AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (“Agreement”)
is
made and entered into as of December 12, 2007, by and among Venture Beverage
Company, a Nevada corporation, with its principal office at 000 Xxxx Xxx Xxxx
Xxxx., Xxxxx 000, Xx. Xxxxxxxxxx, Xxxxxxx, 00000 (“Venture”),
Red
Carpet Entertainment, Inc., a Nevada corporation, with its principal office
at
000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxxxx, 00000 (“Red”),
and
Purple Acquisition Corp., a newly-formed wholly-owned subsidiary of Red
(“Acquisition
Sub”).
A. Red
and
Venture intend to effect a reverse triangular merger (the “Merger”),
pursuant to which Acquisition Sub will merge with and into Venture and Venture
will survive and, in connection therewith, will cause its name to be changed
to
“Purple Beverage Company, Inc.” Immediately thereafter, pursuant to a short-form
merger agreement, Purple Beverage Company, Inc. will merge with and into Red
and
Red will survive and, in connection therewith, will cause its name to be changed
to “Purple Beverage Company, Inc.” (together with Merger, the “Merger
Transactions”).
B. Prior
to
the Merger, Red shall have effected an 8.25-for-one split (the “Stock
Split”)
of the
authorized number of shares of its common stock and all of its then-issued
and
outstanding common stock, par value $.001 per share.
C. Simultaneous
with
the
Closing (as defined below), Xxxxxxxxxxx Xxxxxxx and Xxxxx Xxxxxxx (collectively,
the “Majority
Stockholder”)
shall
sell to Red and Red shall purchase from Majority Stockholder all of the shares
of Red common stock then held by the Majority Stockholder pursuant to a
repurchase agreement of even date herewith to which Red and the Majority
Stockholder are parties (the “Repurchase
Agreement”).
D. Simultaneous
with the Closing, Red and certain investors (the “Investors”),
who
are parties to subscription agreements of even effective date herewith (the
“Subscription
Agreements”),
will
close the $3,015,000 private placement transaction contemplated by the
Subscription Agreements.
E. For
federal income tax purposes, the parties
intend
that the Merger Transactions will qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder (the “Tax
Code”).
In
consideration of the foregoing and the representations, warranties and mutual
covenants herein made, the parties hereby agree to the foregoing and as
follows:
Section
1. Definitions.
Capitalized terms not otherwise defined herein have the meanings set forth
in
the attached Schedule
1.
Section
2. Merger.
(a) Effecting
the Merger.
Upon
the terms and subject to the conditions contained in this Agreement, at the
Effective Time, Acquisition Sub shall be merged with and into Venture, and
the
separate corporate existence of Acquisition Sub shall thereupon cease. In
connection therewith, Venture’s name will be changed to “Purple Beverage
Company, Inc.” Immediately thereafter, Red will merge Venture into itself
pursuant to a plan of merger adopted by the board of directors of Red (the
“Board”)
and
articles of merger filed with the Secretary of State of the State of Nevada
in
accordance with Section 92A.180 of the Nevada Revised Statutes (2007); as a
result of such, the separate corporate existence of Venture will cease, Red
will
continue as the surviving corporation, and the name of Red will be changed
to
“Purple Beverage Company, Inc.”
(b) Conversion
of Shares.
(i) Each
share of common stock of Venture issued and outstanding on the Closing Date
(“Venture
Shares”)
shall,
by virtue of the Merger and without any action on the part of Venture, Red,
Acquisition Sub or the holders of the Venture Shares, be converted into and
will
become 3.4 validly issued, fully paid and non-assessable shares of common stock
of Red (“Share Ratio”),
on a
post-Stock Split basis, such that holders of the Venture Shares as of the
Closing Date will hold a total of 37,581,135 shares
of
Red on a post-Stock Split basis following the conversion. No fractional shares
will be issued, and any right to receive a fractional share will be rounded-up
to the nearest whole share.
(ii) At
the
Effective Time, the Venture Shares will be deemed canceled and retired and
will
cease to exist, and each holder of a certificate for Venture Shares will cease
to have any rights with respect thereto; provided,
however,
that,
following the Closing Date, upon surrender of an original stock certificate
representing Venture Shares, Red will deliver a stock certificate for shares
of
common stock of Red to which such person is entitled pursuant to the Share
Ratio, bearing any necessary or appropriate restrictive legend.
(iii) If
any
certificate evidencing Venture Shares shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed and, if required by Red, the posting
of an indemnity bond, in such reasonable amount as Red or the transfer agent
may
direct, as collateral security against any claim that may be made with respect
to the certificate, Red will issue in exchange for the lost, stolen or destroyed
certificate the applicable number of shares of Red common stock.
(c) Stock
Option Plans.
As a
result of the Merger, the stock option plans listed on Schedule 5(o) hereto
(the
“Option
Plans”)
shall
become the stock option plans of Red at Closing. Furthermore, the number of
options authorized and issued pursuant to the Option Plans shall convert in
accordance with the Share Ratio.
Section
3. Closing
Date.
On the
terms and subject to the conditions of this Agreement, the closing of the Merger
(the “Closing”)
shall
take place at the offices of Xxxxx Xxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx, 00000, at 10:00 a.m., local time, on the date of this
Agreement or such other time, date or place as Red and Venture may otherwise
agree (the
“Closing
Date”).
Section
4. New
Directors and Officers.
On or
before the Closing, but effective ten days following the Closing (“Director
Effective Date”),
or as
soon thereafter as may be permitted by the rules and regulations promulgated
by
the Securities and Exchange Commission, or state or federal law, the Board
of
Red will appoint an individual designated by Venture to fill a vacancy on the
Board to serve as director of Red from and after the Director Effective Date
and, subsequent to such designation, the then-current member of the Board shall
resign effective upon the Director Effective Date. On the Closing Date or as
soon thereafter as practicable, Red shall file with the Securities and Exchange
Commission (the “SEC”) and transmit to the stockholders of record of Red on such
date the information required by Exchange Act Rule 14f-1 with regard hereto.
Effective as of the Closing, the current officers of Red shall be replaced
with
individuals designated as officers by Venture.
2
Section
5. Venture’s
Representations and Warranties.
Venture
represents and warrants to Red that the statements contained in this Section
are
true and correct as of the Closing Date, and do not contain any facts, or omit
any facts, that render the statements herein to be misleading, except (i) where
any variation would not be reasonably likely to have an Adverse Effect, and
(ii)
as set forth herein and in the disclosure schedule delivered by Venture to
Red
(the “Venture
Schedule”),
arranged in sections corresponding to the paragraphs in this Section; the
disclosure in any section or paragraph will qualify other paragraphs in this
Section to the extent that it is reasonably apparent from a reading of the
disclosure that it also qualifies or applies to such other
paragraphs.
(a) Organization.
Venture
is a corporation validly existing and in good standing under the laws of the
State of Nevada and has all requisite power and authority and possesses all
necessary governmental approvals necessary to own, lease and operate its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby. Venture is duly qualified
to
do business and is in good standing in all jurisdictions in which its ownership
of property or the character of its business requires such qualification, except
where the failure to be so qualified would not reasonably be expected to have
an
Adverse Effect. Certified copies of the Articles of Incorporation of
Venture, as amended to date, have been made available to Red, are complete
and
correct, and no amendments have been made thereto or have been authorized since
the date thereof. Venture is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
(b) Capitalization.
(i) Venture’s
authorized capital stock consists solely of 100,000,000 shares of common stock,
par value $0.001.
(ii) There
are
11,053,275 shares of common stock issued and outstanding and no shares held
in
the treasury of Venture. All of the issued and outstanding shares of Venture
common stock were duly and validly issued and fully paid, are non-assessable
and
free of preemptive rights, and were issued in compliance with all applicable
state and federal securities laws.
(iii) There
are
no outstanding (A) options, warrants, or other rights to purchase from Venture
any capital stock of Venture; (B) debt securities or instruments convertible
into or exchangeable for shares of such stock; or (C) commitments of any kind
for the issuance of additional shares of capital stock or options, warrants
or
other securities of Venture.
3
(c) No
Subsidiaries.
Venture
does not own any capital stock or other equity interest in any corporation,
partnership, joint venture or other entity.
(d) Authorization.
Venture
has all requisite power and authority to execute and deliver this Agreement,
to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Venture
and
the consummation by Venture of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate and/or stockholder action
by Venture and no other corporate proceedings on the part of Venture and no
other stockholder vote or consent is necessary to authorize this Agreement
or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Venture. This Agreement and all other
agreements and obligations entered into and undertaken in connection with the
transactions contemplated hereby to which Venture is a party constitute the
valid and legally binding obligations of Venture, enforceable against Venture
in
accordance with their respective terms, except as may be limited by principles
of equity or applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or other similar laws relating to or affecting the rights
and remedies of creditors generally. The execution, delivery and performance
by
Venture of this Agreement and the agreements provided for herein, and the
consummation by Venture of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
violate the provisions of the Articles of Incorporation or Bylaws of Venture,
or
to Venture’s Knowledge (i) violate the provisions of any law, rule or
regulation applicable to Venture, (ii) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (iii) conflict
with or result in the breach or termination of any term or provision of, or
constitute a default under, or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon the properties or assets of
Venture pursuant to, any indenture, mortgage, deed of trust or other instrument
or agreement to which Venture is a party or by which Venture or any of its
properties is or may be bound.
(e) No
Conflict.
The
execution and delivery of this Agreement by Venture does not require any consent
or approval under, result in any breach of, result in any loss of any benefit
under, or constitute a change of control or default (or an event which with
notice or lapse of time or both would become a default) under; give to others
any right of termination, vesting, amendment, acceleration or cancellation
of;
or result in the creation of any lien or encumbrance on any property or asset
of
Venture pursuant to; any material agreement of Venture or other instrument
or
obligation
of
Venture.
(f) Litigation.
There is
no action, suit, legal or administrative proceeding or investigation pending
or,
to Venture’s Knowledge, threatened against or involving Venture (either as a
plaintiff or defendant) before any court or governmental agency, authority,
body
or arbitrator. There is not in existence on the date hereof any order, judgment
or decree of any court, tribunal or agency to Venture’s Knowledge enjoining or
requiring Venture to take any action of any kind with respect to its business,
assets or properties.
(g) Insurance.
The
Venture Schedule sets forth a listing of all current Venture insurance policies.
All current insurance policies are in full force and effect, are in amounts
of a
nature that are adequate and customary for Venture’s business, and to Venture’s
Knowledge are sufficient for compliance with all legal requirements and
agreements to which it is a party or by which it is bound. All premiums due
on
current policies or renewals have been paid, and there is no material default
under any of the policies.
4
(h) Personal
Property.
Venture
has good and marketable title to all of its tangible personal property free
and
clear of all liens, leases, encumbrances, claims under bailment and storage
agreements, equities, conditional sales contracts, security interests, charges,
and restrictions, except for liens, if any, for personal property taxes not
due.
Such property is used by Venture in the ordinary course of its business and
is
sufficient for continued conduct of Venture’s business after the Closing Date in
substantially the same manner as conducted prior to the Closing Date. Such
property is in good operating condition and repair, normal wear and tear
excepted, and normal maintenance has been performed.
(i) Intangible
Property.
Venture
is the sole and exclusive owner of all right, title and interest in and to
all
material items of intangible property (including formula and process know-how)
necessary for the operation of all material aspects of Venture’s business as it
is currently conducted free and clear of all liens, security interests, charges,
encumbrances, equities or other adverse claims. Venture has the right and
authority to use, and to continue to use after the Closing Date, such property
in connection with the conduct of its business in the manner presently
conducted, and to its Knowledge such use or continuing use does not and will
not
materially infringe upon or violate any rights of any other person.
(j) Real
Property.
Venture
is a party to a lease agreement regarding a parcel of improved real property
located in Florida, details of which are contained on Schedule 5(j). Except
as
set forth in the preceding sentence, Venture does not have any interests in
any
parcel of real property, improved or otherwise.
(k) Tax
Matters.
Within
the times and in the manner prescribed by law, Venture has filed all federal,
state and local tax returns and all tax returns for other governing bodies
having jurisdiction to levy taxes upon it that are required to be filed. Venture
has paid all taxes, interest, penalties, assessments and deficiencies that
have
become due, including without limitation income, franchise, real estate, and
sales and withholding taxes. No examinations of the federal, state or local
tax
returns of Venture are currently in progress or threatened and no deficiencies
have been asserted or to its Knowledge assessed against Venture as a result
of
any audit by the Internal Revenue Service or any state or local taxing authority
and no such deficiency has been proposed or threatened.
(l) Books
and Records.
The
general ledger and books of account of Venture, all minute books of Venture,
all
federal, state and local income, franchise, property and other tax returns
filed
by Venture, all of which have been made available to Red, are in all material
respects complete and correct and have been maintained in accordance with good
business practice and in accordance with all applicable procedures required
by
laws and regulations.
(m) Contracts
and Commitments.
The
Venture Schedule lists all material contracts and agreements to which Venture
is
a party, whether written or oral, other than those between Venture and Red.
Each
such contract is a valid and binding agreement of Venture, enforceable against
Venture in accordance with its terms, is in full force and effect and represents
the material terms of the agreement between the respective parties. Venture
has
materially complied with all obligations required pursuant to such contracts
to
have been performed by Venture on its part and neither Venture nor, to its
knowledge, any other party to such contract is in breach of or default in any
material respect under any such contract.
5
(n) Compliance
with Laws.
Venture
has all requisite licenses, permits and certificates, including environmental,
health and safety permits, from federal, state and local authorities necessary
to conduct its business as currently conducted and own and operate its assets,
except where the failure to have such permits would not reasonably be expected
to have an Adverse Effect. Venture is not in violation of any federal, state
or
local law, regulation or ordinance (including, without limitation, laws,
regulations or ordinances relating to building, zoning, environmental, disposal
of hazardous waste, land use or similar matters) relating to its business or
its
properties.
(o) Employee
Benefit Plans.
The
Venture Schedule lists all employee benefit plans as defined in ERISA Section
3(3), and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all material unexpired severance agreements with any current
or former employee of Venture. With respect to such plans, individually and
in
the aggregate, no event has occurred and, to its Knowledge, there exists no
condition or set of circumstances in connection with which Venture could be
subject to any liability that is reasonably likely to have an Adverse Effect
under ERISA, the Tax Code or any other applicable law.
(p) Indebtedness
to and from Affiliates.
Venture
is not indebted, directly or to its Knowledge indirectly, to any officer,
director or 10% stockholder of Venture in any amount other than for salaries
for
services rendered or reimbursable business expenses, and no such person is
indebted to Venture except for advances made to employees of Venture in the
ordinary course of business to meet reimbursable business expenses.
(q) Banking
Facilities.
The
Venture Schedule sets forth a true, correct, and complete list of: (i) each
bank, savings and loan or similar financial institution in which Venture has
an
account or safety deposit box and the numbers of the accounts or safety deposit
boxes maintained by Venture thereat; and (ii) the names of all signatories
authorized to draw on each such account or to have access to any such safety
deposit box facility.
(r) Regulatory
Approvals.
All
consents, approvals, authorizations or other requirements prescribed by any
law,
rule or regulation that must be obtained or satisfied by Venture and that are
necessary for the execution and delivery by Venture of this Agreement or any
documents to be executed and delivered by Venture in connection therewith have
been, or prior to the Closing Date will be, obtained and satisfied.
(s) No
Brokers.
No
broker or finder has acted for Venture in connection with this Agreement or
the
transactions contemplated hereby, and no broker or finder is entitled to any
brokerage or finder’s fee or other commissions in respect of such transactions
based upon agreements, arrangements or understandings made by or on behalf
of
Venture.
(t) Disclosure.
The
information concerning Venture set forth in this Agreement, the exhibits and
schedules hereto, and any document, statement or certificate furnished or to
be
furnished in connection herewith does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein or necessary to make the statements and facts contained
herein or therein, in light of the circumstances in which they are made, not
false or misleading.
6
(u) Tax
Treatment.
Neither
Venture nor, to the Knowledge of Venture, any of its Affiliates has taken or
agreed to take action that would prevent the Merger Transactions from
constituting a reorganization qualifying under the provisions of Section 368
of
the Tax Code.
Section
6. Red’s
and Acquisition Sub’s Representations and Warranties. Each
of
Red and Acquisition Sub represents and warrants to Venture and the surviving
corporation that the statements contained in this Section are true and correct
as of the Closing Date and do not contain any facts, or omit any facts, that
render the statements herein to be misleading, except (i) where any variation
would not be reasonably likely to have an Adverse Effect, and (ii) as set forth
herein and in the disclosure schedule delivered by Red and Acquisition Sub
to
Venture (the “Red
Schedule”),
arranged in sections corresponding to the paragraphs in this Section; the
disclosure in any section or paragraph will qualify other paragraphs in this
Section to the extent that it is reasonably apparent from a reading of the
disclosure that it also qualifies or applies to such other
paragraphs.
(a) Organization.
(i) Red
is a
corporation validly existing and in good standing under the laws of the State
of
Nevada and has all requisite power and authority and possesses all necessary
governmental approvals necessary to own, lease and operate its properties,
to
carry on its business as now being conducted, to execute and deliver this
Agreement and the agreements contemplated herein, and to consummate the
transactions contemplated hereby and thereby. Red is duly qualified to do
business and is in good standing in all jurisdictions in which its ownership
of
property or the character of its business requires such qualification, except
where the failure to be so qualified would not reasonably be expected to have
an
Adverse Effect. Certified copies of the Articles of Incorporation and Bylaws,
as
amended to date, have been made available to Venture, are complete and correct,
and no amendments have been made thereto or have been authorized since the
date
thereof. Red is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws.
Acquisition
Sub is a corporation validly existing and in good standing under the laws of
the
State of Nevada and has all requisite power and authority and possesses all
necessary governmental approvals necessary to own, lease and operate its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby. Certified copies of the
Articles of Incorporation and Bylaws, as amended to date, have been made
available to Venture, are complete and correct, and no amendments have been
made
thereto or have been authorized since the date thereof. Acquisition Sub is
not
in violation of any of the provisions of its Articles of Incorporation or
Bylaws.
7
(b) Capitalization.
(i) Red’s
authorized
capital stock consists solely of 412,500,000
(post-Stock
Split) shares
of
common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001
par value.
(ii) There
are 31,700,625
(post-Stock
Split) shares
of
common stock issued and outstanding (which number excludes the actions
contemplated by the Repurchase Agreement and the Subscription Agreements),
no
shares of preferred stock of Red is issued and outstanding, and no shares of
common stock of Red is held
in
the treasury of Red. All of the issued and outstanding shares of common stock
of
Red were duly and validly issued and fully paid, are non-assessable and free
of
preemptive rights, and were issued in compliance with all applicable state
and
federal securities laws.
(iii) There
are
no outstanding (A) options, warrants, or other rights to purchase from Red
any
capital stock of Red or Acquisition Sub; (B) debt securities or instruments
convertible into or exchangeable for shares of such stock; or (C) commitments
of
any kind for the issuance of additional shares of capital stock or options,
warrants or other securities of Red or Acquisition Sub.
(iv) Red
owns
all of the outstanding capital stock of Acquisition Sub, free and clear of
all
liens or other encumbrances.
(c) No
Subsidiaries.
Except
for Acquisition Sub, Red does not own any capital stock or other equity interest
in any corporation, partnership, joint venture or other entity.
(d) Authorization.
Each of
Red and Acquisition Sub has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Red and Acquisition Sub and the consummation by Red and Acquisition
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by Red and Acquisition Sub,
respectively, and no other corporate proceedings on the part of Red or
Acquisition Sub, respectively, and no stockholder vote or consent is necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Red
and Acquisition Sub. This Agreement and all other agreements and obligations
entered into and undertaken in connection with the transactions contemplated
hereby to which Red or Acquisition Sub is a party constitute the valid and
legally binding obligations of Red and Acquisition Sub, respectively,
enforceable against Red and Acquisition Sub, respectively, in accordance with
its terms, except as may be limited by principles of equity or applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or
other similar laws relating to or affecting the rights and remedies of creditors
generally. The execution, delivery and performance by Red and Acquisition Sub
of
this Agreement and the agreements provided for herein, and the consummation
by
Red and Acquisition Sub of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
violate the provisions of the Articles of Incorporation or Bylaws of Red or
Acquisition Sub or, to Red’s or Acquisition Sub’s Knowledge, (i) violate the
provisions of any law, rule or regulation applicable to Red or Acquisition
Sub,
(ii) violate any judgment, decree, order or award of any court, governmental
body or arbitrator; or (iii) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or
cause
any acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of Red or Acquisition Sub pursuant to, any
indenture, mortgage, deed of trust or other instrument or agreement to which
Red
or Acquisition Sub is a party or by which Red or Acquisition Sub or any of
their
respective properties is or may be bound.
8
(e) No
Conflict.
The
execution and delivery of this Agreement by Red and Acquisition Sub does not
require any consent or approval under, result in any breach of, any loss of
any
benefit under or constitute a change of control or default (or an event which
with notice or lapse of time or both would become a default) under, or give
to
others any right of termination, vesting, amendment, acceleration or
cancellation of, or result in the creation of any lien or encumbrance on any
property or asset of Red or Acquisition Sub pursuant to any material agreement
of Red or Acquisition Sub or other instrument or obligation of Red or
Acquisition Sub.
(f) Absence
of Liabilities.
Except
as set forth on its balance sheet as of September 30, 2007, as set forth in
its
Quarterly Report on Form 10-QSB for the period ended September 30, 2007, as
filed with the Securities and Exchange Commission, Red does not have any
liability or obligation, secured or unsecured, whether accrued, absolute,
contingent, unasserted or otherwise, which exceeds $1,000, not including legal
and accounting expenses incurred pursuant to the Merger, which shall be paid
from the proceeds of the private placement transaction contemplated by the
Subscription Agreements, to a maximum of $50,000.00. Acquisition Sub has no
liabilities or obligations.
(g) Litigation.
There
is no action, suit, legal or administrative proceeding or investigation pending
or, to Red’s Knowledge, threatened against or involving Red or Acquisition Sub
(either as a plaintiff or defendant) before any court or governmental agency,
authority, body or arbitrator. There is not in existence on the date hereof
any
order, judgment or decree of any court, tribunal or agency to Red’s Knowledge
enjoining or requiring Red or Acquisition Sub to take any action of any kind
with respect to its business, assets or properties.
(h) Tax
Matters.
Within
the times and in the manner prescribed by law, Red has filed all federal, state
and local tax returns and all tax returns for other governing bodies having
jurisdiction to levy taxes upon it which are required to be filed. Red has
paid
all taxes, interest, penalties, assessments and deficiencies which have become
due, including without limitation income, franchise, real estate, and sales
and
withholding taxes. No examinations of the federal, state or local tax returns
of
Red are currently in progress nor threatened and no deficiencies have been
asserted or to its Knowledge assessed against Red as a result of any audit
by
the Internal Revenue Service or any state or local taxing authority and no
such
deficiency has been proposed or threatened.
(i) Books
and Records.
The
general ledger and books of account of Red, all minute books of Red, all
federal, state and local income, franchise, property and other tax returns
filed
by Red, all reports and filings with the SEC by Red, all of which have been
made
available to Venture, are in all material respects complete and correct and
have
been maintained in accordance with good business practice and in accordance
with
all applicable procedures required by laws and regulations.
9
(j) Contracts
and Commitments.
There
are no material contracts to which Red is a party other than those specified
in
its filings with the SEC. Acquisition Sub is not a party to any material
contract.
(k) Compliance
with Laws.
Red has
all requisite licenses, permits and certificates, including environmental,
health and safety permits, from federal, state and local authorities necessary
to conduct its business as currently conducted and own and operate its assets,
except where the failure to have such permits would not reasonably be expected
to have an Adverse Effect. Red is not in violation of any federal, state or
local law, regulation or ordinance (including, without limitation, laws,
regulations or ordinances relating to building, zoning, environmental, disposal
of hazardous waste, land use or similar matters) relating to its business or
its
properties.
(l) Employee
Benefit Plans.
Except
as disclosed in its filings with the SEC, Red has no (A) employee benefit plans
as defined in ERISA Section 3(3), (B) bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance or other
similar employee benefit plans, or (C) material unexpired severance agreements
with any current or former employee of Red. With respect to such plans,
individually and in the aggregate, no event has occurred and, to its Knowledge,
there exists no condition or set of circumstances in connection with which
Red
could be subject to any liability that is reasonably likely to have an Adverse
Effect under ERISA, the Tax Code or any other applicable law.
(m) Indebtedness
to and from Affiliates.
Red is
not indebted, directly or to its Knowledge indirectly, to any officer, director
or 10% stockholder of Red in any amount other than for salaries for services
rendered or reimbursable business expenses, and no such person is indebted
to
Red except for advances made to employees of Red in the ordinary course of
business to meet reimbursable business expenses.
(n) Banking
Facilities.
Red has
no account or safety deposit box at any bank, savings and loan or similar
financial institution or other similar facility.
(o) Regulatory
Approvals.
All
consents, approvals, authorizations or other requirements prescribed by any
law,
rule or regulation that must be obtained or satisfied by Red and Acquisition
Sub
and that are necessary for the execution and delivery by Red and Acquisition
Sub
of this Agreement or any documents to be executed and delivered by Red and
Acquisition Sub in connection therewith have been obtained and
satisfied.
(p) No
Brokers.
No
broker or finder has acted for Red or Acquisition Sub in connection with this
Agreement or the transactions contemplated hereby, and no broker or finder
is
entitled to any brokerage or finder’s fee or other commissions in respect of
such transactions based upon agreements, arrangements or understandings made
by
or on behalf of Red or Acquisition Sub.
(q) Disclosure.
The
information concerning each of Red and Acquisition Sub set forth in its reports
and filings with the SEC, this Agreement, the exhibits and schedules hereto,
and
any document, statement or certificate furnished or to be furnished in
connection herewith (as applicable) does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein or necessary to make the statements and facts contained
herein or therein, in light of the circumstances in which they are made, not
false or misleading.
10
(r) SEC
and State Securities Law Filings.
(i) Red
has
timely and properly filed all forms, reports and documents required to be filed
with the SEC since formation of Red. At the time filed or, with respect to
registration statements filed with the SEC under the Securities Act, as of
the
effective date thereof, all such filings (A) complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act,
as
the case may be, and (B) did not at the time they were filed (or if amended
or
superseded by a filing prior to the date of this Agreement, then on the date
of
such filing) contain any untrue statement of a material fact or omit to state
a
material fact required to be stated in such filings or necessary in order to
make the statements in such filings, in the light of the circumstances under
which they were made, not misleading.
(ii) Each
of
the financial statements (including, in each case, any related notes) contained
in Red’s SEC filings complied as to form in all material respects with the
applicable rules and regulations with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-QSB of the
SEC) and fairly presented the financial position of Red as of the dates and
the
results of its operations and cash flows for the periods indicated, except
that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
(s) Tax
Treatment.
Neither
Red nor, to the Knowledge of Red, any of its Affiliates has taken or agreed
to
take action that would prevent the Merger Transactions from constituting a
reorganization qualifying under the provisions of Section 368 of the Tax
Code.
Section
7. Conditions
to the Merger.
The
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or
prior
to the Closing Date of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted
by
applicable law:
(a) The
Stock
Split shall have been consummated.
(b) The
transactions contemplated by the Repurchase Agreement and the Subscription
Agreements shall be effective at the Effective Time.
(c) Any
governmental or third party approvals required to effect the Merger Transactions
shall have been obtained.
11
Section
8. Venture
Conditions to the Merger.
The
obligation of Venture to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, unless waived
by
Venture:
(a) Each
of
the representations and warranties of Red and Acquisition Sub contained in
this
Agreement shall be true and correct as of the date of this Agreement, except
to
the extent that any changes, circumstances or events making such representations
and warranties not true or correct would not, individually or in the aggregate,
constitute an Adverse Effect.
(b) Red
and
Acquisition Sub shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by it.
(c) From
the
date of this Agreement through the Effective Time, there shall not have occurred
any change, circumstance or event concerning Red or Acquisition Sub that has
had
or could be reasonably likely to have an Adverse Effect.
Section
9. Red
and Acquisition Sub Conditions.
The
obligations of Red and Acquisition Sub to effect the Merger shall be subject
to
the fulfillment at or prior to the Closing Date of the following conditions,
unless waived by Red:
(a) Each
of
the representations and warranties of Venture contained in this Agreement shall
be true and correct as of the date of this Agreement, except to the extent
that
any changes, circumstances or events making such representations and warranties
not true or correct would not, individually or in the aggregate, constitute
an
Adverse Effect.
(b) Venture
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by
it
on or prior to the Effective Time.
(c) From
the
date of this Agreement through the Effective Time, there shall not have occurred
any change, circumstance or event concerning Venture that has had or could
be
reasonably likely to have an Adverse Effect.
(d) Red
shall
have received from each holder of shares of Venture capital stock (1) an
investor suitability questionnaire in form and substance satisfactory to Red,
containing customary investment representations and certifying that such holder
is an “accredited investor”
as
defined in Regulation D of the Securities Act or (2) confirmation of receipt
of
the appropriate disclosures required pursuant to Rule 506 under Regulation
D of
the Securities Act.
Section
10. Indemnification.
All
rights to indemnification by Venture and Red existing in favor of each
individual who is an officer or director of Venture or Red of the date of this
Agreement (each such individual, an “Indemnified Person”) for his acts and
omissions as a director or officer of Venture or Red occurring prior to the
Effective Time, as provided in Venture or Red's Articles of Incorporation or
Bylaws (as in effect as of the date of this Agreement) shall survive the Merger
Transactions and shall continue in full force and effect (to the fullest extent
such rights to indemnification are available under and are consistent with
applicable law) for a period of six years from the Closing Date.
Section
11. Confidentiality.
Each
party shall ensure that any nonpublic information provided to it by any other
party in confidence shall be treated as strictly confidential and that all
such
confidential information that each party or any of its respective officers,
directors, employees, attorneys, agents, investment bankers, or accountants
may
now possess or may hereinafter create or obtain relating to the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of the other such parties, any affiliate thereof, or any
customer or supplier thereof shall not be published, disclosed, or made
accessible by any of them to any other person at any time or used by any of
them, in each case without the prior written consent of the other party;
provided,
however,
that
the restrictions of this Section shall not apply (a) as may otherwise be
required by law, (b) as may be necessary or appropriate in connection with
the
enforcement of this Agreement, or (c) to the extent such information was in
the
public domain when received or thereafter enters the public domain other than
because of disclosures by the receiving party. Each such party shall, and shall
cause all of such other persons who received confidential information, from
time
to time to deliver to the disclosing party all tangible evidence of such
confidential information to which the restrictions of this Section apply upon
written request.
12
Section
12. Miscellaneous.
(a) Survival.
The
representations and warranties of the parties will terminate at the Effective
Time and only those covenants that by their terms survive the Effective Time
shall survive the Effective Time. This Section 12 shall survive the Effective
Time.
(b) Press
Releases and Public Announcements.
No
party will issue any press release or make any public announcement relating
to
the subject matter of this Agreement without the prior written approval of
the
other party; provided,
however,
that
any party may make any public disclosure it believes in good faith is required
by applicable law or any listing requirement or trading agreement.
(c) No
Third-Party Beneficiaries.
This
Agreement will not confer any rights or remedies upon any person other than
the
parties and their respective successors and permitted assigns.
(d) Notices.
All
notices required or permitted under this Agreement will be in writing and will
be given by certified or regular mail or by any other reasonable means
(including personal delivery, facsimile, or reputable express courier) to the
party to receive notice at the following addresses or at such other address
as
any party may, by notice, direct:
|
To
Red or
|
Red
Carpet Entertainment, Inc.
|
|
|
Acquisition
Sub:
|
Attention:
President
|
|
|
000
Xxxxxxxxx Xxxxxx, Xxxxx 000
|
||
|
Xxxxxx
Xxxx, Xxxxxxxxxx 00000
|
||
|
With
a copy to:
|
M2
Law Professional Corporation
|
|
|
(which
will not
|
Attention:
Xxxxxxx Xxxxxxxxxxxx, Esq.
|
|
|
constitute
notice)
|
000
Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
|
|
|
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
|
||
|
Fax
number: (000) 000-0000
|
13
|
To
Venture:
|
Venture
Beverage Company
|
|
|
Attention:
Xxxxxxxx Xxxxxxxxxx
|
||
|
000
Xxxx Xxx Xxxx Xxxx., Xxxxx 000
|
||
|
Xx.
Xxxxxxxxxx, Xxxxxxx 00000
|
||
|
Fax
number: (000) 000-0000
|
||
|
With
a copy to:
|
Xxxxx
Xxxx LLP
|
|
|
(which
will not
|
Attention:
Xxxxxxx X. Xxxx, Esq.
|
|
|
constitute
notice)
|
0000
Xxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxxx,
Xxxxxxxxxx 00000
|
||
|
Fax
number: (000) 000-0000
|
All
notices given by certified mail will be deemed as given on the delivery date
shown on the return mail receipt, and all notices given in any other manner
will
be deemed as given when received.
(e) Waiver.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to
in
this Agreement will operate as a waiver of such right, power, or privilege,
and
no single or partial exercise of any right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising from this Agreement or the
documents referred to in this Agreement can be discharged by one party, in
whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the waiving party, (b) no waiver that may be given by a party will
be
applicable except in the specific instance for which it is given, and
(c) no notice to or demand on one party will be deemed to be a waiver of
any obligation of such party or of the right of the party giving such notice
or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
(f) Further
Assurances.
The
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents,
and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and of
the
documents referred to in this Agreement.
(g) Successors
and Assigns.
This
Agreement will be binding upon and inure to the benefit of the parties and
their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the
prior written approval of the other party, which may be granted or withheld
at
the sole discretion of such other party. Any unauthorized assignment is
void.
(h) Severability.
Any
provision of this Agreement that is invalid, illegal or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of
such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction.
14
(i) Expenses.
Each
party will pay all fees and expenses (including, without limitation, legal
and
accounting fees and expenses) incurred by such party in connection with the
transactions contemplated by this Agreement.
(j) Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to principles of conflicts of
laws.
(k) Counterparts;
Signatures.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original, but all of which will be one and the same document.
Facsimiles and electronic copies in portable document format (“PDF”) containing
original signatures shall be deemed for all purposes to be originally signed
copies of the documents that are the subject of such facsimiles or PDF versions.
(l) Entire
Agreement.
This
Agreement, the schedules and exhibits hereto, and the agreements and instruments
to be delivered by the parties on Closing represent the entire understanding
and
agreement between the parties and supersede all prior oral and written and
all
contemporaneous oral negotiations, commitments and
understandings.
[Signatures
on Following Page]
15
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of
Merger as of the date first above written.
| RED CARPET ENTERTAINMENT, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxxxxxx Xxxxxxx | |
|
Name: Xxxxxxxxxxx Xxxxxxx |
||
| Title: President | ||
| PURPLE ACQUISITION CORP. | ||
| |
|
|
| By: | /s/ Xxxxxxxxxxx Xxxxxxx | |
|
Name: Xxxxxxxxxxx Xxxxxxx |
||
| Title: President | ||
| VENTURE BEVERAGE COMPANY | ||
| |
|
|
| By: | /s/ Xxxxxxxx Xxxxxxxxxx | |
|
Name: Xxxxxxxx Xxxxxxxxxx |
||
| Title: President | ||
Schedule
1
Definitions
“Adverse
Effect”
means,
with respect to each party, any effect or change that would have a material
adverse effect on the results of operations, financial condition, assets,
properties or business of the party, taken as a whole, or on the ability of
the
party to consummate timely the transactions contemplated hereby.
“Affiliate”
has
the
meaning set forth in Exchange Act Rule 12b-2.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“Effective
Time”
means
the time of acceptance for record of the Articles of Merger by the Secretary
of
State of the State of Nevada in accordance with the Nevada Revised Statute
(but
not earlier than the Closing Date) or at such later time that the parties hereto
shall have agreed upon and designated in such filing in accordance with
applicable law as the effective time of the Merger.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Knowledge”
means
the actual knowledge of the executive officers of a party, without independent
investigation.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
