ACQUISITION AGREEMENT
Entered into by and between the following parties:
Meridian Holdings Inc., ("MDHG") a Florida corporation,
with its principal offices at: 0000 XX 0xx Xxxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000;
The Old Fashioned Syrup Company, Inc. ("Syrup") a
Florida corporation engaged in manufacture and wholesale
distribution and sales of a sugar, fat and cholesterol free chocolate
syrup, which maintains its principal offices at: 0000 X.X. 00xx
Xxxxxx, Xxxxx X, Xxxxxxx Xxxxx, XX 00000; and
Xxxx Xxxxxxxxxx and Xxxx Xxxxxx, being the officers,
directors and majority shareholders of Syrup.
NOW, THEREFORE, in consideration of the promises and the mutual
and dependent covenants hereinafter contained, the parties hereto
represent, warrant, covenant, and agree as follows:
ARTICLE I
1.1 Plan of Acquisition. The Plan consists of the acquisition
by MDHG, of all of the issued and outstanding shares of Capital Stock
of Syrup, in a contemplated tax-free exchange for the issuance by
MDHG to Syrup Shareholders of 3,026,794 shares of MDHG's
authorized but presently unissued $0.001 par value Common Stock.
Issuance of the foregoing shares shall be made at such time as all of the
terms and conditions set forth in this Agreement (excluding Preferred
Stock conversion conditions) are satisfied.
On Closing MDHG shall also issue an aggregate of 350 shares of $1
par value Preferred Stock, to Xxxx Xxxxxxxxxx and Xxxx Xxxxxx to
enter into the Transaction. Each such share shall be convertible into
Three Hundred (300) shares of $0.001 par value Common Stock upon
the earliest of the following events: i) MDHG's annual gross revenues
equal or exceed $10 Million; or, the Company completes an SEC
registration for the sale of its securities and attains a NASDAQ or
exchange listing.
Xxxxxxxxxx and Posner shall be elected to the board of directors of
MDHG simultaneously with the Closing.
1.2 Agreement to Consummate Transaction. Subject to
the terms and conditions of this Agreement, MDHG and Syrup agree
to consummate or cause to be consummated, the transaction
contemplated hereby ("Transaction"), and agree that the consummation
of the Transaction is conditional upon the compliance with all of the
terms and conditions hereinstated, except for Preferred Stock
conversion conditions.
1.3 Shareholder Approvals. Both parties shall obtain
such Shareholder approvals, if any, which may be required under the
laws of their respective domiciles for the issuance of the shares as
contemplated hereby.
1.4 Closing. Either by a formal meeting of the parties, or
by a timely exchange of documents, a closing ("Closing") will take
place at such time as the parties hereafter determine and which is
contemplated to occur within 30 days from the date of this Agreement.
At such Closing, certificates, opinions, letters and other documents
required by this Agreement will be delivered or exchanged. If a formal
meeting is held, such Closing will take place at a location designated
by the mutual consent of the parties, or in the absence thereof, at the
Offices of MDHG.
Such Closing of the contemplated transaction shall be subject to: i) the
completion of an appropriate due diligence investigation of each of the
parties by the other; ii) the submission to MDHG, at least 10 days prior
to the date hereafter established for the Closing, of Syrup's 1998
audited financial statements.
1.5 Consummation of Transactions. If at the Closing no
condition exists which would permit any of the parties to terminate this
Agreement, or a condition then exists and the party entitled to
terminate because of that condition elects not to do so, then and
thereupon the parties will execute any required documents to effectuate
the transaction.
1.6 Acquisition of Shares. Upon and subject to the terms
and conditions herein stated, the Shareholders of Syrup shall acquire
all rights, title and interests in and to the previously described shares
of the Common Stock of MDHG.
1.7 Consideration, Issuance and Delivery of Stock. In
consideration of the delivery of all of the issued and outstanding shares
of the Capital Stock of Syrup to MDHG, and compliance by Syrup
with its warranties and undertakings contained herein, MDHG shall at
Closing, deliver one or more certificates representing the aggregate of
3,026,794 shares of MDHG Common Stock. Notwithstanding the
foregoing, said stock shall be delivered to Morgenthau, Greenes,
Xxxxxxxx & Aronauer, P.C. as Escrow Agents, to be held by such firm
in escrow until such time as the total sum of $150,000 has been paid to
the Selling Control Shareholder Group as defined in the
contemporaneous Stock Purchase Agreement by and between the
parties. Until such time as such shares are released from escrow, the
Shares will not have voting rights.
All such shares issuable pursuant to this Agreement will be investment
stock, and are subject to all restrictions upon resale, assignment and
transfer as may be imposed under the Securities Act of 1933, as
amended; and when so issued and delivered, such shares, each with an
appropriate restrictive legend thereupon, shall be fully paid and non-
assessable. As a condition precedent to the issuance of the certificates,
Syrup undertakes to provide duly executed Investment Letters from
each person or entity, other than Xxxxxxxxxx and Posner, in whose name
any of the aforementioned shares shall be issued.
1.10 Reverse Reorganization/Share Dilution. The parties
acknowledge that for the earlier of i) a period of two years from the
Closing Date; or, ii) the sale or transfer by the present Control
Shareholders of 75% or more of their holdings, Syrup agrees that upon
assuming 'control', it and its current principal shareholders will not
without the prior written consent of the present control shareholders:
a) effect a 'reverse' recapitalization of MDHG; or, b) otherwise issue
additional shares of Common Stock except in consideration for the
acquisition of valuable assets or raising of capital for valid business
purposes.
1.11 Present Capitalization. MDHG hereby represents that
MDHG's present authorized capitalization consists of Twenty
(20,000,000) Million shares of Common Stock, each of the par value
of $0.001, and One (1,000,000) Million shares of Preferred Stock, each
of the par value of $1.00.
ARTICLE ll
Representations and Warranties
The parties mutually represent and warrant to the other as
follows:
2.1 Organization and Good Standing. That each is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Florida. Each party has the corporate power to
acquire or otherwise enter into a business combination with another
enterprise and to carry on its business as it is now being conducted.
Copies of Certificates of Incorporation, all amendments, and the
corporate By-Laws of each shall be delivered to the representative of
the other party within fifteen (10) days from the execution of this
Agreement. The parties acknowledge that MDHG's Certificate of
Incorporation, all Amendments thereto, and the Corporate By-laws, as
presently in effect are contained in its currently effective 15c2-11
Information and Disclosure Statement which is currently on file with
the National Association of Securities Dealers, Inc., and the Securities
And Exchange Commission ("SEC").
2.2 Authority. Each party has the corporate power to enter
into this Agreement and carry out the transactions contemplated
hereby. The execution, delivery, and performance of the Agreement
will have been duly and validly authorized and adopted by resolution
of the respective Board of Directors; and this Agreement and the
consummation of the Plan of Acquisition will have been duly and
validly authorized and approved by all necessary corporate action and
this Agreement will be legally binding, and enforceable in accordance
with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights
generally from time to time in effect and subject to principles of equity,
which may affect the availability of remedies with respect thereto. To
the best knowledge of the parties, the entering into this Agreement and
its consummation of the Transactions contemplated hereby will not
violate the provisions of (i) any applicable laws of the United States
or any other state or jurisdiction in which each does business; (ii) their
Certificates of Incorporation or By-Laws; or (iii) any judgment or
decree requiring the obtaining of permits, approvals, consents,
authorizations and modifications referred to in Section 4.3 hereof.
Further, no default or breach will occur in any material respect by
virtue of the Plan of Acquisition under any material contract,
agreement, mortgage, indenture or other instrument, of which either of
the parties is a part or by which it is bound, and no material right under
any such existing contract, agreement, mortgage, indenture or other
instrument will be extinguished by virtue of the Agreement.
2.3 Absence of Material Changes. Except as permitted or
contemplated by this Agreement, or otherwise disclosed, there has not
been any material changes in the financial or operating condition of
either party.
2.4 Litigation. Except for the items disclosed on the Schedule
attached hereto, to the best knowledge of management of both parties
hereto, there are no judicial or administrative actions, suits, proceeding
or investigations pending, or, threatened, against which might result in
any material adverse change in their respective condition (financial or
other), properties, assets, business, operations or prospects of either
party; or in any material liability, or which question the validity of this
Agreement, or of any action taken or to be taken in connection
herewith. There are no citations, fines or penalties heretofore asserted
against the parties under any federal, state or local law relating to air
or water pollution, or other environmental protection matters, or
relating to occupational health or safety.
2.5 Disclosing of Material Information. Neither this
Agreement nor any exhibit hereto contains any untrue statement or
material fact, or admits to state a material fact necessary to make the
statements herein or therein not misleading, relating to the business or
affairs of each party hereto. There is no fact known that materially
adversely affects the business, condition (financial or otherwise) or
prospects of either party, which has not been set forth herein or
otherwise disclosed.
2.6 Capitalization. Except as set forth on the schedule
attached hereto, there are no options, warrants, conversion rights, rights
of exchange or other rights, plans, agreements or commitments of any
nature whatsoever (including, without limitation, conversion or
preemptive rights) providing for the purchase, issuance or sale of any
shares of capital stock of MDHG or Syrup.
2.7 Subsidiaries. Except as set forth on the schedule
attached hereto, neither MDHG nor Syrup, either directly or indirectly,
has ever had and as of the date of this Agreement and as of the Closing
Date does not have, any subsidiaries or any interests in any other
corporation, association, joint venture or other business entity.
2.8 Taxes. Except as set forth on the schedule attached
hereto, all taxes, including without limitation, income, property, sales,
use, franchise, value added, withholding and social security taxes
imposed by the United States, any state, municipality, other local
government or other subdivision or instrumentality of the United
States, or any foreign country or any other state or government thereof,
or any other taxing authority, that are due and payable by each of the
parties hereto, and all interest and penalties thereon, whether disputed
or not, and which would result in the imposition of a lien, claim or
encumbrance on either of the parties, other than taxes which are not yet
due and payable, have been paid in full, all tax returns required to be
filed in connection therewith have been accurately prepared and duly
and timely filed and all deposits required by law to be made by each of
the parties with respect to employees' withholding taxes have been duly
made. Neither of the parties is delinquent in the payment of any
foreign or domestic tax, assessment or government charge or deposits
which would result in the imposition of a lien, claim or encumbrance
on either of the parties and neither of the parties has a tax deficiency or
claim outstanding, proposed or assessed against it and there is no basis
for any such deficiency or claim, which would result in the imposition
of any lien, claim or encumbrance on or against either of the parties
hereto.
2.9 No Assets or Liabilities. Except as set forth on the
schedule attached hereto, MDHG has, and at the Closing Date will
have, no assets, liabilities, obligations or commitments of any kind
whatsoever.
2.10 Compliance with Laws. To the best knowledge of
management of both parties hereto, MDHG and Syrup are in
compliance in all material respects with all applicable laws,
regulations, orders, judgments and decrees.
2.11 Charter Documents. MDHG has provided to Syrup
for its examination (i) complete and accurate copies of the Certificate
of Incorporation and By-laws of MDHG, both as amended to the
Closing; (ii) the minute book of MDHG containing all proceedings,
consents, actions and meetings of the stockholders and board of
directors of MDHG; and (iii) the stock transfer books of MDHG,
setting forth all transfers of capital stock of MDHG since its inception.
MDHG warrants that all such records are, and as of the Closing Date
will be, true and accurate in all respects.
2.12 Brokers or Finders Fees. No agent, broker, person
or firm acting on behalf of either of the parties is, or will be, entitled to
any commission or brokers or finders fees from any of the parties
hereto, or from any person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of the
transactions contemplated herein, unless specifically set forth in this
Agreement or in the Stock Purchase Agreement of even date herewith.
2.13 No Reliance of the Representations. Neither of the
parties hereto has relied on any representations or warranties of any
party other than the parties to this Agreement as contained in this
Agreement and in any other agreements, documents or instruments
delivered by the parties in connection with the transaction
contemplated hereby.
ARTICLE III
Covenants of the Parties
Each party covenants with the other as follows:
3.1 Negative Covenants. Without it in any way limiting
the fiduciary obligations of any party hereto, from the date of this
Agreement, neither party will:
3.1-1 Engage in any activities or transactions which
will be detrimental to the interests of its Shareholders, other than
conduct its normal course of business;
3.1-2 Engage in any activities or transactions which
would be adverse to the interests of the Shareholders of the other.
3.2 Affirmative Covenants. Prior to the Closing Date,
each party will do or has done, the following:
3.2-1 If required by the laws of their respective
states of incorporation, have obtained the required consent of their
Shareholders to proceed with the Agreement and the Plan of
Acquisition;
3.2-2 Use its best efforts to enhance its business
organization and retain the services of its officers, employees and "key"
consultants;
3.2-3 Afford to the officers, attorneys, accountants
and other authorized representatives of the other party, full and free
access to its properties, books, tax returns and records, to provide a full
opportunity to make such investigations as deemed necessary of the
affairs of the other party.
3.2-4 Promptly advise the other in writing of any
materially adverse change in the financial condition, business,
operations or key personnel, any breach of its representations or
warranties contained herein, and any material contract, agreement,
license or other arrangement which, if in effect on the date of this
Agreement, should have been included in this Agreement;
3.2-5 Use its best efforts to accomplish all actions
necessary to consummate the Plan of Acquisition, including the
satisfaction of all the conditions set forth in this Agreement.
ARTICLE IV
Mutual Conditions
Neither party will be obligated to complete or cause to be completed
the transactions contemplated by this agreement unless the following
conditions, and any which may be set forth as a Schedule if annexed
hereto as an integral part hereof, have been met prior to or at the
Closing:
4.1 Absence of Restraint. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement, or the
transactions contemplated herein shall have been entered by any court
of or administrative body, and no proceeding to obtain any such order
shall have been commenced or shall be threatened.
4.2 Absence of Termination. The obligations to consummate
the transactions contemplated hereby shall not have been canceled
pursuant to sections 6.1.
4.3 Required Approvals. Each party shall have received all
such approvals, consents, authorizations or modifications as may be
required to permit the specific performance of their respective
obligations under this Agreement, and the consummations of the
transactions herein contemplated (whether for governmental authorities
or other persons), and each party shall have received any and all
permits and approvals from any regulatory authority having jurisdiction
required for the lawful consummation for the Plan of Acquisition.
4.4 Compliance - Securities Laws. The parties hereto
acknowledge that all of the shares of Common Stock to be issued by
MDHG in the consummation of this Agreement are and shall be
"restricted" shares under the Securities Act of 1933, as amended. Each
share shall have the following or similar restrictive legend upon the
face and or the reverse:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for Investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for these shares under
the Securities Act of 1933 or an opinion of the Company's counsel that
registration is not required under said Act."
Except for Xxxxxxxxxx and Posner, all Shareholders of Syrup who will
receive Shares hereunder shall execute an appropriate Investment
Letter indicating that:
i) such Shareholder is acquiring the shares of MDHG by virtue of this
business combination, will hold same as an investment, and does not
then have a present intention to sell, transfer or otherwise engage in a
distribution of such shares; and
ii) any future sale or transfer shall only be made pursuant to an
effective SEC Registration Statement covering said shares, or pursuant
to the provisions of Rule 144 or other applicable exemption from
registration, as promulgated under the Act.
ARTICLE V
Conditions to Obligations
Neither party shall be obligated to complete or cause to be completed
the transactions contemplated by this Agreement unless the following
conditions have been met prior to or at the Closing:
5.1 Compliance with Representations, Warranties and
Covenants. i) All of the representations and warranties contained in
this Agreement are true and shall be true in all material respects at and
as of the Closing date; ii) Each party shall have complied with and
performed all of the covenants contained in this Agreement to be
performed by them at or prior to the Closing Date; iii) evidence of
compliance shall be by appropriate schedules to be attached hereto and
incorporated by reference and certified as correct by the President of
Syrup.
5.2 Tax Opinion. Both parties shall have received from
their respective accountants, a letter to the effect that in their opinion
the income tax consequences of the Agreement to be substantially as
follows:
5.2-1 No gain or loss will be recognized by the
Shareholders of either party upon receipt of the shares as provided for
in the Agreement;
5.2-2 The tax basis of the shares of stock received
will be the value placed upon said shares by the determination pursuant
hereto of the value of the transaction.
5.3 Opinion of Counsel. The parties shall have received
opinion letters dated at or near the Closing date from their respective
counsel that:
5.3-1 The respective party is a corporation validly
organized, legally existing and in good standing under the laws of the
state of its incorporation, and is authorized to conduct business in each
jurisdiction in which may be applicable; and has full corporate power
and authority to own its properties and to conduct its business as it is
being conducted;
5.3-2 Each operating subsidiary corporation, if any,
is validly organized, legally existing and in good standing under the
laws of the jurisdiction in which domiciled, with full corporate power
and authority to own its properties and to conduct its business
operations;
5.3-3 The respective party has the full corporate
power to carry out the transactions contemplated herein; this
Agreement has been duly executed and delivered and all necessary
corporate action has been taken by, the respective Boards of Directors
and Shareholders.
5.4 Good Standing Certificate. Each of the parties shall
have delivered to the other Certificates of Good Standing from the
Secretary of State of the state of its incorporation, to the effect that
such party is in good standing in such state and listing all chartered
documents on file with the Secretary of State.
ARTICLE VI
Miscellaneous
6.1 Termination. This Agreement may be terminated or
canceled, and the transactions contemplated hereby may be abandoned,
notwithstanding Shareholder authorization, at any time before
consummation of the Agreement:
6.1-1 By mutual consent of the Board of Directors of
both parties; or
6.1-2 By either party in the event that the other party
shall not have performed a material obligation of such party hereunder,
within the time contemplated by this Agreement.
6.2 Effect of Termination. If this Agreement is terminated,
this Agreement, except as to Sections 6.3 and 6.4, shall no longer be of
any force or effect and there shall be no liability on the part of any
party or its respective directors, officers or Shareholders, except in the
case of deliberate fraud and misrepresentation, including the intentional
omission of a material fact, neither party shall be responsible for the
damages (including attorneys fees and related costs) incurred by the
other party hereto. All cash funds paid by either party to the other, if
any, shall be deemed liquidated damages and are not refundable in the
event that this Agreement is terminated for any reason whatsoever.
6.3 Return of Information; Confidentially. In the event this
Agreement is terminated or the Plan of Acquisition is not consummated
for any reason, the parties agree that all written information and
documents supplied by either to each other shall be promptly returned
to the other party at its request, and each party shall each use its best
efforts to cause confidential information to continue to be treated as
confidential and shall refrain from disclosure to any third parties.
6.4 Costs and Expenses. Unless otherwise specifically
provided for, all costs and expenses incurred in connection with
satisfying their respective obligations under this Agreement will be
paid by the party incurring the expenses. In the event of a termination
of this Agreement, pursuant to Article VI, each party will bear their
own expenses.
6.5 Extension of Time; Waivers. At any time prior to the
Closing date either party may extend the time for the performance of
the obligations or other acts required by the other party, or (ii) waive
any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto by
the parties to the other, and (iii) waive compliance with any of the
agreements or conditions herein to be performed by the other party. All
performance waivers hereunder shall be in writing and signed by the
waiving party.
6.6 Reliance of Counsel. In rendering any opinion referred
to herein, counsel for the parties may rely upon factual matters,
certificates of public officials and corporate officers, opinions of
corporate general counsel, and such other evidence as counsel may
reasonably deem appropriate.
6.7 Notices. All notices by both parties to the other shall be
in writing, delivered by the U.S. Postal Service (certified, registered or
overnight express) with return receipt requested, and addressed to the
respective party at the address stated hereinabove, or such other
address as may hereafter be provided and such change of address be
acknowledged. Notice may be delivered by private carrier express or
overnight delivery, with written proof of receipt required.
6.8 Amendment. This Agreement may only be altered,
changed or modified by an amendment in writing, which has been
submitted to and approved by the board of directors and or
shareholders of the respective parties.
6.9 Timely Basis. Both parties agree that reasonable delays
in completing the contemplated transaction which are necessitated by
compliance with the provisions of the Securities Act of 1933, and or
the Securities Exchange Act of 1934, both as amended, may be
required, but in no event shall a party be required to agree with any
unreasonable delay when time is of the essence, and the obvious result
would be that the transaction cannot be completed on a timely basis.
6.10 Assignment. The benefits and obligations hereunder
shall inure to the benefit of the parties and their successors in interest,
including their heirs, executors, legal representatives, successors and
assigns. Notwithstanding the foregoing, this Agreement, and the
obligations hereunder, may only be assigned by the written consent of
the other party.
6.11 Miscellaneous.
6.11-1 Entire Agreement. This Agreement and the
contemporaneous Stock Repurchase Agreement between MDHG, the
present Control Shareholders and Xxxxxxxxxx and Posner are the only
agreements between the parties and supersede all prior oral and written
agreements with regard to the subject matter hereof. All provisions
hereof shall survive the Closing until such time as all conditions,
whether their required performance is contemporaneous or subsequent,
shall have been completed as required hereunder.
6.11-2 Effective Date. This Agreement shall take
effect only upon its proper execution by duly authorized
representatives of both parties. No obligation hereunder shall arise
until such time as this Agreement is so duly executed.
6.11-3 Counterparts. This Agreement may be
executed in several counterparts, each of which will be deemed an
original and all of which taken together shall constitute one and the
same instrument.
6.11-4 Facsimile Signatures. The facsimile
signatures of one or more of the signatories hereto shall for be deemed
originals for all purposes hereunder.
6.11-5 Surviving Clauses. The parties hereto
specifically agree that those provisions contained herein that by their
nature require subsequent or continuing performance, shall survive the
Closing and shall be fully enforceable hereunder by appropriate legal
remedies.
6.11-6 Governing Law. This Agreement shall be
governed in all respects, including validity, interpretation and effect,
pursuant to the laws of the State of Florida without regard to the
principles of 'conflict of laws'.
6.11-7 Titles And Captions. The titles and captions
of the Sections and paragraphs of this Agreement are included solely
for convenience of reference, and shall have no effect upon the
constructions or meanings of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this 9 page Agreement as of the 8th day of January, 1999.
Meridian
Holdings Inc.
ATTEST:
/s/ Xxxx Xxxxxx
Xxxx X. Xxxxxx, Secretary
by:/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X.
Xxxxxxxxx, President
The Old
Fashioned Syrup Company, Inc.
ATTEST:
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx, Secretary
by:/s/ Xxxx Xxxxxxxxxx
Xxxx
Xxxxxxxxxx, President
