AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (the
“Agreement”), dated as of June 18, 2007, by, between and among Liberator Medical
Supply, a Florida corporation (the “Company”), Liberator Medical Holdings, Inc.
(formerly Cardiff Communications, Inc.), a Nevada corporation (“Parent”), and
Cardiff Merger, Inc., a Florida corporation, a wholly owned subsidiary of Parent
(“Merger Sub”). The Company, Parent, and Merger Sub together are
referred to as the “Constituent Corporations.”
RECITALS
WHEREAS,
the respective boards of
directors of each of Parent, Merger Sub and the Company have approved the merger
of Merger Sub with and into the Company (the “Merger”) upon the terms and
subject to the conditions set forth in this Agreement and have adopted, approved
and declared advisable this Agreement;
WHEREAS,
it is the intent of the
Constituent Corporations that immediately following the Effective Time of the
Merger, the Merger Sub will have merged with and into the Company; that the
Company shall continue to be known as Liberator Medical Supply, Inc., and be
the
sole surviving wholly-owned subsidiary of the Parent (in that capacity, the
Company is sometimes called the “Surviving Corporation”); that the Parent will
change its name to Liberator Medical Holdings, Inc.; and that the directors
and
officers of the Company will be the directors and officers of the
Parent;
WHEREAS,
it is intended that the Merger
will qualify as a reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the “Code”);
NOW,
THEREFORE, in consideration of the
premises, and of the representations, warranties, covenants and agreements
contained herein, the parties hereto agree as follows:
THE
MERGER; CLOSING; EFFECTIVE TIME
1.1 The
Merger. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub shall
be
merged with and into the Company and the separate corporate existence of Merger
Sub shall thereupon cease. The Company shall be the surviving corporation in
the
Merger (sometimes referred to as the “Surviving Corporation”), so that at the
Effective Time the Company will be a wholly owned operating subsidiary of the
Parent, and the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and
franchises
shall continue unaffected by the Merger, except as set forth in Article II.
The
Merger shall have the effects specified in the Florida Business Corporation
Act
(“FBCA”). Without limiting the generality of the foregoing and subject thereto,
at the Effective Time all of the property, rights, privileges, powers and
franchises of the Merger Sub shall vest in the Company as the Surviving
Corporation, and all debts, liabilities, restrictions, disabilities and duties
of the Merger Sub shall become the debts, liabilities, restrictions,
disabilities and duties of the Surviving Corporation.
1.2 Closing.
Unless otherwise mutually agreed in writing between the Company and Parent,
the
closing of the Merger (the “Closing”) shall take place at the offices of Siegel,
Lipman, Xxxxx, Xxxxxxx & Xxxxxx, LLP, 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000, at 10:00 a.m. (Eastern Time) on or about June 21, 2007
(the “Closing Date”), or at such other location or on such other date as the
parties shall mutually agree.
1.3 Effective
Time. As promptly as practicable following the Closing, the Company, the
Merger Sub, and the Parent will cause articles of merger (the “Articles of
Merger”) to be executed, acknowledged and filed with the Secretary of State of
the State of Florida as provided in Section 607.1105 of the FBCA. The Merger
shall become effective as of the date on which the Articles of Merger are duly
filed with the Secretary of State of the State of Florida, or at such later
time
as may be agreed by the parties and specified in the Articles of Merger (the
“Effective Time”).
1.4 Capitalization. The
Merger shall be effected through the issuance of common stock of the
Parent. The Parent has authorized 200,000,000 shares of common stock,
$001 par value, of which as of the date of this Agreement 10,239,499 shares
are
issued and outstanding. Contemporaneously with the Merger, the Parent
shall effect various corporate actions, including issuance of shares pursuant
to
the Merger, issuance of shares pursuant to private financing, conversion of
debt, cancellation of debt, and cancellation of shares. These actions
shall result in a “post closing” capitalization of the Parent of 30,519,862
shares of Parent Common Stock (as herein defined), subject to adjustment for
shares of Company Common Stock issued or issuable to investors (including
holder’s of the Company’s convertible debt), placement agents, and consultants
to the Company prior to Closing, as the parties shall agree.
ARTICLE
II
ARTICLES
OF INCORPORATION AND BY-LAWS
OF
THE
SURVIVING CORPORATION AND PARENT
2.1 The
Articles of Incorporation. The Articles of Incorporation of the Company (the
“Articles”) as in effect immediately prior to the Effective Time shall continue
to be its Articles after the Merger until duly amended by applicable
Law.
2.2 The
By-Laws. The parties hereto shall take all actions necessary so that the
by-laws of the Company in effect immediately prior to the Effective Time shall
continue to be its by-laws as the Surviving Corporation (the “By-Laws”), until
thereafter amended as provided therein or by applicable Law.
2.3 Articles
of Incorporation of Parent. Parent shall take all actions necessary so that
its Articles of Incorporation are amended, at or prior to the Effective Time,
to
change its name to “Liberator Medical Holdings, Inc.”
ARTICLE
III
OFFICERS
AND DIRECTORS OF THE SURVIVING CORPORATION AND THE PARENT
3.1 Directors
of Surviving Corporation. The parties hereto shall take all actions
necessary so that the members of the board of directors of the Company at the
Effective Time shall, from and after the Effective Time, be the directors of
the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.2 Officers.
The parties hereto shall take all actions necessary so that the officers of
the
Company at the Effective Time shall, from and after the Effective Time, be
the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation
or
removal in accordance with the Charter and the By-Laws.
3.3 Directors
of the Parent. The parties hereto shall take all actions
necessary so that the members of the board of directors of the Company at the
Effective Time shall, from and after the Effective Time, be the directors of
the
Parent until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Articles of Incorporation of Parent and the By-Laws of Parent; provided,
however, that no such action or appointment shall be effective prior to the
Parent’s compliance with applicable law, including Rule 14f-1 promulgated under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
ARTICLE
IV
EFFECT
OF THE MERGER ON CAPITAL STOCK;
ISSUANCE
OF PARENT SHARE CERTIFICATES
4.1 Effect
on Capital Stock. At the Effective Time, as a result of the Merger and
without any action on the part of the Company, Parent, Merger Sub or any holder
of any capital stock of the Company:
(a) Merger
Consideration. For purposes of this Agreement, the term “Merger
Consideration” shall mean one (1) share of common stock, par value$.001 per
share, of the Parent (“Parent Common Stock”).
(b) Exchange
Ratio. As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
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4.2
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Any
shares of any class of capital stock of the Company held by the Company
as
treasury shares shall be canceled.
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4.3
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The issued
and outstanding shares of Common Stock of the Company (the “Company Common
Stock”), other than shares of Company Common Stock, if any, for which
dissenters’ rights are perfected in compliance with applicable law, and
the Company’s convertible notes, shall be converted into one (1) share
of Parent common stock (the “Parent Common Stock”) for each
share of Company Common Stock held by the Company’s shareholder or to
which the Company’s noteholders are entitled on conversion of their notes.
All other outstanding rights, warrants or options, vested or unvested,
to
acquire Company Common Stock (“Stock Purchase Rights”) shall be
automatically converted into Stock Purchase Rights of the
Parent.
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(iii) Each
issued and outstanding share of capital stock of the Parent at the Effective
Time shall continue to remain outstanding after the Effective Time.
(iv) The
Parent shall assume the Company’s Stock Plan (the “Company Plan”), and each
outstanding option to purchase shares of Company Common Stock set forth on
Schedule 4.1(b) to the Disclosure Schedule, whether or not vested or exercisable
(each, an “Option”), shall be assumed by the Parent and shall constitute an
option to acquire, on the same vesting terms, and on substantially the same
other terms and conditions as were applicable under such assumed Option, one
(1)
share of Parent Common Stock.
(v) Holders
of shares of Company Common Stock who have complied with all the requirements
for perfecting dissenters’ rights, as required under the FBCA, shall be entitled
to their rights under the FBCA with respect to such shares (the “Dissenting
Shares”). Notwithstanding the foregoing, if any holder of Dissenting Shares
shall effectively withdraw or lose (through failure to perfect or otherwise)
the
right to dissent, then, as of the later of the Effective Time and the occurrence
of such event, such holder’s shares shall automatically be converted into and
represent only the right to receive the shares of Parent Common Stock to which
such holder is then entitled under this Agreement and the FBCA, without interest
thereon and upon surrender of the certificate representing such shares.
Notwithstanding any provision of this Agreement to the contrary, any Dissenting
Shares held by a Shareholder who has perfected dissenter’s rights for such
shares in accordance with the FBCA shall not be converted in Parent Common
Stock
pursuant to this Section 4.1(b)(v).
(vi) If,
prior to the Effective Time, the Parent recapitalizes through a split-up of
its
outstanding shares of capital stock into a greater number, or a combination
of
its outstanding shares of capital stock into a lesser number, reorganizes,
reclassifies or otherwise changes its outstanding shares of capital stock into
the same or a different number of shares of other classes of capital stock,
or
declares a dividend on its outstanding shares of capital stock payable in shares
or securities convertible into shares, the number of shares of Parent Common
Stock into which the shares of Company Common Stock are to be converted, and
the
number of shares of Parent Common Stock issuable upon the exercise of each
assumed Option will be adjusted appropriately so as to maintain the
proportionate interests of the holders of the Company Common Stock and Options
and the holders of shares of capital stock of the Parent.
(c) Restricted
Stock. The shares of Parent common stock issued to shareholders of the
Company as Preferred Merger Consideration and Common Merger Consideration will
be “restricted securities” within the meaning of Securities and Exchange
Commission Rule 144.
(d) Post-Merger
Authorized Capital of Surviving Corporation. Upon completion of the Merger,
the authorized capital stock of the Surviving Corporation will consist of one
hundred million (100,000,000) shares of Common Stock, no par value per share,
one share of which will be validly issued and outstanding and the Parent will
be
the sole shareholder of the Surviving Corporation.
(f) Post-Merger
Capitalization of Parent. The authorized capital stock of the Parent will
consist of (i) Thirty-million Five-hundred Nineteen-thousand Eight-hundred
Sixty-two (30,519,862) shares of Parent Common Stock, $.001 par value per
share. Exhibit 1.4 sets forth a capitalization table of the
post-Merger capitalization of the Company. The parties confirm their
understanding that the number of the Parent’s outstanding post-Merger shares
will be adjusted for conversion of Company Common Stock and convertible debt
issued to investors in the Company concurrently with the Closing, as more
particularly set forth in Exhibit 1.4 of the Disclosure Schedule.
(a) Immediately
after the Effective Time, all shares of Company Common Stock shall be cancelled
without any requirement of their surrender by holders of those shares to the
Surviving Corporation of the certificates which immediately prior to the
Effective Time represented shares of Company Common Shares. The Parent shall
deliver to such holders their Parent Common Stock.
(b) Transfers.
From and after the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any Certificate
is
presented to the Surviving Corporation or Parent for transfer, it shall be
cancelled and exchanged for Common Merger Consideration, to which the holder
thereof is entitled pursuant to this Article IV.
4.5 Appraisal
Rights. No Person who has perfected a demand for appraisal rights
pursuant to FBCA Sections 607.1301 etseq. shall be entitled to
receive the Common Merger Consideration or any dividends or other distributions
pursuant to this Article IV unless and until the holder thereof shall have
effectively withdrawn the demand for, or otherwise lost such holder’s right to,
appraisal under the FBCA, and any Dissenting Shareholder shall be entitled
to
receive only the payment provided by the FBCA with respect to Shares owned
by
such Dissenting Shareholder. For the purposes of this Agreement, the term
“Person” shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, governmental entity or other entity
of
any kind or nature. If any Dissenting Shareholder shall have effectively
withdrawn the demand for, or otherwise lost the right to, appraisal with respect
to any Shares, such Dissenting Shareholder shall be entitled to receive only the amount to which such
shareholder would be
entitled pursuant to this Article IV. The Company shall give Parent (i) prompt
notice of any written demands for appraisal, attempted withdrawals of such
demands, and any other instruments served pursuant to applicable law received
by
the Company relating to shareholders’ rights of appraisal and (ii) the
opportunity to direct all negotiations and proceedings with respect to demand
for appraisal under the FBCA. The Company shall provide such notices and take
such actions as are required by law with respect to the administration of the
appraisal rights provided pursuant to the FBCA.
4.6 Treatment
of Stock Plans, Phantom Shares and Share Loans.
(a) Treatment
of Options and Warrants. At the Effective Time, each debenture, warrant,
option and other Stock Purchase Rights with respect to shares of Company Common
Stock granted and unexercised immediately prior to the Effective Time (a
“Company Option”), vested or unvested, shall be converted into a like right to
purchase the same number of shares of Parent Common Stock on the same terms
and
conditions as such Stock Purchase Rights. The debentures, notes, warrants,
options or other Stock Purchase Rights that will be granted and exercisable
for
shares of Parent Common Stock at the Effective Time, in the aggregate, are
set
forth on Schedule 4.1(a) to this Agreement.
4.7 Corporate
Actions. At or prior to the Effective Time, the Company, the
board of directors of the Company shall adopt any resolutions and take any
actions which are necessary or appropriate to effectuate the provisions of
Section 4.4(a).
ARTICLE
V
LIMITATION
OF SUBSEQUENT CORPORATE ACTIONS
It
is expressly understood and agreed
that the Company, and its affiliates and shareholders, will take all steps
necessary to insure that with respect to the operations of the Parent for a
period of twelve months following the Merger, (i) there shall be no reverse
split, (ii) there shall be no shares issued for less than $.80 per share
consideration, (with the exception of employee and shareholder warrants and
options currently issued or scheduled and which are not automatically converted
into Parent Common Stock at the Effective Time), (iii) there shall be no
registration of Parent shares pursuant to Form S-8, and (iv) the Company’s
assets existing at the Effective Time shall remain in place as part of the
business operations except for adjustments arising from changes in the Company’s
business operations.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
6.1 Capitalization. Except
for this Agreement or as set forth in the Disclosure Schedule, and with the
exception of employee and shareholder warrants and options currently issued
or
scheduled, there are no outstanding options, contracts, calls, commitments,
agreements or demands of any character relating to the stock of the
Company.
6.2 Organization
and Authority.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, with all requisite corporate power
and
authority to own, operate and lease its properties and to carry on its business
as now being conducted, is duly qualified and in good standing in every
jurisdiction in which the property owned, leased or operated by it, or the
nature of the business conducted by it, makes such qualification necessary
to
avoid material liability or material interference in its business operations,
and is not subject to any agreement, commitment or understanding which restricts
or may restrict the conduct of its business in any jurisdiction or location.
The
Company is presently qualified to do business Florida.
(b) The
outstanding shares of the Company are legally and validly issued, fully paid
and
non-assessable.
(c) The
Company does not own five percent (5%) or more of the outstanding stock of
any
corporation, except as listed on the Disclosure Schedule.
(d) The
minute book of the Company made available to Parent contains complete and
accurate records of all meetings and other corporate actions of the shareholders
and the Board of Directors (and any committee thereof) of the
Company.
(e) The
Disclosure Schedule contains a list of the officers, directors and shareholders
of the Company and copies of the articles of incorporation and by-laws currently
in effect of the Company.
(f) The
execution and delivery of this Agreement does not, and the consummation of
the
transaction contemplated hereby will not, subject to the approval and adoption
by the Shareholders of the Company, violate any provision of the articles of
incorporation or bylaws of the Company, or any provisions thereof, or result
in
the acceleration of any obligation under, any mortgage, lien, lease, agreement,
instrument, court order, arbitration award, judgment or decree to which the
Company is a party, or by which it is bound, and will not violate any other
restriction of any kind or character to which it is subject.
(g) The
authorized capital stock of the Company is one hundred
million (100,000,000) shares of common stock, no par value, of which
approximately 22,895,959 shares of such stock will be issued and outstanding
at
the time of Closing, subject to adjustment for shares issued or issuable prior
to Closing, as more particularly set forth in Exhibit 1.4 of the Disclosure
Schedule.
6.3 Financials.
(a) Audited
financial statements (hereafter “financial statements”) of the Company for the
period January 1, 2005, through December 31, 2006, have been delivered by the
Company to the Parent. Said financial statements are true and correct
in all material respects and present an accurate and complete disclosure of
the
financial condition of the Company as of its date and for the periods
covered.
(b) All
accounts receivable, if any, (net of reserves for doubtful accounts) of the
Company shown on the books of account on the statement date and as incurred
in
the normal course of business since that date, are collectible in the normal
course of business.
(c) The
Company has good and marketable title to all of its assets, business and
properties including, without limitation, all such properties reflected in
the
balance sheet as of the statement date except as disposed of in the normal
course of business, free and clear of any mortgage, lien, pledge, charge, claim
or encumbrance, except as shown on said balance sheet as of the statement date
and, in the case of real properties except for rights-of-way and easements
which
do not adversely affect the use of such property. Any encumbrances
will be included in the attached Disclosure Schedule.
(d) All
currently used property and assets of the Company, or in which it has an
interest, or which it has in possession, are in good operating condition and
repair subject only to ordinary wear and tear.
6.4 Changes
Since the Statement Date. Since the financial statement date,
except as disclosed in the Disclosure Schedule, there will not have been any
material negative change in the financial position or assets of the
Company.
6.5 Liabilities. To
the best of the knowledge of management, there are no material liabilities
of
the Company, whether accrued, absolute, contingent or otherwise, which arose
or
relate to any transaction of the Company, its agents or servants occurring
prior
to the statement date, which are not disclosed by or reflected in said financial
statements, except as disclosed in the Disclosure Schedule. There are
no such liabilities of the Company which have arisen or relate to any
transaction of the Company, its agents or servants, occurring since the
statement date, other than normal liabilities incurred in the normal conduct
of
the business of the Company, and none of which have a material adverse effect
on
the business or financial condition of the Company, except as disclosed in
the
Disclosure Schedule. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual
or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Company, except as disclosed in the Disclosure
Schedule.
6.6 Taxes. All
federal, foreign, county and local income, ad valorem, excise, profits,
franchise, occupation, property, sales, use gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which
are
due and payable have been duly reported, fully paid and discharged as reported
by the Company, and there are no unpaid taxes which are, or could become a
lien
on the properties and assets of the Company, except as provided for in the
financial statements of their date, or have been incurred in the normal course
of business of the Company since that date. All tax returns of any
kind required to be filed have been filed and the taxes paid or
accrued.
6.7 Accuracy
of All Statements Made by Company. No representation or warranty
by the Company and Shareholders in this Agreement, nor any statement,
certificate, schedule or exhibit hereto furnished or to be furnished by or
on
behalf of the Shareholders pursuant to this Agreement, nor any document or
certificate delivered to Parent pursuant to this Agreement or in connection
with
actions contemplated hereby, contains or shall contain any untrue statement
of
material fact or omits or shall omit a material fact necessary to make the
statement contained therein not misleading.
6.8 Limitation
of Subsequent Corporate Actions. It is expressly understood and
agreed that the Company, and its affiliates and shareholders, will take all
steps necessary to insure that with respect to the operations of the Parent
for
a period of twelve months following the Acquisition, (i) there shall be no
reverse split, (ii) no stock shall be issued for less than $.80 per share,
(with
the exception of employee and shareholder warrants and options currently issued
or scheduled), (iii) the Company does not issue shares registered pursuant
to
Form S-8, and (iv) the Company will maintain its existing assets except for
assets sold or replaced in the ordinary course of business and changes in assets
made to meet the Company’s business plan, as amended from
time-to-time.
ARTICLE
VII
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent
represents and warrants as
follows:
7.1 Organization
and Authority. The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with full power and authority to enter into and perform the transactions
contemplated by this Agreement, and with all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted, is duly qualified and in good standing in every
jurisdiction in which the property owned, leased or operated by it, or the
nature of the business conducted by it, makes such qualification necessary
to
avoid material liability or material interference in its business operations,
and is not subject to any agreement, commitment or understanding which restricts
or may restrict the conduct of its business in any jurisdiction or
location.
(a) The
outstanding shares of the Parent are legally and validly issued, fully paid
and
non-assessable.
(b) The
Parent does not own five percent (5%) or more of the outstanding stock of any
corporation, except as listed on the Disclosure Schedule.
(c) The
minute book of the Parent made available to the Company and Shareholders
contains complete and accurate records of all meetings and other corporate
actions of the shareholders and the Board of Directors (and any committee
thereof) of the Parent.
(d) The
Disclosure Schedule contains a list of the officers, directors and shareholders
of the Parent and copies of the articles of incorporation and by-laws currently
in effect of the Parent.
(e) The
execution and delivery of this Agreement does not, and the consummation of
the
transaction contemplated hereby will not violate any provision of the
certificate/articles of incorporation or bylaws of the Parent, or any provisions
thereof, or result in the acceleration of any obligation under, any mortgage,
lien, lease, agreement, instrument, court order, arbitration award, judgment
or
decree to which the Parent is a party, or by which it is bound, and will not
violate any other restriction of any kind or character to which it is
subject.
(f) The
authorized capital stock of the Parent is two hundred million (200,000,000)
shares of common stock, $.001 par value, of which 10,239,499 shares are
currently issued and outstanding. The Parent has no outstanding
options, warrants, or other securities exercisable for or convertible into
Parent Common Stock.
(g) The
number of shares of Parent Common Stock to be issued and outstanding at the
Effective Time, and the allocation of those shares among the Company’s and the
Parent’s existing securities holders and others, is set forth in the Disclosure
Schedule.
(h) Parent
represents that at the time of Closing it will have no assets
or liabilities other than that which is reflected
in its audited financial statements.
(i) Parent
represents that at the time of Closing it has taken all necessary steps to
comply with all applicable state and federal securities laws and regulations
and
that, to the knowledge of the Parent, at the time of Closing, there is no
litigation, arbitration, governmental or other proceeding (formal or informal),
claim or investigation pending or threatened, with respect to the Parents
compliance with any and all applicable securities laws and
regulations.
7.2 Performance
of This Agreement. The execution and performance of this
Agreement and the issuance of stock contemplated hereby have been authorized
by
the board of directors of Parent, and no approval of the Parents shareholder
is
necessary therefore.
7.3 Financials.
(a) True
copies of the audited financial statements of the Parent for the periods from
January 1, 2005, through December 31, 2006, will have been delivered by the
Parent. These statements have been examined and certified by
certified public accountants. Un-audited Interim financial statements
through March 31, 2007, will have also been delivered to the
Company. Said financial statements are true and correct in all
material respects and present an accurate and complete disclosure of the
financial condition and earnings of the Parent for the periods covered, in
accordance with generally accepted accounting principles applied on a consistent
basis.
(b) All
accounts receivable, if any, (net of reserves for doubtful accounts) of the
Parent shown on financial statement, and as incurred in the normal course of
business since that date, are collectible in the normal course of
business.
(c) The
Parent has good and marketable title to all of its assets, business and
properties including, without limitation, all such properties reflected in
the
aforementioned balance sheet, except as disposed of in the normal course of
business, free and clear of any mortgage, lien, pledge, charge, claim or
encumbrance, except as shown on said balance sheet, and, in the case of real
properties, except for rights-of-way and easements which do not adversely affect
the use of such property.
7.4 Changes
Since Date of Financial Statements. Since the date of the
financial statements, except as disclosed in the Disclosure Schedule, there
has
not been any material change in the financial position or assets of the
Parent.
7.5 Accuracy
of All Statements Made by Parent. No representation or warranty
by the Parent in this Agreement, nor any statement, certificate, schedule or
exhibit hereto furnished or to be furnished by the Parent pursuant to this
Agreement, nor any document or certificate delivered to the Company or the
Shareholders pursuant to this Agreement or in connection with actions
contemplated hereby, contains or shall contain any untrue statement of material
fact or omits or shall omit a material fact necessary to make the statement
contained therein not misleading.
7.6 Full
Disclosure. No Information furnished by the Purchaser or the
Merger Sub to the Company or its representatives in connection with this
Agreement or otherwise in connection with the Merger contains any untrue
statement or material fact or omits to state a material fact necessary in order
to make the statements so made or information so delivered
non-misleading.
7.7 Legality
of Shares to be Issued. The shares of common stock of Parent to
be delivered pursuant to this Agreement, when so delivered, will have been
duly
and validly authorized and issued by Parent and will be fully paid and
non-assessable.
7.8 No
Covenant as to Tax Consequences. It is expressly understood and
agreed that neither Parent nor its officers or agents has made any warranty
or
agreement, expressed or implied, as to the tax consequences of the transactions
contemplated by this Agreement or the tax consequences of any action pursuant
to
or growing out of this Agreement.
7.9 No
Approvals or Notices Required; No Conflicts with Instruments. The
execution, delivery and performance of this Agreement by the Parent and the
Merger Sub, as applicable, and the consummation by them of the transactions
contemplated hereby and thereby will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any provision of
law
applicable to the Parent or the Merger Sub; (b) require any consent, approval
or
authorization of any person, except (i) compliance of applicable securities
laws, and (ii) the filing of documents necessary to consummate the Merger with
the Florida Secretary of State; (c) result in a default (with or without the
giving of notice or lapse of time, or both) under, or acceleration or
termination of, with the creation of any party with the right to accelerate,
terminate, modify or cancel, any agreement, lease, note or other restriction,
encumbrance, obligation or liability to which the Parent or the Merger Sub
is a
party or by which either of them is bound or by which any assets of either
of
them are subject; or (d) conflict with or result in a breach of or constitute
a
default under any provision of the Articles of Incorporation or By-Laws of
the
Merger Sub or of the Parent.
7.10 SEC
Documents. The Parent has furnished the Company with true and
complete copies of its annual report on Form 10-KSB for the fiscal year ended
September 30, 2006, all Forms 8-K filed after the date of such Form 10-KSB,
the
quarterly report on Form 10Q-SB for the quarter ended December 31, 2006, and
any
proxy statement relating to any annual meetings of shareholders for the past
two
years (collectively, the “SEC Documents”). Each of the SEC Documents
complies in all material respects with the requirements of Exchange Act, and
the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
ARTICLE
VIII
COVENANTS
OF THE COMPANY
8.1 Access
to Information. Parent and its authorized representatives shall
have full access during normal business hours to all properties, books, records,
contracts and documents of the Company, and the Company shall furnish or cause
to be furnished to Parent and its authorized representative all information
with
respect to its affairs and business of the Company as Parent may reasonably
request.
8.2 Actions
Prior to Closing. From and after the date of this Agreement and
until the Closing Date, the Company shall not materially alter its
business.
ARTICLE
IX
CONDITIONS
PRECEDENT TO PARENT’S OBLIGATIONS
Each
and every obligation of Parent to
be performed on the Closing Date shall be subject to the satisfaction of the
Parent of the following conditions:
9.1 Truth
of Representations and Warranties. The representations and
warranties made by the Company in this Agreement or given on its behalf
hereunder shall be substantially accurate in all material respects on and as
of
the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date.
9.2 Compliance
with Covenants. The Company shall have performed and complied
with all obligations under this Agreement which are to be performed or complied
with by them prior to or on the Closing Date, including the delivery of the
Closing documents specified hereafter.
9.3 Absence
of Suit. No action, suit or proceedings before any court or any
governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced against the Company or any of the affiliates, associates,
officers or directors of any of them, seeking to restrain, prevent or change
the
transactions contemplated hereby, or questioning the validity or legality of
any
such transactions, or seeking damages in connection with any of such
transactions.
9.4 Receipt
of Approvals, Etc. All approvals, consents and/or waivers that
are necessary to effect the transactions contemplated hereby shall have been
received.
9.5 No
Material Adverse Change. As of the Closing Date there shall not
have occurred any material adverse change which materially impairs the ability
of the Company to conduct its business or the earning power thereof on the
same
basis as in the past.
9.6 Accuracy
of Financial Statement. Parent and its representatives shall be
satisfied as to the accuracy of all balance sheets, statements of income and
other financial statements of the Company furnished to Parent
herewith.
9.7 Proceedings
and Instruments Satisfactory; Certificates. All proceedings,
corporate or otherwise, to be taken in connection with the transactions
contemplated by this Agreement shall have occurred and all appropriate documents
incident thereto as Parent may request shall have been delivered to
Parent. The Company and the Shareholders shall have delivered
certificates in such detail as Parent may request as to compliance with the
conditions set forth in this Article 9.
ARTICLE
X
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE COMPANY
Each
and
every obligation of the Company and shareholders to be performed on the Closing
Date shall be subject to the satisfaction prior thereto of the following
conditions:
10.1 Truth
of Representations and Warranties. The representations and
warranties of Parent contained in this Agreement shall be true at and as of
the
Closing Date as though such representations and warranties were made at and
as
of the transfer date.
10.2 Parent’s
Compliance with Covenants. Parent shall have performed and
complied with its obligations under this Agreement which are to be performed
or
complied with by it prior to or on the Closing Date.
10.3 Absence
of Suit. No action, suit or proceedings before any court or any
governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced against Parent, or any of the affiliates, associates, officers
or
directors of the Parent seeking to restrain, prevent or change the transactions
contemplated hereby, or questioning the validity or legality of any such
transactions, or seeking damages in connection with any of such
transactions.
10.4 Receipt
of Approvals, Etc. All approvals, consents and/or waivers that
are necessary to effect the transactions contemplated hereby shall have been
received.
10.5 No
Material Adverse Change. As of the Closing Date there shall not
have occurred any material adverse change which materially impairs the ability
of the Parent to conduct its business or the earning power thereof on the same
basis as in the past.
10.6 Accuracy
of Financial Statements. The Company shall be satisfied as to the
accuracy of all balance sheets, statements of income and other financial
statements of the Parent furnished to the Company herewith.
10.7 Proceedings
and Instruments Satisfactory; Certificates. All proceedings,
corporate or otherwise, to be taken in connection with the transactions
contemplated by this Agreement shall have occurred and all appropriate documents
incident thereto as the Company may request shall have been delivered to the
Company. The Parent shall have delivered certificates in such detail
as the Shareholders may request as to compliance with the conditions set forth
in this Article 10.
ARTICLE
XI
INDEMNIFICATION
The
Company shall indemnify Parent for
any loss, cost, expense or other damage suffered by Parent resulting from,
arising out of, or incurred with respect to the falsity or the breach of any
material representation, warranty or covenant made by the Company
herein. Parent shall indemnify and hold the Company harmless from and
against any loss, cost, expense or other damage (including, without limitation,
attorneys’ fees and expenses) resulting from, arising out of, or incurred with
respect to, or alleged to result from, arise out of or have been incurred with
respect to, the falsity or the breach of any representation, covenant, warranty
or agreement made by Parent herein.
ARTICLE
XII
SECURITIES
ACT PROVISIONS
12.1 Restrictions
on Disposition of Shares. The Company covenants and warrants that
it will advise its securities holders that the Parent shares received by them
a
the Effective Time must be acquired for their own account and not with the
view
towards the distribution thereof and that they cannot dispose of such shares
except (i) pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or (ii) in any other transaction which, in the opinion
of counsel, acceptable to Parent, is exempt from registration under the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. In order to effectuate
the covenants of this sub-section, an appropriate endorsement will be placed
upon each of the certificates of common stock of the Parent at the time of
distribution of such shares pursuant to this Agreement, and stop transfer
instructions shall be placed with the transfer agent for the
securities.
12.2 Notice
of Limitation Upon Disposition. The Company is aware that the
shares exchanged pursuant to this Agreement will not have been registered
pursuant to the Securities Act of 1933, as amended; and, therefore, under
current interpretations and applicable rules, the shareholder will probably
have
to retain such shares for a period of at least one year and at the expiration
of
such one year period sales may be confined to brokerage transactions of limited
amounts requiring certain notification filings with the Securities and Exchange
Commission and such disposition may be available only if the Parent is current
in its filings with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, or other public disclosure requirements, and the other
limitations imposed thereby on the disposition of shares of the
Parent. Additionally, “affiliates” owning shares will be subject to
additional restrictions limiting sales.
12.3 Limited
Public Market for Common Shares. The Company acknowledges that
the Parent’s Common Stock currently has a limited public market in which the
shares may be liquidated and there is no assurance that such pubic market will
grow or develop.
ARTICLE
XIII
CLOSING
13.1 Time. The
Closing of this transaction shall be effective on such date set by the parties,
on only after approval of the Merger by the respective Boards or Directors,
and
Shareholders if applicable. Such date is referred to in this
agreement as the “Closing Date.” If the Closing of the Merger does
not occur by June 12, 2007, this Agreement and the obligations of the parties
to
each other will terminate unless extended by them in writing.
13.2 Documents
To Be Delivered by the Company. At the Closing the Company shall
deliver to Parent the following documents:
(a) A
certificate signed by the President of the Company that the representations
and
warranties made by the Company in this Agreement are true and correct on and
as
of the Closing Date with the same effect as though such representations and
warranties had been made on or given on and as of the Closing Date and that
the
Company has performed and complied with all of their obligations under this
Agreement which are to be performed or complied with by or prior to or on the
Closing Date.
(b) A
copy of the by-laws of the Company certified by its secretary and a copy of
the
certificate of incorporation of the Company.
(c) Such
other documents of transfer, certificates of authority and other documents
as
Parent may reasonably request.
(d) A
certified copy of the duly adopted resolutions of the board of directors and
of
the shareholders of the Company authorizing or ratifying the execution and
performance of this Agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions
thereof.
13.3 Documents
To Be Delivered by Parent. At the Closing Parent shall deliver to
the Company the following documents:
(a) Certificates
for the number of shares of common stock of Parent as determined in Article
1
hereof.
(c) A
certified copy of the duly adopted resolutions of the board of directors of
Parent authorizing or ratifying the execution and performance of this Agreement
and authorizing or ratifying the acts of its officers and employees in carrying
out the terms and provisions thereof.
(d) A
certificate signed by the President of the Parent that the representations
and
warranties made by the Parent in this Agreement are true and correct on and
as
of the Closing Date with the same effect as though such representations and
warranties had been made on or given on and as of the Closing Date and that
the Parent has performed and complied with all of their obligations
under this Agreement which are to be performed or complied with by or prior
to
or on the Closing Date.
13.4 Documents
for the appointment of new management and the resignation of
current
management.
ARTICLE
XIV
TERMINATION
AND ABANDONMENT
14.1 This
Agreement may be terminated and the transaction provided for by this Agreement
may be abandoned without liability on the part of any part to any other, at
any
time before the Closing Date, or on a post closing basis as provided previously
herein:
(a) By
mutual consent of Parent and the Company;
(b) By
Parent if any of the conditions provided for in Article IX of this Agreement
have not been met and have not been waived in writing by Parent.
14.2 By
the Company if any of the conditions provided for in Article X of this Agreement
have not been met and have not been waived in writing by the
Company.
In
the event of termination and
abandonment by any party as above provided in this Article, written notice
shall
forthwith be given to the other party, and each party shall pay its own expenses
incident to preparation for the consummation of this Agreement and the
transactions contemplated hereunder.
ARTICLE
XV
MISCELLANEOUS
15.1 Notices. All
notices, requests, demands and other communications hereunder shall be deemed
to
have been duly given, if delivered by hand or mailed, certified or registered
mail with postage prepaid:
(a) If
to the Company, to Xxxx X. Xxxxxxxxx, at 0000 XX Xxxx Xxxx Xxx,
Xxxxxx, Xxxxxxx 00000, or to such other person and place as the Company shall
furnish to Parent in writing; or
(b) If
to Parent, to Xxxxx Xxxxxxxxx, c/o Xxxxxx X. Xxxxx, P.C., 0000 Xxxxxxxx Xxxx.,
Xxxxxxxx, Xxxx 00000, or to such other person and place as Parent shall furnish
to Company in writing.
15.2 Announcements. Announcements
concerning the transactions provided for in this Agreement by either the Company
or Parent shall be subject to the approval of the other in all essential
respects, except that the approval of the Company shall not be required as
to
any statements and other information which Parent may submit to its
shareholders.
15.3 Default. Should
any party to this Agreement default in any of the covenants, conditions, or
promises contained herein, the defaulting party shall pay all costs and
expenses, including a reasonable attorney’s fee, which may arise or accrue from
enforcing this Agreement, or in pursuing any remedy provided hereunder or by
the
statutes of the State of Nevada, United States of America.
15.4 Assignment. This
Agreement may not be assigned in whole or in part by the parties hereto without
the prior written consent of the other party or parties, which consent shall
not
be unreasonably withheld.
15.5 Successors
and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their successors and assigns.
15.6 Holidays. If
any obligation or act required to be performed hereunder shall fall due on
a
Saturday, Sunday or other day which is a legal holiday established by the State
of Nevada, such obligation or act may be performed on the next succeeding
business day with the same effect as if it had been performed upon the day
appointed.
15.7 Computation
of Time. The time in which any obligation or act provided by this
Agreement is to be performed is computed by excluding the first day and
including the last, unless the last day is a holiday, in which event such day
shall also be excluded.
15.8 Governing
Law and Venue. This Agreement shall be governed by and
interpreted pursuant to the laws of the State of Nevada. Any action
to enforce the provisions of this Agreement shall be brought in a federal or
state court of competent jurisdiction within the State of Nevada and in no
other
place.
15.9 Partial
Invalidity. If any term, covenant, condition or provision of this
Agreement or the application thereof to any person or circumstance shall to
any
extent be invalid or unenforceable, the remainder of this Agreement or
application of such term or provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.
15.10 No
Other Agreements. This Agreement constitutes the entire Agreement
between the parties and there are and will be no oral representations which
will
be binding upon any of the parties hereto.
15.11 Rights
are Cumulative. The rights and remedies granted hereunder shall
be in addition to and cumulative of any other rights or remedies provided under
the laws of the State of Nevada.
15.12 Waiver. No
delay or failure in the exercise of any power or right shall operate as a waiver
thereof or as an acquiescence in default. No single or partial
exercise of any power or right hereunder shall preclude any other or further
exercise thereof or the exercise of any other power or right.
15.13 Survival
of Covenants, Etc. All covenants, representations, and warranties
made herein to any parties or in any statement or document delivered to any
party hereto, shall survive the making of this Agreement and shall remain in
full force and effect until the obligations of such party hereunder have been
fully satisfied.
15.14 Further
Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transaction(s) contemplated herein.
15.15 Amendment. This
Agreement or any provision hereof may not be changed, waived, terminated or
discharged except by means of a written supplemental instrument signed by the
party or parties against whom enforcement of the change, waiver, termination,
or
discharge is sought.
15.16 Headings. The
descriptive headings of the various Sections or parts of this Agreement are
for
convenience only and shall not affect the meaning or construction of any of
the
provisions hereof.
15.17 Counterparts. This
agreement may be executed in two or more partially or fully executed
counterparts, each of which shall be deemed an original and shall bind the
signatory, but all of which together shall constitute but one and the same
instrument, provided that Parent shall have no obligations hereunder until
all
Company’s Shareholders have become signatories hereto.
IN
WITNESS WHEREOF, the parties hereto
executed the foregoing Acquisition Agreement as of the day and year first above
written.
THE
PARENT:
By:
________________________________
Xxxxx
Xxxxxxxxx,
President
THE
COMPANY:
LIBERATOR
MEDICAL SUPPLY,
INC.
By:
________________________________
Xxxx
Xxxxxxxxx, President
