Exhibit 2.1
AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement (hereinafter the "Agreement") is entered into
effective as of this 9th day of June, 2004, by and among Gourmet Group, Inc., a
Nevada corporation (hereinafter "GG"); Drinks Americas, Inc. a Delaware
Corporation (hereinafter "DA"), and the stockholders of Drinks Americas, Inc.
(hereinafter the "DA's Stockholders"), all of whom are the present owners of all
the outstanding shares of common stock of DA.
RECITALS:
WHEREAS, the DA Stockholders own all of the issued and
outstanding shares of common stock of DA which comprises 200 shares ( the "DA
Shares"). GG desires to acquire all of the outstanding DA Shares solely in
exchange for restricted common stock of GG, making DA a wholly-owned subsidiary
of GG; and
WHEREAS, the DA Stockholders (as set forth on the attached
Exhibit "A" made a part hereof) desire to acquire common stock of GG in exchange
for the DA Shares, as more fully set forth herein.
WHEREAS, the parties desire this to be a tax free exchange as
described in the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for the mutual consideration set out herein,
and other good and valuable consideration, the receipt and legal sufficiency of
which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Share Exchange. The DA Stockholders are the present owners of all of
the issued and outstanding DA Shares. It is hereby agreed that all of the DA
Shares shall be acquired by GG in exchange solely for shares of GG restricted
common stock, $.001 par value, (the "GG Shares").
2. Delivery of Shares. GG and the DA Stockholders agree that on the
Closing Date or at the Closing as hereinafter defined, all outstanding DA Shares
shall be delivered to GG in exchange for GG Shares.
(a) The GG Shares will, subject to the conditions set forth herein,
on the Closing Date or at the Closing, be delivered to the DA Stockholders in
exchange for their DA Shares on the basis of 214,822 GG Shares for each one (1)
DA Share, which exchange ratio has taken into account the reduction in the
number of shares of GG's common stock that will be outstanding as a result of
the Result Split (as defined in Section 2(c) hereof) to be effected by GG prior
to Closing.
(b) At Closing, GG shall, subject to the conditions set forth
herein, issue a total of 42,964,382 GG Shares to the DA Stockholders in
accordance with Exhibit "A", which number of shares takes into account the
Reverse Split. Such GG Shares shall bear the following or similar restrictive
legend :
The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933, as
amended (the "Act") and may not be offered, sold, assigned,
pledged, hypothecated or otherwise transferred unless (1) they
are registered under the Act or (2) the holder has delivered
to the issuer an opinion of counsel, which opinion shall be
satisfactory to the issuer, to the effect that there is an
available exemption from registration under the Act and any
applicable state securities laws or that registration is
otherwise not required.
(c) DA's Stockholders have been advised by GG that GG does not
currently have sufficient shares of common stock authorized under its
Certificate of Incorporation to issue all of the GG Shares they are entitled to
receive under Section 2(b) hereof in exchange for their DA Shares as of the date
hereof. Prior to the Closing GG will take all action required, in compliance
with all applicable laws, to file an Amendment to its Articles of Incorporation
including such provisions as DA shall reasonably request, including (i) changing
its name to "Drinks Americas Holdings, Ltd.", or such other name selected by DA,
(ii) effecting a transitory merger changing its state of organization to the
State of Delaware, (iii) effecting a reverse stock split (the "Reverse Split")
whereby ten (10) shares of common stock of GG will be exchanged for one share of
common stock of GG outstanding prior to the Closing, and (iv) authorizing such
number of shares of GG common stock as required to make available for issuance
the number of shares required to be delivered to DA's Stockholders under Section
2(b) hereof (collectively, the "Charter Amendment").
3. Outstanding Securities. As of the Closing Date each of the following
shall occur:
(a) The shares of GG common stock previously issued and outstanding
prior to the Closing will remain outstanding, except that as a result of the
Reverse Split such number of shares shall not exceed an aggregate of 40,587,793
shares issuable or outstanding, not including the shares described in Section 18
hereof and the shares which may be issuable in connection with the Pre-Closing
Offering.
(b) One (1) DA Share issued and outstanding immediately prior to the
Closing Date shall be exchanged for 214,822 GG Shares, taking into account the
Reverse Split to be effected by GG prior to Closing, as the result of which the
ratio of GG Shares issued to Shareholders of DA to (i) the number of GG Shares
outstanding on the date hereof plus (ii) the number of shares issuable at the
Closing under Section 18 hereof shall be 88.00% to 12.00%. Thereafter, all such
DA Shares shall be deemed to be owned by GG. The holders of such certificates
previously evidencing the DA Shares outstanding immediately prior to the Closing
Date shall cease to have any rights with respect to such DA Shares except as
otherwise provided herein or by law.
(c) GG shall (i) file a registration statement with the Securities
and Exchange Commission (the "SEC") registering its shares under the Securities
Act of 1934 (the "1934 Act"), and (ii) file and disseminate an information
statement meeting the requirements of Schedule 14C of the SEC rules and any
other documents which would be required by such rules if GG were currently a
company fully registered under the 1934 Act.
4. Post-Acquisition Events. Upon Closing, the following shall be
accomplished:
(a) The resignation of the existing GG officers and directors and
the appointment of new officers and directors as described in Section 11(f)
hereof.
(b) GG shall promptly fulfill its responsibility to file a Current
Report on Form 8-K with the SEC as well as all reports, statements and other
documents which GG has agreed to prepare, file or distribute pursuant to Section
3(c) hereof.
5. Other Matters.
(a) Prior to Closing, there shall be no stock dividend, stock split,
recapitalization, or exchange of shares with respect to or rights issued in
respect of GG's capital stock after the date hereof, except for the Reverse
Split and the Pre-Closing Offering (as defined in Section 13(c) hereof, and
there shall be no dividends paid on GG's capital stock.
2
(b) Prior to Closing, GG shall have received all requisite Board of
Directors, stockholder and other approvals, if any, of the matters set forth
herein.
(c) GG agrees that it will cause its transfer agent, without
unnecessary delay, to transfer those outstanding GG shares of Common Stock that
are publicly resold pursuant to the resale provisions of Rule 144 of the
Securities Act of 1933, as amended.
(d) DA agrees that prior to the Closing it shall use its best
efforts to cause the members of Maximillian Mixers, LLC, a Delaware limited
liability company ("Mixers"), to transfer all their interests in Mixers to DA
(the "Mixers Transaction"), such that: (i) prior to Closing, Mixers will be a
100% subsidiary of DA (on a fully diluted basis, i.e., no warrants options or
conversion rights of any type related to Mixers will be outstanding); (ii) the
DA Financial Information, as defined in Section 8(c) hereof, will include Mixers
as a member of DA's consolidated group for financial statement purposes, as may
be required under GAAP, and Mixers assets and liabilities will be reflected on
DA's consolidated balance sheet to be delivered under Section 8(c); and (iii)
simultaneous with or immediately after the Closing, the members of Mixers will
be entitled to receive one share of GG common stock for each dollar of cash
capital they invested in Mixers, not to exceed 400,000 shares in the aggregate
(the "Mixers GG Shares"), which will constitute such members' only consideration
for their transfer of the membership interests of Mixers to DA. Notwithstanding
anything contained in this Agreement to the contrary, the Mixers GG Shares that
may be delivered hereunder are not included in and are in addition to the shares
of common stock of GG to be delivered to the DA shareholders under this
Agreement and all representations made by DA hereunder as to DA's capitalization
do not take into account shares of DA's common stock that may be issued or
required to be issued to members of Mixers in consideration for the transfer of
their membership interests in Mixers to DA. The fact that DA becomes obligated
after the date hereof to issue shares of its common stock to members of Mixers
as consideration for the Mixers Transaction will not be deemed a breach of any
representation made by DA hereunder, provided that DA becomes the sole owner of
all of the membership interests in Mixers on a fully diluted basis as
contemplated herein, and that any and all shares of DA's common stock issued or
required to be issued to holders of membership interests in Mixers are exchanged
for the Mixers GG Shares as contemplated herein.
6. Surrender and Issuance of Securities. On or as soon as practicable
after the Closing Date the DA Stockholders shall surrender for cancellation
certificates representing their DA Shares, against delivery of certificates
representing the GG Shares for which their DA Shares are to be exchanged at
Closing.
7. Representations of the DA Stockholders. The DA Stockholders hereby
severally, but not jointly, represent and warrant to the best of their knowledge
and belief as follows, which warranties and representations shall also be true
as of the Closing Date:
(a) Except as may be set forth in Exhibit "A" attached hereto and
made a part hereof, the DA Shares are free from claims, liens, or other
encumbrances, and the DA Stockholders have good and marketable title to, and the
unqualified right to transfer and dispose of, such DA Shares.
(b) The DA Stockholders have no present intent to sell or dispose of
the GG Shares and are under no binding obligation, formal commitment, or
existing plan to sell or otherwise dispose of the GG Shares.
(c) Each DA Stockholder has the power to enter into this Agreement
and to carry out his/her/its obligations hereunder. This Agreement has been duly
executed by each DA Stockholder, and constitutes the valid and binding
obligation of each DA Stockholder and is enforceable against each DA Stockholder
in accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting enforcement of creditors'
rights generally or by general principles of equity. Each DA Stockholder is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act of 1933, as amended ( the "Securities Act") and/or otherwise has
such knowledge and experience in investment and business matters that he/she/it
is capable of evaluating the merits and risks of an investment in the GG Shares.
3
(d) The best knowledge of each DA Stockholder, each representation
and warranty contained in Section 8 hereof is correct in all material respects.
8. Representations Regarding DA. DA hereby represents and warrants as
follows, each of which representations and warranties shall also be true as of
the Closing Date:
(a) As of the date hereof and after delivery to GG, the DA Shares
owned by the DA Stockholders do and will constitute, duly authorized, validly
and legally issued shares of DA, fully-paid and nonassessable.
(b) DA has the corporate power to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions described herein have been duly
authorized by all necessary corporate action, including being duly authorized by
the Board of Directors of DA and the Agreement has been duly executed by the DA
Stockholders. This Agreement and the consummation of the transactions described
herein constitute the binding obligation of DA, enforceable against DA in
accordance with its terms. The execution and performance of this Agreement will
not constitute a breach of any material agreement, indenture, mortgage, license
or other instrument or document to which DA is a party and will not violate any
judgment, decree, order, writ, or applicable rule, statute, or regulation of the
State of Delaware or any other applicable jurisdiction. The execution and
performance of this Agreement will not violate or conflict with any provision of
the Articles of Incorporation or By-laws of DA.
(c) Prior to the Closing, DA will deliver to GG true and complete
copies of its (i) consolidated audited financial statements for the years ended
December 31, 2002, December 31, 2003, and March 31, 2004 (which will constitute
the new last day of DA's fiscal year as a result of an election by DA to change
its fiscal year to April 1st to March 30th), (ii) unaudited consolidated
financial statements for the quarter ended June 30, 2004, (iii) Articles of
Incorporation, as amended, (iv) Bylaws, (v) shareholder list dated May 26, 2004,
(vi) copies of all Board of Directors and stockholder minutes and consents, and
(vii) an unaudited consolidated balance sheet as of June 30, 2004. As of their
respective dates, the documents referred to in (i) and (ii) (collectively, the
"DA Financial Information") will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The audited consolidated financial statements for 2002
and 2003 will be prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and will fairly present the financial position
of DA and its subsidiaries as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended. DA's
consolidated unaudited balance sheet as of June 30, 2004 will fairly present the
financial position of DA as of such date. DA has two subsidiaries as of the date
hereof and expects to have three on or before the Closing Date as a result of
the Mixers Transaction. DA and its subsidiaries have and on the Closing Date
will have no liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) which will not be properly reflected or adequately
reserved against in accordance with GAAP on the financial statements referred to
herein or are otherwise disclosed in the Financial Information.
(d) Except as set forth on Schedule 8(d), since January 1, 2004,
there have not been any material adverse changes in the financial condition of
DA or its subsidiaries. From the date hereof until the Closing Date, DA and its
subsidiaries shall not engage in any activity not in the ordinary course of
business other than activities in anticipation of and in furtherance of the
transactions described in this Agreement.
4
(e) Except as set forth on Schedule 8(e), neither DA nor its
subsidiaries, nor to the knowledge of DA, any 10% or greater shareholder of DA
or any related party or affiliate of DA, is a party to or the subject of any
pending material litigation, claims, or governmental investigation or
proceeding, and there are no lawsuits, claims, assessments, investigations, or
similar matters, to the best knowledge of DA, threatened or contemplated against
or affecting DA or any of its subsidiaries, its properties or the properties of
its subsidiaries, any of its 10% or greater shareholders, or any related party
or affiliate of DA.
(f) DA and its subsidiaries, are duly organized, validly existing
and in good standing under the laws of the jurisdictions of their respective
incorporation; and DA and its subsidiaries presently have and at Closing shall
have the corporate power to own property and to carry on their respective
business as then being conducted and shall be duly qualified to do business in
any jurisdiction where so required except where the failure to so qualify would
have no material negative impact.
(g) Except as set forth on Schedule 8(g), DA (and its subsidiaries
if required by applicable law) have filed (or, by the Closing Date, will have
filed) all income, excise, property and other tax, governmental and/or related
returns, forms, or reports (national, provincial, local or otherwise) required
by an applicable law, which are due or required to be filed by them prior to the
date hereof and has paid or, by the Closing Date will have paid or made adequate
provision in the DA Financial Information referred to in Section 9(c) hereof,
for the payment of all taxes, fees, or assessments which have or may become due
pursuant to such returns or pursuant to any assessments received. Except as set
forth in Schedule 8(g), neither DA nor any of its subsidiaries are delinquent or
obligated for any tax, penalty, interest, delinquency or charge and all such tax
returns are complete and accurate and disclose all taxes required to be paid by
the DA and its subsidiaries for the periods covered thereby and all taxes shown
to be due on such tax returns have been timely paid, other than with respect to
taxes being contested in good faith by DA or its subsidiaries and disclosed on
Schedule 8(g) attached hereto; (iii) neither DA nor any current or former
subsidiary of DA has waived or been requested to waive any statute of
limitations or similar provision applying in any jurisdiction in respect of
taxes; (iv) none of the tax returns referred to in this Section have been
examined by any appropriate national, state, local or foreign taxing authority
or the period for assessment of the taxes in respect of which such tax returns
were required to be filed has expired, and DA and its subsidiaries have filed
tax returns in the jurisdictions listed on Schedule 8(g) attached hereto; (v)
there is no action, suit, audit, claim or assessment pending, proposed or, to
the knowledge of DA, threatened in writing, and, to the knowledge of DA, there
is no investigation with respect to taxes of DA or its subsidiaries; (vi) all
deficiencies asserted or assessments made as a result of any examination of the
tax returns referred to in this Section, if any, have been paid in full or are
currently being contested in good faith by DA or the relevant subsidiary and
disclosed on Schedule 8(g); (vii) there are no liens for taxes upon the assets
of DA and its subsidiaries except liens relating to current taxes not yet due;
(viii) all taxes which DA and its subsidiaries are required by law to withhold
or to collect for payment have been duly withheld and collected, and have been
paid or accrued; (ix) except as described in this Agreement, there are no tax
rulings, requests for rulings, or closing agreements in other agreement relating
to DA or its subsidiaries which could affect DA's or any of its subsidiaries'
liability for taxes for any period after the Closing; and (x) the reserves for
taxes to be contained in the Financial Information and carried on the books of
DA are adequate to cover all tax liabilities as of the date of this Agreement.
(h) DA's authorized capital stock shall, immediately prior to
Closing and without taking into account any capital stock issued or required to
be issued in connection with the Mixers Transaction, consist of:(i) 200 shares
of common stock, $.001 par value, of which not more than 200 shares will be
issued and outstanding immediately prior to Closing. All outstanding shares of
capital stock of DA are validly issued, fully paid and nonassessable. Except
with respect to the Pre-Closing Offering and as set forth or Schedule 8(h), as
of the date of this Agreement there are not (and as of the Closing Date there
will not be) any existing options, calls, warrants, preemptive rights or
commitments of any character relating to the issued or unissued capital stock or
other securities of DA or its subsidiaries. Except as set forth as Schedule
8(h), neither DA nor its subsidiaries is as of the date of this Agreement, or
will be as of the Closing Date, a party to any oral or written employment,
consulting or severance agreement or any agreement similar to any of them.
5
(i) Except for its ownership of 100% of the issued and outstanding
common stock of Bebedes de C.A., a corporation organized in Costa Rica, and
Cohete, S.A., a corporation organized in Panama, DA does not own, directly or
indirectly, any of the capital stock or any other securities of any other
corporation or any equity, profit sharing, participation or other interest in
any corporation, partnership, joint venture or other entity.
(j) DA has disclosed in writing all events, conditions and facts
materially affecting its or its subsidiaries' business, financial condition or
results of operations.
(k) Neither DA nor its subsidiaries has breached, and there is no
pending or threatened claim that either of them has breached any of the terms or
conditions of any agreements, contracts or commitments to which either of them
is a party or by which their properties is bound. DA hereby represents that it
has disclosed to GG all relationships or dealings (with respect to itself and
its subsidiaries) with related parties or affiliates.
(l) All information regarding DA and its subsidiaries which is set
forth herein or has otherwise been provided by DA to GG is true and accurate in
all material respects.
(m) DA and its subsidiaries have conducted its business in
compliance with applicable laws and all filings required to be made by it with
the Federal government or agency or department thereof and the State of Delaware
or any applicable state, local, or foreign government or agency of any of them
to effect the transactions described herein have or will be made prior to
Closing.
(n) Except as noted on Exhibit "A" and as may result as a
consequence of the issuance of additional shares, or rights with respect
thereto, in the Mixers Transaction, the DA Stockholders listed on the attached
Exhibit "A" are the sole owners of record and beneficially own all of the issued
and outstanding DA Shares.
(o) DA has made its corporate financial records, minute books, and
other corporate documents and records available for review to present management
of GG prior to the Closing Date, during reasonable business hours and on
reasonable notice or has provided prior to the Closing Date accurate copies
thereof.
(p) DA has delivered the financial information listed on Schedule
8(p) to GG (the "Interim Financial Information"). The Interim Financial
Information fairly presents the financial position of DA as of the date hereof,
and does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make such information not misleading.
9. Representations Regarding GG. GG hereby represents and warrants as
follows, each of which representations and warranties shall also be true as of
the Closing Date:
(a) As of the Closing Date, the GG Shares, to be issued and
delivered to all of the holders of DA Shares hereunder will, when so issued and
delivered, constitute, duly authorized, validly and legally issued GG Shares,
fully-paid and nonassessable.
(b) Except for the consent of GG's Shareholders required to effect
the Charter Amendments, GG has the corporate power to enter into this Agreement
and after the Charter Amendment is effected will have the corporate power to
perform its obligations hereunder. The execution and delivery of this Agreement
has and provided the Charter Amendment is effected, the consummation of the
transactions described will have, been duly authorized by all necessary
corporate action, including being duly authorized by the Board of Directors of
GG, as may be required by law. This Agreement and the consummation of the
transactions described herein constitute the binding obligation of GG,
enforceable against GG in accordance with its terms. Provided the Charter
Amendment is effected, the execution and performance of this Agreement will not
constitute a breach of any material agreement, indenture, mortgage, license or
other instrument or document to which GG is a party and will not violate any
judgment, decree, order, writ, or applicable rule, statute, or regulation. After
the Charter Amendment is effected, the performance of this Agreement will not
violate or conflict with any provision of the Articles of Incorporation or
By-laws of GG.
6
(c) GG has delivered to DA a true and complete copy of its (i)
Annual Report on Form 10-KSB and any amendments thereto for the year ended June
30, 2003, as filed with the SEC ("Form 10-K"), (ii) Forms 10-QSB for the
quarters ended September 30, 2004, December 31, 2004, and March 31, 2004, as
filed with the SEC ("Forms 10-Q"), (iii) Articles of Incorporation, as amended,
(iv) Bylaws, (v) state and federal tax returns for 2002, and 2003, (vi)
shareholder list dated May 26, 2004, (vii) copies of all Board of Directors and
stockholder minutes and consents, and (viii) unaudited balance sheet as of March
31, 2004. As of their respective dates, documents referred to in (i) and (ii),
above (collectively the "GG Financial Information") did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The audited financial
statements for 2003 included in the Form 10-KSB have been prepared in accordance
with GAAP applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present the financial position of GG as of the
dates thereof and the results of its operations and changes in financial
position for the periods then ended. GG's unaudited balance sheet as of March
31, 2004, fairly presents the financial position of GG as of such date. GG has
no subsidiaries as of the date hereof. GG has no liabilities or obligations of
any nature (absolute, accrued, contingent or otherwise) which were not properly
reflected or adequately reserved against in accordance with GAAP on the
financial statements contained in the GG Form 10-KSB and Forms 10-QSB.
(d) Except as set forth in Schedule 9(d), on the Closing Date, GG
will have no liabilities or obligations of any nature (absolute, accrued,
contingent, or otherwise).
(e) Except as set forth on Schedule 9(d), since March 31, 2004,
there have not been any material adverse changes in the financial condition of
GG. From the date hereof until the Closing Date, GG shall not engage in any
activity other than activities in anticipation of and in furtherance of the
transactions described in this Agreement.
(f) Except as set forth on Schedule 9(e), neither GG nor, to its
knowledge, any 10% or greater shareholder of GG or any related party or
affiliate of GG, is a party to or the subject of any pending material
litigation, claims, or governmental investigation or proceeding, and there are
no lawsuits, claims, assessments, investigations, or similar matters, to the
best knowledge of GG, threatened or contemplated against or affecting GG, its
properties, any of its 10% or greater shareholders, or any related party or
affiliate of GG.
(g) GG is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; and GG presently has
and at Closing shall have the corporate power to own its property and to carry
on its business as then being conducted and shall be duly qualified to do
business in any jurisdiction where so required except where the failure to so
qualify would have no material negative impact.
(h) Except as set forth on Schedule 9(g), GG has filed (or, by the
Closing Date, will have filed) all federal, state, county and local income,
excise, property and other tax, governmental and/or related returns, forms, or
reports, which are due or required to be filed by it prior to the date hereof
and has paid (or, by the Closing Date will have paid) or made adequate provision
in the GG Financial Information for the payment of all taxes, fees, or
assessments which have or may become due pursuant to such returns or pursuant to
any assessments received. Except as set forth in Schedule 9(g), GG is not
delinquent or obligated for any tax, penalty, interest, delinquency or charge
and all such tax returns are complete and accurate and disclose all taxes
required to be paid by the GG for the periods covered thereby and all taxes
shown to be due on such tax returns have been timely paid, other than with
respect to taxes being contested in good faith by GG and disclosed on Schedule
9(g) attached hereto; (iii) neither GG nor any former subsidiary of GG has
waived or been requested to waive any statute of limitations in respect of
taxes; (iv) none of the tax returns referred to in this Section have been
examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment of the taxes in respect of
which such tax returns were required to be filed has expired, and GG has filed
tax returns in the jurisdiction listed on Schedule 9(g) attached hereto; (v)
there is no action, suit, audit, claim or assessment pending, proposed or, to
the knowledge of GG, threatened in writing, and, to the knowledge of GG, there
is no investigation with respect to taxes of GG or its subsidiaries; (vi) all
deficiencies asserted or assessments made as a result of any examination of the
tax returns referred to in this Section, if any, have been paid in full or are
currently being contested in good faith by GG and disclosed on Schedule 9(g);
(vii) there are no liens for taxes upon the assets of GG except liens relating
to current taxes not yet due; (viii) as a result of the transactions described
in this Agreement, GG will not be obligated to make a payment to an individual
that would be a "parachute payment" to a disqualified individuals as those terms
are defined in the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future;
(ix) no payments of compensation by GG are subject to the limitations imposed by
Section 162(m) of the Code; (x) all taxes which GG is required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued; (xi) except as set for in Schedule 9(h), there are no
tax rulings, requests for rulings, or closing agreements relating to GG which
could affect GG's liability for taxes for any period after the Closing; (xiii)
GG has not filed a consent under Section 341(f) of the Code or any comparable
provision of state statutes; (xiv) the reserves for taxes contained in the
financial statements and carried on the books of GG are adequate to cover all
tax liabilities as of the date of this Agreement; and (xv) GG has no corporate
acquisition indebtedness, as described in Section 279(b) of the Code. GG is not
a party to any tax sharing or similar agreement.
7
(i) As of the date hereof, GG's authorized capital stock consists
of: (i) 50,000,000 shares of common stock, $.001 par value, of which not more
than 40,587,793 shares are issued and outstanding. All outstanding shares of
capital stock of GG are validly issued, fully paid and nonassessable. No
additional shares of common stock will be issued by GG prior to the Closing
Date. Immediately prior to the Closing, after effecting the Reverse Split, GG's
authorized capital stock shall consist of (i) 50,000,000 shares of common stock,
$.001 par value, of which not more than 4,058,774 shares will be issued and
outstanding immediately prior to Closing. As of the date of this Agreement there
are not (and except for such those issued in the Pre Closing Offering and under
Section 18 hereof, as of the Closing Date there will not be) any existing
options, calls, warrants, preemptive rights or commitments of any character
relating to the issued or unissued capital stock or other securities of GG. GG
is not as of the date of this Agreement, nor will be as of the Closing Date, a
party to any oral or written employment, consulting or severance agreement or
any agreement similar to any of them.
(j) Except as set forth in Schedule 9(j), GG does not own, directly
or indirectly, any of the capital stock or any other securities of any other
corporation or any equity, profit sharing, participation or other interest in
any corporation, partnership, joint venture or other entity.
(k) GG has disclosed in writing all events, conditions and facts
materially affecting its business, financial condition or results of operations.
(l) The corporate financial records, minute books, and other
documents and records of GG have been and will be made available to DA and the
DA Stockholders prior to the Closing Date, during reasonable business hours and
on reasonable notice.
(m) GG has not breached, and there is no pending or threatened claim
that GG has breached any of the terms or conditions of any agreements, contracts
or commitments to which it is a party or by which it or its properties is bound.
Assuming the Charter Amendment is effected, the execution and performance hereof
will not violate any provisions of applicable law or any agreement to which GG
is subject. GG hereby represents that it is not a party to any material contract
or commitment, and that it has disclosed to DA and the DA Stockholders all
relationships or dealings with related parties or affiliates.
8
(n) All information regarding GG which is set forth herein or has
otherwise been provided by GG to DA and the DA Stockholders is true and accurate
in all material respects.
(o) The affirmative vote of the holders of a majority of the issued
and outstanding shares of GG common stock entitled to vote is the only vote of
the holders of any class or series of the GG's capital stock necessary to
consummate the transactions described in this Agreement.
(p) The restrictions on change in control and business combinations
contained in applicable law including but not limited to NRS Sections 78.378 to
78.3793, inclusive, and NRS Sections 78.441 to 78.444, inclusive, respectively),
are not applicable to GG with respect to the transactions described herein.
(q) GG is current in all material respects with regard to its
reporting obligations with the SEC and, to GG's knowledge, all reports filed
with the SEC are materially true, complete and accurate, and there is no
information or event required to be disclosed that has not been disclosed or
will not be disclosed in any of GG's public filings as of the date hereof and as
of the Closing Date. All filings required to be made with the SEC or any state
or local government to effect the transactions described herein have or will be
made prior to Closing.
(r) Not fewer than 400 shareholders of GG hold not fewer than
15,000,000 GG Shares which are free to trade without the necessity of complying
with the requirements of Rule 144 (other than the necessity of getting a legend
removed from certificates representing shares which were acquired from GG or an
affiliate thereof but are currently eligible to be sold pursuant to subsection
(k) of such Rule).
(s) GG has one subsidiary, Goug Merger Sub, Inc., which is not now
nor has ever been engaged in any trade or business and has no assets and no
liabilities.
10. Closing. The Closing of the transactions described herein shall take
place on such date (the "Closing" or "Closing Date") as mutually determined by
the parties hereto when all conditions precedent have been met and all required
documents have been delivered, which Closing is expected to be on or about
August 16, 2004, unless extended by mutual consent of all parties hereto.
11. Conditions Precedent to the Obligations of the DA Stockholders. All
obligations of the DA Stockholders under this Agreement are subject to the
fulfillment, prior to or as of the Closing and/or the Effective Date, as
indicated below, of each of the following conditions:
(a) The representations and warranties regarding GG contained in
this Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of the
Closing Date as though such representations and warranties were made at and as
of such time.
(b) GG shall have performed and complied, in all material respects,
with all covenants, agreements, and conditions set forth herein, and shall have
executed and delivered all documents required by this Agreement to be performed
or complied with or executed and delivered by it prior to or at the Closing.
(c) On or before the Closing, the Board of Directors of GG shall
have approved in accordance with applicable corporation law the execution and
delivery of this Agreement and the consummation of the transactions described
herein.
9
(d) On or before the Closing Date, GG shall have delivered certified
copies of resolutions of the Board of Directors of GG approving and authorizing
the execution, delivery and performance of this Agreement and authorizing all of
the necessary and proper action to enable GG to comply with the terms of this
Agreement including the election of DA's nominees to the Board of Directors of
GG and all matters outlined herein.
(e) The holders of a majority of GG's issued and outstanding Common
Stock shall have duly approved all applicable matters described in this
Agreement in accordance with applicable law. At Closing, the existing officers
and directors of GG shall have resigned in writing from all positions as
directors and officers of GG upon the election and appointment of the DA
nominees.
(f) At the Closing, all instruments and documents delivered to the
DA Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for DA.
(g) At the Closing, upon consummation of the transactions, GG shall
have the authorized capital as described in Section 9(i) hereof.
(h) The GG Shares to be issued to the DA Stockholders at Closing
will be validly issued, nonassessable and fully-paid under applicable
corporation law and will be issued in compliance with all federal, state and
applicable securities laws.
(i) The Charter Amendment has been effected in compliance with all
applicable laws.
12. Conditions Precedent to the Obligations of GG. All obligations of GG
under this Agreement are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
(a) The representations and warranties regarding the DA Stockholders
and DA contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at and
as of the Closing as though such representations and warranties were made at and
as of such time.
(b) The DA Stockholders shall have performed and complied with, in
all material respects, all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing.
(c) The DA Stockholders shall deliver a letter commonly known as an
"Investment Letter", in substantially the form attached hereto and made a part
hereof as Exhibit "B", acknowledging that the GG Shares are being acquired for
investment purposes.
(d) The Charter Amendment has been effected in compliance with all
applicable laws.
(e) All financial and other information required to file the report
on Form 8K with respect to the transactions described in this Agreement shall
have been prepared by DA in such form suitable for filing.
(f) The DA Financial Information and other information to be
delivered to GG by DA prior to the Closing under Section 8(c) will not present a
financial condition for DA materially and negatively different than that
presented in the Interim Financial Information.
13. Covenants of the Parties.
10
(a) GG hereby agrees that it will use its best efforts to effect the
Charter Amendment in compliance with all applicable laws, and that it will
commence such efforts as soon as possible after the date hereof.
(b) DA hereby agrees that it will use its best efforts to prepare
all financial and other information required to file the report on Form 8K with
the SEC with respect to the transactions described in this Agreement.
(c) GG shall (i) file a registration statement with the SEC
registering its shares under the 1934 Act, and (ii) file and disseminate an
information statement meeting the requirements of Schedule 14C of the SEC rules
and any other documents which would be required by such rules if GG were
currently a company fully registered under the 1934 Act.
(d) DA will use its best efforts to consummate the Mixers
Transaction.
(e) Each of GG and DX will use reasonable commercial efforts to consummate
the an offering of convertible debt of GG, on terms substantially as set forth
on Schedule 13(c), or as GG and DX may otherwise agree (the "Pre Closing
Offering") as soon as practicable after the date hereof.
14. Press Releases. GG and DA shall consult with the other as to the form
and substance of any press release or other public disclosure of matters related
to this Agreement or any of the transactions described herein; provided,
however, that nothing in this Section 14 shall be deemed to prohibit any party
hereto from making any disclosure that is required to fulfill such party's
disclosure obligations imposed by law, including, without limitation, federal
securities laws, provided that the disclosing part shall provide the
non-disclosing party with reasonable advance notice thereof and any text of such
disclosure.
15. Indemnification. For a period of two years from the Closing Date, GG
agrees to indemnify and hold harmless the DA Stockholders and DA, and the DA
Stockholders and DA agree to indemnify and hold harmless GG at all times after
the date of this Agreement against and in respect of any liability, damage or
deficiency, all actions, suits, proceedings, demands, assessments, judgments,
costs and expenses including attorney's fees incident of any of the forgoing,
resulting from any material misrepresentations made by an indemnifying party to
an indemnified party, an indemnifying party's material breach of a covenant,
representation or warranty, or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation in or omission from
any certificate furnished or to be furnished hereunder.
16. Nature and Survival of Representations. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for three
years from the Closing. All of the parties hereto are executing and carrying out
the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement and not upon
any investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
17. Documents at Closing. At the Closing, the following documents shall be
delivered:
(a) The DA will deliver, or will cause to be delivered, to GG the
following:
(i) a certificate executed by the President and Secretary of
DA to the effect that to the best of their knowledge and belief all
representations and warranties made regarding DA under this Agreement are true
and correct as of the Closing, the same as though originally given to GG on said
date;
11
(ii) certificates from the jurisdictions of incorporation of
DA and each of its subsidiaries dated at or about the Closing to the effect that
DA and each subsidiary is in good standing under the laws of said jurisdiction
or such other evidence reasonably acceptable to GG to such effect.
(iii) corporate resolutions of DA's Board of Directors
authorizing the transactions described in this Agreement;
(iv) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of this
Agreement;
(v) all other items, the delivery of which is a condition
precedent to the obligations of GG, as set forth herein;
(b) The DA Stockholders will deliver or cause to be delivered to GG:
(i) The certificates representing their respective DA Shares
as set forth on Exhibit "A" hereto;
(ii) Investment Letters in the form attached hereto as Exhibit
"B" executed by each of the DA Stockholders;
(c) GG will deliver or cause to be delivered to the DA
Stockholders:
(i) stock certificates representing those securities of GG to
be issued in the exchange as described in Sections 2(c) hereof;
(ii) a certificate of the President and Secretary of GG, to
the effect that, to the best of their knowledge and belief, all representations
and warranties of GG made under this Agreement are true and correct as of the
Closing, the same as though originally given to the DA Stockholders on said
date;
(iii) certified copies of resolutions adopted by GG's Board of
Directors authorizing the transactions described herein;
(iv) certificates from the jurisdiction of incorporation of GG
dated at or about the Closing Date that said corporation is in good standing
under the laws of said jurisdiction;
(v) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement;
(vi) resignation of all of the officers and directors of GG;
and
(vii) all other items, the delivery of which is a condition
precedent to the obligations of the DA Stockholders, as set forth in Section 11
hereof.
18. Finder's Fees. GG represents and warrants to the DA Stockholders and
DA, and the DA Stockholders and DA represent and warrant to GG, that none of
them, or any party acting on their behalf, has incurred any liabilities, either
express or implied, to any "broker", "finder", "consultant", or similar person
in connection with this Agreement or any of the transactions contemplated
hereby. In this regard, GG on the one hand, and the DA Stockholders and DA,
jointly and severally, on the other hand, will indemnify and hold the other
harmless from any claim, loss, cost or expense whatsoever (including reasonable
fees and disbursements of counsel) from or relating to any such express or
implied liability.
19. Miscellaneous. (a) Further Assurances. At any time, and from time to
time, after the Closing Date, each party will execute such additional
instruments and take such action as may be reasonably requested by the other
party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
12
(b) Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
(c) Termination. All obligations hereunder may be terminated at the
discretion of either GG's or DA's Board of Directors if (i) the closing
conditions specified in Sections 11 and 12 are not met by October 19, 2004,
unless extended, or (ii) any of the representations and warranties made herein
have been materially breached.
(d) Amendment. This Agreement may be amended only in writing as
agreed to by all the parties hereto.
(e) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered in person or sent
by prepaid first class registered or certified mail, return receipt requested,
as follows:
If to Gourmet Group, Inc.: Gourmet Group, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
With a copy to: Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
If to DA and the
DA Stockholders: Drinks Americas, Inc.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: 000-000-0000
13
With a copy to: Ballon Xxxxx Xxxxx & Xxxxxx, P.C.
14th Floor
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
(f) Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(h) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed upon
or understood with respect to the subject matter hereof. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof.
(j) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
(k) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to conflicts or choice of law provisions of the State of New
York.
(l) Responsibility and Costs. Except as may be agreed by the
parties, all fees, expenses and out-of-pocket costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred by the parties hereto shall be borne solely and entirely
by DA which will advance funds reasonably necessary to pay expenses incurred by
GG including those relating to its filings with the Securities and Exchange
Commission, the due dates of which are in the 2004 calendar year, provided each
of GG and DA are proceeding in good faith to complete the transactions
contemplated in this Agreement at the time the expense is incurred.
(m) Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. This Agreement
shall not be deemed to confer upon any person not a party hereto any rights or
remedies hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
14
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
DRINKS AMERICAS, INC. GOURMET GROUP, INC.
By: /s/ By: /s/
------------------------------- -----------------
Name: J. Xxxxxxx Xxxxx Name: Xxxxxxxx Xxxxxxxx
Title: Chairman Title: President
STOCKHOLDERS OF DRINKS AMERICAS, INC.
Maximillian Partners, LLC
By:
----------------------------------
J. Xxxxxxx Xxxxx, Manager
--------------------------------
Xxxx Xxxxx
15
EXHIBIT "B"
INVESTMENT LETTER
TO THE BOARD OF DIRECTORS OF GOURMET GROUP, INC.
The undersigned hereby represents to Gourmet Group, Inc. (the
"Corporation"), that (1) the shares of the Corporation's common stock (the
"Securities") which are being acquired by the undersigned are being acquired for
his own account and for investment and not with a view to the public resale or
distribution thereof; (2) the undersigned will not sell, transfer or otherwise
dispose of the securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) the undersigned is aware that the Securities are
"restricted securities" as that term is defined in Rule 144 or the General Rules
and Regulations under the Act.
The undersigned hereby agrees and acknowledges that he will not sell the
Securities outside of the United States in any manner which will allow the
Securities to become nonrestricted except upon registration in the United
States.
The undersigned further acknowledges that he or she is an "accredited
investor" as that term is defined in Regulation D promulgated under the Act or
has such knowledge and experience in financial matters and investments that he
or she considers himself or herself to be financially sophisticated. The
undersigned further acknowledges that he or she has had an opportunity to ask
questions of and receive answers from duly designated representatives of the
Corporation concerning the terms and conditions pursuant to which the Securities
are being acquired. The undersigned acknowledges that he has been afforded an
opportunity to examine such documents and other information which he or she has
requested for the purpose of verifying the information set forth in said
documents.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions for
the most part are set forth in Rule 144. The Rule permits sales of "restricted
securities" upon compliance with the requirements of such Rule. If the Rule is
available to the undersigned, the undersigned may make only routine sales of
securities, in limited amounts, in accordance with the terms and conditions of
that Rule.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefor, shall bear the
following legend, which the undersigned has read and understands:
The Securities represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted securities" as
that term is defined in Rule 144 under the Act. The Securities may not be
offered for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is be established to the
satisfaction of the Corporation.
The undersigned further agrees that the Corporation shall have the right
to issue stop-transfer instructions to its transfer agent and acknowledges that
the Corporation has informed the undersigned of its intention to issue such
instructions.
Very truly yours,
--------------------
(Please print name)
Date:
16
