AGREEMENT AND PLAN OF STOCK EXCHANGE
AGREEMENT
AND PLAN OF STOCK EXCHANGE
This Agreement and Plan of Stock
Exchange ("Agreement"), is
made and entered into this 30th day of June 2010, by and among
FOUR STAR HOLDINGS, INC., a Florida Corporation ("FOUR
STAR HOLDINGS"), and TWELVE OAKS PROPERTIES, INC., an Alabama Corporation ("TWELVE
OAKS”). FOUR STAR HOLDINGS, and
TWELVE OAKS are
hereinafter sometimes collectively referred to as the
"Parties."
RECITALS:
A. FOUR STAR HOLDINGS desires to
acquire all of the issued and outstanding shares of TWELVE OAKS, through a Stock
Exchange with and into FOUR STAR
HOLDINGS (the "Stock
Exchange"), with FOUR STAR HOLDINGS.
B. It
is the intention of the parties hereto that: (i) the Stock Exchange shall
qualify as a tax free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended, and related sections thereunder; and the parties
intend this Agreement to qualify as a "plan of reorganization" within the
meaning of Treasury Regulation Sections 1.368-2(g) and 1.368-3(a), and (ii) the
Stock Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended, and
under the applicable securities laws of each state or jurisdiction where the
FOUR STAR HOLDINGS Security Holders reside.
C. The board of directors of each of
FOUR STAR HOLDINGS, and
TWELVE OAKS and the
FOUR STAR HOLDINGS
Security Holders each deem it to be in the best interests of FOUR STAR
HOLDINGS and TWELVE OAKS
and their respective shareholders
to consummate the Stock Exchange, as a result of which FOUR STAR HOLDINGS
shall acquire all of the issued
and outstanding shares of TWELVE OAKS.
NOW, THEREFORE, in consideration
of the mutual covenants, agreements, representations and warranties contained in
this Agreement, the parties hereto agree as follows:
CERTAIN
DEFINITIONS
As used
in this Agreement, the following terms shall have the meanings set forth
below:
"Applicable Law" means any
domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties, the Stock Exchange and/or
the Parties.”
"Articles of Stock Exchange"
shall mean the certificate of Stock Exchange of TWELVE OAKS with and into
FOUR STAR HOLDINGS.”
"Business Day" shall mean any
day, excluding Saturday or Sunday or any other day on which national banks
located in Alabama and Florida shall be closed for business.”
"dollar" and "$" means lawful money of the
United States of America.”
"FOUR STAR HOLDINGS Common Stock"
shall mean the shares of common stock of FOUR STAR HOLDINGS, $2.99 par
value per share.”
Page 1 of
17
"FOUR
STAR HOLDINGS Fully-Diluted Common Stock" means, as at the time in question, the
maximum number shares of FOUR STAR HOLDINGS Common Stock that are issued and
outstanding, after giving
effect to: (a) the issuance of all of the Stock Exchange Shares; and (b)
the issuance of any other shares of FOUR STAR HOLDINGS Common Stock that are
issuable upon conversion of any FOUR STAR HOLDINGS notes or shares of FOUR STAR
HOLDINGS Preferred Stock, or upon the exercise of options, warrants or other
rights to purchase shares of FOUR STAR HOLDINGS capital stock, but only to the
extent that such securities are (i) outstanding as at the Effective Time of the
Stock Exchange, or (ii) issued subsequent to the Effective Time of the Stock
Exchange.”
"Effective
Time" shall mean the date upon which the Stock Exchange of FOUR STAR HOLDINGS
into TWELVE OAKS shall be consummated pursuant to the filing of the Articles of
Stock Exchange with the Secretary of State of Florida.”
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.”
"GAAP"
means generally accepted accounting principles in the United States of America
as promulgated by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board or any successor Institutes concerning the
treatment of any accounting matter.”
"Knowledge" means the knowledge after reasonable inquiry.”
"Lien"
means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset.”
"Material
Adverse Effect" with respect to any entity or group of entities means any event,
change or effect that has or would have a materially adverse effect on the
financial condition, business or results of operations of such entity or group
of entities, taken as a consolidated whole.”
"Stock
Exchange Shares" shall mean that number of shares of FOUR STAR HOLDINGS Common
Stock or Preferred Stock to be issued to the TWELVE OAKS Stock Holders on the
Closing Date and at the Effective Time of the Stock Exchange.”
"Person"
means any individual, corporation, partnership, trust or unincorporated
organization or a government or any agency or political subdivision
thereof.”
"TWELVE OAKS Shares" shall mean the Common Stock of TWELVE OAKS.”
"TWELVE
OAKS CEO" shall mean the CEO of TWELVE OAKS.”
"TWELVE OAKS Shares" means, as at the date in question, all of the issued and
outstanding Shares of TWELVE OAKS.”
"Stock
Subscription Agreement" means that certain agreement by and between FOUR STAR
HOLDINGS and the TWELVE OAKS Share Holders providing for the acquisition by the
FOUR STAR HOLDINGS Security Holders of the TWELVE OAKS Share
Holders.”
Page 2 of
17
"Tax"
(and, with correlative meaning, "Taxes" and "Taxable") means:
(i) any
income, alternative or add-on minimum tax, gross receipts tax, sales tax, use
tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax,
withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall profit tax, custom,
duty or other tax, impost, levy, governmental fee or other like assessment or
charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any responsibility for the payment
of any amounts of the type described in clause (i) above as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period, and
(iii) any
responsibility for the payment of any amounts of the type described in clauses
(i) or (ii) above as a result of any express or implied obligation to indemnify
any other person.”
"Tax Return" means any return, declaration,· form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.”
THE STOCK
EXCHANGE
SECTION 1. THE STOCK
EXCHANGE: EFFECTIVE TIME.
1.1
The Stock Exchange.
At the Effective Time and subject to and upon the terms and conditions of
this Agreement, TWELVE OAKS shall become a wholly owned subsidiary of FOUR STAR
HOLDINGS, the separate corporate existence of TWELVE OAKS shall continue. The
Effective Time of the Stock Exchange shall occur upon the filing of the Articles
of Stock Exchange executed in accordance with the applicable provisions of the
Corporate Law and the Secretary of State of Florida, or at such later time as
may be agreed to by FOUR STAR HOLDINGS and TWELVE OAKS and specified in the
Certificate of Stock Exchange subject to the satisfaction or waiver of each of
the conditions set forth in Section 4. The date on which the Effective Time
occurs is referred to as the "Effective Date." Provided that this Agreement has
not been terminated, the Parties will cause the Articles of Stock Exchange to be
filed on the Closing Date, as hereafter defined in Section 1.3.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, at the
Effective Time, all TWELVE OAKS Shares shall be converted into the right to
receive the Stock Exchange Shares existing and to be issued by FOUR STAR
HOLDINGS.
(b) Exchange Agent. ,
Xxxxxx X. Xxxxxxx, Esq. shall act as the exchange agent (the
"Exchange Agent") for the purpose of exchanging TWELVE OAKS Shares for the Stock
Exchange Shares. At or within thirty (30) days after the Effective Date, FOUR
STAR HOLDINGS shall deliver to the Exchange Agent certificates evidencing the
Stock Exchange Shares. The Stock Exchange Shares issued at the Effective Time of
the Stock Exchange shall be registered in the names of the TWELVE OAKS Share
Holders.
Page 3 of
17
1.2 Conversion of
Securities.
(a) Conversion of TWELVE OAKS
Shares. At the Effective Time, by virtue of the Stock Exchange and
without any action on the part of FOUR STAR HOLDINGS, TWELVE OAKS or the holders
of any of their respective securities:
(i) Each one
of the Shares of TWELVE OAKS issued and outstanding immediately prior to the
Effective Time shall be converted into a total of 678,072 common shares of FOUR
STAR HOLDINGS to be distributed among the TWELVE OAKS Share
Holders.
(ii) All
TWELVE OAKS Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such TWELVE OAKS Shares shall cease to have any
rights with respect thereto, except the right to receive the Stock Exchange
Shares to be issued pursuant to this Section 1.2(a) (fractional shares may be
issued rounded to the hundredth decimal point) upon the surrender of such
certificate in accordance with Section 1.8, without interest.
(iii) Each
TWELVE OAKS Share that immediately prior to the Effective Time is held by TWELVE
OAKS as a treasury share shall be cancelled and retired without payment of any
consideration therefore and without any conversion thereof into a right to
receive the Stock Exchange Shares.
1.3 Closing.
The
closing of the Stock Exchange (the "Closing") will take place at the offices of
Xxxxxx X. Xxxxxxx Esq., counsel to TWELVE OAKS, at their office in Torrance,
California, within one (1) Business Day following the satisfaction or waiver of
the conditions precedent set forth in Section 4 or at such other date as FOUR
STAR HOLDINGS, and TWELVE OAKS shall agree (the "Closing Date"), but in no event
shall the Closing Date occur later than July 10, 2010.
1.4 Effect Of The Stock
Exchange.
At the
Effective Time, all the properties, rights, privileges, powers and franchises of
TWELVE OAKS shall vest in FOUR STAR HOLDINGS, and all debts, liabilities and
duties of TWELVE OAKS shall become the debts, liabilities and duties of FOUR
STAR HOLDINGS.
1.5 Certificate Of Incorporation
and Bylaws; Directors And Officers. Prior to the Effective Time of the
Stock Exchange:
(a) The
Certificate of Incorporation of FOUR STAR HOLDINGS are made a part hereof shall
be the Certificate of Incorporation of FOUR STAR HOLDINGS following the Stock
Exchange. The Bylaws of FOUR STAR HOLDINGS are made a part hereof shall be the
Bylaws of FOUR STAR HOLDINGS following the Stock Exchange.
(b) The
initial board of directors of TWELVE OAKS subsequent to the Stock Exchange shall
consist of Xxxxx X. Xxxxx Xx. The officers of FOUR STAR HOLDINGS
subsequent to the Stock Exchange shall be the current officers of FOUR STAR
HOLDINGS.
Page 4 of
17
1.6 Further
Actions.
(a) After
closing and upon issuance of FOUR STAR HOLDINGS Common Stock to Share Holders
TWELVE OAKS shall transfer its outstanding shares to FOUR STAR
HOLDINGS.
(b) If,
at any time after the Effective Time, FOUR STAR HOLDINGS considers or
is
advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm (of record or
otherwise) in FOUR STAR HOLDINGS its right, title or interest in, to or under
any of the rights, properties, or assets of TWELVE OAKS, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of
FOUR STAR HOLDINGS will be authorized to execute and deliver, in the name and on
behalf of each of TWELVE OAKS and FOUR STAR HOLDINGS, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of TWELVE OAKS and FOUR STAR HOLDINGS, all such other actions and things
as the Board of Directors of FOUR STAR HOLDINGS may determine to be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in FOUR STAR HOLDINGS or
otherwise to carry out the intent and purposes of this
Agreement.
1.7 Restrictions On
Resale
(
a) The Stock Exchange
Shares. The Stock Exchange Shares will not be registered under the
Securities Act, or the securities laws of any state, and cannot be transferred,
hypothecated, sold or otherwise disposed of until: (i) a registration statement
with respect to such securities is declared effective under the Securities Act,
or (ii) FOUR STAR HOLDINGS receives an opinion of counsel for the stockholder,
reasonably satisfactory to counsel for FOUR STAR HOLDINGS, that an exemption
from the registration requirements of the Securities Act is
available.
The certificates representing the Stock Exchange Shares to be issued on the
Effective Date pursuant to this Agreement shall contain a legend substantially
as follows:
"THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT."
1.8 Exchange of
Certificates.
(a) After
the Effective Time and pursuant to a customary letter of transmittal or other
instructional
form provided by the Exchange Agent to the TWELVE OAKS Share Holders, the TWELVE
OAKS Share Holders shall be required to surrender all their TWELVE OAKS Shares
to the Exchange Agent, and the TWELVE OAKS Share Holders shall be entitled upon
such surrender to receive in exchange therefore certificates representing the
number of Stock Exchange Shares into which the TWELVE OAKS Shares theretofore
represented by the stock transfer forms so surrendered shall have been exchanged
pursuant to this Agreement. Until so surrendered, each outstanding certificate,
which, prior to the Effective Time, represented TWELVE OAKS Shares, shall be
deemed for all corporate purpose, subject to the further provisions of this
Article I, to evidence the ownership of the number of whole Stock Exchange
Shares for which such TWELVE OAKS Shares have been so exchanged. No dividend
payable to holders of Stock Exchange Shares of record as of any Date subsequent
to the Effective Time shall be paid to the owner of any certificate which, prior
to the Effective Time, represented TWELVE OAKS Shares, until such certificate or
certificates representing all the relevant TWELVE OAKS Shares, together with a
stock transfer form, are surrendered as provided in this Article I or pursuant
to letters of transmittal or other instructions with respect to lost
certificates provided by the Exchange Agent.
Page 5 of
17
(b) All
Stock Exchange Shares for which the TWELVE OAKS Shares shall have been exchanged
pursuant to this Article I shall be deemed to have been issued in full
satisfaction of all rights pertaining to the TWELVE OAKS Shares.
(c) On
the Effective Date, the stock transfer book of TWELVE OAKS shall be deemed to be
closed and no transfer of TWELVE OAKS Shares shall thereafter be recorded
thereon.
SECTION 2. REPRESENTATIONS
AND WARRANTIES OF TWELVE OAKS
TWELVE
OAKS hereby represents and warrants as follows:
2.1
Organization and Good
Standing: Ownership of Shares. TWELVE OAKS is a corporation duly
organized and validly existing under the laws of the State of Alabama. There are
no outstanding subscriptions, rights, options, warrants or other agreements
obligating TWELVE OAKS to issue, sell or transfer any Shares of TWELVE OAKS
other than those represented in Schedule A.
2.2
Corporate
Authority. TWELVE OAKS has the corporate power to enter into this
Agreement and to perform its respective obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transaction contemplated
hereby have been duly authorized by the Board of Directors of TWELVE OAKS. The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument or
document to which TWELVE OAKS is a party and will not violate any judgment,
decree, order, writ, rule, statute, or regulation applicable to TWELVE OAKS or
its properties. The execution and performance of this Agreement will not violate
or conflict with any provision of the respective Articles of Incorporation or
bylaws of TWELVE OAKS.
2.3
Ownership of
Shares. The TWELVE OAKS Share Holders are the owners of record and
beneficially of all of the issued and outstanding Shares of TWELVE OAKS Shares,
which TWELVE OAKS Shares, to the best of TWELVE OAKS's knowledge, are owned free
and clear of all rights, claims, liens and encumbrances, and have not been sold,
pledged, assigned or otherwise transferred except pursuant to this
Agreement.
2.4
Financial Statements,
Books and Records. Will consist of the unaudited financial
Statements (balance sheet, income Statement, notes) of TWELVE OAKS as of the
Closing Date (the "Financial Statements"). The Financial Statements fairly
represent the financial position of TWELVE OAKS as at such Dates and the results
of their operations for the periods then ended. The books of account and other
financial records of TWELVE OAKS are in all respects complete and correct in all
material respects and are maintained in accordance with good business and
accountings practices, and are capable of being audited.
2.5 Access to Records.
The corporate financial records, minute books and other documents and
records
of TWELVE OAKS have been made available to FOUR STAR HOLDINGS prior to the
Closing hereof.
Page 6 of
17
2.6 No Material Adverse Changes.
Between the execution and Closing of this Agreement, there
shall not have been:
(a) any
material adverse change in the financial position of TWELVE OAKS except changes
arising in the ordinary course of business, which changes will in no event
materially and adversely affect the financial position of TWELVE
OAKS;
(b) any
damage, destruction or loss materially affecting the assets, prospective
business,
operations or condition (financial or otherwise) of TWELVE OAKS whether or not
covered by insurance;
(c) any
declaration, setting aside or payment of any dividend or distribution with
respect
to any redemption or repurchase of TWELVE OAKS capital stock;
(d) any
sale of an asset (other than in the ordinary course of business) or any
mortgage
or pledge by TWELVE OAKS of any properties or assets, other than as set forth in
Sections 2.13 or 2.14 below; or
(e) adoption
of any pension, profit sharing, retirement, stock bonus, stock option
or
similar plan or arrangement.
2.7
Taxes. TWELVE
OAKS as of the Closing Date, has filed all material tax, governmental and/or
related forms and reports (or extensions thereof) due or required to be filed
and has (or will have) paid or made adequate provisions for all taxes or
assessments which had become due as of the Closing Date and there are no
deficiency notices outstanding.
2.8
Compliance with Laws.
TWELVE OAKS has complied with all federal, State, county and local laws,
ordinances, regulations, inspections, orders, judgments, injunctions, awards or
decrees applicable to it or its business which, if not complied with, would
materially and adversely affect the business of TWELVE OAKS.
2.9 No Breach. The
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not:
(a)
violate any provision of the Articles of Incorporation or Bylaws of TWELVE
OAKS;
(b) violate,
conflict with or result in the breach of any of the Terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time, or both
constitute) a default under any contract or other agreement to which TWELVE OAKS
is a party or by or to which it or any of its assets or properties may be bound
or subject;
(c)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, TWELVE
OAKS or upon the properties or business of TWELVE OAKS; or
(d) violate
any statute, law or regulation of any jurisdiction applicable to the
transactions
contemplated herein which could have a materially adverse effect on the business
or operations of TWELVE OAKS.
Page 7 of
17
2.10
Actions and
Proceedings. TWELVE OAKS is not a party to any material pending
litigation or, to its knowledge, any governmental investigation or proceeding
not reflected in the TWELVE OAKS Financial Statements, and to its best
knowledge, no material litigation, claims, assessments or non-governmental
proceedings are threatened against TWELVE OAKS.
2.11
Agreements.
There are no material contract or arrangement to which TWELVE OAKS is a
party or by or to which it or its assets, properties or business are bound or
subject, whether written or oral.
2.12
Brokers or Finders.
No broker's or finder's fee will be payable by TWELVE OAKS in connection
with the transactions contemplated by this Agreement, nor will any such fee be
incurred as a result of any actions by TWELVE OAKS or any of its
Shareholders.
2.13
Real Estate.
TWELVE OAKS has full title and interest in all real estate.
2.14
Tangible Assets.
TWELVE OAKS has full title and interest in all machinery, equipment,
furniture, leasehold improvements, fixtures, projects, owned or leased by TWELVE
OAKS, any related capitalized items or other tangible property material to the
business of TWELVE OAKS (the "Tangible Assets"). TWELVE OAKS holds all rights,
title and interest in all the Tangible Assets owned by it on the Balance Sheet
or acquired by it after the Date on the Balance Sheet free and clear of all
liens, pledges, mortgages, security interests, conditional sales contracts or
any other encumbrances. All of the Tangible Assets are in good operating
condition and repair and are usable in the ordinary course of business of TWELVE
OAKS and conform to all applicable laws, ordinances and government orders, rules
and regulations relating to their construction and operation.
2.15
Liabilities.
TWELVE OAKS did not have any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, known or unknown,
fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or
absolute contingent or otherwise, including, without limitation, any liability
on account of taxes, any governmental charge or lawsuit (all of the foregoing
collectively defined to as "Liabilities"), which are not fully, fairly and
adequately reflected on the Financial Statement except for specific Liabilities
set forth in the Unaudited Financial Statements and as declared in Schedule A.
As of the Date of Closing, TWELVE OAKS will not have any further Liabilities,
other than Liabilities fully and adequately reflected on the Financial
Statements and as per Schedule A except for Liabilities incurred in the ordinary
course of business. There is no circumstance, condition, event or arrangement
which may hereafter give rise to any Liabilities not in the ordinary course of
business.
2.16
Operations of TWELVE
OAKS. Between the execution and Closing of this Agreement, TWELVE OAKS
shall not have:
(a) incurred
any indebtedness or borrowed money;
(b) declared
or paid any dividend or declared or made any distribution of any kind
to
any
shareholder, or made any direct or indirect redemption, retirement, purchase or
other acquisition of any shares in its capital stock;
(c) made
any loan or advance to any shareholder, officer, director,
employee,
consultant,
agent Of other
representative or made any other loan or advance otherwise than in the ordinary
course of business;
Page 8 of
17
(d) except
in the ordinary course of business, incurred or assumed any indebtedness or
liability (whether or not currently due and payable);
(e) disposed
of any assets of TWELVE OAKS except in the ordinary course of
business;
(f) materially
increased the annual level of compensation of any executive employee of
TWELVE
OAKS;
(g) increased,
terminated, amended or otherwise modified any plan for the benefit ofemployees of TWELVE OAKS;
(h) issued
any shares or rights to acquire such equity securities; or
(i) except
in the ordinary course of business, entered into or modified any contract,
agreement
or transaction.
2.17
Capitalization.
The authorized capital stock of TWELVE OAKS consists of 2,500 common
shares of TWELVE OAKS of which (a) 900 Shares of TWELVE OAKS have been issued to
the four stockholder listed in attachment “A”. TWELVE OAKS has not granted,
issued or agreed to grant, issue or make any other commitments of any character
relating to the issued or unissued Shares of capital stock of TWELVE OAKS, (b)
and 900 Shares are issued and outstanding as of June 30, 2010.
2.18
Full Disclosure.
No representation or warranty by TWELVE OAKS in this Agreement or in any
document or schedule to be delivered by them pursuant hereto, and no written
Statement, certificate or instrument furnished or to be furnished by TWELVE OAKS
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue Statement of a material
fact or omits or will omit to State any fact necessary to make any Statement
herein or therein not materially misleading or necessary to a complete and
correct presentation of all material aspects of the business of TWELVE
OAKS.
SECTION
3. REPRESENTATIONS AND WARRANTIES OF FOUR
STAR HOLDINGS
FOUR STAR
HOLDINGS hereby represents and warrants as to itself and FOUR STAR HOLDINGS as
follows:
3.1
Organization and
Good Standing. FOUR STAR HOLDINGS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Each has the corporate power to own its own property and to carry on its
business as now being conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so qualify would have
no material negative impact.
3.2
Corporate
Authority. Each has the corporate power to enter into this Agreement and
to perform their respective obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of FOUR STAR HOLDINGS as required
by Florida law and the directors and shareholders of FOUR STAR HOLDINGS as
required by Florida law. The execution and performance of this Agreement will
not constitute a material breach of any agreement, indenture, mortgage, license
or other instrument or document to which FOUR STAR HOLDINGS is a party and will
not violate any judgment, decree, order, writ, rule, statute, or regulation
applicable to FOUR STAR HOLDINGS or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision of
the respective Articles of Incorporation or Bylaws of FOUR STAR HOLDINGS or FOUR
STAR HOLDINGS.
Page 9 of
17
3.3 Capitalization: Purchase of
FOUR STAR HOLDINGS Shares by TWELVE OAKS Share Holders: Initial Financing and
Stock Exchange Shares.
(a) As
of the date of this Agreement, FOUR STAR HOLDINGS is authorized to issue
100,000,000 shares of FOUR STAR HOLDINGS Common Stock, $0.00 par value per
share, and 50,000,000 shares of FOUR STAR HOLDINGS Preferred Stock, $0.001 par
value per share, of which approximately (i) 22,234,228 shares of FOUR STAR
HOLDINGS Common Stock and (ii)
no shares of FOUR STAR HOLDINGS Preferred Stock are issued and
outstanding.
(b) Immediately
prior to the Effective Time of the Stock Exchange, TWELVE OAKS shall provide to
FOUR STAR HOLDINGS completed and executed copies of the Investor Questionnaire
and the Stock Subscription Agreement.
(c) There are
no outstanding warrants, issued stock options, stock rights or other
commitments
of any character relating to the issued or unissued shares of either Common
Stock or Preferred Stock of FOUR STAR HOLDINGS, other than those which are set
forth in Section 3.3(e) below.
(d) At the
Closing, the Stock Exchange Shares to be issued and delivered to the TWELVE OAKS
Share Holders hereunder will when so issued and delivered, constitute valid and
legally issued shares of FOUR STAR HOLDINGS Common Stock, fully paid and
non-assessable. The Stock Exchange Shares issuable to such TWELVE OAKS Share
Holders shall represent approximately 3.04% of the FOUR STAR HOLDINGS
Fully-Diluted Common Stock as at the Effective Time of the Stock
Exchange.
3.4
Compliance with
Laws. FOUR STAR HOLDINGS has complied with all federal, State, county and
local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, which, if not
complied with, would materially and adversely affect the business of FOUR STAR
HOLDINGS or the trading market for the FOUR STAR HOLDINGS Shares and
specifically, and FOUR STAR HOLDINGS has complied with provisions for
registration under the Securities Act of 1933 and all applicable blue sky laws
in connection with its public stock offering and there are no outstanding,
pending or threatened stop orders or other actions or investigations relating
thereto.
3.5
Actions
and Proceedings. At this time
there is one pending legal proceeding filed May 6, 2010, Xxxx Xxxxx et. al., as
Plaintiffs, claiming that the company owes him an undetermined amount of cash
and common stock for referral fees. At this time the company is denying
these allegations.
3.6 Access to Records.
The corporate financial records, minute books, and other documents
and
records of FOUR STAR HOLDINGS
have been made available to TWELVE OAKS prior to the Closing
hereof.
3.7 No Breach. The
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not:
(a)
violate any provision of the Articles
of Incorporation or Bylaws of FOUR STAR HOLDINGS;
Page 10
of 17
(b)
violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any contract or other agreement to which FOUR STAR HOLDINGS is a party or
by or to which it or any of its assets or properties may be bound or
subject;
(c) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
governmental
or regulatory body against, or binding upon, FOUR STAR HOLDINGS or upon the
securities, properties or business to FOUR STAR HOLDINGS;
or
(d) violate
any statute, law or regulation of any jurisdiction applicable to the
transactions
contemplated herein.
3.8
Brokers or
Finders. No broker's or
finder's fee will be payable by FOUR STAR HOLDINGS in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred as a result of
any actions of FOUR STAR HOLDINGS.
3.9
Authority to
Execute and Perform Agreements. FOUR STAR HOLDINGS has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of FOUR
STAR HOLDINGS enforceable in accordance with its Terms, except as may be
limited by bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
the performance by FOUR STAR
HOLDINGS of this Agreement, in accordance with its respective Terms and
conditions will not:
(a) require
the approval or consent of any governmental or regulatory body or the
approval
or consent of any other person;
(b) conflict with or result in any breach
or violation of any of the Terms and conditions of, or constitute (or with any
notice or lapse of time or both would constitute) a default under, any
order, judgment or decree applicable to FOUR STAR HOLDINGS, or any
instrument, contract or other agreement to which FOUR STAR HOLDINGS is a party
or by or to which FOUR STAR HOLDINGS is bound or subject; or
(c) result in
the creation of any lien or other encumbrance on the assets or properties of
FOUR STAR HOLDINGS.
3.10
Full Disclosure.
No representation or warranty by FOUR STAR HOLDINGS in this Agreement or
in any document or schedule to be delivered by them pursuant hereto, and no
written Statement, certificate or instrument furnished or to be furnished by
FOUR STAR HOLDINGS pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
Statement of a material fact or omits or will omit to State any fact necessary
to make any Statement herein or therein not materially misleading or necessary
to complete and correct presentation of all material aspects of the business of
FOUR STAR HOLDINGS.
SECTION 4. CONDITIONS
PRECEDENT
4.1
Conditions
Precedent to the Obligation of TWELVE OAKS. All obligations of TWELVE
OAKS and the TWELVE OAKS Member Holders under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, as indicated below, of each of
the following conditions (anyone of which may be waived at Closing by TWELVE
OAKS):
Page 11
of 17
|
(a)
|
The
representations and warranties by or on behalf of FOUR STAR HOLDINGS
contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects
at and as of Closing Date as though such representations and warranties
were made at and as of such time.
|
|
(b)
|
FOUR
STAR HOLDINGS shall have performed and complied in all material respects,
with all covenants, agreements, and conditions set forth in, and shall
have executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them prior to or
at the Closing.
|
|
(c)
|
On
the Closing Date, an executive officer of FOUR STAR HOLDINGS shall have
delivered to TWELVE OAKS a certificate, duly executed by such Person and
certifying, that to the best of such Person's knowledge and belief, the
representations and warranties of FOUR STAR HOLDINGS set forth in this
Agreement are true and correct in all material
respects.
|
|
(d)
|
On
or before the Closing, the Board of Directors and the shareholders of FOUR
STAR HOLDINGS shall have approved, in accordance with applicable law, the
execution, delivery and performance of this Agreement and the consummation
of the transaction contemplated herein and authorized all of the necessary
and proper action to enable FOUR STAR HOLDINGS to comply with the Terms of
the Agreement
|
|
(e)
|
The
Stock Exchange shall be permitted by applicable law and FOUR STAR HOLDINGS
shall have sufficient shares of FOUR STAR HOLDINGS Common Stock authorized
to complete the Stock Exchange.
|
|
(f)
|
At
the Closing, all instruments and documents delivered to TWELVE OAKS and
the Shareholders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for TWELVE
OAKS.
|
|
(g)
|
The
Stock Exchange Shares to be issued to the Shareholders of TWELVE OAKS at
Closing will be validly issued, non-assessable and fully paid for and will
be issued in a non-public offering and exempt Stock Exchange transaction
in Compliance with all federal and State securities laws, bearing a
restrictive legend, as is more fully set forth
herein.
|
4.2
Conditions Precedent
to the Obligations of FOUR STAR HOLDINGS. All obligations of FOUR STAR
HOLDINGS under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions (anyone of which may be waived at
Closing by FOUR STAR HOLDINGS):
|
(a)
|
The
representations and warranties by TWELVE OAKS contained in this Agreement
or in any certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects at and as of the Closing as
though such representations and warranties were made at and as of such
time;
|
|
(b)
|
TWELVE
OAKS and the TWELVE OAKS Share Holders shall have performed and complied
with, in all material respects, with all covenants, agreements, and
conditions set forth in, and shall have executed and delivered all
documents required by this Agreement to be performed or complied or
executed and delivered by them prior to or at the
Closing;
|
Page 12
of 17
|
(c)
|
On
the Closing Date, the TWELVE OAKS CEO shall have delivered to FOUR STAR
HOLDINGS a certificate, duly executed by such Person and certifying, that
to the best of such Person's knowledge and belief, the representations and
warranties of TWELVE OAKS set forth in this Agreement are true and correct
in all material respects.
|
|
(d)
|
The
holders of a majority of the issued and outstanding Shares of TWELVE OAKS
Shares shall have approved, ratified and confirmed this Agreement, the
Stock Exchange and all of the transactions contemplated hereby, all in
accordance with applicable Alabama
law.
|
SECTION 5.
COVENANTS
5.1
Corporate Examinations
and Investigations. Prior to the Closing Date, the parties acknowledge
that they have been entitled, through their employees and representatives, to
make such investigation of the assets, properties, business and operations,
books, records and financial condition of the other as they each may reasonably
require. No investigations, by a party hereto shall, however, diminish or waive
any of the representations, warranties, covenants or agreements of the party
under this Agreement.
5.2
Further Assurances.
The parties shall execute such documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Each such party
shall use its best efforts to fulfill or obtain the fulfillment of the
conditions to the Closing, including, without limitation, the execution and
delivery of any documents or other papers, the execution and delivery of which
are necessary or appropriate to the Closing.
5.3
Confidentiality.
In the event the transactions contemplated by this Agreement are not
consummated, FOUR STAR HOLDINGS, and TWELVE OAKS and the respective parties
Principal Executive Officers agree to keep confidential any information
disclosed to each other in connection therewith for a period of three (3) years
from the Date hereof; provided, however, such obligation shall not apply to
information which:
(i) at
the time of the disclosure was public knowledge;
(ii) is
required to be disclosed publicly pursuant to any applicable Federal or State
securities
laws;
(iii) after
the time of disclosure becomes public knowledge (except due to the action of
the
receiving party);
(iv) the
receiving party had within its possession at the time of disclosure;
or
(v) is
ordered disclosed by a Court of proper jurisdiction.
Page 13
of 17
5.4
Stock
Certificates. Within thirty (30) days of the Closing or a time frame as
determined by SEC regulatory requirements for filings etc., the FOUR STAR
HOLDINGS Share Holders shall have delivered the certificates representing the
FOUR STAR HOLDINGS Securities duly endorsed (or with executed stock powers) so
as to make TWELVE OAKS the sole owner thereof. Further, within thirty (30) days
of such Closing, FOUR STAR HOLDINGS shall issue to the TWELVE OAKS Share Holders
the Stock Exchange Shares.
5.5 Filing of Certificate of
Stock Exchange. The Articles of Stock Exchange shall have been filed in
the office of the Secretary of State for the State of Florida.
5.6
Board of Directors.
A list of the initial board of directors of TWELVE OAKS subsequent to the
Stock Exchange shall be provided by TWELVE OAKS prior to the Closing. Such
initial members of the board of directors shall serve until the earlier of their
death, resignation or removal or until the next annual meeting of the
stockholders of TWELVE OAKS, when their respective successors are duly appointed
and qualified. The officers of TWELVE OAKS subsequent to the Stock Exchange
shall be the current officers of TWELVE OAKS.
5.7
Indemnification of
Officers and Directors. It is the intention of the Parties that FOUR STAR
HOLDINGS and TWELVE OAKS shall indemnify its officers and directors to the
fullest extent permitted by law, as applicable. In such connection, the Parties
agree not to amend the Certificates of incorporation or Bylaws of either FOUR
STAR HOLDINGS or TWELVE OAKS if such amendment shall have the effect of
reducing, terminating or otherwise adversely affecting the indemnification
rights and privileges applicable to officers and directors of each of FOUR STAR
HOLDINGS and TWELVE OAKS, as the same are in effect Immediately prior to the
Effective Time of the exchange.
SECTION
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any right of either party to investigate the affairs of the
other party and its Shareholders, each party has the right to rely fully upon
representations, warranties, covenants and agreements of the other party and its
Shareholders contained in this Agreement or in any document delivered to one by
the other or any of their representatives, in connection with the transactions
contemplated by this Agreement. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the closing
hereunder for three (3) years following the Closing.
SECTION 7. DOCUMENTS AT
CLOSING AND THE CLOSING
7.1 Documents at Closing
At the Closing, the following transactions shall occur, all of such
transactions
being deemed to occur simultaneously:
(a)
TWELVE
OAKS will deliver, or will cause to be delivered, to FOUR STAR HOLDINGS the
following:
(i)
a certificate executed by the CEO of TWELVE OAKS to the effect that all
representations and warranties made by TWELVE OAKS under this Agreement are true
and correct as of the Closing, the same as though originally given to FOUR STAR
HOLDINGS on said Date;
Page 14
of 17
(ii) a
certificate from the State of Alabama Dated at or about the Closing to the
effect
that TWELVE OAKS is validly existing under the laws of said State;
(iii)
Shares
representing those Shares of TWELVE OAKS to be exchanged for the Stock Exchange
Shares; and
(iv) all
other items, the delivery of which is a condition precedent to the obligations
of FOUR STAR HOLDINGS, as set forth in Section 4.
(b)
FOUR STAR
HOLDINGS will deliver or cause to be delivered to TWELVE OAKS and the TWELVE
OAKS Security Holders:
(i)
a certificate from FOUR STAR HOLDINGS executed by the President or
Secretary of FOUR STAR HOLDINGS, to the effect that all representations and
warranties of FOUR STAR HOLDINGS made under this Agreement are true and correct
as of the Closing, the same as though originally given to TWELVE OAKS on said
Date;
(ii)
certified
copies of resolutions by FOUR STAR HOLDINGS Board of Directors authorizing this
transaction;
(iii) certificates
from the Florida Secretary of State Dated at or about the Closing Date that
FOUR STAR HOLDINGS are in good standing under the laws of said State;
and
(iv) all
other items, the delivery of which is a condition precedent to the obligations
of TWELVE OAKS, as set forth in Section 4 hereof.
SECTION 8.
MISCELLANEOUS
8.1
Waivers. The
waiver of a breach of this Agreement or the failure of any party hereto to
exercise any right under this Agreement shall in no way constitute waiver as to
future breach whether similar or dissimilar in nature or as to the exercise of
any further right under this Agreement.
8.2 Amendment. This
Agreement may be amended or modified only by an instrument of equal formality
signed by the parties or the duly authorized representatives of the respective
parties.
8.3 Assignment. This
Agreement is not assignable except by operation of law.
8.4 Notice. Until
otherwise specified in writing, the mailing addresses and fax numbers of the
parties
of this Agreement shall be as follows:
To: FOUR STAR
HOLDINGS:
Xxxxx X.
Xxxxx, Xx., Four Star Holdings, Inc., 000 Xxxx Xxxx Xxxx, Xxxxxxxxx, XX
00000
To: TWELVE OAKS AND THE TWELVE OAKS
PRINCIPAL EXECUTIVE OFFICERS:
Xxxx Xxxx, TWELVE OAKS PROPERTIES, INC
000 Xxxx Xxxx Xxxx, Xxxxxxxxx, XX 00000
Any
notice or Statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
Page 15
of 17
8.5
Governing Law.
This Agreement shall be construed, and the legal relations between the
parties determined, in accordance with the laws of the State of Florida, thereby
precluding any choice of
law rules which may direct the application of the laws of any other
jurisdiction.
8.6
Arbitration. The
parties hereby agree that any dispute or cause of action arising under this
Agreement shall be settled by arbitration conducted by one arbitrator. The
arbitrator shall be acceptable to both TWELVE OAKS and FOUR STAR HOLDINGS. If an
arbitrator cannot be agreed upon as provided in the preceding sentence, an
arbitrator will be appointed. The arbitrator shall set a limited time period and
establish procedures designed to reduce the cost and time for discovery while
allowing the parties an opportunity, adequate in the sole judgment of the
arbitrator, to discover relevant information from the opposing parties about the
subject matter of the dispute The arbitrator shall rule upon motions to compel
or limit discovery and shall have the authority to impose sanctions, including
attorneys' fees and costs, to the same extent as a court of competent law or
equity, should the arbitrator determine that discovery was sought without
substantial justification or that discovery was refused or objected to without
substantial justification. The decision of the arbitrator shall be written,
shall be in accordance with applicable law and with this Agreement, and shall be
supported by written findings of fact and conclusion of law which shall set
forth the basis for the decision of the arbitrator. Any such arbitration shall
be held exclusively in Florida.
8.7
Publicity.
No publicity release or announcement concerning this Agreement or the
transactions contemplated hereby shall be issued by either party hereto at any
time from the signing hereof without advance approval in writing of the form and
substance by the other party.
8.8
Entire
Agreement. This Agreement (including the Exhibits and Schedules to be
attached hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
8.9 Headings. The
headings in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
8.10
Severability of
Provisions. The invalidity or unenforceability of any term, phrase,
clause, paragraph, restriction, covenant, agreement or provision of this
Agreement shall in no way affect the validity or enforcement of any other
provision or any part thereof.
8.11
Counterparts.
This Agreement may be executed in any number of counterparts, each of
which when so executed, shall constitute an original copy hereof, but all of
which together shall consider but one and the same document.
8.12
Binding Effect.
This Agreement shall be binding upon the parties hereto and inure to the
benefit of the parties, their respective heirs, administrators, executors,
successors
and assigns.
8.13
Press
Releases. The parties will mutually agree as to the wording and timing of
any informational releases concerning this transaction prior to and through
Closing.
SIGNATURE
PAGE FOLLOWS
Page 16
of 17
IN WITNESS WHEREOF, the
parties have executed this agreement on the Date first above
written.
By:
/s/ Xxxxx X. Xxxxx,
Xx.
Name:
Xxxxx X. Xxxxx Xx.
Its:
Chief Executive Officer
TWELVE
OAKS PROPERTIES, INC.
By: /s/ Xxxx
Xxxx
Name:
Xxxx Xxxx
Its: President
Page 17
of 17
