AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 21, 2000, by and among
PACIFIC DEVELOPMENT CORPORATION, a Colorado corporation ("PACIFIC"), CHESHIRE
HOLDINGS, INC., a Delaware corporation ("HOLDINGS"), and the persons listed on
Exhibit A attached hereto and made a part hereof, being the executive officers
of PACIFIC and HOLDINGS ("MANAGEMENT"), CHESHIRE DISTRIBUTORS, INC., a Delaware
corporation ("DISTRIBUTORS"), and the persons listed on Exhibit B attached
hereto and made a part hereof (each, a "STOCKHOLDER" and collectively, the
"STOCKHOLDERS").
W I T N E S S E T H:
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WHEREAS, PACIFIC owns beneficially and of record all of the issued and
outstanding shares of capital stock of HOLDINGS; and
WHEREAS, the STOCKHOLDERS own beneficially and of record all of the issued
and outstanding shares of capital stock of DISTRIBUTORS; and
WHEREAS, DISTRIBUTORS desires to merge with and into HOLDINGS, and PACIFIC
and HOLDINGS desire to have DISTRIBUTORS merge with and into HOLDINGS, with
HOLDINGS being the surviving corporation, in consideration of the issuance by
PACIFIC of shares of its common stock in exchange for all of the shares of
common stock of DISTRIBUTORS outstanding at the effective time of the merger;
and
WHEREAS, for federal income tax purposes it is intended that the foregoing
merger transaction shall qualify as a reorganization under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"), all upon the terms and subject to the conditions set forth
herein and in accordance with the General Corporation Law of the State of
Delaware, as the same may be amended from time to time (the "GCL").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Merger
(a) Merger; Surviving Corporation. In accordance with the provisions of
this Agreement and the GCL, at the Effective Time (as defined in Section 1(e)
hereof), DISTRIBUTORS shall be merged with and into HOLDINGS (the "Merger"), and
HOLDINGS shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the State of Delaware, under the name Cheshire Holdings, Inc. At the
Effective Time, the separate existence of DISTRIBUTORS shall cease. In addition,
PACIFIC shall have its name changed to Cheshire Distributors, Inc. and its state
of domicile shall be moved to Delaware. All properties, franchises and rights
belonging to DISTRIBUTORS and HOLDINGS, by virtue of the Merger and without
further act or deed, shall be vested in the Surviving Corporation, which shall
be responsible for all the liabilities and obligations of each of HOLDINGS and
DISTRIBUTORS. The Merger will otherwise also have the effects set forth in
Section 259 of the GCL.
It is intended that the Merger shall constitute a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.
(b) Certificate of Incorporation. The Certificate of Incorporation of
HOLDINGS in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until altered or
amended as provided by law or by such Certificate of Incorporation.
(c) By-laws. The By-laws of HOLDINGS in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until altered,
amended or repealed as provided by law, by the Certificate of Incorporation of
the Surviving Corporation or by such By-laws.
(d) Directors and Officers. PACIFIC and HOLDINGS shall cause their
respective directors to tender their resignations as directors, effective as of
the Effective Time, and DISTRIBUTORS, shall designate and elect, as of the
Effective Time, a new Board of Directors of the Surviving Corporation, which
shall consist of the individuals identified on Exhibit C. Commencing at the
Effective Time, the directors and officers of the Surviving Corporation shall be
as set forth on Exhibit C. Each of the directors and officers of the Surviving
Corporation shall hold their respective offices in accordance with the By-laws
of the Surviving Corporation.
(e) Effective Time. The Merger shall become effective at the time of
filing of a certificate of merger in the form attached as Exhibit D to this
Agreement with the Secretary of State of the State of Delaware in accordance
with the provisions of Section 251 of the GCL (the "Certificate of Merger"). The
Certificate of Merger shall be filed immediately after fulfillment of the
conditions set forth in Section 6 hereof. The date and time when the Merger
shall become effective are referred to herein as the "Effective Time."
(f) Conversion of Securities.
(1) Each holder of a share of Common Stock, par value $.01 per
share, of DISTRIBUTORS ("DISTRIBUTORS Common Stock") issued and outstanding
immediately prior to the Effective Time (except for shares of DISTRIBUTORS
Common Stock then held in the treasury of DISTRIBUTORS, which shares shall be
canceled, and, if appraisal rights are available under the GCL, other than
shares of DISTRIBUTORS Common Stock as to which a demand for appraisal shall
have been duly perfected in accordance with the GCL) shall, by virtue of the
Merger and without any action on the part of such holder, receive that number of
shares of Common Stock, par value $.001 per share, of PACIFIC ("PACIFIC Common
Stock") equal to the Stock Consideration (as hereinafter defined) multiplied by
the Exchange Percentage (as hereinafter defined) and multiplied by the number of
shares held by such STOCKHOLDER. The shareholdings of each of the
STOCKHOLDERS in Pacific upon completion of the merger shall be as set forth on
Exhibit E.
(2) "Stock Consideration" shall mean 10,000,000 shares of
PACIFIC Common Stock (the "Stock Consideration"). "Exchange Percentage"shall
mean 4,957.858 shares of PACIFIC Common Stock for each share of CHESHIRE Common
Stock.
(3) Each security convertible into common shares and each
warrant exercisable into common shares of DISTRIBUTORS shall be recast in
accordance with their terms so that for each share of DISTRIBUTORS into which
such security or warrant is convertible or exercisable, as the case may be, the
holder shall receive the right to receive 4,957.858 shares of the stock of
PACIFIC in accordance with the Exchange Percentage, provided that in no event
shall the number of shares of PACIFIC issued to the STOCKHOLDERS upon the
completion of the merger exceed 10,000,000.
(4) As of the Effective Time, the holders of certificates
representing shares of DISTRIBUTORS Common Stock shall cease to have any rights
as stockholders of DISTRIBUTORS, except such rights, if any, as they may have
pursuant to the GCL, and, except as otherwise expressly set forth herein, their
sole right shall be the right to receive PACIFIC Common Stock in accordance with
the provisions of this Agreement.
(h) Surrender and Payment. PACIFIC shall, at the Effective Time and
upon surrender of a DISTRIBUTORS Certificate (hereinafter defined), deliver to
each holder of record of one or more certificates representing DISTRIBUTORS
Common Stock (collectively, the "DISTRIBUTORS Certificates") that has been
converted into PACIFIC Common Stock as set forth in Section 1(f), a certificate
or certificates representing the number of PACIFIC Common Stock into which the
shares represented by the DISTRIBUTORS Certificate so surrendered shall have
been converted as provided in Section 1(f). If any PACIFIC Common Stock is to be
issued in a name other than that in which a DISTRIBUTORS Certificate so
surrendered is then registered, it shall be a condition of such exchange that
the DISTRIBUTORS Certificate surrendered be accompanied by payment of any
applicable transfer taxes and documents required for a valid transfer in the
reasonable judgment of PACIFIC and its counsel. From and after the Effective
Time, until so surrendered, each DISTRIBUTORS Certificate shall be deemed for
all corporate purposes, except as set forth below, to evidence the number of
PACIFIC Common Stock into which the DISTRIBUTORS Common Stock represented by
such DISTRIBUTORS Certificate shall have been converted. Unless and until any
DISTRIBUTORS Certificate shall be so surrendered, the holder of such
DISTRIBUTORS Certificate shall have no right to vote or to receive any dividends
or other distributions made to holders of record of PACIFIC Common Stock after
the Effective Time. Upon surrender of a DISTRIBUTORS Certificate, the holder of
record thereof shall receive, together with certificates representing PACIFIC
Common Stock to which he shall be entitled in accordance with Section 1(f), all
dividends and other distributions which shall have theretofore been paid or made
to holders of record of PACIFIC Common Stock after the Effective Time with
respect to such shares. PACIFIC shall be authorized to deliver certificates for
PACIFIC Common Stock attributable to any DISTRIBUTORS Certificate theretofore
issued which has been lost or destroyed upon receipt of satisfactory evidence of
ownership of the shares of DISTRIBUTORS Common Stock formerly represented
thereby and of appropriate indemnification of PACIFIC. Exhibit B annexed hereto
sets forth each holder of record of DISTRIBUTORS Common Stock, the number of
shares of DISTRIBUTORS Common Stock owned by such holder, and the DISTRIBUTORS
Certificate(s) representing the shares of DISTRIBUTORS Common Stock owned by
such holder.
(i) Fractional Shares. No fractional shares shall be issued by PACIFIC
in the Merger. Each fractional interest in an PACIFIC Common Share which would
otherwise be issued as a result of the Merger shall be rounded to the nearest
whole PACIFIC Common Share.
(j) No Further Transfers. At the Effective Time, the stock transfer
books of DISTRIBUTORS shall be closed and no further transfers of DISTRIBUTORS
Common Stock shall thereafter be made or be effective.
2. Representations and Warranties of DISTRIBUTORS and the STOCKHOLDERS.
DISTRIBUTORS and the STOCKHOLDERS, severally and solely with respect to himself
and itself as to such STOCKHOLDER'S stock interest in DISTRIBUTORS, hereby
represent, warrant and agree with PACIFIC as follows:
(a) Organization and Standing. DISTRIBUTORS is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is qualified to do business as a foreign corporation in every
other state or jurisdiction in which it operates to the extent required by the
laws of such states and jurisdictions, and has full power and authority to carry
on its business as now conducted and to own and operate its assets, properties
and business.
(b) Capitalization. As of the Closing Date, DISTRIBUTORS'
entire authorized equity capital consists of 3,000 shares of Common Stock $.01
par value, of which 2,017 shares of Common Stock will be outstanding as of the
Closing. As of the Closing Date, a maximum of 100 additional shares of Common
Stock will be issuable, assuming the exercise of all warrants and conversion of
all convertible notes at a price not less than $15,000 per DISTRIBUTOR's share.
Aside from the above-described issued and authorized shares, as of the Closing
Date, there will be no other voting or equity securities authorized or issued,
nor any authorized or issued securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options, rights, commitments or
agreements by which DISTRIBUTORS or the STOCKHOLDERS are bound calling for the
issuance of any additional shares of common stock or any other voting or equity
security. The issued and outstanding DISTRIBUTORS Common Stock constitute one
hundred (100%) percent of the equity of DISTRIBUTORS, which includes, inter
alia, one hundred (100%) percent of DISTRIBUTORS' voting power, right to receive
dividends, when, as and if declared and paid, and the right to receive the
proceeds of liquidation attributable to common stock, if any.
(c) Ownership of DISTRIBUTORS' Stock. Each STOCKHOLDER
warrants and represents, severally, that as of the date hereof, such STOCKHOLDER
is the sole owner of the DISTRIBUTORS Common Stock listed by his or her name on
Exhibit B, free and clear of all liens, encumbrances, and restrictions
whatsoever, except that the DISTRIBUTORS Common Stock so listed have not been
registered under the Securities Act of 1933, as amended (the "'33 Act"), or any
applicable state securities laws and that such Common Stock are subject to the
terms of a Shareholders' Agreement which will terminate according to its terms
upon completion of the merger..
(d) Taxes. DISTRIBUTORS has filed all federal, state and local
income or other tax returns and reports that it is required to file with all
governmental agencies, wherever situate, and has paid or accrued for payment all
taxes as shown on such returns, such that a failure to file, pay or accrue will
not have a material adverse effect on DISTRIBUTORS. DISTRIBUTORS' income tax
returns have never been audited by any authority empowered to do so.
(e) Pending Actions. There are no material legal actions,
lawsuits, proceedings or investigations, either administrative or judicial,
pending or threatened, against or affecting DISTRIBUTORS, or against the
STOCKHOLDERS that arise out of their operation of DISTRIBUTORS, except as
described in Schedule 2(e) attached hereto. DISTRIBUTORS is not knowingly in
material violation of any law, material ordinance or regulation of any kind
whatever, including, but not limited to laws, rules and regulations governing
the sale of its services, the `33 Act, the Securities Exchange Act of 1934, as
amended (the "'34 Act"), the Rules and Regulations of the U.S. Securities and
Exchange Commission ("SEC"), or the Securities Laws and Regulations of any
state.
(f) Governmental Regulation. DISTRIBUTORS holds the licenses
and registrations necessary to permit it to conduct its current business. All of
such licenses and registrations are in full force and effect, and there are no
proceedings, hearings or other actions pending that may affect the validity or
continuation of any of them. No approval of any other trade or professional
association or agency of government other than as set forth on Schedule 2(f),
attached hereto, is required for any of the transactions effected by this
Agreement, and the completion of the transactions contemplated by this Agreement
will not, in and of themselves, affect or jeopardize the validity or
continuation of any of them.
(g) Ownership of Assets. Except as set forth in Schedule 2(g)
attached hereto, DISTRIBUTORS has good, marketable title, without any liens or
encumbrances of any nature whatever, to all of the following, if any: its
assets, properties and rights of every type and description, including, without
limitation, all cash on hand and in banks, certificates of deposit, stocks,
bonds, and other securities, good will, customer lists, its corporate name and
all variants thereof, trademarks and trade names, copyrights and interests
thereunder, licenses and registrations, pending licenses and permits and
applications therefor, inventions, processes, know-how, trade secrets, real
estate and interests therein and improvements thereto, machinery, equipment,
vehicles, notes and accounts receivable, fixtures, rights under agreements and
leases, franchises, all rights and claims under insurance policies and other
contracts of whatever nature, rights in funds of whatever nature, books and
records and all other property and rights of every kind and nature owned or held
by DISTRIBUTORS as of this date, and will continue to hold such title on and
after the completion of the transactions contemplated by this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or
Competitors. Neither the STOCKHOLDERS nor any member of their families have any
material interest of any nature whatever in any supplier, customer, landlord or
competitor of DISTRIBUTORS.
(i) No Debt Owed by DISTRIBUTORS to STOCKHOLDERS. Except as
set forth in Schedule 2(i) attached hereto, DISTRIBUTORS does not owe any money,
securities, or property to either the STOCKHOLDERS or any member of their
families or to any company controlled by such a person, directly or indirectly.
To the extent that DISTRIBUTORS may have any undisclosed liability to pay any
sum or property to any such person or entity or any member of their families
such liability is hereby forever irrevocably released and discharged.
(j) Corporate Records. All of DISTRIBUTORS' books and records,
including, without limitation, its books of account, corporate records, minute
book, stock certificate books and other records are up-to-date, complete and
reflect accurately and fairly the conduct of its business in all material
respects since its date of incorporation.
(k) No Misleading Statements or Omissions. Neither this
Agreement nor any financial statement, exhibit, schedule or document attached
hereto or presented to HOLDINGS in connection herewith, contains any materially
misleading statement, or omits any fact or statement necessary to make the other
statements or facts therein set forth not materially misleading.
(l) Validity of this Agreement. All corporate and other
proceedings required to be taken by the STOCKHOLDERS and by DISTRIBUTORS to
enter into and to carry out this Agreement have been duly and properly taken.
This Agreement has been duly executed by the STOCKHOLDERS and by DISTRIBUTORS,
and constitutes the valid and binding obligation of each of them, enforceable in
accordance with its terms except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights and the application of general
rules of equity. The execution and delivery of this Agreement and the carrying
out of its purposes will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, DISTRIBUTORS'
Certificate of Incorporation or By-Laws, or any material agreement, lease,
mortgage, bond, indenture, license or other material document or undertaking,
oral or written, to which DISTRIBUTORS or the STOCKHOLDERS is a party or is
bound or may be affected, nor, to DISTRIBUTORS knowledge, will such execution,
delivery and carrying out violate any law, rule or regulation or any order,
writ, injunction or decree, of any court, regulatory agency or other
governmental body; and the business now conducted by DISTRIBUTORS can continue
to be so conducted after completion of the transactions contemplated hereby.
(m) Consents and Approvals; Compliance with Laws. Neither
DISTRIBUTORS nor the STOCKHOLDERS are required to make any filing with, or
obtain the consent or approval of, any person or entity as a condition to the
consummation of the transactions contemplated by this Agreement. The business of
DISTRIBUTORS has been operated in material compliance with all laws, rules, and
regulations applicable to its business, including, without limitation, those
related to securities matters, trade matters, environmental matters, public
health and safety, and labor and employment.
(n) Access to Books and Records. PACIFIC and HOLDINGS will
have full and free access to DISTRIBUTORS' books during the course of this
transaction prior to Closing, during regular business hours on reasonable
notice.
(o) Acquisition for Investment. The Stockholders are acquiring
the PACIFIC Common Stock for investment and not with a view towards the public
distribution thereof. The Stockholders are aware that the Pacific Common Stock
is not registered under the `33 Act and that the certificates evidencing such
shares will contain an appropriate restrictive legend to that effect.
3. Warranties, Representations and Covenants of PACIFIC, HOLDINGS and
MANAGEMENT. To induce the STOCKHOLDERS and DISTRIBUTORS to enter into this
Agreement and to complete the transaction contemplated hereby, PACIFIC, HOLDINGS
and MANAGEMENT jointly and severally warrant, represent and covenant to
DISTRIBUTORS and the STOCKHOLDERS that:
(a) Organization and Standing. PACIFIC is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, is qualified to do business as a foreign corporation in every
other state and jurisdiction in which it operates to the extent required by the
laws of such states or jurisdictions, and has full power and authority to carry
on its business as now conducted and to own and operate its assets, properties
and business. Other than HOLDINGS, PACIFIC has no subsidiaries or any other
investments or ownership interests in any corporation, partnership, joint
venture or other business enterprise.
(b) Capitalization. PACIFIC's entire authorized equity capital
consists of 100,000,000 shares of voting common stock, $.001 par value and no
shares of preferred stock, PACIFIC presently has 137,283 Shares of its Common
Stock issued and outstanding. After giving effect to the issuance of 227,717
shares to the CONSULTANT, as described in Section 9 hereof, PACIFIC will have
issued and outstanding 10,365,000 shares of voting common stock, $.001 par
value, including the 10,000,000 shares of common stock being issued to the
STOCKHOLDERS pursuant to this Agreement, and no shares of preferred stock
issued.. Upon issuance, all of the PACIFIC Common Stock will be validly issued,
fully paid and non-assessable. The relative rights and preferences of PACIFIC's
equity securities are set forth in the Certificate of Incorporation, as amended
and PACIFIC's By-Laws (annexed as Schedule 3(b) hereto). There are no other
voting or equity securities authorized or issued, nor any authorized or issued
securities convertible into voting stock, and no outstanding subscriptions,
warrants, calls, options, rights, commitments or agreements by which PACIFIC is
bound, providing for the issuance of any additional shares of common stock or
any other voting or equity security. The By-Laws of PACIFIC provide that a
simple majority of the shares voting at a stockholders' meeting at which a
quorum is present may elect all of the directors of PACIFIC. As of the Closing
the 10,000,000 shares being issued to and acquired by the STOCKHOLDERS will
constitute 96.5% of the PACIFIC Common Stock that will then be issued and
outstanding (including all shares issued on account of consulting fees), which
includes, inter alia, that same percentage of PACIFIC's voting power, right to
receive dividends, when, as and if declared and paid, and the right to receive
the proceeds of liquidation attributable to common stock, if any.
(c) Ownership of Shares. By issuance of the PACIFIC Common
Stock to the STOCKHOLDERS pursuant to this Agreement, the STOCKHOLDERS will
thereby acquire good, absolute marketable title thereto, free and clear of all
liens, encumbrances and restrictions of any nature whatsoever, except by reason
of the fact that such PACIFIC Common Stock will not have been registered under
the `33 Act, or any applicable state securities laws.
(d) Significant Agreements. PACIFIC is not and, at Closing,
will not be bound by any agreements, including without limitation, agreements in
any of the categories listed below, except for those specifically listed in
Schedule 3(d) hereto:
(i) Employment, advisory or consulting contract;
(ii) Plan providing for employee benefits of any
nature;
(iii) Lease with respect to any property or
equipment;
(iv) Contract or commitment for any current
expenditure;
(v) Contract or commitment pursuant to which it
has assumed, guaranteed, endorsed, or
otherwise become liable for any obligation
of any other person, firm or organization;
(vi) Contract, agreement, understanding, or
commitment relating to a business
arrangement; and
(vii) Agreement with any person relating to the
dividend, purchase or sale of securities,
that has not been settled by the delivery or
payment of securities when due, and which
remains unsettled upon the date of this
Agreement.
(e) Taxes. PACIFIC has filed all federal, state and local
income or other tax returns and reports that it is required to file with all
governmental agencies, wherever situate, and has paid all taxes as shown on such
returns. All of such returns are true and complete. PACIFIC's income tax returns
have never been audited by any authority empowered to do so.
(f) Absence of Liabilities. At and as of the Closing Date
neither HOLDINGS nor PACIFIC will have any liabilities of any kind or nature,
fixed or contingent, except for the costs, including legal and accounting fees
and other expenses, in connection with this transaction, for which PACIFIC and
HOLDINGS agree to be responsible and to pay in full at or before the Closing.
(g) No Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting HOLDINGS, PACIFIC or against any of the
MANAGEMENT and arising out of their operation of HOLDINGS or PACIFIC. Each of
HOLDINGS and PACIFIC has been in compliance with, and has not received notice of
violation of any law, ordinance or regulation of any kind whatever, including,
but not limited to, the `33 Act, the `34 Act, the Rules and Regulations of the
SEC, or the Securities Laws and Regulations of any state. Neither HOLDINGS or
PACIFIC is an investment company as defined in, or otherwise subject to
regulation under, the Investment Company Act of 1940. PACIFIC is required to
file reports pursuant to Section 12(g) of the `34 Act and is now and as of the
Closing will be current in its filings. Schedule 3(g) sets forth all securities
filings made by PACIFIC since January 1, 1997.
(h) Corporate Records. All of HOLDINGS' and PACIFIC's books
and records, including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other records are up-to-date,
complete and reflect accurately and fairly the conduct of its business in all
respects since its date of incorporation; all of said books and records will be
made available for inspection by DISTRIBUTORS' authorized representatives prior
to the Closing as provided by Section 4(l) herein, and will be delivered to
HOLDINGS new management at the Closing.
(i) No Misleading Statements or Omissions. Neither this
Agreement nor any financial statement, exhibit, schedule or document attached
hereto or presented to DISTRIBUTORS in connection herewith contains any
materially misleading statement, or omits any fact or statement necessary to
make the other statements or facts therein set forth not materially misleading.
(j) Validity of this Agreement. All corporate and other
proceedings required to be taken by each of HOLDINGS and PACIFIC to enter into
and to carry out this Agreement have been duly and properly taken. This
Agreement has been duly executed by HOLDINGS and PACIFIC, and constitutes a
valid and binding obligation of each of HOLDINGS and PACIFIC enforceable in
accordance with its terms. The execution and delivery of this Agreement and the
carrying out of its purposes will not result in the breach of any of the terms
or conditions of, or constitute a default under or violate, HOLDINGS' or
PACIFIC's Certificate of Incorporation or By-Laws, or any agreement, lease,
mortgage, bond, indenture, license or other document or undertaking, oral or
written, to which either HOLDINGS or PACIFIC is a party or is bound or may be
affected, nor will such execution, delivery and carrying out violate any law,
rule or regulation or any order, writ, injunction or decree of any court,
regulatory agency or other governmental body.
(k) Consents and Approvals; Compliance with Laws. Neither
HOLDINGS, PACIFIC nor MANAGEMENT is required to make any filing with, or obtain
the consent or approval of, any person or entity as a condition to the
consummation of the transactions contemplated by this Agreement. The business of
each of HOLDINGS and PACIFIC has been operated in compliance with all laws,
rules, and regulations applicable to its business, including, without
limitation, those related to securities matters, trade matters, environmental
matters, public health and safety, and labor and employment.
(l) Access to Books and Records. DISTRIBUTORS and STOCKHOLDERS
will have full and free access to HOLDINGS' and PACIFIC's books and records
during the course of this transaction prior to and at the Closing on reasonable
notice.
(m) HOLDINGS and PACIFIC Financial Statements. At or before
the Closing, PACIFIC and will provide DISTRIBUTORS with (a) PACIFIC's audited
financial statements for the 1997 and 1998 fiscal years, which will be certified
in accordance with GAAP by independent certified public accountants with
substantial SEC experience, and which comply with applicable Federal securities
laws and regulations including Regulation S-X, (b) unaudied financial statements
for DISTRIBUTORS for the 1999 fiscal year,, and (c) HOLDING's unaudited
financials (internally generated) as of the date hereof. There will have been no
material change in the business, assets, or condition (financial or otherwise)
of HOLDINGS or PACIFIC since the date of such financial statements to the
Closing.
(n) HOLDINGS' Financial Condition. As of the Closing, HOLDINGS
will have no assets orliabilities.
(o) Directors' Approval. Prior to the signing of this
Agreement, each of HOLDINGS' and PACIFIC's Board of Directors and HOLDING's
shareholders, by meeting or consent, will duly and properly authorize this
Agreement and the matters described herein.
(p) The PACIFIC Common Stock. All of the PACIFIC Common Stock
issued to the STOCKHOLDERS shall be validly issued, fully-paid non-assessable
shares of PACIFIC Common Stock, with full voting rights, dividend rights, and
tight to receive the proceeds of liquidation, if any, as set forth in PACIFIC's
Certificate of Incorporation.
(q) Trading of PACIFIC Stock. PACIFIC's Common Stock is now
and as of the Closing will be traded on the NASDAQ Bulletin Board (Symbol:
PDVC); no further action must be taken before the Closing for continued trading
on the Bulletin Board, except after the Closing a Current Report on Form 8-K
must be filed, which will be the responsibility of PACIFIC's new management.
(r) Disclosure. No representation or warranty by PACIFIC in
this Agreement, nor any statement, certificate or Schedule furnished, or to be
furnished, by or on behalf of PACIFIC pursuant to this Agreement, nor any
document or certificate delivered to DISTRIBUTORS pursuant to this Agreement, or
in connection with actions contemplated hereby, contains or shall contain any
untrue statement of a material fact, or omits, or shall omit to state a material
fact necessary to make the statements contained therein not misleading. PACIFIC
has no knowledge of any unasserted claim, the assertion of which is likely and
that, if asserted, will be for legal or equitable relief that, if granted, would
have a material adverse effect on PACIFIC or the transaction contemplated
hereby. No injunction, stay or restraining order is in effect prohibiting the
consummation of any of the transactions contemplated by this Agreement.
(s) SEC Reports. PACIFIC has heretofore delivered to
DISTRIBUTORS and the STOCKHOLDERS complete and correct copies of the securities
filings listed on Schedule 3(g) as filed by PACIFIC with the Securities and
Exchange Commission pursuant to the `33 Act and the `34 Act (collectively, the
"SEC Reports"), which are all such SEC Reports required to be filed or submitted
to the SEC and all of which have complied in all material respects with the `33
Act and the x00 Xxx. As of their respective dates, the SEC Reports, including
without limitation, any financial statements or schedules included therein, did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4. Representations and Warranties Regarding HOLDINGS. PACIFIC, HOLDINGS
and MANAGEMENT jointly and severally represent and warrant to the STOCKHOLDERS
and DISTRIBUTORS as follows:
(a) Organization. HOLDINGS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is a
wholly owned subsidiary of PACIFIC. There are no options, warrants, conversion
or other rights, agreements or commitments of any kind obligating PACIFIC or
HOLDINGS, contingently or otherwise, to issue or sell any shares of capital
stock of HOLDINGS or any securities convertible into or exchangeable for any
such shares, and no authorization therefore has been given.
(b) Authority Relative to this Agreement. HOLDINGS has the requisite
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by HOLDINGS'
Board of Directors and approved by its sole stockholder, and no other corporate
proceedings on the part of HOLDINGS are necessary to authorize the execution and
delivery of this Agreement and the transactions contemplated hereby.
(c) Binding Agreement. This Agreement has been duly and validly
executed and delivered by HOLDINGS and constitutes the legal, valid and binding
obligation of HOLDINGS, enforceable against HOLDINGS in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally.
(d) HOLDINGS Common Stock. HOLDINGS Common Stock issued to PACIFIC is
validly issued, fully-paid and non-assessable.
(e) Special Purpose Subsidiary. Holdings is a wholly-owned subsidiary
of PACIFIC and has been organized by PACIFIC solely for the purpose of entering
into this Agreement and consummating the Merger. HOLDINGS has not engaged, and
prior to the Merger will not engage, in any other business or activity.
5. Survival of Representations and Warranties; Indemnification. All
representations, warranties, and agreements of the STOCKHOLDERS, DISTRIBUTORS
and PACIFIC contained herein (including all schedules annexed hereto) or in any
document, statement, certificate or other instrument referred to herein or
delivered hereunder in connection with the transactions contemplated hereby
shall survive the Closing Date. MANAGEMENT hereby agrees, jointly and severally,
to indemnify, defend, and hold harmless DISTRIBUTORS and the STOCKHOLDERS from
and against any damage, loss liability, or expense (including, without
limitation, reasonable expenses of investigation and reasonable attorney's fees)
arising out of any material breach of any representation, warranty, covenant, or
agreement made by HOLDINGS, PACIFIC or MANAGEMENT in this Agreement.
6. Conditions Precedent to Closing. (a) The obligations of DISTRIBUTORS
and the STOCKHOLDERS under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing, of each of the following conditions:
(i) That PACIFIC's, HOLDINGS' and MANAGEMENT'S representations
and warranties contained herein shall be true and correct at the time of Closing
as if such representations and warranties were made at such time;
(ii) That PACIFIC, HOLDINGS and MANAGEMENT shall have
performed or complied with all agreements, terms and conditions required by this
Agreement to be performed or complied with by them prior to or at the time of
the Closing;
(iii) That DISTRIBUTORS shall have received a legal opinion
from counsel to HOLDINGS and PACIFIC that the representations and warranties
contained in Sections 3(a), (b), (g), (j), and (p), and Sections 4(a), (b), (c)
(d) and (e) are true and correct as of the Closing Date, and that the actions
described in Section 6(a)(iv) and Section 6(a)(v) herein can be effected without
approval of PACIFIC's stockholders;
(iv) That PACIFIC shall have made all necessary filings and
given all necessary notices, including without limitation the notice of the
reverse split required by Rule 10b-17 under that Act, and the notice to its
stockholders of the transactions referenced herein;
(v) That PACIFIC's Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the transactions
contemplated hereby; previously consummated approved the reverse split of
PACIFIC's outstanding Common Stock without changing either the authorized shares
or the par value; approved the resignation of all of PACIFIC's current directors
and the election of up to five designees of DISTRIBUTORS to serve as directors
in place of PACIFIC's current directors; and will have approved such other
changes as are consistent with this Agreement and approved by DISTRIBUTORS; and
(vi) That HOLDINGS' Board of Directors and Shareholder, by
proper and sufficient vote, shall have approved this Agreement and the
transactions contemplated hereby; approved the resignation of all of HOLDINGS'
current directors and the election of up to five designees of DISTRIBUTORS to
serve as directors in place of HOLDINGS' current directors; and will have
approved such other changes as are consistent with this Agreement and approved
by DISTRIBUTORS.
(b) The obligations of HOLDINGS, PACIFIC and MANAGEMENT under this
Agreement shall be and are subject to fulfillment, prior to or at the Closing of
each of the following conditions:
(i) That DISTRIBUTORS' and the STOCKHOLDERS' representations
and warranties contained herein shall be true and correct at the time of Closing
as if such representations and warranties were made at such time; and
(ii) That DISTRIBUTORS and the STOCKHOLDERS shall have
performed or complied with all agreements, terms and conditions required by this
Agreement to be performed or complied with by them prior to or at the time of
Closing; and
(iii) That HOLDINGS shall have entered into for delivery at
the Closing, the Consulting Agreements attached hereto as Exhibit F and Exhibit
G.
(iv) That no STOCKHOLDER shall have exercised its dissenters
rights under the GCL.
7. Termination and Abandonment. This Agreement may be terminated and
the Merger provided for by this Agreement may be abandoned without liability on
the part of any party to the other, on or before the Closing Date:
(a) by mutual consent of PACIFIC and the STOCKHOLDERS;
(b) by PACIFIC if any of the conditions provided for in
Section 6 of this Agreement have not been met on or before 30 days from the date
hereof and have not been waived by PACIFIC in writing; or
(c) by the STOCKHOLDERS if any of the conditions provided for
in Section 7 of this Agreement have not been met on or before 30 days from the
date hereof and have not been waived by the STOCKHOLDERS in writing.
In the event of termination and abandonment by any party, as above
provided in this Section 7, prompt written notice shall be given to the other
party.
8. Closing Date. The closing with respect to the transactions
contemplated hereunder (the "Closing") shall take place at the offices of Xxxxxx
Xxxxxxx & Associates, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m.
local time on January 25, 2000, or at such other date as may agreed by the
parties. The date on which the Closing takes place is sometimes referred to in
this Agreement as the "Closing Date." At the Closing, the following deliveries
shall be made:
(a) The STOCKHOLDERS shall deliver to PACIFIC the following:
(1) a certificate of fulfillment of conditions signed by the
President and Treasurer of DISTRIBUTORS, referred to in subsection (i) of
Section 6(a) hereof;
(2) a certificate of good standing for DISTRIBUTORS;
(3) certificates representing all of DISTRIBUTORS Common Stock
as set forth on Exhibit B and;
(4) such other and further documents, instruments and
certificates not inconsistent with the provisions of this Agreement, executed by
STOCKHOLDERS as PACIFIC shall reasonably require to carry out and effectuate the
purposes and terms of this Agreement.
(b) PACIFIC shall deliver to the STOCKHOLDERS
the following:
(1) stock certificates (the "PACIFIC Stock Certificates")
representing 10,000,000 PACIFIC Common Stock;
(2) a certificate of fulfillment of conditions signed by
the President and Secretary of PACIFIC;
(3) the opinion of counsel for PACIFIC;
(4) certificates of good standing for PACIFIC and
HOLDINGS;
(5) the Consulting Agreements set forth as Exhibit F and
Exhibit G hereto; and
(6) such other and further documents, instruments and
certificates not inconsistent with the provisions of
this Agreement, executed by STOCKHOLDERS as PACIFIC
shall reasonably require to carry out and effectuate
the purposes and terms of this Agreement.
9. Fees and Commissions. Except as described in this Section 9, no
broker, finder, or other person or entity is entitled to any fee or commission
from HOLDINGS, PACIFIC or DISTRIBUTORS for services rendered on behalf of
HOLDINGS or DISTRIBUTORS in connection with the transactions contemplated by
this Agreement. As compensation for its services in initiating this transaction
and ongoing consulting services to HOLDINGS, PACIFIC and DISTRIBUTORS, PACIFIC
agrees to issue to XXXX XXXXXX (the "CONSULTANT"), a total of 227,717
post-reverse split shares. Such shares shall be issued at Closing pursuant to
the Consulting Agreement attached hereto as Exhibit G, and shall be registered
at or before the Closing under the `33 Act pursuant to a Registration Statement
on Form S-8. The CONSULTANT hereby acknowledges that, upon his receipt of such
227,717 shares, and the registration of the 227,717 shares on Form S-8,
HOLDINGS, PACIFIC, DISTRIBUTORS, and the STOCKHOLDERS shall have no further
obligation to compensate the CONSULTANT.
10. Miscellaneous.
(a) Nature and Survival of Representations. All statements contained in
any certificate, instrument, schedule or document executed and delivered by any
of the parties pursuant to the terms of this Agreement shall be deemed
representations and warranties by the respective parties hereunder. All
representations and warranties made by the parties each to each other in this
Agreement or pursuant hereto shall survive, except to the extent waived in
writing by the parties hereto, the consummation of the transactions contemplated
by this Agreement, notwithstanding any investigation heretofore or hereafter
made by any of them or on behalf of any of them. Each Exhibit and Schedule
delivered in accordance with this Agreement shall be deemed to include and refer
to every other Schedule hereto.
(b) Entire Agreement. This Agreement, together with the Schedules and
Exhibits delivered pursuant to this Agreement, sets forth the entire agreement
and understanding between the parties as to the subject matter hereof, and
merges and supersedes all prior discussions, agreements and understandings of
every and any nature between them, and no party shall be bound by any condition,
definition, warranty, or representation, other than as expressly set forth or
provided for in this Agreement, or as may be, on or subsequent to the date
hereof, set forth in writing and signed by the party to be bound thereby. This
Agreement may not be changed or modified, except by agreement in writing, signed
by all of the parties hereto.
(c) Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors in interest of the respective parties hereto.
(d) Laws Governing. This Agreement shall be construed and interpreted
according to the law of the State of Delaware as applied to contracts executed
and performed in the State of Delaware, without regard to principles of
conflicts of law.
(e) Assignment. This Agreement shall not be assigned by the
STOCKHOLDERS or PACIFIC except by operation of law; provided, however, that each
of the STOCKHOLDERS shall have the right to have any or all of his or her
PACIFIC Common STOCK issued by PACIFIC at Closing in the name of one or more
third parties designated by such STOCKHOLDER, subject to the terms and
conditions of Section 1(h).
(f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person, overnight courier, or telecopied or if mailed, by certified
mail, with first-class postage prepaid, in each case addressed as follows: (a)
if to DISTRIBUTORS or the STOCKHOLDERS, or any of them, to 000 Xxxx Xxxx Xxxx,
Xxxxxxxx XX. 00000, or to such other person and place as DISTRIBUTORS or a
STOCKHOLDER shall furnish to PACIFIC in writing, with a copy to Xxxxxx Xxxxxxx,
Esq., Xxxxxx Xxxxxxx & Associates, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Telecopy No. (000) 000-0000; and (b) if to HOLDINGS or PACIFIC, to Xxxxx X.
Little, 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Telecopy No. 000-000-0000 or
to such other person and place as HOLDINGS or PACIFIC shall furnish to
DISTRIBUTORS in writing, with a copy to Xxxxxx X. Xxxxxxx, Esq., Suite 403, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy No.: (000) 000-0000. All
notices shall be deemed given upon receipt.
(g) Further Instruments. Each of the parties hereto will, on and after
the Closing Date, execute and deliver or cause to be executed and delivered such
other documents as the other parties hereto may reasonably request to more
effectively consummate the transactions contemplated by this Agreement.
(h) Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(i) Headings. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
(j) Expenses. Except as otherwise provided in this Agreement, PACIFIC,
on the one hand, and the STOCKHOLDERS and DISTRIBUTORS on the other hand, shall
bear their own respective expenses, including professional fees, incurred in
connection with this Agreement.
(k) Confidentiality. Each party shall maintain the existence of this
Agreement and the terms and conditions described herein ("Confidential
Information") strictly confidential. No party may disclose any Confidential
Information to any third party (other than to its legal, accounting or financial
advisors) without the prior consent of the other party. Any press release will
be subject to the prior consent of the parties. However, the parties acknowledge
that PACIFIC shall have the right to make any press release or other disclosure
required to be made by PACIFIC, in its discretion, in order for it to comply
with any federal or state securities laws and that the contents of such
disclosure shall be at PACIFIC's discretion; provided, however, that PACIFIC
shall deliver a copy thereof to the STOCKHOLDERS prior to its release or
disclosure, and shall consult with the STOCKHOLDERS concerning the contents
thereof.
(l) Severability. If any provision of this Agreement is held by any
court of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be of no force and effect, but the illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
(THE NEXT PAGE IS THE SIGNATURE PAGE)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PACIFIC DEVELOPMENT CORPORATION
By:
----------------------
Name: Xxxxx X. Little
Title: President
CHESHIRE HOLDINGS, INC.
By:
---------------------
Name: Xxxxx X. Little
Title: President
MANAGEMENT:
---------------------------------
Xxxxx X. Little, as President and Individually
-----------------------
Xxxxxxx Xxxxx, Secretary
CHESHIRE DISTRIBUTORS, INC.
By:
--------------------
Name:Xxx Xxxxxxxxx
Title: President
STOCKHOLDERS:
----------------------------------
Xxx Xxxxxxxxx, Individually
----------------------------------
Gilad Gat, Individually
----------------------------------
Xxxx Xxxxxxxxx, Individually
----------------------------------
Xxxxxx Xxxx Xxxxxxxx, Individually
Xxxxxxxx Overseas Ltd.
By:
-------------------------------
Its:
Gloster Holdings, LLC
By:
-------------------------------
Xxxxxx Xxxxxxx, Managing Member
Xxxxxxx Xxxxxx Xxxxx Limited Partnership
By:
------------------------------
, Its
EXHIBIT A
PACIFIC DEVELOPMENT CORPORATION ("PACIFIC") AND
CHESHIRE HOLDINGS, INC. ("HOLDINGS"):
PRINCIPAL STOCKHOLDERS AND OFFICERS
PACIFIC
OFFICERS:
President: Xxxxx X. Little
Secretary: Xxxxxxx Xxxxx
HOLDINGS
OFFICERS:
President: Xxxxx X. Little
Secretary: Xxxxxxx Xxxxx
EXHIBIT B
STOCKHOLDERS
EXHIBIT A
SHARES OWNED BY THE SHAREHOLDERS
Name of Number of Certificate
Shareholder Shares Number
Xxx Xxxxxxxxx ................................... 1709 1
Xxxx Xxxxxxxxx .................................. 82 2
Gilad Gat ....................................... 102 3
Xxxxxxxx Overseas Ltd. .......................... 65 4
Gloster Holdings, Inc. .......................... 16 5
Xxxxxx Xxxx Livense ............................. 6 6
Xxxxxxx Xxxxxx Xxxxx Limited Partnership ........ 22 7
Xxxxxxxx Overseas Ltd. .......................... 15 8
EXHIBIT C
CHESHIRE DISTRIBUTORS, INC.:
POST MERGER DIRECTORS AND OFFICERS
DIRECTORS: Xxx Xxxxxxxxx, Chairman
Gilad Gat
Xxxxxx Xxxx-Xxxxxxxx
OFFICERS:
President: Xxx Xxxxxxxxx
Senior Vice President and Chief Executive Officer: Xxxxxx Xxxx-Xxxxxxxx
Vice President and Treasurer: Gilad Gat
Secretary: Xxxxxx Xxxxxxx
EXHIBIT D
FORM OF CERTIFICATE OF MERGER
AGREEMENT OF MERGER
OF
CHESHIRE DISTRIBUTORS, INC.
AND
CHESHIRE HOLDINGS, INC.
AGREEMENT OF MERGER approved on January __, 2000 by Cheshire
Distributors, Inc., a business corporation of the State of Delaware, and by
resolution adopted by its Board of Directors on said date, and approved on
January __, 2000 by Cheshire Holdings, Inc., a business corporation of the State
of Delaware, and by resolution adopted by its Board of Directors on said date.
WHEREAS Cheshire Distributors, Inc. is a business corporation of the
State of Delaware with its registered office therein located at
_________________________, City of ________________, County of
__________________; and
WHEREAS the total number of shares of stock which Cheshire
Distributors, Inc. has authority to issue is 3,000, all of which is of one class
and of a par value of $.01 each; and
WHEREAS Cheshire Holdings, Inc. is a business corporation of the State
of Delaware with its registered office therein located at
_________________________, City of ________________, County of
__________________; and
WHEREAS the total number of shares of stock which Cheshire Holdings,
Inc. has authority to issue is _______, all of which is of one class and of a
par value of _____ each; and
WHEREAS Cheshire Distributors, Inc. and Cheshire Holdings, Inc. and the
respective Boards of Directors thereof declare it advisable and to the
advantage, welfare, and best interests of said corporations and their respective
stockholders to merge Cheshire Distributors, Inc. with and into Cheshire
Holdings, Inc. pursuant to the provisions of the General Corporation Law of the
State of Delaware upon the terms and conditions hereinafter set forth;
BOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly approved by a resolution
adopted by the Board of Directors of Cheshire Distributors, Inc. and duly
approved by a resolution adopted by the Board of Directors of Cheshire Holdings,
Inc., the Agreement of Merger and the terms and conditions thereof and the mode
of carrying the same into effect, together with any provisions required or
permitted to be set forth therein, are hereby determined and agreed upon as
hereinafter in this Agreement set forth.
1. Cheshire Distributors, Inc. and Cheshire Holdings, Inc. shall,
pursuant to the provisions of the General Corporation Law of the State of
Delaware, be merged with and into a single corporation, to wit, Cheshire
Holdings, Inc., which shall be the surviving corporation from and after the
effective time of the merger, and which is sometimes hereinafter referred to as
the "surviving corporation", and which shall continue to exist as said surviving
corporation under its present name pursuant to the provisions of the General
Corporation law of the State of Delaware.
2. The Certificate of Incorporation of the surviving corporation, as
now in force and effect, shall continue to be the Certificate of Incorporation
of said surviving corporation and said certificate of Incorporation shall
continue in full force and effect until amended and changed in the manner
prescribed by the provisions of the General Corporation Law of the State of
Delaware.
3. The present by-laws of the surviving corporation will be the by-laws
of said surviving corporation and will continue in full force and effect until
changed, altered, or amended as therein provided and in the manner prescribed by
the provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving corporation at
the effective time of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their directorships and offices until the election and qualification of
their respective successors or until their tenure is otherwise terminated in
accordance with the by-laws of the surviving corporation.
5. Each issued share of the terminating corporation shall, at the
effective time of the merger, be converted into 4,957.858 shares of common stock
of Pacific Development Corporation, a Colorado corporation. The issued shares of
the surviving corporation shall not be converted or exchanged in any manner, but
each said share which is issued as of the effective time of the merger shall
continue to represent one issued share of the surviving corporation.
6. In the event that this Agreement of Merger shall have been fully
adopted upon behalf of the terminating corporation and of the surviving
corporation in accordance with the provisions of the General Corporation Law of
the State of Delaware, the said corporations agree that they will cause to be
executed and filed and recorded any document or documents prescribed by the laws
of the State of Delaware, and that they will cause to be performed all necessary
acts within the State of Delaware and elsewhere to effectuate the merger herein
provided for.
7. The Board of Directors and the proper officers of the terminating
corporation and of the surviving corporation are hereby authorized, empowered,
and directed to do any and all acts and things, and to make, execute, and
deliver, file, and record any and all instruments, papers, and documents which
shall be necessary, proper or convenient to carry out or put into effect any of
the provisions of this Agreement of Merger and of the merger herein provided
for.
8. The effective time of the Agreement of Merger, and the time when the
merger therein agreed upon shall become effective, shall be upon the filing of
this Agreement of Merger with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, this Agreement of Merger is hereby signed upon
behalf of each of the constituent corporations parties thereto.
Dated: January __, 2000
CHESHIRE DISTRIBUTORS, INC.
By:
---------------------------------
Name:
Title:
Dated: January __, 2000
CHESHIRE HOLDINGS, INC.
By:
---------------------------------
Name:
Title:
CERTIFICATE OF SECRETARY OF
CHESHIRE DISTRIBUTORS, INC.
The undersigned, being the Secretary of Cheshire Distributors, Inc.,
does hereby certify that written consent has been given to the adoption of the
foregoing Agreement of Merger by the holders of all of the outstanding stock of
said corporation, in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
Dated: January __, 2000
-------------------------------
Name:
Title: Secretary
CERTIFICATE OF SECRETARY OF
CHESHIRE HOLDINGS, INC.
The undersigned, being the Secretary of Cheshire Holdings, Inc., does
hereby certify that the foregoing Agreement of Merger has been adopted upon
behalf of said corporation pursuant to the provisions of Subsection (f) of
Section 251 of the General Corporation Law of the State of Delaware, and that,
as of the date of this Certificate, the outstanding shares of said corporation
were such as to render the provisions of Subsection (f) applicable.
Dated: January __, 2000
-------------------------------
Name:
Title: Secretary
EXHIBIT E
STOCKHOLDER'S POST-MERGER STOCKHOLDINGS IN PACIFIC
Stockholder Pre-Merger Cheshire Shares Post-Merger Pacific Shares
----------- -------------------------- --------------------------
Xxx Xxxxxxxxx ............................... 1709 8,472,979
Xxxx Xxxxxxxxx .............................. 82 406,544
Gilad Gat ................................... 102 505,702
Xxxxxxxx Overseas Ltd. ...................... 80 396,628
Gloster Holdings, Inc. ...................... 16 79,327
Xxxxxx Xxxx-Xxxxxxxx ........................ 6 29,747
Xxxxxxx Xxxxxx Xxxxx Limited Partnership .... 22 109,073
EXHIBIT F
CONSULTING AGREEMENT
AGREEMENT made as of the day of January 2000, by and between CHESHIRE
DISTRIBUTORS, INC., a Delaware corporation having an address at 000 Xxxx Xxxx
Xxxx, Xxxxxxxx XX. 00000 (the "Company") and XXXX X. LITTLE, having an address
at 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000 (the "Consultant").
R E C I T A L S
A. The Consultant is the President of PACIFIC DEVELOPMENT CORPORATION,
a Colorado corporation ("Pacific");
B. As of the date hereof, the Company is entering into an agreement and
plan of merger (the "Merger Agreement") with Pacific, and its wholly owned
subsidiary, CHESHIRE HOLDINGS, INC., a Delaware corporation ("Holdings"), among
others, pursuant to which the Company will be merged with and into Holdings, and
the shareholders of the Company will receive common stock of Pacific (subsequent
to the merger, the "Surviving Corporation");
C. The Company desires to retain and utilize the services of the
Consultant to enhance the growth and profitability of the Surviving Corporation,
and the Consultant is willing to serve as a consultant to the Surviving
Corporation; and
D. Consultant acknowledges that while in the service of the Company
and/or any affiliate thereof, and for the Company and its subsidiaries and
affiliates to operate efficiently and profitably, Consultant will be exposed to,
and the Company must take reasonable steps to protect its ideas, methods,
developments, strategies, business plans and financial and other information of
the Company which are confidential and/or proprietary in nature and which are of
significant value to other persons or entities that operate in the Company's
industry.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
A G R E E M E N T S
1. Consulting Services. The Company hereby engages Consultant as an in-
dependent contractor, and not as an employee, to render consulting services to
the Company as hereinafter provided, and Consultant hereby accepts such
engagement. Consultant shall not have any authority to bind or act on behalf of
the Company. Consultant shall consult with the Company regarding (a) financial,
marketing and investor relations matters and (b) such other matters as the
Consultant and the Company may periodically agree. Consultant shall be free to
determine the time and location and the manner in which he shall render the
consulting services described herein and he shall not be required to devote any
minimum number of hours per year to rendering such services.
2. Term. This Agreement shall terminate on the second anniversary date
of this Agreement. Thereafter, this Agreement may be renewed by the Consultant
and the Board of Directors of this Company on such terms as the parties may
agree in writing. As used herein, the term "term" refers to the entire period of
engagement of the Consultant hereunder, including any extensions.
3. Company Defined. For purposes of this Agreement, the term "Company"
shall, unless the context dictates otherwise, also mean any of the Company's
subsidiaries or affiliates.
4. Compensation. The Consultant shall receive as full compensation for
his services during the Term of this Agreement a fee equal to $275,000. The
Consultant's fee shall be payable upon the execution of this Agreement by wire
transfer as instructed by the Consultant. Said fee shall be the only
compensation of any kind payable to the Consultant hereunder unless previously
agreed in writing by the Company.
5. Expenses. Subject to the Company's prior written approval in each
instance, the Company shall reimburse the Consultant for his normal and
reasonable expenses incurred in the performance of the Consultant's duties
hereunder including for travel, entertainment and similar items. As a condition
of reimbursement, the Consultant agrees to provide the Company with copies of
all available invoices and receipts, and otherwise account to the Company in
sufficient detail to allow the Company to claim an income tax deduction for such
paid item, if such item is deductible. Reimbursements shall be made monthly.
6. Confidentiality And Competitive Activities. The Consultant agrees
that during the term he is in a position of special trust and confidence and has
access to confidential and proprietary information about the Company's business
and plans. The Consultant agrees that he will not directly or indirectly, either
as an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any similar individual or representative
capacity, engage or participate in any business that is in competition, in any
manner whatsoever, with the Company. Notwithstanding anything in the foregoing
to the contrary, the Consultant shall be allowed to invest as a shareholder in
publicly traded companies, or through a venture capital firm or an investment
pool.
7. Trade Secrets.
A. Special Techniques. It is hereby agreed that the Company has
developed or acquired certain technology, know-how, unique or special methods,
processes and techniques, trade secrets, special written marketing plans and
special customer arrangements, supplier and customer lists and arrangements, and
other proprietary rights and confidential information and shall during the term
continue to develop, compile and acquire said items (all hereinafter
collectively referred to as the "Company's Property"). It is expected that the
Consultant will gain knowledge of and utilize the
Company's Property during the course and scope of the term, and will be
in a position of trust with respect to the Company's Property.
B. Company's Property. It is hereby agreed that the Company's Property
shall remain the Company's sole property. If the Consultant's engagement is
terminated, for whatever reason, the Consultant agrees not to copy, make known,
disclose or use, any of the Company's Property without the Company's prior
written consent which shall not be unreasonably withheld. In such event, The
Consultant further agrees not to endeavor or attempt in any way to interfere
with or induce a breach of any prior proprietary contractual relationship that
the Company may have with any employee, customer, contractor, suppliers,
representative, or distributor for two (2) years from the date of termination of
this Agreement. The Consultant agrees upon termination of engagement to deliver
to the Company all confidential papers, documents, records, lists and notes
(whether prepared by the Consultant or others) comprising or containing the
Company's Property. The Consultant recognizes that violation of covenants and
agreements contained in this Section 6 may result in irreparable injury to the
Company which would not be fully compensable by way of money damages.
C. Covenant Not to Compete. For a period of two (2) year from the date
of any termination of the Consultant's engagement with the Company, the
Consultant shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity, engage or participate in
any activities which are the same as, or competitive with, the activities in
which the Company is then engaged.
8. Independent contractor status. In furnishing Consultant's services
hereunder, the Consultant shall be acting as an independent contractor in
relation to the Company. Accordingly, the Consultant shall have no authority to
act for or on behalf of the Company or to bind the Company without its express
written consent and shall not be considered as having employee status for the
purpose of any employee benefit plan applicable to the Company's employees
generally.
9. Miscellaneous.
A. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matters
herein, and supersedes and replaces any prior agreements and understandings,
whether oral or written between them with respect to such matters. The
provisions of this Agreement may be waived, altered, amended or repealed in
whole or in part only upon the written consent of both parties to this
Agreement.
B. No Implied Waivers. The failure of either party at any time to
require performance by the other party of any provision hereof shall not affect
in any way the right to require such performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of any subsequent breach of the same provision or any other
provision.
C. Personal Services. It is understood that the services to be
performed by the Consultant hereunder are personal in nature and the obligations
to perform such services and the conditions and covenants of this Agreement
cannot be assigned by the Consultant. Subject to the foregoing, and except as
otherwise provided herein, this Agreement shall inure to the benefit of and bind
the successors and assigns of the Company.
D. Severability. If for any reason any provision of this Agreement
shall be determined to be invalid or inoperative, the validity and effect of the
other provisions hereof shall not be affected thereby, provided that no such
severability shall be effective if it causes a material detriment to any party.
E. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of Delaware, applicable to contracts between residents
of New York entered into and to be performed entirely within Delaware.
F. Notices. All notices, requests, demands, instructions or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given upon delivery, if
delivered personally, or if given by prepaid telegram, or mailed first-class,
postage prepaid, registered or certified mail, return receipt requested, shall
be deemed to have been given seventy-two (72) hours after such delivery, if
addressed to the other party at the addresses as set forth on the signature page
below. Either party hereto may change the address to which such communications
are to be directed by giving written notice to the other party hereto of such
change in the manner above provided.
G. Merger, Transfer of Assets, or Dissolution of the Company. This
Agreement shall not be terminated by any dissolution of the Company resulting
from either merger or consolidation in which the Company is not the consolidated
or surviving company or a transfer of all or substantially all of the assets of
the Company. In such event, the rights, benefits and obligations herein shall
automatically be assigned to the surviving or resulting company or to the
transferee of the assets.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Company:
CHESHIRE DISTRIBUTORS, INC.
By:
-------------------------
President
CONSULTANT
--------------------------
Xxxxx X. Little
EXHIBIT G
CONSULTING AGREEMENT
AGREEMENT made as of the __ day of January 2000, by and between PACIFIC
DEVELOPMENT CORPORATION, a Colorado corporation having an address c/o Cheshire
Distributors, Inc., 000 Xxxx Xxxx Xxxx, Xxxxxxxx XX. 00000 (the "Company") and
XXXX XXXXXX, having an address at 0 Xxxxxx Xxxx, Xxxxxxxx, XX. 00000 (the
"Consultant").
R E C I T A L S
A. The Consultant has rendered valuable services to the Company, the
Company desires to retain and utilize the services of the Consultant to enhance
the growth and profitability of the Company, and the Consultant is willing to
serve as a consultant to the Company; and
B. Consultant acknowledges that while in the service of the Company
and/or any affiliate thereof, and for the Company and its subsidiaries and
affiliates to operate efficiently and profitably, Consultant will be exposed to,
and the Company must take reasonable steps to protect its ideas, methods,
developments, strategies, business plans and financial and other information of
the Company which are confidential and/or proprietary in nature and which are of
significant value to other persons or entities that operate in the Company's
industry.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
A G R E E M E N T S
1. Consulting Services. The Company hereby engages Consultant as an
independent contractor, and not as an employee, to render consulting services to
the Company as hereinafter provided, and Consultant hereby accepts such
engagement. Consultant shall not have any authority to bind or act on behalf of
the Company. Consultant shall consult with the Company regarding (a) mergers and
acquisitions and corporate filings and (b) such other matters as the Consultant
and the Company may periodically agree. Consultant shall be free to determine
the time and location and the manner in which he shall render the consulting
services described herein and he shall not be required to devote any minimum
number of hours per year to rendering such services.
2. Term. This Agreement shall terminate on the second anniversary of
the date of this Agreement. Thereafter, this Agreement may be renewed by the
Consultant and the Board of Directors of this Company on such terms as the
parties may agree in writing. As used herein, the term "term" refers to the
entire period of engagement of the Consultant hereunder, including any
extensions.
3. Company Defined. For purposes of this Agreement, the term "Company"
shall, unless the context dictates otherwise, also mean any of the Company's
subsidiaries or affiliates.
4. Compensation. The Consultant shall receive as full compensation for
his services a fee equal to 227,717 shares of common stock of the Company (the
"Shares"). The Consultant's fee shall be payable upon the execution of this
Agreement by issuance to the Consultant of certificates of the Company's common
stock representing the Shares. Said fee shall be the only compensation of any
kind payable to the Consultant hereunder unless previously agreed in writing by
the Company. It is agreed that the Shares will be registered pursuant to the
Securities Act of 1933 on Form S-8, and, until such time as such registration
has been completed, such Shares will bear a restrictive legend in the form in
use by the Company.
5. Expenses. Subject to the Company's prior written approval in each
instance, the Company shall reimburse the Consultant for his normal and
reasonable expenses incurred in the performance of the Consultant's duties
hereunder including for travel, entertainment and similar items. As a condition
of reimbursement, the Consultant agrees to provide the Company with copies of
all available invoices and receipts, and otherwise account to the Company in
sufficient detail to allow the Company to claim an income tax deduction for such
paid item, if such item is deductible. Reimbursements shall be made monthly.
6. Confidentiality And Competitive Activities. The Consultant agrees
that during the term he is in a position of special trust and confidence and has
access to confidential and proprietary information about the Company's business
and plans. The Consultant agrees that he will not directly or indirectly, either
as an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any similar individual or representative
capacity, engage or participate in any business that is in competition, in any
manner whatsoever, with the Company. Notwithstanding anything in the foregoing
to the contrary, the Consultant shall be allowed to invest as a shareholder in
publicly traded companies, or through a venture capital firm or an investment
pool.
7. Trade Secrets.
A. Special Techniques. It is hereby agreed that the Company has
developed or acquired certain technology, know-how, unique or special methods,
processes and techniques, trade secrets, special written marketing plans and
special customer arrangements, supplier and customer lists and arrangements, and
other proprietary rights and confidential information and shall during the term
continue to develop, compile and acquire said items (all hereinafter
collectively referred to as the "Company's Property"). It is expected that the
Consultant will gain knowledge of and utilize the Company's Property during the
course and scope of the term, and will be in a position of trust with respect to
the Company's Property.
B. Company's Property. It is hereby agreed that the Company's Property
shall remain the Company's sole property. If the Consultant's engagement is
terminated, for whatever reason, the Consultant agrees not to copy, make known,
disclose or use, any of the Company's Property without the Company's prior
written consent which shall not be unreasonably withheld. In such event, the
Consultant further agrees not to endeavor or attempt in any way to interfere
with or induce a breach of any prior proprietary contractual relationship that
the Company may have with any employee, customer, contractor, suppliers,
representative, or distributor for two (2) years for two (2) years from the date
of termination of this Agreement. The Consultant agrees upon termination of
engagement to deliver to the Company all confidential papers, documents,
records, lists and notes (whether prepared by the Consultant or others)
comprising or containing the Company's Property. The Consultant recognizes that
violation of covenants and agreements contained in this Section 7 may result in
irreparable injury to the Company which would not be fully compensable by way of
money damages.
C. Covenant Not to Compete. For a period of two (2) year from the date
of any termination of the Consultant's engagement with the Company, the
Consultant shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity, engage or participate in
any activities which are the same as, or competitive with, the activities in
which the Company is then engaged.
8. Independent contractor status. In furnishing Consultant's services
hereunder, the Consultant shall be acting as an independent contractor in
relation to the Company. Accordingly, the Consultant shall have no authority to
act for or on behalf of the Company or to bind the Company without its express
written consent and shall not be considered as having employee status for the
purpose of any employee benefit plan applicable to the Company's employees
generally.
9. Miscellaneous.
A. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matters
herein, and supersedes and replaces any prior agreements and understandings,
whether oral or written between them with respect to such matters. The
provisions of this Agreement may be waived, altered, amended or repealed in
whole or in part only upon the written consent of both parties to this
Agreement.
B. No Implied Waivers. The failure of either party at any time to
require performance by the other party of any provision hereof shall not affect
in any way the right to require such performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of any subsequent breach of the same provision or any other
provision.
C. Personal Services. It is understood that the services to be
performed by the Consultant hereunder are personal in nature and the obligations
to perform such services and the conditions and covenants of this Agreement
cannot be assigned by the Consultant. Subject to the foregoing, and except as
otherwise provided herein, this Agreement shall inure to the benefit of and bind
the successors and assigns of the Company.
D. Severability. If for any reason any provision of this Agreement
shall be determined to be invalid or inoperative, the validity and effect of the
other provisions hereof shall not be affected thereby, provided that no such
severability shall be effective if it causes a material detriment to any party.
E. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of Delaware, applicable to contracts between residents
of New York entered into and to be performed entirely within Delaware.
F. Notices. All notices, requests, demands, instructions or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given upon delivery, if
delivered personally, or if given by prepaid telegram, or mailed first-class,
postage prepaid, registered or certified mail, return receipt requested, shall
be deemed to have been given seventy-two (72) hours after such delivery, if
addressed to the other party at the addresses as set forth on the signature page
below. Either party hereto may change the address to which such communications
are to be directed by giving written notice to the other party hereto of such
change in the manner above provided.
G. Merger, Transfer of Assets, or Dissolution of the Company. This
Agreement shall not be terminated by any dissolution of the Company resulting
from either merger or consolidation in which the Company is not the consolidated
or surviving company or a transfer of all or substantially all of the assets of
the Company. In such event, the rights, benefits and obligations herein shall
automatically be assigned to the surviving or resulting company or to the
transferee of the assets.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Company:
PACIFIC DEVELOPMENT CORPORATION
By:
-----------------------------
Xxxxx X. Little, President
CONSULTANT
----------------------------
Xxxx Xxxxxx
SCHEDULE 2(e)
PENDING ACTIONS
None
SCHEDULE 2(f)
GOVERNMENT APPROVALS
None
SCHEDULE 2(g)
CHESHIRE DISTRIBUTORS, INC.:
LIENS AND ENCUMBRANCES
None
SCHEDULE 2(i)
CHESHIRE DISTRIBUTORS, INC.:
INDEBTEDNESS TO STOCKHOLDERS
None
SCHEDULE 3(b)
PACIFIC DEVELOPMENT CORPORATION:
CERTIFICATE OF INCORPORATION AND BY-LAWS
SCHEDULE 3(d)
PACIFIC DEVELOPMENT CORPORATION:
SIGNIFICANT AGREEMENTS
SCHEDULE 3(g)
PACIFIC DEVELOPMENT CORPORATION:
SECURITIES FILINGS SINCE JANUARY 1, 1997
SCHEDULE 4(d)
CHESHIRE HOLDINGS, INC.:
CERTIFICATE OF INCORPORATION AND BY-LAWS