ACQUISITION AGREEMENT
Entered into by and between the following parties:
Meridian Holdings Inc., ("MDHG") a Florida corporation, with its principal
offices at: 0000 XX 0xx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000;
The Old Fashioned Syrup Company, Inc. ("Syrup") a Florida corporation
engaged in manufacture and wholesale distribution and sales of a sugar, fat and
cholesterol free chocolate syrup, which maintains its principal offices at: 0000
X.X. 00xx Xxxxxx, Xxxxx X, Xxxxxxx Xxxxx, XX 00000; and
Xxxx Xxxxxxxxxx and Xxxx Xxxxxx, being the officers, directors and majority
shareholders of Syrup.
NOW, THEREFORE, in consideration of the promises and the mutual and dependent
covenants hereinafter contained, the parties hereto represent, warrant,
covenant, and agree as follows:
ARTICLE I
1.1 Plan of Acquisition. The Plan consists of the acquisition by MDHG, of
all of the issued and outstanding shares of Capital Stock of Syrup, in a
contemplated tax-free exchange for the issuance by MDHG to Syrup Shareholders of
3,026,794 shares of MDHG's authorized but presently unissued $0.001 par value
Common Stock.
Issuance of the foregoing shares shall be made at such time as all of the terms
and conditions set forth in this Agreement (excluding Preferred Stock conversion
conditions) are satisfied.
On Closing MDHG shall also issue an aggregate of 350 shares of $1 par value
Preferred Stock, to Xxxx Xxxxxxxxxx and Xxxx Xxxxxx to enter into the
Transaction. Each such share shall be convertible into Three Hundred (300)
shares of $0.001 par value Common Stock upon the earliest of the following
events: i) MDHG's annual gross revenues equal or exceed $10 Million; or, the
Company completes an SEC registration for the sale of its securities and attains
a NASDAQ or exchange listing.
Xxxxxxxxxx and Posner shall be elected to the board of directors of MDHG
simultaneously with the Closing.
1.2 Agreement to Consummate Transaction. Subject to the terms and
conditions of this Agreement, MDHG and Syrup agree to consummate or cause to be
consummated, the transaction contemplated hereby ("Transaction"), and agree that
the consummation of the Transaction is conditional upon the compliance with all
of the terms and conditions hereinstated, except for Preferred Stock conversion
conditions.
1.3 Shareholder Approvals. Both parties shall obtain such Shareholder
approvals, if any, which may be required under the laws of their respective
domiciles for the issuance of the shares as contemplated hereby.
1.4 Closing. Either by a formal meeting of the parties, or by a timely
exchange of documents, a closing ("Closing") will take place at such time as the
parties hereafter determine and which is contemplated to occur within 30 days
from the date of this Agreement.
At such Closing, certificates, opinions, letters and other documents required by
this Agreement will be delivered or exchanged. If a formal meeting is held, such
Closing will take place at a location designated by the mutual consent of the
parties, or in the absence thereof, at the Offices of MDHG.
Such Closing of the contemplated transaction shall be subject to: i) the
completion of an appropriate due diligence investigation of each of the parties
by the other; ii) the submission to MDHG, at least 10 days prior to the date
hereafter established for the Closing, of Syrup's 1998 audited financial
statements.
1.5 Consummation of Transactions. If at the Closing no condition exists
which would permit any of the parties to terminate this Agreement, or a
condition then exists and the party entitled to terminate because of that
condition elects not to do so, then and thereupon the parties will execute any
required documents to effectuate the transaction.
1.6 Acquisition of Shares. Upon and subject to the terms and conditions
herein stated, the Shareholders of Syrup shall acquire all rights, title and
interests in and to the previously described shares of the Common Stock of MDHG.
1.7 Consideration, Issuance and Delivery of Stock. In consideration of the
delivery of all of the issued and outstanding shares of the Capital Stock of
Syrup to MDHG, and compliance by Syrup with its warranties and undertakings
contained herein, MDHG shall at Closing, deliver one or more certificates
representing the aggregate of 3,026,794 shares of MDHG Common Stock.
Notwithstanding the foregoing, said stock shall be delivered to Morgenthau,
Greenes, Xxxxxxxx & Aronauer, P.C. as Escrow Agents, to be held by such firm in
escrow until such time as the total sum of $150,000 has been paid to the Selling
Control Shareholder Group as defined in the contemporaneous Stock Purchase
Agreement by and between the parties. Until such time as such shares are
released from escrow, the Shares will not have voting rights.
All such shares issuable pursuant to this Agreement will be investment stock,
and are subject to all restrictions upon resale, assignment and transfer as may
be imposed under the Securities Act of 1933, as amended; and when so issued and
delivered, such shares, each with an appropriate restrictive legend thereupon,
shall be fully paid and non- assessable. As a condition precedent to the
issuance of the certificates, Syrup undertakes to provide duly executed
Investment Letters from each person or entity, other than Xxxxxxxxxx and Posner,
in whose name any of the aforementioned shares shall be issued.
1.10 Reverse Reorganization/Share Dilution. The parties acknowledge that
for the earlier of i) a period of two years from the Closing Date; or, ii) the
sale or transfer by the present Control Shareholders of 75% or more of their
holdings, Syrup agrees that upon assuming 'control', it and its current
principal shareholders will not without the prior written consent of the present
control shareholders: a) effect a 'reverse' recapitalization of MDHG; or, b)
otherwise issue additional shares of Common Stock except in consideration for
the acquisition of valuable assets or raising of capital for valid business
purposes.
1.11 Present Capitalization. MDHG hereby represents that MDHG's present
authorized capitalization consists of Twenty (20,000,000) Million shares of
Common Stock, each of the par value of $0.001, and One (1,000,000) Million
shares of Preferred Stock, each of the par value of $1.00.
ARTICLE ll
Representations and Warranties
The parties mutually represent and warrant to the other as follows:
2.1 Organization and Good Standing. That each is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Each party has the corporate power to acquire or otherwise enter into a
business combination with another enterprise and to carry on its business as it
is now being conducted. Copies of Certificates of Incorporation, all amendments,
and the corporate By-Laws of each shall be delivered to the representative of
the other party within fifteen (10) days from the execution of this Agreement.
The parties acknowledge that MDHG's Certificate of Incorporation, all Amendments
thereto, and the Corporate By-laws, as presently in effect are contained in its
currently effective 15c2-11 Information and Disclosure Statement which is
currently on file with the National Association of Securities Dealers, Inc., and
the Securities And Exchange Commission ("SEC").
2.2 Authority. Each party has the corporate power to enter into this
Agreement and carry out the transactions contemplated hereby. The execution,
delivery, and performance of the Agreement will have been duly and validly
authorized and adopted by resolution of the respective Board of Directors; and
this Agreement and the consummation of the Plan of Acquisition will have been
duly and validly authorized and approved by all necessary corporate action and
this Agreement will be legally binding, and enforceable in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights generally from time to time in effect
and subject to principles of equity, which may affect the availability of
remedies with respect thereto. To the best knowledge of the parties, the
entering into this Agreement and its consummation of the Transactions
contemplated hereby will not violate the provisions of (i) any applicable laws
of the United States or any other state or jurisdiction in which each does
business; (ii) their Certificates of Incorporation or By-Laws; or (iii) any
judgment or decree requiring the obtaining of permits, approvals, consents,
authorizations and modifications referred to in Section 4.3 hereof. Further, no
default or breach will occur in any material respect by virtue of the Plan of
Acquisition under any material contract, agreement, mortgage, indenture or other
instrument, of which either of the parties is a part or by which it is bound,
and no material right under any such existing contract, agreement, mortgage,
indenture or other instrument will be extinguished by virtue of the Agreement.
2.3 Absence of Material Changes. Except as permitted or contemplated by
this Agreement, or otherwise disclosed, there has not been any material changes
in the financial or operating condition of either party.
2.4 Litigation. Except for the items disclosed on the Schedule attached
hereto, to the best knowledge of management of both parties hereto, there are no
judicial or administrative actions, suits, proceeding or investigations pending,
or, threatened, against which might result in any material adverse change in
their respective condition (financial or other), properties, assets, business,
operations or prospects of either party; or in any material liability, or which
question the validity of this Agreement, or of any action taken or to be taken
in connection herewith. There are no citations, fines or penalties heretofore
asserted against the parties under any federal, state or local law relating to
air or water pollution, or other environmental protection matters, or relating
to occupational health or safety.
2.5 Disclosing of Material Information. Neither this Agreement nor any
exhibit hereto contains any untrue statement or material fact, or admits to
state a material fact necessary to make the statements herein or therein not
misleading, relating to the business or affairs of each party hereto. There is
no fact known that materially adversely affects the business, condition
(financial or otherwise) or prospects of either party, which has not been set
forth herein or otherwise disclosed.
2.6 Capitalization. Except as set forth on the schedule attached hereto,
there are no options, warrants, conversion rights, rights of exchange or other
rights, plans, agreements or commitments of any nature whatsoever (including,
without limitation, conversion or preemptive rights) providing for the purchase,
issuance or sale of any shares of capital stock of MDHG or Syrup.
2.7 Subsidiaries. Except as set forth on the schedule attached hereto,
neither MDHG nor Syrup, either directly or indirectly, has ever had and as of
the date of this Agreement and as of the Closing Date does not have, any
subsidiaries or any interests in any other corporation, association, joint
venture or other business entity.
2.8 Taxes. Except as set forth on the schedule attached hereto, all taxes,
including without limitation, income, property, sales, use, franchise, value
added, withholding and social security taxes imposed by the United States, any
state, municipality, other local government or other subdivision or
instrumentality of the United States, or any foreign country or any other state
or government thereof, or any other taxing authority, that are due and payable
by each of the parties hereto, and all interest and penalties thereon, whether
disputed or not, and which would result in the imposition of a lien, claim or
encumbrance on either of the parties, other than taxes which are not yet due and
payable, have been paid in full, all tax returns required to be filed in
connection therewith have been accurately prepared and duly and timely filed and
all deposits required by law to be made by each of the parties with respect to
employees' withholding taxes have been duly made. Neither of the parties is
delinquent in the payment of any foreign or domestic tax, assessment or
government charge or deposits which would result in the imposition of a lien,
claim or encumbrance on either of the parties and neither of the parties has a
tax deficiency or claim outstanding, proposed or assessed against it and there
is no basis for any such deficiency or claim, which would result in the
imposition of any lien, claim or encumbrance on or against either of the parties
hereto.
2.9 No Assets or Liabilities. Except as set forth on the schedule attached
hereto, MDHG has, and at the Closing Date will have, no assets, liabilities,
obligations or commitments of any kind whatsoever.
2.10 Compliance with Laws. To the best knowledge of management of both
parties hereto, MDHG and Syrup are in compliance in all material respects with
all applicable laws, regulations, orders, judgments and decrees.
2.11 Charter Documents. MDHG has provided to Syrup for its examination (i)
complete and accurate copies of the Certificate of Incorporation and By-laws of
MDHG, both as amended to the Closing; (ii) the minute book of MDHG containing
all proceedings, consents, actions and meetings of the stockholders and board of
directors of MDHG; and (iii) the stock transfer books of MDHG, setting forth all
transfers of capital stock of MDHG since its inception. MDHG warrants that all
such records are, and as of the Closing Date will be, true and accurate in all
respects.
2.12 Brokers or Finders Fees. No agent, broker, person or firm acting on
behalf of either of the parties is, or will be, entitled to any commission or
brokers or finders fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein, unless
specifically set forth in this Agreement or in the Stock Purchase Agreement of
even date herewith.
2.13 No Reliance of the Representations. Neither of the parties hereto has
relied on any representations or warranties of any party other than the parties
to this Agreement as contained in this Agreement and in any other agreements,
documents or instruments delivered by the parties in connection with the
transaction contemplated hereby.
ARTICLE III
Covenants of the Parties
Each party covenants with the other as follows:
3.1 Negative Covenants. Without it in any way limiting the fiduciary
obligations of any party hereto, from the date of this Agreement, neither party
will:
3.1-1 Engage in any activities or transactions which will be detrimental to
the interests of its Shareholders, other than conduct its normal course of
business;
3.1-2 Engage in any activities or transactions which would be adverse to
the interests of the Shareholders of the other.
3.2 Affirmative Covenants. Prior to the Closing Date, each party will do or
has done, the following: 3.2-1 If required by the laws of their respective
states of incorporation, have obtained the required consent of their
Shareholders to proceed with the Agreement and the Plan of Acquisition;
3.2-2 Use its best efforts to enhance its business organization and retain
the services of its officers, employees and "key" consultants;
3.2-3 Afford to the officers, attorneys, accountants and other authorized
representatives of the other party, full and free access to its properties,
books, tax returns and records, to provide a full opportunity to make such
investigations as deemed necessary of the affairs of the other party.
3.2-4 Promptly advise the other in writing of any materially adverse change
in the financial condition, business, operations or key personnel, any breach of
its representations or warranties contained herein, and any material contract,
agreement, license or other arrangement which, if in effect on the date of this
Agreement, should have been included in this Agreement;
3.2-5 Use its best efforts to accomplish all actions necessary to
consummate the Plan of Acquisition, including the satisfaction of all the
conditions set forth in this Agreement.
ARTICLE IV
Mutual Conditions
Neither party will be obligated to complete or cause to be completed
the transactions contemplated by this agreement unless the following
conditions, and any which may be set forth as a Schedule if annexed
hereto as an integral part hereof, have been met prior to or at the
Closing:
4.1 Absence of Restraint. No order to restrain, enjoin or otherwise prevent
the consummation of this Agreement, or the transactions contemplated herein
shall have been entered by any court of or administrative body, and no
proceeding to obtain any such order shall have been commenced or shall be
threatened.
4.2 Absence of Termination. The obligations to consummate the transactions
contemplated hereby shall not have been canceled pursuant to sections 6.1.
4.3 Required Approvals. Each party shall have received all such approvals,
consents, authorizations or modifications as may be required to permit the
specific performance of their respective obligations under this Agreement, and
the consummations of the transactions herein contemplated (whether for
governmental authorities or other persons), and each party shall have received
any and all permits and approvals from any regulatory authority having
jurisdiction required for the lawful consummation for the Plan of Acquisition.
4.4 Compliance - Securities Laws. The parties hereto acknowledge that all
of the shares of Common Stock to be issued by MDHG in the consummation of this
Agreement are and shall be "restricted" shares under the Securities Act of 1933,
as amended. Each share shall have the following or similar restrictive legend
upon the face and or the reverse:
"The shares represented by this Certificate have not been registered under
the Securities Act of 1933. The shares have been acquired for Investment and may
not be sold, transferred or assigned in the absence of an effective registration
statement for these shares under the Securities Act of 1933 or an opinion of the
Company's counsel that registration is not required under said Act."
Except for Xxxxxxxxxx and Posner, all Shareholders of Syrup who will receive
Shares hereunder shall execute an appropriate Investment Letter indicating that:
i) such Shareholder is acquiring the shares of MDHG by virtue of this business
combination, will hold same as an investment, and does not then have a
present intention to sell, transfer or otherwise engage in a distribution
of such shares; and
ii) any future sale or transfer shall only be made pursuant to an effective SEC
Registration Statement covering said shares, or pursuant to the provisions
of Rule 144 or other applicable exemption from registration, as promulgated
under the Act.
ARTICLE V
Conditions to Obligations
Neither party shall be obligated to complete or cause to be completed the
transactions contemplated by this Agreement unless the following conditions have
been met prior to or at the Closing:
5.1 Compliance with Representations, Warranties and Covenants. i) All of
the representations and warranties contained in this Agreement are true and
shall be true in all material respects at and as of the Closing date; ii) Each
party shall have complied with and performed all of the covenants contained in
this Agreement to be performed by them at or prior to the Closing Date; iii)
evidence of compliance shall be by appropriate schedules to be attached hereto
and incorporated by reference and certified as correct by the President of
Syrup.
5.2 Tax Opinion. Both parties shall have received from their respective
accountants, a letter to the effect that in their opinion the income tax
consequences of the Agreement to be substantially as follows:
5.2-1 No gain or loss will be recognized by the Shareholders of either
party upon receipt of the shares as provided for in the Agreement;
5.2-2 The tax basis of the shares of stock received will be the value
placed upon said shares by the determination pursuant hereto of the value of the
transaction.
5.3 Opinion of Counsel. The parties shall have received opinion letters
dated at or near the Closing date from their respective counsel that:
5.3-1 The respective party is a corporation validly organized, legally
existing and in good standing under the laws of the state of its incorporation,
and is authorized to conduct business in each jurisdiction in which may be
applicable; and has full corporate power and authority to own its properties and
to conduct its business as it is being conducted;
5.3-2 Each operating subsidiary corporation, if any, is validly organized,
legally existing and in good standing under the laws of the jurisdiction in
which domiciled, with full corporate power and authority to own its properties
and to conduct its business operations;
5.3-3 The respective party has the full corporate power to carry out the
transactions contemplated herein; this Agreement has been duly executed and
delivered and all necessary corporate action has been taken by, the respective
Boards of Directors and Shareholders.
5.4 Good Standing Certificate. Each of the parties shall have delivered to
the other Certificates of Good Standing from the Secretary of State of the state
of its incorporation, to the effect that such party is in good standing in such
state and listing all chartered documents on file with the Secretary of State.
ARTICLE VI
Miscellaneous
6.1 Termination. This Agreement may be terminated or canceled, and the
transactions contemplated hereby may be abandoned, notwithstanding Shareholder
authorization, at any time before consummation of the Agreement:
6.1-1 By mutual consent of the Board of Directors of both parties; or
6.1-2 By either party in the event that the other party shall not have
performed a material obligation of such party hereunder, within the time
contemplated by this Agreement.
6.2 Effect of Termination. If this Agreement is terminated, this Agreement,
except as to Sections 6.3 and 6.4, shall no longer be of any force or effect and
there shall be no liability on the part of any party or its respective
directors, officers or Shareholders, except in the case of deliberate fraud and
misrepresentation, including the intentional omission of a material fact,
neither party shall be responsible for the damages (including attorneys fees and
related costs) incurred by the other party hereto. All cash funds paid by either
party to the other, if any, shall be deemed liquidated damages and are not
refundable in the event that this Agreement is terminated for any reason
whatsoever.
6.3 Return of Information; Confidentially. In the event this Agreement is
terminated or the Plan of Acquisition is not consummated for any reason, the
parties agree that all written information and documents supplied by either to
each other shall be promptly returned to the other party at its request, and
each party shall each use its best efforts to cause confidential information to
continue to be treated as confidential and shall refrain from disclosure to any
third parties.
6.4 Costs and Expenses. Unless otherwise specifically provided for, all
costs and expenses incurred in connection with satisfying their respective
obligations under this Agreement will be paid by the party incurring the
expenses. In the event of a termination of this Agreement, pursuant to Article
VI, each party will bear their own expenses.
6.5 Extension of Time; Waivers. At any time prior to the Closing date
either party may extend the time for the performance of the obligations or other
acts required by the other party, or (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto by the parties to the other, and (iii) waive
compliance with any of the agreements or conditions herein to be performed by
the other party. All performance waivers hereunder shall be in writing and
signed by the waiving party.
6.6 Reliance of Counsel. In rendering any opinion referred to herein,
counsel for the parties may rely upon factual matters, certificates of public
officials and corporate officers, opinions of corporate general counsel, and
such other evidence as counsel may reasonably deem appropriate.
6.7 Notices. All notices by both parties to the other shall be in writing,
delivered by the U.S. Postal Service (certified, registered or overnight
express) with return receipt requested, and addressed to the respective party at
the address stated hereinabove, or such other address as may hereafter be
provided and such change of address be acknowledged. Notice may be delivered by
private carrier express or overnight delivery, with written proof of receipt
required.
6.8 Amendment. This Agreement may only be altered, changed or modified by
an amendment in writing, which has been submitted to and approved by the board
of directors and or shareholders of the respective parties.
6.9 Timely Basis. Both parties agree that reasonable delays in completing
the contemplated transaction which are necessitated by compliance with the
provisions of the Securities Act of 1933, and or the Securities Exchange Act of
1934, both as amended, may be required, but in no event shall a party be
required to agree with any unreasonable delay when time is of the essence, and
the obvious result would be that the transaction cannot be completed on a timely
basis.
6.10 Assignment. The benefits and obligations hereunder shall inure to the
benefit of the parties and their successors in interest, including their heirs,
executors, legal representatives, successors and assigns. Notwithstanding the
foregoing, this Agreement, and the obligations hereunder, may only be assigned
by the written consent of the other party.
6.11 Miscellaneous.
6.11-1 Entire Agreement. This Agreement and the contemporaneous Stock
Repurchase Agreement between MDHG, the present Control Shareholders and
Xxxxxxxxxx and Posner are the only agreements between the parties and supersede
all prior oral and written agreements with regard to the subject matter hereof.
All provisions hereof shall survive the Closing until such time as all
conditions, whether their required performance is contemporaneous or subsequent,
shall have been completed as required hereunder.
6.11-2 Effective Date. This Agreement shall take effect only upon its
proper execution by duly authorized representatives of both parties. No
obligation hereunder shall arise until such time as this Agreement is so duly
executed.
6.11-3 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed an original and all of which taken
together shall constitute one and the same instrument.
6.11-4 Facsimile Signatures. The facsimile signatures of one or more of the
signatories hereto shall for be deemed originals for all purposes hereunder.
6.11-5 Surviving Clauses. The parties hereto specifically agree that those
provisions contained herein that by their nature require subsequent or
continuing performance, shall survive the Closing and shall be fully enforceable
hereunder by appropriate legal remedies.
6.11-6 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, pursuant to the laws of the State
of Florida without regard to the principles of 'conflict of laws'.
6.11-7 Titles And Captions. The titles and captions of the Sections and
paragraphs of this Agreement are included solely for convenience of reference,
and shall have no effect upon the constructions or meanings of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this 9 page Agreement as of
the 8th day of January, 1999.
Meridian Holdings Inc.
ATTEST:
/s/ Xxxx Xxxxxx
Xxxx X. Xxxxxx, Secretary
by:/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X.
Xxxxxxxxx, President
The Old
Fashioned Syrup Company, Inc.
ATTEST:
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx, Secretary
by:/s/ Xxxx Xxxxxxxxxx
Xxxx
Xxxxxxxxxx, President
