AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") among Cactus
Multimedia I, Inc. ("Cactus"), a Delaware corporation, Southland Financial,
Inc., a Nevada corporation ("Southland") and the persons listed in Exhibit A
hereof (collectively the "Shareholders"), being the owners of record of all of
the issued and outstanding stock of Cactus.
Whereas, Southland wishes to acquire and the Shareholders wish to
transfer all of the issued and outstanding securities of Cactus in a transaction
intended to qualify as a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
Now, therefore, Cactus, Southland and the Shareholders adopt this plan
of reorganization and agree as follows:
1. EXCHANGE OF STOCK
1.1 Number of Shares. The Shareholders agree to transfer to
Southland at the Closing (defined below) the number of shares of common stock of
Cactus, $.0001 par value per share, shown opposite their names in Exhibit A, in
an exchange for an aggregate of 500,000 shares of voting common stock of
Southland, $.001 par value per share
1.2 Exchange of Certificates. Each holder of an outstanding
certificate or certificates theretofore representing shares of Cactus common
stock shall surrender such certificate(s) for cancellation to Southland, and
shall receive in exchange a certificate or certificates representing the number
of full shares of Southland common stock into which the shares of Cactus common
stock represented by the certificate or certificates so surrendered shall have
been converted. The transfer of Cactus shares by the Shareholders shall be
effected by the delivery to Southland at the Closing of certificates
representing the transferred shares endorsed in blank or accompanied by stock
powers executed in blank.
1.3 Fractional Shares. Fractional shares of Southland common
stock shall not be issued, but in lieu thereof Southland shall round up
fractional shares to the next highest whole number.
1.4 Further Assurances. At the Closing and from time to time
thereafter, the Shareholders shall execute such additional instruments and take
such other action as Southland may request in order more effectively to sell,
transfer, and assign the transferred stock to Southland and to confirm
Southland's title thereto.
2. RATIO OF EXCHANGE.
The securities of Cactus owned by the Shareholders, and the
relative securities of Southland for which they will be exchanged, are set out
opposite their names in Exhibit A.
3. CLOSING.
3.1 Time And Place. The Closing contemplated herein shall be
held as soon as possible at the offices of Atlas Xxxxxxxx, P.A., 000 Xxxx Xxx
Xxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, unless another place
or time is agreed upon in writing by the parties without requiring the meeting
of the parties hereof. All proceedings to be taken and all documents to be
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
The date of Closing may be accelerated or extended by agreement of the parties.
3.2 Form of Documents. Any copy, facsimile telecommunication
or other reliable reproduction of the writing or transmission required by this
Agreement or any signature required thereon may be used in lieu of an original
writing or transmission or signature for any and all purposes for which the
original could be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire original
writing or transmission or original signature.
4. UNEXCHANGED CERTIFICATES.
Until surrendered, each outstanding certificate that prior to
the Closing represented Cactus common stock shall be deemed for all purposes,
other than the payment of dividends or other distributions, to evidence
ownership of the number of shares of Southland common stock into which it was
converted. No dividend or other distribution shall be paid to the holders of
certificates of Cactus common stock until presented for exchange at which time
any outstanding dividends or other distributions shall be paid.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and
warrant as follows:
5.1 Title to Shares. The Shareholders, and each of them, are
the owners, free and clear of any liens and encumbrances, of the number of
Cactus shares which are listed in the attached schedule and which they have
contracted to exchange.
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5.2 Litigation. There is no litigation or proceeding pending,
or to any Shareholder's knowledge threatened, against or relating to shares of
Cactus held by the Shareholders.
6. REPRESENTATIONS AND WARRANTIES OF CACTUS.
Cactus represents and warrants that:
6.1 Corporate Organization And Good Standing. Cactus is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
6.2 Reporting Company Status. Cactus has filed with the
Securities and Exchange Commission a registration statement on Form 10-SB which
became effective pursuant to the Securities Exchange Act of 1934 and is a
reporting company pursuant to Section12(g) thereunder.
6.3 Reporting Company Filings. Cactus has timely filed and is
current on all reports required to be filed by it pursuant to Section 13 of the
Securities Exchange Act of 1934.
6.4 Capitalization. Cactus's authorized capital stock consists
of 100,000,000 shares of Common Stock, $.0001 par value per share, of which
10,000,000 shares are issued and outstanding, and 10,000,000 shares of Preferred
Xxxxx, x.0000 par value per share, of which no shares are issued or outstanding.
6.5 Issued Stock. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and non-assessable.
6.6 Stock Rights. There are no stock grants, options, rights,
warrants or other rights to purchase or obtain Cactus Common or Preferred Stock
issued or committed to be issued.
6.7 Corporate Authority. Cactus has all requisite corporate
power and authority to own, operate and lease its properties to carry on its
business as it is now being conducted and to execute, deliver, perform and
conclude the transactions contemplated by this Agreement and all other
agreements and instruments related to this Agreement.
6.8 Authorization. Execution of this Agreement has been duly
authorized and approved by Cactus 's Board of Directors.
6.9 Subsidiaries. Cactus has no subsidiaries.
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6.10 Financial Statements. Cactus's financial statements dated
as of January 31, 2000, copies of which will have been delivered by Cactus to
Southland prior to the Closing Date (the "Cactus Financial Statements"), fairly
present the financial condition of Cactus as of the date therein and the results
of its operations for the periods then ended in conformity with generally
accepted accounting principles consistently applied.
6.11 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in the Cactus Financial Statements, Cactus did not
have at that date any liabilities or obligations (secured, unsecured,
contingent, or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles.
6.12 No Material Changes. Except as set out by attached
schedule, there has been no material adverse change in the business, properties,
or financial condition of Cactus since the date of the Cactus Financial
Statements.
6.13 Litigation. There is not, to the knowledge of Cactus, any
pending, threatened, or existing litigation, bankruptcy, criminal, civil, or
regulatory proceeding or investigation, threatened or contemplated against
Cactus or against and of its officers.
6.14 Contracts. Except as set out by attached schedule, Cactus
is not a party to any material contract not in the ordinary course of business
that is to be performed in whole or in party at or after the date of this
Agreement.
6.15 Title. Cactus has good and marketable title to all the
real property and good and valid title to all other property included in the
Cactus Financial Statements. Except as set out in the balance sheet thereof, the
properties of Cactus are not subject to any mortgage, encumbrance, or lien of
any kind except minor encumbrances that do not materially interfere with the use
of the property in the conduct of the business of Cactus.
6.16 Tax Returns. All required tax returns or federal, state,
county, municipal, local, foreign and other taxes and assessments have been
properly prepared and filed by Cactus for all years for which such returns are
due unless an extension for filing any such return has been properly prepared
and filed. Any and all federal, state, county, municipal, local, foreign and
other taxes, assessments, including any and all interest, penalties and
additions imposed with respect to such amounts have been paid or provided for.
The provisions for federal and state taxes reflected in the Cactus Financial
Statements are adequate to cover any such taxes that may be assessed against
Cactus in respect of its business and its operations during the periods covered
by the Cactus Financial Statements and all prior periods.
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6.17 No Violation. The Closing will not constitute or result
in a breach or default under any provision of any charter, by-law, indenture,
mortgage, lease, or agreement, or any order, judgment, decree, law, or
regulation to which any property of Cactus is subject or by which Cactus is
bound.
7. REPRESENTATIONS AND WARRANTIES OF SOUTHLAND.
Southland represents and warrants that:
7.1 Corporate Organization and Good Standing. Southland is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
7.2 Capitalization. Southland's authorized capital stock
consists of 100,000,000 shares of Common Stock, $.001 par value per share, of
which 15,306,384 shares have been issued and are outstanding, and no shares of
Preferred Stock.
7.3 Issued Stock. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and non-assessable.
7.4 Stock Rights. There are not stock grants, options, rights,
warrants or other rights to purchase or obtain Southland Common or Preferred
Stock issued or committed to be issued.
7.5 Corporate Authority. Southland has all requisite corporate
power and authority to own, operate and lease its properties, to carry on its
business as it is now being conducted and to execute, deliver, perform and
conclude the transactions contemplated by this Agreement and all other
agreements and instruments related to this Agreement.
7.6 Authorization. Execution of this Agreement has been duly
authorized and approved by Southland's Board of Directors.
7.7 Subsidiaries. Southland has one wholly owned active and no
inactive subsidiaries.
7.8 Financial Statements. Southland's financial statements
dated as of a current date, copies of which will have been delivered by
Southland to Cactus prior to the Closing Date (the "Southland Financial
Statements"), fairly present the financial condition of Southland as of the date
therein and the results of its operations for the periods then ended in
conformity with generally accepted accounting principles consistently applied.
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7.9 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in the Southland Financial Statements, Southland
did not have at that date any liabilities or obligations (secured, unsecured,
contingent, or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles.
7.10 No Material Changes. There has been no material adverse
change in the business, properties, or financial condition of Southland since
the date of the Southland Financial Statements.
7.11 There is not, to the knowledge of Southland, any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against Southland or
against and of its officers.
7.12 Contracts. Southland is not a party to any material
contract not in the ordinary course of business that is to be performed in whole
or in party at or after the date of this Agreement.
7.13 Title. Southland has good and marketable title to all the
real property and good and valid title to all other property included in the
Southland Financial Statements. Except as set out in the balance sheet thereof,
the properties of Southland are not subject to any mortgage, encumbrance, or
lien of any kind except minor encumbrances that do not materially interfere with
the use of the property in the conduct of the business of Southland.
7.14 Tax Returns. All required tax returns or federal, state,
county, municipal, local, foreign and other taxes and assessments have been
properly prepared and filed by Southland for all years for which such returns
are due unless an extension for filing any such return has been properly
prepared and filed. Any and all federal, state, county, municipal, local,
foreign and other taxes, assessments, including any and all interest, penalties
and additions imposed with respect to such amounts have been paid or provided
for. The provisions for federal and state taxes reflected in the Southland
Financial Statements are adequate to cover any such taxes that may be assessed
against Southland in respect of its business and its operations during the
periods covered by the Southland Financial Statements and all prior periods.
7.15 No Violation. The Closing will not constitute or result
in a breach or default under any provision of any charter, by-law, indenture,
mortgage, lease, or agreement, or any order, judgment, decree, law, or
regulation to which any property of Southland is subject or by which Southland
is bound.
8. CONDUCT PENDING THE CLOSING
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Cactus, Southland and the Shareholders covenant that between
the date of this Agreement and the Closing as to each of them:
8.1 No change will be made in the charter documents, by-laws,
or other corporate documents of Cactus.
8.2 Cactus will use its best efforts to maintain and preserve
its business organization, employee relationships, and goodwill intact, and will
not enter into any material commitment except in the ordinary course of
business.
8.3 No change will be made in the charter documents, by-law,
or other corporate documents of Southland.
8.4 Southland will use its best efforts to maintain and
preserve its business organization, employee relationships, and goodwill intact,
and will not enter into any material commitment except in the ordinary course of
business.
8.5 None of the Shareholders will sell, transfer, assign,
hypothecate, lien, or otherwise dispose or encumber the Cactus shares of common
stock owned by them.
9. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS
9.1 Southland's Representations and Warranties. The
representations and warranties of Southland set forth herein shall be true and
correct at the Closing as though made at and as of that date, except as affected
by transactions contemplated hereby.
9.2 Southland's Covenants. Southland shall have performed all
covenants required by this Agreement to be performed by it on or before the
Closing.
9.3 Board of Director Approval. This Agreement shall have been
approved by the Board of Directors of Southland.
9.4 Supporting Documents of Southland. Southland shall have
delivered to the Shareholders supporting documents in form and substance
reasonably satisfactory to the Shareholders, to the effect that:
(a) A good standing certificate from the jurisdiction
of Southland's organization stating that Southland is a corporation duly
organized, validly existing and in good standing;
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(b) Secretary's certificate stating that Southland's
authorized capital stock is as set forth herein;
(c) Certified copies of the resolutions of the Board of
Directors of Southland authorizing the execution of this Agreement and the
consummation hereof;
(d) Secretary's certificate of incumbency of the
officers and directors of Southland;
(e) Southland's Financial Statements; and
(f) Any document as may be specified herein or required
to satisfy the conditions, representations and warranties enumerated elsewhere
herein.
10. CONDITIONS PRECEDENT TO OBLIGATION OF SOUTHLAND
Southland's obligation to consummate this exchange shall be
subject to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing by Southland:
10.1 Shareholders' Representations and Warranties. The
representations and warranties of the Shareholders set forth herein shall be
true and correct at the Closing as though made at and as of that date, except as
affected by transactions contemplated hereby.
10.2 Covenants. The Shareholders shall have performed all
covenants required by this Agreement to be performed by them on or before the
Closing.
10.3 Cactus's Representations and Warranties. The
representations and warranties of Cactus set forth herein shall be true and
correct at the Closing as though made at and as of that date, except as affected
by transactions contemplated hereby.
10.4 Cactus's Covenants. Cactus shall have performed all
covenants required by this Agreement to be performed by them on or before
Closing.
10.5 Board of Director Approval. This Agreement shall have
been approved by the Board of Directors of Cactus.
10.6 Supporting Documents of Cactus. Cactus shall have
delivered to the shareholders supporting documents in form and substance
reasonably satisfactory to the Shareholders, to the effect that:
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(a) A good standing certificate from the jurisdiction
of Cactus's organization stating that Cactus is a corporation duly organized,
validly existing and in good standing;
(b) Secretary's certificate stating that Cactus's
authorized capital stock is as set forth herein;
(c) Certified copies of the resolutions of the Board of
Directors of Cactus authorizing the execution of this Agreement and the
consummation hereof;
(d) Secretary's certificate of incumbency of the
officers and directors of Cactus;
(e) Cactus's Financial Statements; and
(f) Any document as may be specified herein or required
to satisfy the conditions, representations and warranties enumerated elsewhere
herein.
11. SHAREHOLDER REPRESENTATIVE.
The Shareholders hereby irrevocably designate and appoint XX
Xxxxxxx, 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000, as their agent and
attorney in fact (the "Shareholders' Representative") with full power and
authority until the Closing to execute, deliver, and receive on their behalf all
notices, requests, and other communications hereunder; to fix and alter on their
behalf the date, time, and place of the Closing; to waive, amend, or modify any
provisions of this Agreement, and to take such other action on their behalf in
connection with this Agreement, the Closing, and the transactions contemplated
hereby as such agent or agents deem appropriate; provided, however, that no such
waiver, amendment, or modification may be made if it would decrease the number
of shares to be issued to the Shareholders hereunder or increase the extent of
their obligation to indemnity Reorganization hereunder.
12. TERMINATION.
This Agreement may be terminated (1) by mutual consent in
writing; or (2) if the Closing shall not have taken place within fifteen (15)
days following execution of this Agreement, unless adjourned to a later date by
mutual consent in writing.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Shareholders,
Southland and Cactus set out herein shall survive the Closing.
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14. ARBITRATION
14.1 Scope. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief) whether
existing now, in the past or in the future as to which the parties may or any
affiliates may be adverse parties, and whether arising out of this Agreement or
from any other cause, will be resolved by arbitration before the American
Arbitration Association within the Broward County, Florida.
14.2 Consent to Jurisdiction, Situs and Judgment. The parties
hereby irrevocably consent to the jurisdiction of the American Arbitration
Association and the situs of the arbitration (any and requests for injunctive or
other equitable relief) within Broward County, Florida. Any award in arbitration
may be entered in any domestic or foreign court having jurisdiction over the
enforcement of such awards.
14.3 Applicable Law. The law applicable to the arbitration and
this agreement shall be that of the State of Florida, determined without regard
to its provisions which would otherwise apply to a question of conflict of laws.
14.4 Disclosure and Discovery. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and discovery in
regard to any matters which are the subject of the arbitration and to compel
compliance with such disclosure and discovery order. The arbitrator may order
the parties to comply with all or any of the disclosure and discovery provisions
of the Federal Rules of Civil Procedure, as they then exist, as may be modified
by the arbitrator consistent with the desire to simplify the conduct and
minimize the expense of the arbitration.
14.5 Rules of Law. Regardless of any practices of arbitration
to the contrary, the arbitrator will apply the rules of contract and other law
of the jurisdiction whose law applies to the arbitration so that the decision of
the arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
14.6 Finality and Fees. Any award or decision by the American
Arbitration Association shall be final, binding and non-appealable except as to
errors of law or the failure of the arbitrator to adhere to the arbitration
provisions contained in this Agreement. Each party to the arbitration shall pay
its own costs and counsel fees except as specifically provided otherwise in this
Agreement.
14.7 Measure of Damages. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and/or securities
issued or to be issued and no claims shall be made by any party or affiliate for
lost profits, punitive or multiple damages.
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14.8 Covenant Not to Xxx. The parties covenant that under no
scondition will any party or any affiliate file any action against the other
(except only requests for injunctive or other equitable relief) in any forum
other than before the American Arbitration Association, and the parties agree
that any such action, if filed, shall be dismissed upon application and shall be
referred for arbitration hereunder with costs and attorney's fees to the
prevailing party.
14.9 Intention. It is the intention of the parties and their
affiliates that all disputes of any nature between them, whenever arising,
whether in regard to this Agreement or any other matter, from whatever cause,
based on whatever law, rule or regulation, whether statutory or common law, and
however characterized, be decided by arbitration as provided herein and that no
party or affiliate be required to litigate in any other forum any disputes or
other matters except for requests for injunctive or equitable relief. This
Agreement shall be interpreted in conformance with this stated intent of the
parties and their affiliates.
14.10 Survival. The provisions for arbitration contained
herein shall survive the termination of this Agreement for any reason.
15. GENERAL PROVISIONS.
15.1 Further Assurances. From time to time, each party will
execute such additional instruments and take such actions as may be reasonably
required to carry out the intent and purposes of this Agreement.
15.2 Waiver. Any failure on the party of either party hereto
to comply with any of its obligations, agreements, or conditions hereunder may
be waived in writing by the party to whom such compliance is owed.
15.3 Brokers. Each party agrees to indemnify and hold harmless
the other party against any fee, loss, or expense arising out of claims by
brokers or finders employed or alleged to have been employed by the indemnifying
party.
15.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first class certified mail, return receipt requested,
or recognized commercial courier service as follows:
If to Cactus Multimedia, to:
Cactus Multimedia I, Inc.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
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If to Southland, to:
Southland Financial, Inc.
Xxxxx 0, 00 Xxxxxxxx Xxxxxx
Xxx Xxxx, XXX 0000, Xxxxxxxxx
If to the Shareholders, to:
XX Xxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
15.5 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida.
15.6 Assignment. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and assigns;
provided, however, that any assignment by either party of its rights under this
Agreement without the written consent of the other party shall be void.
15.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Signatures sent by facsimile transmission shall be deemed to be
evidence of the original execution thereof.
15.8 Exchange Agent And Closing Date. The Exchange Agent shall
be the law firm of Atlas Xxxxxxxx, P.A., Fort Lauderdale, Florida. The Closing
shall take place upon the fulfillment by each party of all the conditions of the
Closing required herein, but not later than 15 days following execution of this
Agreement unless extended by mutual consent of the parties.
15.9 Review of Agreement. Each party acknowledges that it has
had time to review this Agreement and, as desired, consult with counsel. In the
interpretation of this Agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of this Agreement.
15.10 Schedules. All schedules attached hereto, if any, shall
be acknowledged by each party by signature or initials thereon and shall be
dated.
15.11 Effective Date. This effective date of this Agreement
shall be April 3, 2000.
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SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION AMONG CACTUS,
SOUTHLAND AND THE SHAREHOLDERS OF CACTUS.
IN WITNESS WHEREOF, the parties have executed this Agreement this 3rd
day of April, 2000.
CACTUS MULTIMEDIA I, INC.
By: /s/ XX Xxxxxxx
------------------
XX Xxxxxxx, President
SOUTHLAND FINANCIAL, INC.
By: /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx, CEO
THE SHAREHOLDERS OF CACTUS
MULTIMEDIA, INC.:
By: /s/ XX Xxxxxxx
------------------
XX Xxxxxxx, As Power of Attorney
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