AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
EXHIBIT
2.1
AGREEMENT OF MERGER AND PLAN
OF REORGANIZATION
THIS
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION is made and entered into on July
20, 2009, by and among LG HOLDING CORPORATION, a Nevada corporation (“Parent”), LG
ACQUISITION CORP., a Colorado corporation (“Acquisition Corp.”),
which is a wholly-owned subsidiary of Parent, and MIKOJO, INC., a California
company incorporated in the state of Delaware (the “Company”).
W I T N E S S E T H
:
WHEREAS,
the Board of Directors of each of Acquisition Corp., Parent and the Company have
each determined that it is fair to and in the best interests of their respective
corporations and shareholders for Acquisition Corp. to be merged with and into
the Company (the “Merger”) upon the
terms and subject to the conditions set forth herein;
WHEREAS,
the Board of Directors of Acquisition Corp. and the Board of Directors of the
Company have approved the Merger in accordance with the Colorado Business
Corporation Act (the “BCA”), and upon the
terms and subject to the conditions set forth herein and in the Statement of
Merger (the “Statement
of Merger”) attached as Exhibit A hereto; and
the Board of Directors of Parent has also approved this Agreement and the
Statement of Merger;
WHEREAS,
the requisite Stockholders have approved, by written consent pursuant to the
BCA, this Agreement and the Statement of Merger and the transactions
contemplated hereby and thereby, including without limitation, the Merger, and
Parent, as the sole stockholder of Acquisition Corp., has approved this
Agreement, the Statement of Merger and the transactions contemplated and
described hereby and thereby, including without limitation, the Merger;
and
NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows:
1. The
Merger.
1.1 Merger Subject to the
terms and conditions of this Agreement and the Statement of Merger, Acquisition
Corp. shall be merged with and into the Company in accordance with the
BCA. At the Effective Time (as hereinafter defined), the separate
legal existence of Acquisition Corp. shall cease, and the Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
“Surviving
Corporation”) and shall continue its corporate existence under the laws
of the State of Colorado under the name of Mikojo, Inc., or some derivation
thereof.
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1.2 Effective Time The Merger shall
become effective on the date and at the time the Statement of Merger is filed
with the Secretary of State of the State of Colorado in accordance with the
BCA. The time at which the Merger shall become effective as aforesaid
is referred to hereinafter as the “Effective
Time.”
1.3 Articles of Incorporation,
By-laws, Directors and Officers.
(a) The
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, attached as Exhibit B hereto,
shall be the Articles of Incorporation of the Surviving Corporation from and
after the Effective Time until further amended in accordance with applicable
law.
(b) The
By-laws of the Company, as in effect immediately prior to the Effective Time,
attached as Exhibit
C hereto, shall be the By-laws of the Surviving Corporation from and
after the Effective Time until amended in accordance with applicable law, the
Articles of Incorporation of the Surviving Corporation and such
By-laws.
(c) The
directors and officers listed in Exhibit D hereto
shall be the directors and officers of the Surviving Corporation, and each shall
hold his respective office or offices from and after the Effective Time (except,
in the case of directors, as described in Section 6.4) until his successor
shall have been elected and shall have qualified in accordance with applicable
law, or as otherwise provided in the Articles of Incorporation or By-laws of the
Surviving Corporation.
1.4 Assets and Liabilities At the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of
Acquisition Corp. and the Company (collectively, the “Constituent
Corporations”); and all the rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and
mixed, and all debts due to any of the constituent corporations on whatever
account, as well for stock subscriptions as all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective constituent corporations, and the title to any real estate vested by
deed or otherwise in either of the such Constituent Corporations shall not
revert or be in any way impaired by the Merger; but all rights of creditors and
all liens upon any property of any of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
1.5 Manner and Basis of
Converting Shares.
(a) At
the Effective Time:
(i) each
share of common stock, par value $.001 per share, of Acquisition Corp. that
shall be outstanding immediately prior to the Effective Time shall,
by
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virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive one (1) shares of common stock, par value
$.001 per share, of the Surviving Corporation, so that at the Effective Time,
Parent shall be the holder of all of the issued and outstanding shares of the
Surviving Corporation;
(ii) the
shares of common stock, par value $.0001 per share, of the Company (the “Company Common
Stock”), which shares at the Closing will constitute all of the issued
and outstanding shares of capital stock of the Company, beneficially owned by
the Stockholders listed in Schedule 2.4 (other
than shares of Company Common Stock as to which appraisal rights are perfected
pursuant to the applicable provisions of the BCA and not withdrawn or otherwise
forfeited), shall, by virtue of the Merger and without any action on the part of
the holders thereof, be converted into the right to receive the number of shares
of Parent Common Stock specified in Schedule 1.5 for each
of the Stockholders, which shall be equal to one share of Parent Common Stock
for each share of Company Common Stock (based on a total of 26,000,000 shares of
Company Common Stock pre-Merger and 1,530,600 shares of Parent Common Stock on a
fully diluted basis allocated to the Stockholders post-Merger) including 1,000,000 shares
of Common Stock which were escrowed pursuant to the promissory notes issued by
the Parent.; and
(iii) each
share of Company Common Stock held in the treasury of the Company immediately
prior to the Effective Time shall be cancelled in the Merger and cease to
exist.
(b) After
the Effective Time, there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective
Time.
1.6 Surrender and Exchange of
Certificates Promptly
after the Effective Time and upon (i) surrender of a certificate or certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time or an affidavit and indemnification in form
reasonably acceptable to counsel for the Parent stating that such Stockholder
has lost its certificate or certificates or that such have been destroyed and
(ii) delivery of a Subscription and Lock Up agreement (if any as described in
Section 4 hereof), Parent shall issue to each record holder of the Company
Common Stock surrendering such certificate or certificates and Subscription and
Lock Up agreement, a certificate or certificates registered in the name of such
Stockholder representing the number of shares of Parent Common Stock that such
Stockholder shall be entitled to receive as set forth in Section 1.5(a)(ii)
hereof. Until the certificate, certificates or affidavit is or are
surrendered together with the Subscription and Lock Up agreement as contemplated
by this Section 1.6 and Section 4 hereof, each certificate or affidavit that
immediately prior to the Effective Time represented any outstanding shares of
Company Common Stock shall be deemed at and after the Effective Time to
represent only the right to receive upon surrender as aforesaid the Parent
Common Stock specified in Schedule 1.5 hereof
for the holder thereof or to perfect any rights of appraisal which such holder
may have pursuant to the applicable provisions of the BCA.
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1.7 Warrants.
(a) (i) At
the Effective Time, all outstanding warrants issued by the Company to purchase
shares of Company Common Stock (the “Company Warrants”)
that have not been surrendered by the holder thereof in exchange for Company
Common Stock, will, at the Effective Time, be deemed be a warrant (the “Parent Warrants”) to
acquire the same number of shares of Parent Common Stock as the holder of such
Company Warrants would have been entitled to receive pursuant to the Merger had
such holder exercised such Company Warrants in full immediately prior to the
Effective Time at a price per share of Parent Common Stock equal to the exercise
price for the shares of Company Common Stock otherwise purchasable pursuant to
such Company Warrant. Schedules 2.10 and
1.7(a)(i) attached hereto set forth the name of each holder of Company
Warrants, the aggregate number of shares of Company Common Stock that each such
person may purchase pursuant to the exercise of his or her Company Warrants and
the aggregate number of shares of Parent Common Stock that each such person may
purchase upon exercise of Parent Warrants acquired pursuant to this Section
1.7(a)(i). By its signature hereunder, Parent expressly assumes the
obligation to issue Parent Common Stock to the holders of Parent Warrants upon
exercise thereof, in accordance with the provisions of this Section
1.7(a)(i).
(ii) Without
limiting the generality of the foregoing, the Company and the Parent shall take
all corporate actions as may be necessary and desirable in order to effectuate
the transactions contemplated by this Section 1.7(a).
(b) Parent
shall take all action necessary and appropriate, on or prior to the Effective
Time, to authorize and reserve a number of shares of Parent Common Stock
sufficient for issuance upon the exercise of Parent Warrants following the
Effective Time as contemplated by this Section 1.7.
(c) Other
than the Company Warrants, all options, warrants and rights to purchase Company
Common Stock outstanding as of the Effective Date will be exercised or
terminated prior to or effective upon the Effective Time, and neither Parent nor
Acquisition Corp. shall assume or have any obligation with respect to such
options, warrants or rights.
1.8 Parent Common
Stock
Parent
agrees that it will cause the Parent Common Stock into which the Company Common
Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) to be
available for such purpose. Parent further covenants that immediately
prior to the Effective Time there will be no more than 1,530,600 shares of
Parent Common Stock issued and outstanding, including 1,000,000 shares of Common
Stock which were escrowed pursuant to the promissory notes issued by the
Parent.and no other common or preferred stock or equity securities or any
options, warrants, rights or other agreements or instruments convertible,
exchangeable or exercisable into common or preferred stock or other equity
securities shall be issued or outstanding.
1.9 Payment of Expenses and
Purchase of Securities. The Company agrees to pay an aggregate of
$400,000 for expenses of the acquisition and for the purchase of Parent common
stock, as shown in the distribution list in Attachment A, resulting in current
Parent
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shareholders
retaining 1,530, 600 shares of which 1,464,500 are restricted and the other
66,100 shares will be free trading in the float. The Company has paid
Parent a non-refundable fee of $25,000, which shall be used for a portion of the
expenses of the transaction and shall be subtracted from the aggregate of
$400,000 to be paid by the Company hereunder. The balance due of
$375,000 will be paid within 90 days of Closing and shall be evidenced by a
promissory note or notes in the form as shown in Attachment B. Should the
$375,000 payment not be received within 120 days of closing, the Company agrees
to pay a $100,000 penalty increasing the amount due to $475,000. Furthermore if
the payment (including penalty) is not received within 150 days of closing,
noteholder(s) will receive a total of the 1,000,000 shares of Parent common
stock which are being held in escrow.
2. Representations and
Warranties of the Company
The
Company hereby represents and warrants to Parent and Acquisition Corp. as
follows:
2.1 Organization, Standing,
Subsidiaries, Etc.
(a) The
Company is a corporation duly organized and existing in good standing under the
laws of the State of Delaware, and has all requisite power and authority
(corporate and other) to carry on its business, to own or lease its properties
and assets, to enter into this Agreement and the Statement of Merger and to
carry out the terms hereof and thereof. Copies of the Articles of
Incorporation and By-laws of the Company that have been delivered to Parent and
Acquisition Corp. prior to the execution of this Agreement are true and complete
and have not since been amended or repealed.
(b) The
Company has no subsidiaries or direct or indirect interest (by way of stock
ownership or otherwise) in any firm, corporation, limited liability company,
partnership, association or business. The Company owns all of the
issued and outstanding capital stock or membership interests of the Subsidiaries
free and clear of all Liens, and the Subsidiaries have no outstanding options,
warrants or rights to purchase capital stock or other equity securities of such
Subsidiaries, other than the capital stock or membership interests owned by the
Company. Unless the context otherwise requires, all references in
this Section 2 to the “Company” shall be treated as being a reference to the
Company and the Subsidiaries taken together as one enterprise.
2.2 Qualification The
Company is duly qualified to conduct business as a corporation and is
in good standing with the State of Delaware and in each other jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the condition (financial or otherwise),
properties, assets, liabilities, business operations, results of operations or
prospects of the Company taken as a whole (the “Condition of the
Company”).
2.3 Capitalization of the
Company
The authorized capital stock of the Company consists of (a) 100,000,000 shares
of Company Capital Stock, $0.0001 par value, and (b) 10,000,000 shares of
preferred stock, par value $.0001 per share, of which no shares are issued or
outstanding, the Company has no authority to issue any other capital
stock. There are 26,000,000 shares of Company Common Stock issued and
outstanding, and such shares are duly
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authorized,
validly issued, fully paid and nonassessable. Except as disclosed in
Schedules 2.10 and
1.7(a)(i), the Company has no outstanding warrants, stock options, rights
or commitments to issue Company Common Stock or other Equity Securities of the
Company, and there are no outstanding securities convertible or exercisable into
or exchangeable for Company Common Stock or other Equity Securities of the
Company.
2.4 Company Stockholders Schedule
2.4 hereto contains a true and complete list of the names and addresses
of the record owner of all of the outstanding shares of Company Common Stock and
other Equity Securities of the Company, together with the number and percentage
(on a fully-diluted basis) of securities held. To the knowledge of
the Company, except as described in Schedule 2.4, there
is no voting trust, agreement or arrangement among any of the beneficial holders
of Company Common Stock affecting the exercise of the voting rights of Company
Common Stock.
2.5 Corporate Acts and
Proceedings The
execution, delivery and performance of this Agreement and the Statement of
Merger (together, the “Merger Documents”)
have been duly authorized by the Board of Directors of the Company and have been
approved by the requisite vote of the Stockholders, and all of the corporate
acts and other proceedings required for the due and valid authorization,
execution, delivery and performance of the Merger Documents and the consummation
of the Merger have been validly and appropriately taken, except for the filing
of the Statement of Merger referred to in Section 1.2.
2.6 Compliance with Laws and
Instruments To the
knowledge of the Company, the business, products and operations of the Company
have been and are being conducted in compliance in all material respects with
all applicable laws, rules and regulations, except for such violations thereof
for which the penalties, in the aggregate, would not have a material adverse
effect on the Condition of the Company. The execution, delivery and
performance by the Company of the Merger Documents and the consummation by the
Company of the transactions contemplated by this Agreement: (a) will not require
any authorization, consent or approval of, or filing or registration with, any
court or governmental agency or instrumentality, except such as shall have been
obtained prior to the Closing, (b) will not cause the Company to violate or
contravene in any material respect (i) any provision of law, (ii) any rule or
regulation of any agency or government, (iii) any order, judgment or decree of
any court, or (iv) any provision of the Articles of Incorporation or By-laws of
the Company, (c) will not violate or be in conflict with, result in a breach of
or constitute (with or without notice or lapse of time, or both) a default
under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other contract, agreement or instrument to which the
Company is a party or by which the Company or any of its properties is bound or
affected, except as would not have a material adverse effect on the Condition of
the Company, and (d) will not result in the creation or imposition of any
material Lien upon any property or asset of the Company.
2.7 Binding Obligations The
Merger Documents constitute the legal, valid and binding obligations of the
Company and are enforceable against the Company in accordance with their
respective terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity.
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2. Broker’s and Finder’s
Fees No
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against the Company, Parent, Acquisition Corp. or any
Stockholder for any commission, fee or other compensation as a finder or broker,
or in any similar capacity.
2.9 Financial Statements Attached
hereto as Schedule
2.9 are the Company’s audited Consolidated Balance Sheet, Consolidated
Statement of Operations, Consolidated Statement of Changes in Shareholders’
Equity and Consolidated Statement of Cash Flows as of and for the year ended
June 30, 2008, and the Company’s unaudited Consolidated Balance Sheet (the
“Balance
Sheet”) as of March 31, 2009 (the “Balance Sheet Date”)
and related Statement of Operations, Consolidated Statement of Changes in
Shareholders’ Equity and Consolidated Statement of Cash Flows as of and for the
period ended March 31, 2009. Such financial statements (i) are in
accordance with the books and records of the Company, (ii) present fairly in all
material respects the financial condition of the Company at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified and (iii) have been prepared in accordance
with generally accepted accounting principles (“GAAP”) applied on a
basis consistent with prior accounting periods.
2.10 Absence of Undisclosed
Liabilities The
Company has no material obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due), arising out
of any transaction entered into at or prior to the Closing, except (a) as
disclosed in Schedule
2.10 and/or Schedule 2.11 hereto,
(b) to the extent set forth on or reserved against in the Balance Sheet, (c)
current liabilities incurred and obligations under agreements entered into in
the usual and ordinary course of business since the Balance Sheet Date, none of
which (individually or in the aggregate) has had or will have a material adverse
effect on the Condition of the Company and (d) by the specific terms of any
written agreement, document or arrangement identified in the
Schedules.
2.11 Changes/Indebtedness Since
the Balance Sheet Date, except as disclosed in Schedule 2.11 hereto,
the Company has not (a) incurred any debts, obligations or liabilities,
absolute, accrued, contingent or otherwise, whether due or to become due, except
for fees, expenses and liabilities incurred in connection with the Merger and
related transactions and current liabilities incurred in the usual and ordinary
course of business, (b) discharged or satisfied any Liens other than those
securing, or paid any obligation or liability other than, current liabilities
shown on the Balance Sheet and current liabilities incurred since the Balance
Sheet Date, in each case in the usual and ordinary course of business, (c)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, other than in the usual and ordinary course of business, (d) sold,
transferred or leased any of its assets, except in the usual and ordinary course
of business, (e) cancelled or compromised any debt or claim, or waived or
released any right, of material value, (f) suffered any physical damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting the Condition of the Company, or (g) entered into any
transaction other than in the usual and ordinary course of
business.
2.12 Employee Benefit Plans;
ERISA
. Schedule 2.12 lists
all: (i) "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of
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1974, as
amended (“ERISA”), maintained
or contributed to by the Company and covering employees of the Company,
including (i) any such plans that are "employee welfare benefit plans" as
defined in Section 3(1) of ERISA and (ii) any such plans that are "employee
pension benefit plans" as defined in Section 3(2) of ERISA (collectively, the
“Company Benefit
Plans”); and (ii) life and health insurance, hospitalization, savings,
bonus, deferred compensation, incentive compensation, holiday, vacation,
severance pay, sick pay, sick leave, disability, tuition refund, service award,
company car, scholarship, relocation, patent award, fringe benefit and other
employee benefit plans, contracts (other than individual employment, consultancy
or severance contracts), policies or practices of the Company providing employee
or executive compensation or benefits to its employees, other than the Company
Benefit Plans (collectively, the “Benefit
Arrangements”). Each Company Benefit Plan and Benefit
Arrangement has been maintained and administered in all material respects in
accordance with applicable law.
2.13 Title to Property and
Encumbrances Except
as disclosed in Schedule 2.13 hereto,
the Company has good, valid and indefeasible marketable title to all properties
and assets used in the conduct of its business (except for property held under
valid and subsisting leases which are in full force and effect and which are not
in default) free of all Liens and other encumbrances, except Permitted Liens and
such ordinary and customary imperfections of title, restrictions and
encumbrances as do not, individually or in the aggregate, materially detract
from the value of the property or assets or materially impair the use made
thereof by the Company in its business. Without limiting the generality of the
foregoing, the Company has good and indefeasible title to all of its properties
and assets reflected in the Balance Sheet, except for property disposed of in
the usual and ordinary course of business since the Balance Sheet Date and for
property held under valid and subsisting leases which are in full force and
effect and which are not in default.
2.14 Litigation Except as
set forth on Schedule
2.14, there is no legal action, suit, arbitration or other legal,
administrative or other governmental proceeding pending or, to the best
knowledge of the Company, threatened against or affecting the Company or its
properties, assets or business, and after reasonable investigation, the Company
is not aware of any incident, transaction, occurrence or circumstance that might
reasonably be expected to result in or form the basis for any such action, suit,
arbitration or other proceeding. The Company is not in default with
respect to any order, writ, judgment, injunction, decree, determination or award
of any court or any governmental agency or instrumentality or arbitration
authority.
2.15 Reserved.
2.16 Disclosure There is
no fact relating to the Company that the Company has not disclosed to Parent
that materially and adversely affects or, insofar as the Company can now
foresee, will materially and adversely affect, the condition (financial or
otherwise), properties, assets, liabilities, business operations or results of
operations of the Company. No representation or warranty by the
Company herein and no information disclosed in the schedules or exhibits hereto
by the Company contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.
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3. Representations and
Warranties of Parent and Acquisition Corp. Parent and
Acquisition Corp. jointly and severally represent and warrant to the Company, as
follows:
3.1 Organization and
Standing
Parent is a corporation duly organized and existing in good standing under the
laws of the State of Nevada. Acquisition Corp. is a corporation duly
organized and existing in good standing under the laws of the State of
Colorado. Parent and Acquisition Corp. have heretofore delivered to
the Company complete and correct copies of their respective Articles or
Certificates of Incorporation and By-laws as now in effect. Parent
and Acquisition Corp. have full corporate power and authority to carry on their
respective businesses as they are now being conducted and as now proposed to be
conducted and to own or lease their respective properties and
assets. Except as disclosed in Schedule 3.1 hereto,
neither Parent nor Acquisition Corp. has any subsidiaries (except Parent as the
sole stockholder of Acquisition Corp.) or direct or indirect interest (by way of
stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business. Parent owns all of the
issued and outstanding capital stock of Acquisition Corp. free and clear of all
Liens, and Acquisition Corp. has no outstanding options, warrants or rights to
purchase capital stock or other equity securities of Acquisition Corp., other
than the capital stock owned by Parent. Unless the context otherwise
requires, all references in this Section 3 to the “Parent” shall be treated as
being a reference to the Parent and Acquisition Corp. taken together as one
enterprise.
3.2 Corporate Authority Each of
Parent and/or Acquisition Corp. (as the case may be) has full corporate power
and authority to enter into the Merger Documents and the other agreements to be
made pursuant to the Merger Documents, and to carry out the transactions
contemplated hereby and thereby. All corporate acts and proceedings required for
the authorization, execution, delivery and performance of the Merger Documents
and such other agreements and documents by Parent and/or Acquisition Corp. (as
the case may be) have been duly and validly taken or will have been so taken
prior to the Closing. Each of the Merger Documents constitutes a
legal, valid and binding obligation of Parent and/or Acquisition Corp. (as the
case may be), each enforceable against them in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’ rights generally and
by general principles of equity.
3.3 Broker’s and Finder’s
Fees
Except for the firms engaged by the Company described in Section 2.8, no person,
firm, corporation or other entity is entitled by reason of any act or omission
of Parent or Acquisition Corp. to any broker’s or finder’s fees, commission or
other similar compensation with respect to the execution and delivery of this
Agreement or the Statement of Merger, or with respect to the consummation of the
transactions contemplated hereby or thereby. Parent and Acquisition
Corp. jointly and severally indemnify and hold Company harmless from and against
any and all loss, claim or liability arising out of any such claim from any
other Person who claims he, she or it introduced Parent or Acquisition Corp. to,
or assisted them with, the transactions contemplated by or described
herein.
3.4 Capitalization of
Parent
The authorized capital stock of Parent consists of (a) 50,000,000 shares of
common stock, par value $.001 per share (the “Parent Common
Stock”), of which not more than 1,530,600 shares will be, prior to the
Effective Time, issued and outstanding, and (b) 1,000,000 shares of preferred
stock, par value $.01 per share, of which no
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shares
are issued or outstanding. Parent has no outstanding options, rights
or commitments to issue shares of Parent Common Stock or any other Equity
Security of Parent or Acquisition Corp., and there are no outstanding securities
convertible or exercisable into or exchangeable for shares of Parent Common
Stock or any other Equity Security of Parent or Acquisition
Corp. There is no voting trust, agreement or arrangement among any of
the beneficial holders of Parent Common Stock affecting the nomination or
election of directors or the exercise of the voting rights of Parent Common
Stock. All outstanding shares of the capital stock of Parent are
validly issued and outstanding, fully paid and nonassessable, and none of such
shares have been issued in violation of the preemptive rights of any
person.
3.5 Acquisition Corp. Acquisition
Corp. is a wholly-owned subsidiary of Parent that was formed specifically for
the purpose of the Merger and that has not conducted any business or acquired
any property, and will not conduct any business or acquire any property prior to
the Closing Date, except in preparation for and otherwise in connection with the
transactions contemplated by this Agreement, the Statement of Merger and the
other agreements to be made pursuant to or in connection with this Agreement and
the Statement of Merger.
3.6 Validity of Shares The 26,000,000
shares of Parent Common Stock to be issued at the Closing pursuant to Section
1.5(a)(ii) hereof, when issued and delivered in accordance with the terms hereof
and of the Statement of Merger, shall be duly and validly issued, fully paid and
nonassessable. Based in part on the representations and warranties of
the Stockholders as contemplated by Section 4 hereof and assuming the accuracy
thereof, the issuance of the Parent Common Stock upon the Merger pursuant to
Section 1.5(a)(ii) will be exempt from the registration and prospectus delivery
requirements of the Securities Act and from the qualification or registration
requirements of any applicable state blue sky or securities laws.
3.7 SEC Reporting and
Compliance
(a) Parent
filed a registration statement on Form S-1 under the Exchange Act which became
effective on April 18, 2008. Parent has filed with the Commission all reports
required to be filed by companies registered pursuant to Section 12(g) of the
Exchange Act.
(b) Parent
has delivered to the Company true and complete copies of all annual reports on
Form 10-KSB, quarterly reports on Form 10-QSB and Form 10-Q, current reports on
Form 8-K and other statements reports and filings (collectively, the “Parent SEC
Documents”) filed by the Parent with the Commission.
(c) Parent
has not filed, and nothing has occurred with respect to which Parent would be
required to file, any report on Form 8-K since April 30,2009. Prior
to and until the Closing, Parent will provide to the Company copies of any and
all amendments or supplements to the Parent SEC Documents filed with the
Commission since April 30, 2009 and any and all subsequent statements, reports
and filings filed by the Parent with the Commission or delivered to the
stockholders of Parent.
(d) The
shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin
Board under the symbol “LGHG.OB,” and Parent is in compliance in all material
respects with all rules and regulations of the OTC Bulletin Board applicable to
it and the Parent Stock.
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(e) Between
the date hereof and the Closing Date, Parent shall continue to satisfy the
filing requirements of the Exchange Act and all other requirements of applicable
securities laws and the OTC Bulletin Board.
3.8Financial Statements The
balance sheets, and statements of operations, statements of changes in
shareholders’ equity and statements of cash flows contained in the Parent SEC
Documents (the “Parent
Financial Statements”) (i) have been prepared in accordance with GAAP
applied on a basis consistent with prior periods (and, in the case of unaudited
financial information, on a basis consistent with year-end audits), (ii) are in
accordance with the books and records of the Parent, and (iii) present fairly in
all material respects the financial condition of the Parent at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified. The financial statements included
in the Annual Report on Form 10-KSB for the fiscal year ended January 31, 2009,
are audited by, and include the related report of Xxxxxx X. Xxxxxxxx, P.C.,
Parent’s independent certified public accountants.
3.9 Governmental Consents All
consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or state
governmental authority on the part of Parent or Acquisition Corp. required in
connection with the consummation of the Merger shall have been obtained prior
to, and be effective as of, the Closing.
3.10 Compliance with Laws and
Instruments The
execution, delivery and performance by Parent and/or Acquisition Corp. of this
Agreement, the Statement of Merger and the other agreements to be made by Parent
or Acquisition Corp. pursuant to or in connection with this Agreement or the
Statement of Merger and the consummation by Parent and/or Acquisition Corp. of
the transactions contemplated by the Merger Documents will not cause Parent
and/or Acquisition Corp. to violate or contravene (i) any provision of law, (ii)
any rule or regulation of any agency or government, (iii) any order, judgment or
decree of any court, or (v) any provision of their respective articles or
Articles of incorporation or by-laws as amended and in effect on and as of the
Closing Date and will not violate or be in conflict with, result in a breach of
or constitute (with or without notice or lapse of time, or both) a default under
any indenture, loan or credit agreement, deed of trust, mortgage, security
agreement or other agreement or contract to which Parent or Acquisition Corp. is
a party or by which Parent and/or Acquisition Corp. or any of their respective
properties is bound.
3.11 No General Solicitation In
issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone
acting on its behalf has offered to sell the Parent Common Stock by any form of
general solicitation or advertising.
3.12 Binding Obligations The
Merger Documents constitute the legal, valid and binding obligations of the
Parent and Acquisition Corp., and are enforceable against the Parent and
Acquisition Corp., in accordance with their respective terms, except as such
enforcement is limited
by bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of
equity.
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3.13 Absence of Undisclosed
Liabilities Neither
Parent nor Acquisition Corp. has any obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or
reserved against in the audited balance sheet of Parent as of January 31, 2009
(the “Parent Balance
Sheet”) or the Notes to the Parent Financial Statements, (c) current
liabilities incurred and obligations under agreements entered into in the usual
and ordinary course of business since April 30, 2009 (the “Parent Balance Sheet
Date”), none of which (individually or in the aggregate) materially and
adversely affects the condition (financial or otherwise), properties, assets,
liabilities, business operations, results of operations or prospects of the
Parent or Acquisition Corp., taken as a whole (the "Condition of the
Parent"), and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC
Documents.
3.14 Changes Since the
Parent Balance Sheet Date, except as disclosed in the Parent SEC Documents, the
Parent has not (a) incurred any debts, obligations or liabilities, absolute,
accrued or, to the Parent’s knowledge, contingent, whether due or to become due,
except for current liabilities incurred in the usual and ordinary course of
business, (b) discharged or satisfied any Liens other than those securing, or
paid any obligation or liability other than, current liabilities shown on the
Parent Balance Sheet and current liabilities incurred since the Parent Balance
Sheet Date, in each case in the usual and ordinary course of business, (c)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, other than in the usual and ordinary course of business, (d) sold,
transferred or leased any of its assets, except in the usual and ordinary course
of business, (e) cancelled or compromised any debt or claim, or waived or
released any right of material value, (f) suffered any physical damage,
destruction or loss (whether or not covered by insurance) which could reasonably
be expected to have a material adverse effect on the Condition of the Parent,
(g) entered into any transaction other than in the usual and ordinary course of
business, (h) encountered any labor union difficulties, (i) made or granted any
wage or salary increase or made any increase in the amounts payable under any
profit sharing, bonus, deferred compensation, severance pay, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement, other than
in the ordinary course of business consistent with past practice, or entered
into any employment agreement, (j) issued or sold any shares of capital stock,
bonds, notes, debentures or other securities or granted any options (including
employee stock options), warrants or other rights with respect thereto, (k)
declared or paid any dividends on or made any other distributions with respect
to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered
or experienced any change in, or condition affecting, the financial condition of
the Parent other than changes, events or conditions in the usual and ordinary
course of its business, none of which (either by itself or in conjunction with
all such other changes, events and conditions) could reasonably be expected to
have a material adverse effect on the Condition of the Parent, (m) made any
change in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted, (n) made or
permitted any amendment or termination of any material contract, agreement or
license to which it is a party, (o) suffered any material loss not reflected
in
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the
Parent Balance Sheet or its statement of income for the year ended on the Parent
Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of,
bonuses or special compensation of any kind or any severance or termination pay
to any present or former officer, director, employee, stockholder or consultant,
(q) made or agreed to make any charitable contributions or incurred any
non-business expenses in excess of $5,000 in the aggregate, or (r) entered into
any agreement, or otherwise obligated itself, to do any of the
foregoing.
3.15 Tax Returns and Audits All required
federal, state and local Tax Returns of the Parent have been accurately prepared
in all material respects and duly and timely filed, and all federal, state and
local Taxes required to be paid with respect to the periods covered by such
returns have been paid to the extent that the same are material and have become
due, except where the failure so to file or pay could not reasonably be expected
to have a material adverse effect upon the Condition of the
Parent. The Parent is not and has not been delinquent in the payment
of any Tax. The Parent has not had a Tax deficiency assessed against
it. None of the Parent’s federal income tax returns nor any state or
local income or franchise tax returns has been audited by governmental
authorities. The reserves for Taxes reflected on the Parent Balance
Sheet are sufficient for the payment of all unpaid Taxes payable by the Parent
with respect to the period ended on the Parent Balance Sheet
Date. There are no federal, state, local or foreign audits, actions,
suits, proceedings, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns of the Parent now pending, and the Parent
has not received any notice of any proposed audits, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns.
3.16 Employee Benefit Plans;
ERISA
There are
no “employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor
any other employee benefit or fringe benefit arrangements, practices, contracts,
policies or programs other than programs merely involving the regular payment of
wages, commissions, or bonuses established, maintained or contributed to by the
Parent.
3.17 Litigation There is
no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the knowledge of the Parent, threatened
against or affecting the Parent or Acquisition Corp. or their properties, assets
or business. To the knowledge of the Parent, neither Parent nor
Acquisition Corp. is in default with respect to any order, writ, judgment,
injunction, decree, determination or award of any court or any governmental
agency or instrumentality or arbitration authority.
4. Conduct of Businesses
Pending the Merger.
4.1 Conduct of Business by the
Company Pending the Merger
Prior to
the Effective Time, unless Parent or Acquisition Corp. shall otherwise agree in
writing or as otherwise contemplated by this Agreement:
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(a) the
business of the Company shall be conducted only in the ordinary
course;
(b) the
Company shall not (i) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of its
capital stock; (ii) amend its Articles of Incorporation or By-laws; or (iii)
split, combine or reclassify the outstanding Company Common Stock or declare,
set aside or pay any dividend payable in cash, stock or property or make any
distribution with respect to any such stock;
(c) the
Company shall not (i) issue or agree to issue any additional shares of, or
options, warrants or rights of any kind to acquire any shares of, Company Common
Stock; (ii) acquire or dispose of any fixed assets or acquire or dispose of any
other substantial assets other than in the ordinary course of business; (iii)
incur additional Indebtedness or any other liabilities or enter into any other
transaction other than in the ordinary course of business; (iv) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing; or (v) except as contemplated by this Agreement, enter into any
contract, agreement, commitment or arrangement to dissolve, merge, consolidate
or enter into any other material business combination;
(d) the
Company shall use its best efforts to preserve intact the business organization
of the Company, to keep available the service of its present officers and key
employees, and to preserve the good will of those having business relationships
with it;
(e) the
Company will not, nor will it authorize any director or authorize or permit any
officer or employee or any attorney, accountant or other representative retained
by it to, make, solicit, encourage any inquiries with respect to, or engage in
any negotiations concerning, any Acquisition Proposal (as defined
below). The Company will promptly advise Parent orally and in writing
of any such inquiries or proposals (or requests for information) and the
substance thereof. As used in this paragraph, “Acquisition Proposal”
shall mean any proposal for a merger or other business combination involving the
Company or for the acquisition of a substantial equity interest in it or any
material assets of it other than as contemplated by this
Agreement. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any person
conducted heretofore with respect to any of the foregoing; and
(f) the
Company will not enter into any new employment agreements with any of its
officers or employees or grant any increases in the compensation or benefits of
its officers and employees other than increases in the ordinary course of
business and consistent with past practice or amend any employee benefit plan or
arrangement.
4.2Conduct of Business by
Parent and Acquisition Corp. Pending the Merger Prior to the
Effective Time, unless the Company shall otherwise agree in writing or as
otherwise contemplated by this Agreement:
(a) the
business of Parent and Acquisition Corp. shall be conducted only in the ordinary
course; provided, however, that Parent
shall take the steps necessary to have discontinued
its existing business without liability to Parent or Acquisition Corp. as of the
Closing Date;
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(b) neither
Parent nor Acquisition Corp. shall (A) directly or indirectly redeem, purchase
or otherwise acquire or agree to redeem, purchase or otherwise acquire any
shares of its capital stock; (B) amend its articles or Articles of incorporation
or by-laws; or (C) split, combine or reclassify its capital stock or declare,
set aside or pay any dividend payable in cash, stock or property or make any
distribution with respect to such stock; and
(c) neither
Parent nor Acquisition Corp. shall (A) issue or agree to issue any additional
shares of, or options, warrants or rights of any kind to acquire shares of, its
capital stock; (B) acquire or dispose of any assets other than in the ordinary
course of business (except for dispositions in connection with Section 5.2(a)
hereof); (C) incur additional Indebtedness or any other liabilities or enter
into any other transaction except in the ordinary course of business; (D) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing, or (E) except as contemplated by this Agreement, enter into any
contract, agreement, commitment or arrangement to dissolve, merge; consolidate
or enter into any other material business contract or enter into any
negotiations in connection therewith.
(d) neither
Parent nor Acquisition Corp. will, nor will they authorize any director or
authorize or permit any officer or employee or any attorney, accountant or other
representative retained by them to, make, solicit, encourage any inquiries with
respect to, or engage in any negotiations concerning, any Acquisition Proposal
(as defined below for purposes of this paragraph). Parent will
promptly advise the Company orally and in writing of any such inquiries or
proposals (or requests for information) and the substance thereof. As
used in this paragraph, “Acquisition Proposal”
shall mean any proposal for a merger or other business combination involving the
Parent or Acquisition Corp. or for the acquisition of a substantial equity
interest in either of them or any material assets of either of them other than
as contemplated by this Agreement. Parent will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any person conducted heretofore with respect to any of the foregoing;
and
(e) neither
the Parent nor Acquisition Corp. will enter into any new employment agreements
with any of their officers or employees or grant any increases in the
compensation or benefits of their officers or employees.
5. Additional
Agreements.
5.1 Access and Information The
Company, Parent and Acquisition Corp. shall each afford to the other and to the
other’s accountants, counsel and other representatives full access during normal
business hours throughout the period prior to the Effective Time of all of its
properties, books, contracts, commitments and records (including but not limited
to tax returns) and during such period, each shall furnish promptly to the other
all information concerning its business, properties and personnel as such other
party may reasonably request; provided, that no
investigation pursuant to this Section 6.1 shall affect any representations or
warranties made herein. Each party shall hold, and shall cause its
employees and agents to hold,
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in
confidence all such information (other than such information which (i) is
already in such party’s possession or (ii) becomes generally available to the
public other than as a result of a disclosure by such party or its directors,
officers, managers, employees, agents or advisors, or (iii) becomes available to
such party on a non-confidential basis from a source other than a party hereto
or its advisors, provided that such source is not known by such party to be
bound by a confidentiality agreement with or other obligation of secrecy to a
party hereto or another party until such time as such information is otherwise
publicly available; provided, however, that (A) any
such information may be disclosed to such party’s directors, officers, employees
and representatives of such party’s advisors who need to know such information
for the purpose of evaluating the transactions contemplated hereby (it being
understood that such directors, officers, employees and representatives shall be
informed by such party of the confidential nature of such information), (B) any
disclosure of such information may be made as to which the party hereto
furnishing such information has consented in writing, and (C) any such
information may be disclosed pursuant to a judicial, administrative or
governmental order or request; provided, however, that the
requested party will promptly so notify the other party so that the other party
may seek a protective order or appropriate remedy and/or waive compliance with
this Agreement and if such protective order or other remedy is not obtained or
the other party waives compliance with this provision, the requested party will
furnish only that portion of such information which is legally required and will
exercise its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the information
furnished). If this Agreement is terminated, each party will deliver
to the other all documents and other materials (including copies) obtained by
such party or on its behalf from the other party as a result of this Agreement
or in connection herewith, whether so obtained before or after the execution
hereof.
5.2 Additional Agreements Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use its commercially reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts to satisfy the conditions precedent to the obligations of any
of the parties hereto to obtain all necessary waivers, and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible). In order to obtain any
necessary governmental or regulatory action or non-action, waiver, consent,
extension or approval, each of Parent, Acquisition Corp. and the Company agrees
to take all reasonable actions and to enter into all reasonable agreements as
may be necessary to obtain timely governmental or regulatory approvals and to
take such further action in connection therewith as may be
necessary. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Parent, Acquisition Corp. and the
Company shall take all such necessary action.
5.3 Publicity No party
shall issue any press release or public announcement pertaining to the Merger
that has not been agreed upon in advance by Parent and the Company, except as
Parent reasonably determines to be necessary in order to comply with the rules
of the Commission or of the principal trading exchange or market for Parent
Common Stock; provided, that in
such case Parent will use its best efforts to allow the Company to review and
reasonably approve any press release or public announcement prior to its
release.
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5.4 Appointment of Directors Parent
shall accept the resignation of the current officers and directors of Parent as
provided by Section 7.2 hereof, and shall cause the persons listed as directors
in Exhibit D
hereto to be elected to the Board of Directors of Parent, in each case
immediately upon the Effective Time, except that the resignation and appointment
of certain directors shall be delayed until compliance with Section 14(f) of the
Exchange Act and rules promulgated thereunder, as set forth in Section 7.2
hereof. At the first annual meeting of Parent stockholders and
thereafter, the election of members of Parent’s Board of Directors shall be
accomplished in accordance with the by-laws of Parent.
5.5 Parent Name Change and
Exchange Listing At the
Effective Time, Parent shall take all required legal actions, including the
filing of an Information Statement on Schedule 14C under the Exchange Act, to
change its corporate name to MIKOJO, INC., or some derivation
thereof.
5.6 Reserved
5.7 Reserved
6. Conditions of Parties’
Obligations.
6.1 Company Obligations The
obligations of Parent and Acquisition Corp. under this Agreement and the
Statement of Merger are subject to the fulfillment at or prior to the Closing of
the following conditions, any of which may be waived in whole or in part by
Parent.
(a) No Errors, etc. The
representations and warranties of the Company under this Agreement shall be
deemed to have been made again on the Closing Date and shall then be true and
correct in all material respects.
(b) Compliance with
Agreement. The Company shall have performed and complied in
all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
(c) No Default or Adverse
Change. There shall not exist on the Closing Date any Default
or Event of Default or any event or condition that, with the giving of notice or
lapse of time, or both, would constitute a Default or Event of Default, and
since the Balance Sheet Date, there shall have been no material adverse change
in the Condition of the Company.
(d) Certificate of
Officer. The Company shall have delivered to Parent and
Acquisition Corp. a certificate dated the Closing Date, executed on its behalf
by Xxxxx X. Xxxxx the Chairman of the Board of Directors of the Company,
certifying the satisfaction of the conditions specified in paragraphs (a), (b)
and (c) of this Section 6.1.
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(e) No Restraining
Action. No action or proceeding before any court, governmental
body or agency shall have been threatened, asserted or instituted to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
Statement of Merger or the carrying out of the transactions contemplated by the
Merger Documents.
(f) Supporting
Documents. Parent and Acquisition Corp. shall have received
the following:
(1) Copies
of resolutions of the Board of Directors and the Stockholders of the Company,
certified by the Secretary of the Company, authorizing and approving the
execution, delivery and performance of the Merger Documents and all other
documents and instruments to be delivered pursuant hereto and
thereto.
(2) A
certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute any
documents referred to in this Agreement and further certifying that the Articles
of Incorporation and By-laws of the Company delivered to Parent and Acquisition
Corp. at the time of the execution of this Agreement have been validly adopted
and have not been amended or modified.
(3) A
certificate, dated the Closing Date, executed by the Company’s Secretary,
certifying that, except for the filing of the Statement of
Merger: (i) all consents, authorizations, orders and approvals of,
and filings and registrations with, any court, governmental body or
instrumentality that are required for the execution and delivery of this
Agreement and the Statement of Merger and the consummation of the Merger shall
have been duly made or obtained, and all material consents by third parties that
are required for the Merger have been obtained; and (ii) no action or proceeding
before any court, governmental body or agency has been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the Statement of Merger or the carrying out of the
transactions contemplated by the Merger Documents.
(4) Evidence
as of a recent date of the good standing and corporate existence of the Company
issued by the Secretary of State of the State of Delaware and evidence that the
Company is qualified to transact business as a corporation and is in
good standing in each other state of the United States and in each
other jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary.
(5) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as Parent and Acquisition Corp. may reasonably
request.
(g) Proceedings and
Documents. All corporate and other proceedings and actions
taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transactions shall be reasonably satisfactory in form
and substance to Parent and Acquisition Corp. The Company shall
furnish to Parent and Acquisition Corp. such supporting documentation and
evidence of the satisfaction of any or all of the conditions precedent specified
in this Section 6.1 as Parent or its counsel may reasonably
request.
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6.2 Parent and Acquisition Corp.
Obligations The
obligations of the Company under this Agreement and the Statement of Merger are
subject to the fulfillment at or prior to the Closing of the conditions
precedent specified in paragraph (f) of Section 6.1 hereof and the following
additional conditions:
(a) No Errors,
etc. The representations and warranties of Parent and
Acquisition Corp. under this Agreement shall be deemed to have been made again
on the Closing Date and shall then be true and correct in all material
respects.
(b) Compliance with
Agreement. Parent and Acquisition Corp. shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement and the Statement of Merger to be performed or
complied with by them on or before the Closing Date.
(c) No Default or Adverse
Change. There shall not exist on the Closing Date any Default
or Event of Default or any event or condition, that with the giving of notice or
lapse of time, or both, would constitute a Default of Event of Default, and
since the Parent Balance Sheet Date, there shall have been no material adverse
change in the Condition of the Parent.
(d) Certificate of
Officer. Parent and Acquisition Corp. shall have delivered to
the Company a certificate dated the Closing Date, executed on their behalf by
their respective President, certifying the satisfaction of the conditions
specified in paragraphs (a), (b), and (c) of this Section 6.2.
(e) Supporting
Documents. The Company shall have received the
following:
(1) Copies
of resolutions of Parent’s and Acquisition Corp.’s respective boards of
directors and the sole shareholder of Acquisition Corp., certified by their
respective Secretaries, authorizing and approving, to the extent applicable, the
execution, delivery and performance of this Agreement, the Statement of Merger
and all other documents and instruments to be delivered by them pursuant hereto
and thereto.
(2) A
certificate of incumbency executed by the respective Secretaries of Parent and
Acquisition Corp. certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in paragraph (1) above and
further certifying that the articles or certificates of incorporation and
by-laws of Parent and Acquisition Corp. appended thereto have not been amended
or modified.
(3) A
certificate, dated the Closing Date, executed by the Secretary of each of the
Parent and Acquisition Corp., certifying that, except for the filing of the
Statement of Merger: (i) all consents, authorizations, orders and
approvals of, and filings and
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registrations
with, any court, governmental body or instrumentality that are required for the
execution and delivery of this Agreement and the Statement of Merger and the
consummation of the Merger shall have been duly made or obtained, and all
material consents by third parties required for the Merger have been obtained;
and (ii) no action or proceeding before any court, governmental body or agency
has been threatened, asserted or instituted to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the Statement of
Merger or the carrying out of the transactions contemplated by any of the Merger
Documents.
(4) A
certificate of Corporate Stock Transfer, Inc., Parent’s transfer agent and
registrar, certifying as of the business day prior to the Closing Date, a true
and complete list of the names and addresses of the record owners of all of the
outstanding shares of Parent Common Stock, together with the number of shares of
Parent Common Stock held by each record owner.
(5) A
letter from Corporate Stock Transfer, Inc., Parent’s transfer agent and
registrar setting forth that the number of shares of Parent Common Stock that
would be issued and outstanding as of the Closing Date but prior to the closing
of the Merger, is no more than 1,530,600 shares of Parent Common Stock including
1,000,000 shares of Common Stock which were escrowed pursuant to the promissory
notes issued by the Parent.
(6) An
agreement in writing from Xxxxxx X. Xxxxxxxx, P.C., in form and substance
reasonably satisfactory to the Company, to deliver copies of the audit opinions
and audit reports with respect to any and all financial statements of Parent
that had been audited by such firm.
(7) (i)
The executed resignation of Xxxxx Xxxx as an officer of Parent, with the officer
resignation to take effect at the Effective Time, and with the resignation of
Xx. Xxxx as a director to take effect upon Parent’s compliance with Section
14(f) of the Exchange Act and rules promulgated thereunder. Parent will enter
into an Indemnification Agreement with Xx. Xxxx in the form as shown in Exhibit
F hereto to indemnify him as a director between the Effective Time and his
resignation upon Parent’s compliance with Section 14(f) of the Exchange Act and
rules promulgated thereunder.
(8) Evidence
as of a recent date of the good standing and corporate existence of the Parent
made available to the Company by the Secretary of State of Nevada and evidence
that the Parent is qualified to transact business as a foreign corporation and
is in good standing in each state of the United States and in each other
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary.
(9) Evidence
as of a recent date of the good standing and corporate existence of Acquisition
Corp. issued by the Secretary of State of Colorado.
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(10) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably
request.
(f) Proceedings and
Documents. All corporate and other proceedings and actions
taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transactions shall be satisfactory in form and substance
to the Company. Parent and Acquisition Corp. shall furnish to the Company such
supporting documentation and evidence of satisfaction of any or all of the
conditions specified in this Section 6.2 as the Company may reasonably
request.
The
Company and Parent may waive compliance with any of the conditions precedent
specified in this Section 6.2.
8. Amendment of Agreement This
Agreement and the Statement of Merger may be amended or modified at any time in
all respects by an instrument in writing executed (i) in the case of this
Agreement by the parties hereto and (ii) in the case of the Statement of Merger
by the parties thereto.
9. Definitions Unless
the context otherwise requires, the terms defined in this Section 9 shall have
the meanings herein specified for all purposes of this Agreement, applicable to
both the singular and plural forms of any of the terms herein
defined.
“Acquisition Corp.”
means LG ACQUISITION Corp., a Colorado corporation.
“Acquisition Proposal”
shall have the meaning assigned to such term in each of Section 5.1(e) and
Section 5.2(d) hereof, as applicable.
“Affiliate” shall mean
any Person that directly or indirectly controls, is controlled by, or is under
common control with, the indicated Person.
“Agreement” shall mean
this Agreement.
“Balance Sheet” and
“Balance Sheet
Date” shall have the meanings assigned to such terms in Section 2.9
hereof.
“Benefit Arrangements”
shall have the meaning assigned to it in Section 2.12 hereof.
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“Statement of Merger”
shall have the meaning assigned to it in the second recital of this
Agreement.
“Closing” and “Closing Date” shall
have the meanings assigned to such terms in Section 11 hereof.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Commission” shall
mean the U.S. Securities and Exchange Commission.
“Company” shall mean
MIKOJO, INC., a Delaware corporation.
“Company Common Stock”
shall have the meaning assigned to it in Section 1.5(a)(ii).
“Company Benefit
Plans” shall have the meaning assigned to it in Section 2.12
hereof.
“Company Warrants”
shall have the meaning assigned to it in Section 1.7(a) hereof.
“Condition of the
Company” shall have the meaning assigned to it in Section 2.2
hereof.
“Condition of the
Parent” shall have the meaning assigned to it in Section 3.13
hereof.
“Constituent
Corporations” shall have the meaning assigned to it in Section 1.4
hereof.
“Default” shall mean a
default or failure in the due observance or performance of any covenant,
condition or agreement on the part of the Company to be observed or performed
under the terms of this Agreement or the Statement of Merger, if such default or
failure in performance shall remain unremedied for five (5) days.
“BCA” shall have the
meaning assigned to it in the second recital hereof.
“Effective Time” shall
have the meaning assigned to it in Section 1.2 hereof.
“Equity Security”
shall mean any stock or similar security of an issuer or any security (whether
stock or Indebtedness for Borrowed Money) convertible, with or without
consideration, into any stock or similar equity security, or any security
(whether stock or Indebtedness for Borrowed Money) carrying any warrant or right
to subscribe to or purchase any stock or similar security, or any such warrant
or right.
“ERISA” shall have the
meaning assigned to it in Section 2.12 hereof.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
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“Event of Default”
shall mean (a) the failure of the Company to pay any Indebtedness for Borrowed
Money, or any interest or premium thereon, within five (5) days after the same
shall become due, whether such Indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise, (b)
an event of default under any agreement or instrument evidencing or securing or
relating to any such Indebtedness, or (c) the failure of the Company to perform
or observe any material term, covenant, agreement or condition on its part to be
performed or observed under any agreement or instrument evidencing or securing
or relating to any such Indebtedness when such term, covenant or agreement is
required to be performed or observed.
“GAAP” shall have the
meaning assigned to it in Section 2.9 hereof.
“Indebtedness” shall
mean any obligation of the Company which under generally accepted accounting
principles is required to be shown on the balance sheet of the Company as a
liability. Any obligation secured by a Lien on, or payable out of the proceeds
of production from, property of the Company shall be deemed to be Indebtedness
even though such obligation is not assumed by the Company.
“Indebtedness for Borrowed
Money” shall mean (a) all Indebtedness in respect of money borrowed
including, without limitation, Indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing money
or using available funds to pay such amounts and not constituting an account
payable or expense accrual incurred or assumed in the ordinary course of
business of the Company, (b) all Indebtedness evidenced by a promissory note,
bond or similar written obligation to pay money, or (c) all such Indebtedness
guaranteed by the Company or for which the Company is otherwise contingently
liable.
“Investment Company
Act” shall mean the Investment Company Act of 1940, as
amended.
“knowledge” and “know” means, when
referring to any person or entity, the actual knowledge of such person or entity
of a particular matter or fact, and what that person or entity would have
reasonably known after due inquiry. An entity will be deemed to have
"knowledge" of a particular fact or other matter if any individual who is
serving, or who has served, as an executive officer of such entity has actual
"knowledge" of such fact or other matter, or had actual "knowledge" during the
time of such service of such fact or other matter, or would have had "knowledge"
of such particular fact or matter after due inquiry.
“Lien” shall mean any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other
law.
“Memorandum” shall
have the meaning assigned to it in the fourth recital hereof.
“Merger” shall have
the meaning assigned to it in the first recital hereof.
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“Merger Documents”
shall have the meaning assigned to it in Section 2.5 hereof.
“Parent” shall mean LG
HOLDING CORPORATION, a Nevada corporation.
“Parent Balance Sheet”
and “Parent Balance
Sheet Date” shall have the meanings assigned to them in Section 3.13
hereof.
“Parent Common Stock”
shall have the meaning assigned to it in Section 3.4 hereof.
“Parent Employee Benefit
Plans” shall have the meaning assigned to it in Section 3.16
hereof.
“Parent Financial
Statements” shall have the meaning assigned to it in Section 3.8
hereof.
“Parent SEC Documents”
shall have the meaning assigned to it in Section 3.7(b) hereof.
“Parent Warrants”
shall have the meaning assigned to it in Section 1.7(a) hereof.
“Patent and Trademark
Rights” shall have the meaning assigned to it in Section 2.15
hereof.
“Permitted Liens”
shall mean (a) Liens for taxes and assessments or governmental charges or levies
not at the time due or in respect of which the validity thereof shall currently
be contested in good faith by appropriate proceedings; (b) Liens in respect of
pledges or deposits under workmen’s compensation laws or similar legislation,
carriers’, warehousemen’s, mechanics’, laborers’ and similar Liens, if the
obligations secured by such Liens are not then delinquent or are being contested
in good faith by appropriate proceedings; and (c) Liens incidental to the
conduct of the business of the Company that were not incurred in connection with
the borrowing of money or the obtaining of advances or credits and which do not
in the aggregate materially detract from the value of its property or materially
impair the use made thereof by the Company in its business.
“Person” shall include
all natural persons, corporations, business trusts, associations, limited
liability companies, partnerships, joint ventures and other entities and
governments and agencies and political subdivisions.
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Stockholders” shall
mean all of the stockholders of the Company.
“Subsidiaries” shall
have the meaning assigned to it in Section 2.1(b) hereof.
“Surviving
Corporation” shall have the meaning assigned to it in Section 1.1
hereof.
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“Tax” or “Taxes” shall mean (a)
any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts,
deficiencies and other governmental charges of any kind whatsoever (including,
but not limited to, taxes on or with respect to net or gross income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
real property transfer, transfer gains, transfer taxes, inventory, capital
stock, license, payroll, employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent, excise, occupancy,
recordation, bulk transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon, penalties, fines,
damages costs, fees, additions to tax or additional amounts with respect
thereto, imposed by the United States (federal, state or local) or other
applicable jurisdiction; (b) any liability for the payment of any amounts
described in clause (a) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor or
successor liability, including, without limitation, by reason of Regulation
section 1.1502-6; and (c) any liability for the payments of any amounts as a
result of being a party to any Tax Sharing Agreement or as a result of any
express or implied obligation to indemnify any other Person with respect to the
payment of any amounts of the type described in clause (a) or (b).
“Tax Return” shall
include all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns (including Form 1099 and
partnership returns filed on Form 1065) required to be supplied to a Tax
authority relating to Taxes.
10.Closing The closing
of the Merger (the “Closing”) shall occur
concurrently with the Effective Time (the “Closing
Date”). The Closing shall occur at the offices of Xxxxx Xxxxxx
& Associates, P.C. At the Closing, Parent shall present for
delivery to each Stockholder the certificate representing the Parent Common
Stock to be issued pursuant to Section 1.5(a)(ii) hereof to them pursuant to
Sections 1.6 and 4 hereof. Such presentment for delivery shall be
against delivery to Parent and Acquisition Corp. of the certificates, opinions,
agreements and other instruments referred to in Section 6.1 hereof, and the
certificates representing all of the Common Stock issued and outstanding
immediately prior to the Effective Time. Parent will deliver at such Closing to
the Company the officers’ certificate and opinion referred to in Section 6.2
hereof. All of the other documents, certificates and agreements referenced in
Section 6 will also be executed as described therein. At the Effective Time, all
actions to be taken at the Closing shall be deemed to be taken
simultaneously.
11. Termination Prior to
Closing.
11.1 Termination of Agreement This
Agreement may be terminated at any time prior to the Closing:
(a) By
the mutual written consent of the Company, Acquisition Corp. and
Parent;
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25 -
(b) By
the Company, if Parent or Acquisition Corp. (i) fails to perform in any material
respect any of its agreements contained herein required to be performed by it on
or prior to the Closing Date, (ii) materially breaches any of its
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after the Company has notified
Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant
to this paragraph (b);
(c) By
Parent and Acquisition Corp., if the Company (i) fails to perform in any
material respect any of its agreements contained herein required to be performed
by it on or prior to the Closing Date, (ii) materially breach any of its
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after Parent or Acquisition Corp.
has notified the Company of its intent to terminate this Agreement pursuant to
this paragraph (c);
(d) By
either the Company, on the one hand, or Parent and Acquisition Corp., on the
other hand, if there shall be any order, writ, injunction or decree of any court
or governmental or regulatory agency binding on Parent, Acquisition Corp. or the
Company, which prohibits or materially restrains any of them from consummating
the transactions contemplated hereby; provided, that the
parties hereto shall have used their best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted within
ninety (90) days after entry, by any such court or governmental or regulatory
agency;
(e) By
the Parent and Acquisition Corp., if they deem in their sole and complete
discretion, that the final audited financials statements yet to be provided by
the Company under Section 2.9 are materially different in any aspect from the
unaudited financial statements which have previously been provided;
(f) By
the Parent and Acquisition Corp., if they deem in their sole and complete
discretion, that any aspect of the Company’s business or status is materially
different from its situation as disclosed to the Parent and Acquisition Corp. by
the Company as of March 30, 2009;
(i) By
either the Company, on the one hand, or Parent and Acquisition Corp., on the
other hand, if the Closing has not occurred on or prior to August 1, 2009 for
any reason other than delay or nonperformance of the party seeking such
termination.
11.2 Termination of Obligations
Termination of this Agreement pursuant to this Section 11 shall terminate all
obligations of the parties hereunder, except for the obligations under Section
6.1; provided,
however, that
termination pursuant to paragraphs (b) or (c) of Section 11.1 shall not relieve
the defaulting or breaching party or parties from any liability to the other
parties hereto.
12. Miscellaneous.
12.1 Notices Any notice,
request or other communication hereunder shall be given in writing and shall be
served either personally by overnight delivery or delivered by mail, certified
return receipt and addressed to the following addresses:
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26 -
If to
Parent
or
Acquisition Corp.: LG HOLDING CORPORATION
0000 X
Xxxxxx Xxxxxx #00-0
Xxxxxxxx,
XX 00000
Attention: Xx.
Xxxxx Xxxx, President and CEO
|
|
With
a copy to:
|
Xxxxx Xxxxxx & Associates, P.C.
|
0000 Xxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxx
Xxxxx
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx
Xxxxxx, Esq.
If to the
Company: MIKOJO, INC.
0000
Xxxxxxx Xxxxx Xxxxx 000
Xxxxxx
Xxxx, XX 00000
Attention:
Xxxxx X. Xxxxx , Chairman and CEO
With a
copy to:
Law
Offices of Xxxxxx Xxxxxx
000 Xxxxx
Xxxx Xxxx. Xxxxx 000
Xxxxx
Xxxxxx, XX 00000
Tel.
(000) 000-0000
Fax. (000)
000-0000
Attention: Xxxxxx
X. X. Xxxxxx, Esq.
Notices
shall be deemed received at the earlier of actual receipt or three (3) business
days following mailing. Counsel for a party (or any authorized
representative) shall have authority to accept delivery of any notice on behalf
of such party.
12.2 Entire
Agreement
. This
Agreement, including the schedules and exhibits attached hereto and other
documents referred to herein, contains the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and undertakings between the parties with
respect to such subject matter.
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27 -
12.3 Expenses. Each party
shall bear and pay all of the legal, accounting and other expenses incurred by
it in connection with the transactions contemplated by this
Agreement.
12.4 Time Time is of the
essence in the performance of the parties’ respective obligations herein
contained.
12.5 Severability
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.6 Successors and Assigns This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and heirs.
12.7 No Third Parties
Benefited This
Agreement is made and entered into for the sole protection and benefit of the
parties hereto, their successors, assigns and heirs, and no other Person shall
have any right or action under this Agreement.
12.8 Counterparts This
Agreement may be executed in one or more counterparts, with the same effect as
if all parties had signed the same document. Each such counterpart shall be an
original, but all such counterparts together shall constitute a single
agreement.
12.9 Governing Law This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Colorado. The parties to this Agreement agree that any
breach of any term or condition of this Agreement or the transactions
contemplated hereby shall be deemed to be a breach occurring in the State of
Colorado by virtue of a failure to perform an act required to be performed in
the State of Colorado. The parties to this Agreement irrevocably and
expressly agree to submit to the jurisdiction of the courts of the State of
Colorado for the purpose of resolving any disputes among the parties relating to
this Agreement or the transactions contemplated hereby. The parties
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby, or any judgment entered by any court in respect hereof
brought in Denver, Colorado, and further irrevocably waive any claim that any
suit, action or proceeding brought in Denver, Colorado has been brought in an
inconvenient forum. With respect to any action before the above
courts, the parties hereto agree to service of process by certified or
registered United States mail, postage prepaid, addressed to the party in
question.
[SIGNATURE
PAGE FOLLOWS]
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28 -
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding
and effective as of the day and year first above written.
|
PARENT:
LG
HOLDING CORPORATION
By: /s/
Xxxxx
Xxxx
Xxxxx
Xxxx
President
and Chief Executive Officer
|
|
|
ACQUISITION
CORP.:
LG
ACQUISITION CORP.
By: /s/
Xxxxx
Xxxx
Xxxxx
Xxxx
President
and Chief Executive Officer
|
|
|
THE
COMPANY:
MIKOJO,
INC
By: /s/
Xxxxx X.
Xxxxx
Xxxxx
X. Xxxxx
Chairman
|
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29 -
