EXHIBIT 10.6
PLAN AND AGREEMENT OF REORGANIZATION
UNDER I.R.C. SS.368(a)(1)(C)
REVOLUTIONS MEDICAL CORPORATON
AND
CLEAR IMAGE ACQUISITIION CORPORATION
THIS PLAN AND AGREEMENT OF REORGANIZATION, dated this 26th day of
January, 2007, made by and between:
REVOLUTIONS MEDICAL CORPORATION, a Nevada corporation having its
principal business office located at 0000 Xxxxx Xxxx Xxxxxx, Xx. Xxxxxxxx, Xxxxx
Xxxxxxxx 00000 (hereinafter referred to as "Buyer");
AND
CLEAR IMAGE ACQUISITION CORPORATION, a Nevada corporation having its
principal business office located at 0 Xxxxxx Xxxxxx, Xxxxx 0, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000 (hereinafter "Seller"): WITNESSETH THAT:
WHEREAS, Seller desires to transfer to Buyer at the Closing (as
hereinafter defined), and Buyer desires to acquire from Seller at the Closing,
all of Seller's assets, as more fully described herein, upon and subject to the
terms and conditions contained in this Agreement; and
WHEREAS, it is intended by the parties that the transaction qualify as
a tax-free reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and that for accounting
purposes it is intended that the transaction be treated as a "purchase";
NOW, THEREFORE, intending to be legally bound, and in consideration of the
foregoing recitals and the mutual promises and covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller hereby agree as follows:
ARTICLE I
SALE AND TRANSFER OF ASSETS AND ASSUMPTION OF CERTAIN LIABILITES
1.1 Transfer of Assets. Buyer acknowledges that: Seller is a
newly-organized Nevada corporation which was formed specifically to acquire a
controlling block of shares of Clear Image, Inc., an Oklahoma corporation; that
such controlling block, consisting of 9,824,139 shares of the Common Stock of
Clear Image, Inc., was contributed by Seller's shareholders pursuant to a
Section 351 Agreement and constitutes the sole asset of Seller: and that
accordingly the only asset being acquired by Buyer is such 9,824,139 shares of
the Common Stock of Clear Image, Inc., which are hereinafter referred to as the
"Assets". Except as otherwise herein expressly set forth, Seller hereby agrees
that at the Closing provided for in Section 4.1 hereof (the "Closing"), Seller
shall sell, assign, transfer, convey and deliver to Buyer all of Seller's right,
title and interest in and to such shares (the Assets). Seller represents that
the shares are all of the assets of Seller.
1.2 Excluded Assets. Seller and Buyer understand and agree that since
the 9,824,139 shares of the Common Stock of Clear Image, Inc. are the sole asset
of Seller, there are no excluded or Seller- retained assets.
1.3 Assumed Obligations. Buyer has represented and warranted that it
has no debts, liabilities, or other payables, will not have any debts,
liabilities or other payables as of Closing, and that the only liabilities that
it will incur following the Closing will be the costs related to its liquidation
and dissolution. Relying upon such representation, Buyer agrees to pay only
those costs and expenses directly related to the liquidation and dissolution of
Seller and then limited to an amount within the allowed percentage of the value
of the gross assets obtained as permitted under Section 368(a)(1)(C).
ARTICLE II
CONSIDERATION
2.1 Assumption of Certain Liabilities and Stock Issuance. In full and
complete payment for the Assets, Buyer agrees to (i) assume the assumed
liabilities pursuant to Section 1.3 hereof (I.E., the costs and expenses of
Seller's liquidation and dissolution) and (ii) issue to the Seller 8,260,139
post-split shares of Common Stock of the Buyer, issued in the name of and paid
to Seller (the 8,260,139 shares of Common Stock are hereinafter referred to as
the "RMS Stock)"
2.2 Investment Representations. Seller acknowledges, agrees
and represents that:
(a) It has been advised that none of the shares of Buyer being acquired
hereunder have been registered under the Securities Act of 1933 (the "1933
Act").
(b) All of the shares of Buyer being acquired hereunder are being, and
will be, acquired and held for investment, not for resale or distribution to the
public and not for the purpose of effecting or causing to be effected a public
offering of such securities.
(c) It has been advised and is aware of the fact, that by reason of the
foregoing investment representations and restrictions upon transfer: (i) the
shares of the Buyer's Common Stock must be held indefinitely unless they are
subsequently registered under the 1933 Act or an exemption from such
registration is available; (ii) if Rule 144 of the Rules and Regulations
promulgated by the SEC is applicable to any future routine sales of any such
securities, such sales can be made only in limited amounts in accordance with
the terms and conditions of that Rule; (iii) in the case of securities to which
that Rule is not applicable, compliance with some applicable exemption, if any
be available, will be required; (iv) all of the certificates for the shares of
Buyer's Common Stock will bear a legend restricting transfer thereof; and (v)
the Transfer Agent of Buyer's Common Stock will be given "stop-transfer"
instructions so as to prevent any illegal transfer of such shares.
(d) It has relied only and exclusively upon its own investigation into
Buyer and its financial condition for purposes of deciding to enter into and
close this Agreement and to accept shares of Buyer's Common Stock in exchange
for its Assets. It has not relied upon any oral or written representation made
by Buyer or any of its officers or directors or representatives of Buyer and
that no representation, or statements shall survive the Closing with the sole
exception of the representations and warranties contained in this Agreement.
(e) It has reviewed the filings made by the Buyer pursuant to the
Securities Exchange Act of 1934, including the included financial statements,
and has had full opportunity to review and inspect all books and records of
Buyer.
2.3 Liquidation of Seller. Seller acknowledges awareness that (i)
following the transfer of the Assets it is required by the Internal Revenue Code
and related IRS Regulations to dissolve and in connection therewith to
distribute the RMS Stock to its shareholders, (ii) the RMS Stock has not been
registered with the Securities and Exchange Commission and cannot be distributed
without an eligible exemption from such registration, and (iii) all of Seller's
shareholders are "accredited investors" and it will make a distribution of the
8,260,139 shares of RMS Stock to its shareholders pursuant to Rule 506 of
Regulation D.
ARTICLE III
CLOSING
3.1 Closing. The Closing shall occur at the close of business
on January 31, 2007.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof (which
representations and warranties shall survive the execution and delivery of this
Agreement and the transfer of the Assets), as set forth below:
4.1 Litigation. There are no outstanding orders, judgments, writs,
injunctions. or decrees of any court, governmental authority or arbitration or
mediation panel or tribunal against or affecting the Assets.
4.3 Non-Contravention. Seller is not in breach of, default under, or in
violation of any applicable law, decree or order that may cause a material
adverse effect relating to the Assets and Seller is not in breach of, default
under, or in violation of any deed, lease, loan agreement, commitment, bond,
note, deed of trust, restrictive covenant, license, indenture, contract or other
agreement, instrument or obligation to which it is a party or by which it is
bound or to which any of its respective assets is subject that may cause a
material adverse effect on the Assets.
4.4 Title. Seller has good, complete, indefeasible and marketable title
to, and ownership of, the Assets, free and clear of all liens, encumbrances,
charges, pledges, voting trusts and pools, defects, claims, and security
interests.
4.5 Assets. The Assets are free and clear of all liens, encumbrances,
charges, pledges, voting trusts and pools, defects, claims, and security
interests.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof (which
representations and warranties shall survive the execution and delivery of this
Agreement and the transfer of the Assets), as set forth below:
5.1 Legal Compliance. To its knowledge, (i) Buyer is not in violation
of any applicable law that would apply to it or to its business, the violation
of which would cause a material adverse effect, (ii) Buyer is not in violation
of any applicable environmental, securities or employee benefits law, which
violation would cause a material adverse effect, and (iii) neither Buyer nor, to
the knowledge of Buyer, any of Buyer's agents, contractors or employees has been
notified of any action, suit, proceeding or investigation which calls into
question compliance by Buyer.
5.2 Shares and Corporate Documents. All of the RMS Stock to be issued
hereunder have been duly authorized and when issued will be valid and legally
issued shares of the Common Stock, fully paid and nonassessable, free and clear
of all liens or encumbrances, and not in violation of any preemptive or similar
rights or any securities laws.
5.3 Undisclosed Liabilities. The Buyer does not have any liabilities
(whether known or unknown, whether absolute, conditional or contingent and
whether liquidated or unliquidated and whether due or to become due), except for
(a) liabilities that will be accrued for or reserved against in the December 31,
2006 balance sheet, and (b) contractual or statutory liabilities incurred in the
ordinary course of business which are not required to be reflected on a balance
sheet. Buyer's balance sheet and the related income statement as of September
31, 2006 were prepared in accordance with generally accepted accounting
principles and fairly present the assets, liabilities, financial condition and
results of operations of Buyer as of the date indicated and for the period
referred to therein. Except as disclosed in writing to Buyer, there have been no
events, changes or effects with respect to Buyer or its subsidiaries that,
individually or in the aggregate, have had or reasonably would be expected to
have had a material adverse effect.
ARTICLE VI
MUTUAL REPRESENTATIONS AND WARRANTIES
Each party hereto represents and warrants to the other party as of the
date hereof (which representations and warranties shall survive the execution
and delivery of this Agreement and the transfer of the Assets) as set forth
below:
6.1 Organization; Good-Standing.
(a) Seller is a corporation duly formed, validly organized and in good
standing in the State of Nevada.
(b) Buyer is a corporation duly formed, validly organized and in good
standing, in the State of Nevada.
6.2 No Untrue Statements or Material Omissions. Each party hereto
represents to the other party hereto, on its own respective behalf, that no
statement in writing furnished by such party to the other party in connection
with the transactions contemplated herein contains any untrue statement of
material fact or omits to state a material fact necessary to make the statement
not misleading in any material respects.
6.3 No Default. Each party hereto represents to the other party, on its
own respective behalf, that neither the execution and delivery of this Agreement
nor the performance by such party of its respective obligations hereunder will
cause any breach, default or violation or will require the consent or approval
of any court or governmental authority, except as expressly contemplated by the
terms of this Agreement.
6.4 Power and Authority. Each party hereto represents to the other
party, on its own respective behalf, that (i) it has full power and authority to
enter into this Agreement any other related documents, to incur the obligations
as contemplated hereby, and to carry out the provisions of this Agreement; and
(ii) it has taken all action necessary for the execution and delivery of this
Agreement and each of the other related documents and for the performance of
each of its obligations hereunder, and thereunder, as evidenced by corporate
resolution(s) or other authorization.
6.5 Enforceability. Upon execution and delivery by each of the parties
hereto, this Agreement and any other related document shall be the legal, valid
and binding obligations of each party and shall be enforceable against each
party in accordance with their respective terms.
ARTICLE VII
MISCELLANEOUS
7.1 Non-Waiver. No course of dealing between the parties or any failure
or delay on the part of either party in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of either party
under this or any other applicable instrument. No single or partial exercise of
any rights or remedies hereunder shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder.
7.2 Indemnification.
(a) Seller. Seller hereby agrees to defend, indemnify and hold harmless
Buyer against any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses directly related to or arising from (i) the breach
of a representation or warranty by Seller herein or the documents delivered at
Closing or (ii) any liabilities of Seller not assumed by Buyer at Closing.
(b) Buyer. Buyer hereby agrees to defend, indemnify and hold harmless
Seller against any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses directly related to or arising from (i) the breach
of a representation or warranty by Seller herein or the documents delivered at
Closing or (ii) any of the assumed liabilities.
(c) Procedure. The indemnified party shall promptly notify the
indemnifying, party in writing of any claim, demand, action or proceeding for
which indemnification will be sought under Sections 7.2(a) or 7.2(b), and, if
such claim, demand, action or proceeding is a third party claim, demand, action
or proceeding, the indemnifying party will have the right at its expense to
assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at
its own expense, with respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, Buyer and Seller shall cooperate with each other and provide each
other with access to relevant books and records in their possession related to
such claim. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld. If a firm written offer is made to
settle any such third party claim, demand, action or proceeding, which offer
does not involve any injunctive or non-monetary relief against the indemnified
party, and the indemnifying party proposes to accept such settlement and the
indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding and (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement. In the event that Buyer or
Seller shall fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding, anything else to the
contrary herein, the other party shall not be required to indemnify any person
for any Losses that could reasonably be expected to have been avoided if Buyer
or Seller, as the case may be, had made such efforts.
7.3 Notices. All notices or communications under this Agreement shall
be to the following addresses (or to such other address as shall at any time be
designated by any party in writing to the other parties):
To Buyer: Revolutions Medical Corporation
0000 Xxxxx Xxxx Xxxxxx
Xx. Xxxxxxxx, Xxxxx Xxxxxxxx 00000
To Seller: Clear Image Acquisition Corporation
0 Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
With a copy to: Xxxxxxx X. Xxx, Esq.
0 Xxxxxxx Xxxx Xxxx, #0
Xxxxxx, Xxxxxxxxxxxxx 00000
Notice shall be deemed given three days after deposit in the U.S. mail, postage
prepaid, or one day after deposit with a nationally recognized overnight
delivery service. Rejection or other refusal to accept, or the inability to
deliver because of a changed address of which no notice was given, shall not
affect the effectiveness or the date of delivery for any notice sent in
accordance with the foregoing provisions.
7.4 Binding Agreement; Survival. This Agreement shall inure to the
benefit of, and be binding upon, Seller and Buyer, and their respective
legatees, distributees, estates, executors, administrators, personal
representatives, successors and assigns, and other legal representatives. All
representations, warranties, covenants and agreements by the parties contained
in this Agreement shall survive the Closing for a period of one (1) year from
the Closing Date.
7.5 Entire Agreement; Integration Clause. This Agreement sets forth the
entire agreement and understanding of the parties hereto with respect to this
transaction, and any prior agreements are hereby merged herein and terminated.
7.6 Brokers' or Finders' Fees. No agent, broker, person, or firm acting
on behalf of either party or any of their subsidiaries or under the authority of
any of them is or will be entitled to any commission or broker's or finder's fee
or financial advisory fee in connection with any of the transactions
contemplated herein.
7.7 No Oral Modification or Waivers. The terms herein may not be
modified or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the modification or waiver (as the case may
be) is sought.
7.8 Controlling Law; Venue. This Agreement and each of the other
documents ancillary hereto shall be governed by, and interpreted and construed
in accordance with, the internal laws of the State of Nevada (without regard to
its conflicts of law principles). Venue for the adjudication of any claim or
dispute arising out of this Agreement or any of the other ancillary documents
shall be proper only in the state or federal courts of the State of Nevada, and
the parties to this Agreement hereby consent to such venue.
7.9 Headings. The headings of this Agreement and each of the other
documents ancillary hereto are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement or such ancillary documents.
7.10 Severabilitv. To the extent any provision herein violates any
applicable law, that provision shall be considered void and the balance of this
Agreement shall remain unchanged and in full force and effect.
7.11 Public Disclosure. Seller acknowledges that Buyer is a reporting
company under the Securities Exchange Act of 1934 and must disclose this
Agreement and the terms and conditions hereof. Accordingly, Seller authorizes
Buyer to issue such press release and file such periodic report as may be
required.
7.12 Counterparts. This Agreement may be executed in as many
counterpart copies as may be required. All counterparts shall collectively
constitute a single agreement.
7.13 Third Party Beneficiary. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
7.14 Expenses. Each party shall be responsible for its own costs and
expenses (including legal, financial advisory, investment banking and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
7.15 Tax Treatment. Buyer and Seller hereby agree and covenant that
they shall not (before or after the Closing Date and individually or
collectively) take any action and shall not (before or after the Closing) fail
to take any action which action or failure to act would prevent, or would be
reasonably likely to prevent, the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368(a)(l)(C) of the
Code.
7.16 Dissolution. Buyer and Seller hereby agree that from and after the
Closing Date, Seller will not engage in any new business, will promptly
liquidate and dissolve as a corporation, and will distribute the 8,260,139
shares of RMS Stock pursuant to the terms and conditions of the differing
contributions under the Section 351 Contribution Agreement.
In Witness Whereof, the undersigned have executed and delivered this
Plan and Agreement of Reorganization as of the day and year first above written.
REVOLUTIONS MEDICAL CORPORATION
By:
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CLEAR IMAGE ACQUISITION CORPORATION
By:
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