respective Affiliates, directors or officers, should
be
discovered by American, any Subsidiary, or Marwich which should be set forth
in
an amendment or supplement to the Proxy Statement, so that either such document
would not include any misstatement of material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and
an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by applicable Legal
Requirement or the SEC, disseminated to the stockholders of Marwich. Marwich
shall notify American promptly of the receipt of any comments from the SEC
or
the staff of the SEC for amendments or supplements to the Proxy Statement or
for
additional information and shall supply American with copies of (i) all
correspondence between Marwich or any of its Representatives, on the one hand,
and the SEC or staff of the SEC, on the other hand, with respect to the Proxy
Statement or the Merger.
6.3. Approval
of American’s Stockholders; Disclosure Document.
(a) American
shall take all actions necessary in accordance with the NCL and its Articles
of
Incorporation and Bylaws to duly call, give notice of, convene and hold a
meeting of its stockholders or solicit the written consent from American’s
stockholders (including, if necessary, a separate meeting or written consent
of
holders of American Preferred Stock) as promptly as practicable to consider
and
vote upon the adoption and approval of this Agreement and the Transactions.
American will, through American’s Board of Directors, recommend to its
stockholders approval of such matters. American shall promptly solicit the
votes
or the written consents of the stockholders approving this Agreement and the
Merger. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Disclosure Statement, American or Marwich, as
the
case may be, will promptly inform the other of such occurrence and cooperate
in
preparing and mailing to stockholders such amendment or supplement. American
shall comply with the requirements of the NCL and the rules and regulations
promulgated thereunder in connection with the solicitation of votes to approve
this Agreement and the Merger from the stockholders.
(b) Since
Marwich will issue the shares of Marwich Stock in the Merger in reliance on
the
exemption from registration under Regulation D of the Securities Act, each
stockholder of American will complete a certification regarding investment
intent with respect to holding the Marwich Stock and other matters related
to
demonstrating full compliance with Regulation D, and no stockholder of American
will (i) offer or sell any such shares of Marwich Common Stock except in
compliance with Rule 144 promulgated under the Securities Act or (ii) otherwise
dispose of any such shares except in compliance with the Securities Act and
the
rules and regulations thereunder. Each stockholder of American, by virtue of
the
Merger and the conversion into Marwich Stock of American Stock held by such
stockholder, shall be bound by this Section 6.3(b).
(c) Promptly
after the execution of this Agreement, Marwich and American shall jointly
prepare a Disclosure Statement so that the issuance of Marwich Stock in the
Merger shall be exempt from registration under Regulation D of the Securities
Act. The Disclosure Statement shall constitute a disclosure document for the
offer and issuance of the shares of Marwich Stock to be received by the
stockholders of American in the Merger. Each of Marwich and American agrees
to
provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the
Disclosure Statement, or in any amendments or supplements thereto, and to cause
its counsel and auditors to cooperate with the other’s counsel and auditors in
the preparation thereof. American will promptly advise Marwich and Marwich
will
promptly advise American in writing if at any time prior to the Effective Time
of Merger either American or Marwich shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the Disclosure
Statement in order to make the statements contained or incorporated by reference
therein not misleading or compliant with applicable law. Anything to the
contrary contained herein notwithstanding, American shall not include in the
Disclosure Statement, or in any other materials delivered to the stockholders,
any information with respect to Marwich or its affiliates or associates, the
form and content of which information shall not have been approved by Marwich
prior to such inclusion.
(d) Marwich
shall use all commercially reasonable efforts to comply with the securities
and
blue sky laws of all jurisdictions that are applicable to the issuance of
Marwich Stock pursuant hereto. American shall use all commercially reasonable
efforts to assist Marwich as may be necessary to comply with the securities
and
blue sky laws of all jurisdictions that are applicable in connection with the
issuance of Marwich Stock pursuant hereto.
6.4. Best
Efforts.
The
Parties shall: (i) promptly make their respective filings and thereafter make
any other required submissions under all applicable laws with respect to the
Merger and the other transactions contemplated hereby; and (ii) use their best
efforts to promptly take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement
as
soon as practicable.
6.5. Maintenance
of Insurance.
Between
the date hereof and through the Effective Time each of American and Marwich
will
maintain in full force and effect all of their presently existing policies
of
insurance or insurance comparable to the coverage afforded by such
policies.
6.6. Representations
and Warranties.
Neither
Marwich, on the one hand, nor American, on the other, will take any action
that
would cause any of their respective representations and warranties set forth
in
Section 5.1 or 5.2, as the case may be, not to be true and correct in all
material respects at and as of the Effective Time.
6.7. Notification
of Certain Matters.
Each of
American and Marwich shall give prompt notice to the other of (a) any notice
of,
or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by it subsequent to
the
date of this Agreement and prior to the Effective Time, under any contract
material to its financial condition, properties, businesses or results of
operations to which it is a party or is subject, (b) any notice or other
communication from any third party alleging that the consent of such third
party
is or may be required in connection with the transactions contemplated by this
Agreement, or (c) any material adverse change in their respective financial
condition, properties, businesses or results of operations, taken as a whole,
other than changes resulting from general economic conditions.
6.8. Tax-Free
Reorganization Treatment.
Prior
to the Effective Time, the Parties shall use their best efforts to cause the
Merger to be treated as a reorganization within the meaning of Section 368
of
the Code and shall not knowingly take or fail to take any action which action
or
failure to act would jeopardize the qualification of the Merger as a
reorganization within Section 368 of the Code.
6.9. Board
Seat.
Marwich
agrees to take all actions necessary so as to cause the individuals selected
by
American to be nominated and elected to the Board of Directors of Marwich and
to
be appointed as officers of Marwich as of the Closing.
ARTICLE
VII
Conditions
7.1. Conditions
to Each Party’s Obligations.
The
respective obligations of each Party to consummate the Merger are subject to
the
satisfaction or waiver by each of the Parties of the following
conditions:
(a) this
Agreement and the Merger and related matters shall have received the Requisite
Stockholder Approval;
and
(b) no
writ,
order, decree or injunction of a court of competent jurisdiction or governmental
entity shall have been entered against either Party which prohibits the
consummation of the Merger
and
related matters.
7.2. Conditions
to the Obligations of American.
The
obligations of American to consummate the Merger are subject to the fulfillment
at or prior to the Effective Time of the following conditions, any or all of
which may be waived in whole or in part by American to the extent permitted
by
applicable law:
(a) Marwich
shall have obtained all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
referred to in Section 5.1(e) that are reasonably deemed necessary by American,
upon advice of counsel, to provide for the continuation of all material
agreements and to consummate the Merger;
(b) the
representations and warranties of Marwich set forth in Section 5.1 shall be
true
and correct in all material respects (except for representations qualified
by
materiality or Material Adverse Effect which shall be correct in all respects)
as of the Effective Time, with the same force and effect as if made on and
as of
the Effective Time, except for representations and warranties made as of a
specific date, which shall be true and correct in all material respects (except
for representations qualified by materiality or Material Adverse Effect which
shall be correct in all respects) as of such specific date;
(c) Marwich
shall have performed or complied in all material respects with its agreements
and covenants required to be performed or complied with under this Agreement
as
of or prior to the Effective Time;
(d) no
action, suit or proceeding shall be pending or threatened before any
governmental entity or authority wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Marwich to own, operate or control any of
the
assets and operations of the Surviving Corporation following the Merger, and
no
such judgment, order, decree, stipulation or injunction shall be in
effect;
(e) from
the
date of this Agreement to the Effective Time, there shall not have been any
event or development which results in a Material Adverse Effect upon the
business of Marwich, nor shall there have occurred any event or development
which could reasonably be likely to result in a Material Adverse Effect upon
the
business of Marwich in the future;
and
(f) all
actions to be taken by Marwich in connection with the consummation of the
transactions contemplated hereby and all certificates, instruments and other
documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to American and its
counsel.
7.3. Conditions
to the Obligations of Marwich.
The
obligation of Marwich to consummate the Merger is subject to the fulfillment
at
or prior to the Effective Time of the following conditions, any or all of which
may be waived in whole or in part by Marwich to the extent permitted by
applicable law:
(a) American
shall have obtained all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
referred to in Section 5.2(e) that are reasonably deemed necessary by Marwich,
upon advice of counsel, to provide for the continuation of all material
agreements and to consummate the Merger;
(b) the
representations and warranties of American set forth in Section 5.2 shall be
true and correct in all material respects (except for representations qualified
by materiality or Material Adverse Effect which shall be correct in all
respects) as of the Effective Time, with the same force and effect as if made
on
and as of the Effective Time, except for representations and warranties made
as
of a specific date, which shall be true and correct in all material respects
(except for representations qualified by materiality or Material Adverse Effect
which shall be correct in all respects) as of such specific date;
(c) American
shall have performed or complied with in all material respects its agreements
and covenants required to be performed or complied with under this Agreement
as
of or prior to the Effective Time;
(d) no
action, suit or proceeding shall be pending or threatened before any
governmental entity or authority wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of Marwich to own, operate or control any of the
assets and operations of the Surviving Corporation following the Merger, and
no
such judgment, order, decree, stipulation or injunction shall be in
effect;
(e) from
the
date of this Agreement to the Effective Time, there shall not have been any
event or development which results in a Material Adverse Effect upon the
business of American, nor shall there have occurred any event or development
which could reasonably be likely to result in a Material Adverse Effect upon
the
business of American in the future; and
(f) all
actions to be taken by American in connection with the consummation of the
transactions contemplated hereby and all certificates, instruments and other
documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to Marwich and its
counsel.
ARTICLE
VIII
Termination
8.1. Termination
by Mutual Consent.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time, before or after gaining Requisite Stockholder Approval,
by
the mutual written consent of American and Marwich.
8.2. Termination
by Marwich.
This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of Marwich if:
(a) any
representation or warranty of American contained in this Agreement shall not
be
true in all material respects when made or, if a representation or warranty
relates to a particular date, shall not be true in all material respects as
of
such date (provided such breach is capable of being cured and has not been
cured
within five (5) business days following receipt by the breaching Party of notice
of the breach) or on and as of the Effective Time as if made on and as of the
Effective Time; or
(b) the
Merger is not submitted to American’s stockholders as contemplated by this
Agreement (provided that Marwich is not in material breach of the terms of
this
Agreement and this Agreement has not otherwise been terminated pursuant to
this
Article VIII).
8.3. Termination
by American.
This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of American if:
(a) any
representation or warranty of Marwich contained in this Agreement shall not
be
true in all material respects when made or, if a representation or warranty
relates to a particular date, shall not be true in all material respects as
of
such date (provided such breach is capable of being cured and has not been
cured
within five (5) business days following receipt by the breaching Party of notice
of the breach) or on and as of the Effective Time as if made on and as of the
Effective Time; or
(b) the
Merger is not submitted to Marwich’s stockholders as contemplated by this
Agreement (provided that American is not in material breach of the terms of
this
Agreement and this Agreement has not otherwise been terminated pursuant to
this
Article VIII).
8.4. Effect
of Termination.
In the
event of termination of this Agreement by either Party as provided in this
Article VIII, this Agreement shall forthwith become void and there shall be
no
liability or obligation on the part of the Parties or
their
respective affiliates, officers, directors or stockholders, except
(x) with
respect to the payment of expenses pursuant to Section 9.1 and (y) to the extent
that such termination results from the breach of a Party of any of its
representations or warranties, or any of its covenants or agreements, in each
case, as set forth in this Agreement.
ARTICLE
IX
Miscellaneous
and General
9.1. Payment
of Expenses.
Whether
or not the Merger shall be consummated, each Party shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and
the
consummation of the transactions contemplated hereby, provided that the
Surviving Corporation shall pay any and all property or transfer taxes imposed
on the Surviving Corporation.
9.2. Non-Survival
of Representations and Warranties.
The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement, except to the extent a breach
or such representation formed the basis for such termination (as provided in
Section 8.4).
9.3. Modification
or Amendment.
Subject
to the applicable provisions of the CGCL, at any time prior to the Effective
Time, the Parties may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of both Parties; provided,
however, that after the Requisite Stockholder Approval is obtained, no amendment
shall be made which changes the consideration payable in the
Merger or adversely affects the rights of American’s or Marwich’s stockholders
(as the case may be) hereunder without the approval of such
stockholders.
9.4. Waiver
of Conditions.
The
conditions to each of the Parties’ obligations to consummate the Merger are for
the sole benefit of such Party and may be waived by such Party in whole or
in
part to the extent permitted by applicable law.
9.5. Counterparts.
For the
convenience of the parties hereto, this Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
9.6. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California, without giving effect to the principles of conflicts of
law
thereof.
9.7. Entire
Agreement; Assignment.
This
Agreement (i) constitutes the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the Parties or any of them with
respect to the subject matter hereof, and (ii) shall not be assigned by
operation of law or otherwise.
9.8. Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each Party
hereto and their respective successors and assigns. Nothing in this Agreement,
express or implied, other than the right to receive the consideration payable
in
the Merger pursuant to Article IV hereof, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under
or by reason of this Agreement.
9.9. Certain
Definitions.
As used
herein:
(a) “ERISA”
means the Employment Retirement Income Security Act of 1974, as
amended.
(b) “Material
Adverse Effect” shall mean any adverse change in the properties, financial
condition, business or results of operations of Marwich or American, as the
case
may be, which is material to Marwich or American, as the case may
be.
(c) “Tax”
or
“Taxes” refers to any and all Federal, state, local and foreign, taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed
with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(d) “Significant
Tax Agreement” is any agreement to which any Party is a party under which such
Party could reasonably be expected to be liable to another party under such
agreement in an amount in excess of $10,000 in respect of Taxes payable by
such
other party to any taxing authority.
(e) “knowledge”
with respect to a Party hereto shall mean the actual knowledge of any of the
executive officers or directors of such Party.
(f) “including”
when used herein is not intended to be exclusive and means “including, without
limitation.”
9.10. Severability.
If any
term or other provision of this Agreement is invalid, illegal or unenforceable,
all other provisions of this Agreement shall remain in full force and effect
so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any Party.
9.11. Specific
Performance.
The
parties hereto acknowledge that irreparable damage would result if this
Agreement were not specifically enforced, and they therefore consent that
the rights
and obligations of the parties under this Agreement may be enforced by a decree
of specific performance issued by a court of competent jurisdiction. Such remedy
shall, however, not be exclusive and shall be in addition to any other remedies
which any Party may have under this Agreement or otherwise.
9.12. Recovery
of Attorney’s Fees.
In the
event of any litigation between the parties relating to this Agreement, the
prevailing party shall be entitled to recover its reasonable attorney’s
fees and costs (including court costs) from the non-prevailing party, provided
that if both parties prevail in part, the reasonable attorney’s fees and costs
shall be awarded by the court in such manner as it deems equitable to reflect
the relative amounts and merits of the parties’ claims.
9.13. Captions.
The
Article, Section and paragraph captions herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
[Signature
page follows.]
IN
WITNESS WHEREOF,
this
Agreement has been duly executed and delivered by the duly authorized officers
of the Parties hereto and shall be effective as of the date first written
above.
|
MARWICH
II, LTD.
By:
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Its:
Chief Executive Officer
|
|
|
AMERICAN
ETHANOL, INC.
By:
/s/ Xxxx A, McAfee
Name:
Xxxx A, McAfee
Its:
Chairman of the Board
|
Exhibit
A
Matters
for Consideration of Marwich Stockholders
1. Approval
of Agreement and Plan of Merger and the Merger
2. Approval
of change of corporate domicile from Colorado to Nevada
3. Approval
of amendment of Articles of Incorporation and Bylaws
5. Election
of persons designated by American to the Board of Directors of Marwich, which
election shall become effective as of the Effective Time.
