Exhibit 2
PLAN OF REORGANIZATION AND MERGER AGREEMENT
This Plan of Reorganization and Merger Agreement (the "Agreement")
dated as of February13, 2004 is made and entered into by and between P.D.C.
INNOVATIVE INDUSTRIES, INC., a Nevada corporation (the "Company"), PDC
ACQUISITION CORP., a newly formed Florida corporation and wholly-owned
subsidiary of the Company (hereinafter "Company Sub"), XXXXX' RIBS, INC., a
Florida corporation. ("RRI"), and XXXXX' RIBS FRANCHISE CORP., a Florida
corporation ("RRI Subsidiary").
WITNESSETH:
WHEREAS, the boards of directors of the Company, Company Sub, RRI and
RRI Subsidiary deem it advisable and in the best interests of such corporations
and their respective stockholders that Company Sub merge with and into RRI
pursuant to this Agreement and the Articles of Merger in the form attached
hereto as Exhibit A and pursuant to applicable provisions of law (such
transaction hereinafter referred to as the "Merger");
WHEREAS, Company Sub has an authorized capitalization consisting of
1,000 shares of common stock, $0.001 par value per share (the "Company Sub
Stock"), of which 100 shares are issued and outstanding and are owned by the
Company as of the date hereof; the Company has an authorized capitalization of
210,000,000 shares, consisting of: 200,000,000 shares of common stock, $0.001
par value per share (the "Company Stock"), of which 6,291,794 shares of Company
Stock are currently issued and outstanding as of the date hereof, and 10,000,000
shares of blank check preferred stock, par value $0.001 of which 40,000 shares
of Class A preferred stock ("Company Class A Preferred Stock ") are currently
authorized but none issued and outstanding as of the date hereof; and RRI has an
authorized capitalization consisting of: 50,000,000 shares of common stock, no
par value per share (the "RRI Stock"), of which 43,941,800 shares are currently
issued and outstanding as of the date hereof, 10,000,000 shares of blank check
preferred stock, no par value per share of which 40,000 shares of Class A
preferred stock ("RRI Class A Preferred Stock") have been authorized and 36,301
shares of Class A Preferred Stock are currently issued and outstanding as of the
date hereof; and warrants issued and outstanding to purchase 225,000 shares of
RRI Stock; and RRI Subsidiary has an authorized capitalization consisting of
7,500 shares of common stock, $1.00 par value per share of which 100 shares are
issued and outstanding and are owned by RRI as of the date hereof;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and undertakings contained herein, and for such other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
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ARTICLE I
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MERGER
1.01 General. At the Effective Time (as defined in Article X below) of
the Merger and pursuant to the provisions of this Agreement, the corporate
existence of Company Sub will be merged with and into RRI (hereinafter referred
to as the "Surviving Corporation" whenever reference is made to it as of the
Effective Time or thereafter) and continued in the Surviving Corporation, and
the Surviving Corporation shall be deemed to be a continuation of the entities
and identities of the Company Sub and RRI.
1.02. Name and Organization. The name of the Surviving Corporation
shall be "Xxxxx' Ribs, Inc." The Articles of Incorporation and bylaws of RRI
shall be the Articles of Incorporation and bylaws of the Surviving Corporation.
The established offices and facilities of RRI shall become the established
offices and facilities of the Company and of the Surviving Corporation.
1.03. Rights and Interests. At the Effective Time, the Surviving
Corporation shall become the owner, by operation of law and without other
transfer, of all the right, title and interest that Company Sub and RRI now
have, or may have in the future, in and to all of their respective properties
(both real and personal) and assets (both tangible and intangible) of every kind
and nature whatsoever, whether xxxxxx or inchoate, now existing or arising in
the future (the "Assets"). At the Effective Time, all rights, franchises, and
interests of Company Sub and RRI in and to every type of intellectual property,
including all of their respective trademarks, registrations, trademark
applications, and goodwill associated therewith, shall be transferred to and
vested in the Surviving Corporation by virtue of the Merger without any deed or
other transfer. The Surviving Corporation at the Effective Time, and without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises, and interests, including appointments,
powers, designations, and nominations, and all other rights and interests as
trustee, executor, administrator, agent, transfer agent, registrar of stocks and
bonds, administrator of estates, assignee, and receiver, and in every other
fiduciary and agency capacity in the same manner and to the same extent as such
rights, franchises, and interests were held or enjoyed by the Company Sub and
RRI, respectively, immediately prior to the Effective Time.
1.04. Liabilities and Obligations. At the Effective Time, the Surviving
Corporation shall be liable for all liabilities of RRI. Company Sub is newly
formed and has no liabilities of any type whatsoever, nor are there any
creditors or any obligees of Company Sub or any liens on any of its property as
it does not lease or own any property. All rights of creditors and other
obligees and all liens on property of RRI shall be preserved unimpaired.
1.05 Directors and Officers. The directors and officers of the
Surviving Corporation and of the Company at the Effective Time shall be the same
persons who constitute the directors and officers of RRI as of the date hereof
pursuant to resolutions adopted by the Board of Directors of Company Sub and of
the Company and the directors and officers of both Company Sub and of the
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Company immediately prior to the Effective Time shall, as of the Effective Time,
resign all such capacities.
1.06. Adoption. Unless contrary to the laws of the State of Florida,
the United States of America, or other applicable laws, all corporate acts,
plans, policies, applications, agreements, orders, registrations, licenses,
approvals, and authorizations of Company Sub and RRI, their respective
shareholders, boards of directors, committees elected or appointed by their
boards of directors or officers, and agents that were valid and effective
immediately before the Effective Time shall be taken for all purposes at and
after the Effective Time as the acts, plans, policies, applications, agreements,
orders, registrations, licenses, approvals, and authorizations of the Surviving
Corporation and shall be effective and binding thereon as the same were with
respect to Company Sub and RRI immediately before the Effective Time.
1.07. Accounting Treatment; Federal Income Tax Treatment. The parties
hereby agree that it is their intention that the Merger will be treated as a
reverse-merger "purchase" for accounting purposes with RRI being the accounting
survivor under applicable U.S. accounting standards. The parties further agree
that it is their intention that the Merger will be treated as a tax-free
reorganization for federal income tax purposes under Section 368 of the Internal
Revenue Code of 1986, as amended. The parties hereby mutually agree that they
will give such notices, file such instruments, give such consents, and take or
cause to have taken such actions as are reasonably necessary to ensure the
accounting treatment and federal income tax treatment described herein.
1.08. Post-Merger Matters. Following the Merger, the Company will
utilize its best efforts to effect a change of the Company's name to "Xxxxx Ribs
International, Inc." or a similar name.
ARTICLE II
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CONVERSION AND CANCELLATION OF RRI STOCK AND RRI CLASS A
PREFERRED STOCK
2.01. General. The manner of exchanging and converting the issued and
outstanding shares of RRI Stock and RRI Class A Preferred Stock shall be as
hereinafter provided in this Article II.
2.02. Conversion of RRI Stock and RRI Class A Preferred Stock. At the
Effective Time and without any action on the part of the Company, Company Sub,
RRI, or the holders of any of the securities of any of these corporations:
(a) each outstanding share of RRI Stock shall be converted into one
share of Company Stock, and each outstanding share of RRI Class A Preferred
Stock shall be converted into one share of Company Class A Preferred Stock. All
such shares of RRI Stock and RRI Class A Preferred Stock shall no longer be
outstanding, and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive, upon the surrender of such
certificates, in accordance with the provisions of Article II
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hereof, certificates evidencing such number of shares of Company Stock into
which such shares of RRI Stock were converted, and certificates evidencing such
number of shares of Company Class A Preferred Stock into which such shares of
RRI Class A Preferred Stock, respectively, were converted. The holders of such
certificates previously evidencing such shares of RRI Stock and RRI Class A
Preferred Stock outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such shares of RRI Stock and RRI Class A
Preferred Stock except as otherwise provided herein or by law;
(b) any shares of RRI Stock and RRI Class A Preferred Stock held in the
treasury of RRI immediately prior to the Effective Time shall automatically be
canceled and extinguished without any conversion thereof and no payment of any
type shall be made with respect thereto;
(c) each share of Company Sub Stock issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common stock of
the Surviving Corporation and thereafter, each stock certificate of Company Sub
shall evidence ownership of shares of common stock of the Surviving Corporation.
(d) each warrant to purchase shares of RRI Stock (collectively, the
"Assumed Securities") shall become, without further action, exercisable for one
share of Company Stock for each one share of RRI Stock to which each such
warrant relates, without any adjustment in the exercise price per share. The
Company shall assume all of RRI's obligations relating to the Assumed
Securities, in accordance with such conversion ratio, and otherwise be subject
to the other terms and conditions as set forth in such security.
2.03. Transmittal Instructions. As soon as is practical after the
Effective Time, shareholders of RRI will be sent transmittal forms for use in
forwarding for surrender their stock certificates representing RRI Stock and RRI
Class A Preferred Stock for the purpose of exchanging them for certificates
representing Company Stock and Company Class A Preferred Stock, as the case may
be. The transmittal forms and certificates for the RRI Stock must be sent to
Florida Atlantic Stock Transfer, which is the transfer agent (the "Transfer
Agent") and registrar for the Company Stock. The transmittal forms and
certificates for the RRI Class A Preferred Stock must be sent to the Company as
the Company presently acts as its own transfer agent in respect to the Company
Class A Preferred Stock. The provisions of Section 2.02 and this Section 2.03
shall not apply to any share of RRI Stock or RRI Class A Preferred Stock in
respect of which the holder thereof pursues the remedy of appraisal rights in
accordance with applicable Florida law, unless and until such holder has
exhausted his/her appraisal rights thereunder, at which time the provisions of
Sections 2.02 and 2.03 shall apply in their entirety thereto.
2.04. Issued in Name Other than Current Ownership. If any share of
Company Stock or Company Class A Preferred Stock is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange shall pay to the Transfer
Agent or the Company as the case
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may be, any transfer or other taxes required by reason of the issuance of a
share of Company Stock or a share of Company Class A Preferred Stock in any name
other than that of the registered holder of the certificate surrendered, or
shall establish to the satisfaction the Transfer Agent or the Company, as the
case may be, that such tax has been paid or is not payable.
2.05. Consideration in Full Satisfaction. All rights to receive Company
Stock or Company Class A Preferred Stock for which shares of RRI Stock and RRI
Class A Preferred Stock, as the case may be, shall have been converted pursuant
to this Article II shall be deemed to have been issued in full satisfaction of
all rights pertaining to such exchanged shares of RRI Stock and RRI Class A
Preferred Stock, respectively.
2.06. Subsequent Transfer of Stock. After the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of RRI Stock and RRI Class A Preferred Stock
that were outstanding immediately prior to the Effective Time. If after the
Effective Time certificates representing any such shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for Company Stock
and Company Class A Preferred Stock, as the case may be, as provided in this
Article II.
2.07 Adjustments. If between the date of this Agreement and the
Effective Time, the outstanding shares of Company Stock, RRI Stock, or RRI Class
A Preferred Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment, or stock dividend declared
thereon with a record date within such period, the exchange rate described in
Section 2.02 above for each share of RRI Stock and RRI Class A Preferred Stock,
as the case may be, shall be adjusted so that the total fair market value of the
shares of Company Stock and Company Class A Preferred Stock, as the case may be,
that would have been issued for RRI Stock and RRI Class A Preferred Stock,
respectively, in the absence of such reclassification, recapitalization,
split-up, combination, exchange of shares, readjustment, or stock dividend, will
be preserved. No such adjustments shall be made without the prior written
consent of all of the parties hereto.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND COMPANY SUB
The Company and Company Sub hereby jointly and severally represent and
warrant to RRI as of the date hereof, which shall also be true through the
Closing Date (as defined in Article X below), as follows:
3.01. Organization and Qualification. The Company and Company Sub (a)
are each duly organized, (1) as to the Company, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; and (2) as to
Company Sub, validly existing under the laws of the jurisdiction of its
incorporation whose status is active; (b) each has all requisite corporate power
and
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authority to own, operate, and lease its properties and to carry on its business
as it is currently being conducted; and (c) are each qualified to do business in
every jurisdiction in which the character and location of the assets owned by it
or the nature of its business require such qualification.
3.02. Licenses and Permits. To their Knowledge, the Company and Company
Sub each have all licenses, permits, consents, orders, approvals, and other
authorizations necessary for the conduct of its business as now being conducted
and proposed to be conducted. Except as provided in Section 6.04 herein, no
approval, consent, authorization, or other order of, and no designation, filing,
registration, qualification, or recording with any governmental authority,
domestic or foreign, is required for the Company's or Company's Sub's
performance of this Agreement or the consummation of the transactions
contemplated hereby.
3.03. Capitalization.
(a) The authorized capital stock of the Company is 210,000,000
shares, consisting of 200,000,000 shares of Company Stock, $0.001 par value per
share, of which 6,291,794 shares of Company Stock are currently issued and
outstanding, and 10,000,000 shares of blank check preferred stock, par value
$0.001 per share, of which no shares are currently issued and outstanding. The
authorized capital stock of Company Sub consists of 1,000 shares of Company Sub
Stock, $0.001 par value per share, of which 100 shares are currently issued and
outstanding, all of which are owned by the Company, free and clear of all liens,
claims, and encumbrances. All outstanding shares of capital stock of the Company
and Company Sub are validly issued, fully paid and nonassessable.
3.04. Options, Warrants, and Subscriptions.
(a) Except as set forth in 3.03 above , neither the Company or
Company Sub has outstanding (i) any other shares of any class of capital stock
other than the common stock of each of the Company and Company Sub,
respectively, (ii) no options, warrants, subscription, or other rights to
purchase from the Company or Company Sub any capital stock of the Company or of
Company Sub; (iii) no securities convertible into or exchangeable for capital
stock of the Company or of Company Sub; and (iv) no other commitments of any
kind for the issuance of additional shares of capital stock or options,
warrants, or other securities of the Company or of Company Sub.
(b) No Person, including, but not limited to, any officer or
director of the Company, has any right (preemptive or otherwise) to acquire any
capital stock of the Company or of Company Sub.
3.05. Subsidiaries. Except as set forth in the Company's Form 10-KSB
for the fiscal year ended December 31, 2002, there is presently no corporation,
partnership, limited liability company, or other business enterprise in which
the Company has any direct or indirect equity interest other than Company Sub.
To the Knowledge of the Company and Company Sub, the Company subsidiary listed
in the exhibit section to the Company's Form 10-KSB for the fiscal year ended
December 31,
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2002 has been administratively dissolved. In connection with this Agreement, the
Company has filed Articles of Incorporation with the Office of the Secretary of
State of Florida and formed a new corporation, PDC Acquisition Corp., which
shall be a wholly-owned subsidiary of the Company immediately prior to
completion of the Merger.
3.06. Authorization, Execution, and Delivery. The Company and Company
Sub each has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. No proceedings
on the part of the Company or Company Sub are necessary to authorize the
execution and delivery of this Agreement and, except as provided in Section 6.04
herein, the consummation of such transactions. This Agreement and all other
agreements herein contemplated to be executed by the Company and Company Sub
have been duly authorized by the respective Boards of Directors of the Company
and Company Sub, duly executed and delivered by the Company and Company Sub and
constitute legal, valid, and binding obligations of the Company and Company Sub
enforceable against each of the Company and Company Sub in accordance with their
respective terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles and judicial discretion. The execution and performance of this
Agreement by the Company and Company Sub will not, with the passing of time or
otherwise, constitute a material breach of any agreement, indenture, mortgage,
license, or other instrument or document to which the Company or Company Sub is
a party or otherwise bound. The execution and performance of this Agreement will
not, with the passing of time, or otherwise, violate or conflict with any
provision of the respective articles of incorporation or bylaws of the Company
or Company Sub. No dissenters' or other similar rights have been or will be
created for the shareholders of the Company and/or of Company Sub as a result of
or arising from the execution of this Agreement by the Company and/or Company
Sub or the consummation by the Company and/or Company Sub of the transactions
contemplated hereby.
3.07. No Conflict With Judgments and Decrees. The consummation of the
Merger in accordance with the terms, conditions, and provisions of this
Agreement will not conflict with, or result, with the passing of time, or
otherwise, in a breach of, any term, condition, or provision of any judgment,
order, injunction, decree, writ, or ruling of any court, tribunal, or regulatory
or self- regulatory authority, either domestic or foreign, to which either the
Company or Company Sub is subject.
3.08. Government Approvals. Except for the approvals to be obtained
pursuant to Section 6.04 below, no consent, approval, order, or authorization
of, or registration, declaration, or filing with, any federal, state, local or
foreign governmental authority, either domestic or foreign, is required to be
made or obtained by the Company or Company Sub in connection with the execution
and delivery of this Agreement by the Company and Company Sub or the
consummation by the Company and Company Sub of the transactions contemplated
hereby.
3.09. Financial Statements. The Company has previously delivered to RRI
true, correct, and complete copies of the following financial statements and
notes thereto (the "Financial
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Statements"):
(a) audited financial statements of the Company for the period
from inception to December 31, 2002;
(b) unaudited financial statements as filed by the Company
with the U.S. Securities and Exchange Commission (the "SEC") for the periods
ended March 31, 2003, June 30, 2003 and September 30, 2003.
The Company's fiscal year end is December 31. Except as set
forth in this Section 3.09, the Financial Statements (a) are a true and correct
reflection of the financial condition of the Company as of the dates therein;
(b) were prepared in accordance with generally accepted accounting principals
applied on a consistent basis over the reported periods ("GAAP"); (c) were
prepared in accordance with the books and records of the Company; (d) fairly
present the Company's financial condition and the results of its operations and
changes in its financial position at the relevant dates thereof and for the
years or periods covered thereby, subject in the case of the unaudited interim
financial statements, to normal year end audit adjustments; and (e) contain and
reflect all necessary adjustments and accruals for a fair presentation of its
financial condition and the results of its operations for the periods covered by
such financial statements. Company Sub has no financial statements because it is
newly formed for the purpose of effectuating the Merger and it has no assets,
liabilities, contracts or obligations of any kind or nature whatsoever.
3.10. No Undisclosed Liabilities. Except as set forth in the Financial
Statements and in Schedule 3.10 hereto, the Company has no liabilities or
obligations of any kind or nature, whether absolute, accrued, contingent, or
otherwise, and whether due or to become due (including without limitation any
liability for taxes and interest, penalties, and other charges payable with
respect to any such liability or obligation) which have had or could have a
Material Adverse Effect (as defined in Article XI below).
3.11. Absence of Certain Changes. Since September 30, 2003, and except
as otherwise set forth in the Company's Form 10-QSB for the quarter ended
September 30, 2003, the Company's Form 10-KSB for the fiscal year ended December
30, 2002, and/or below in this section, there has not been with respect to the
Company and/or Company Sub:
(a) any transaction not in the ordinary course of business
that has had or could have a Material Adverse Effect;
(b) any change in the business, property, assets, liabilities
(whether absolute, accrued, contingent, or otherwise), operations, liquidity,
income, condition (financial or otherwise), prospects, or net worth of the
Company or Company Sub that has had or could have a Material Adverse Effect;
(c) a declaration, or an agreement to declare or make any
payment of dividends
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or distributions of any assets of any kind to the stockholders of the Company or
Company Sub, or a redemption, or agreement or authorization to redeem any of the
Company Stock or Company Sub Stock;
(d) any damage, destruction, or loss, extraordinary or
otherwise and whether or not covered by insurance, that has had or could have a
Material Adverse Effect;
(e) any amendment permitted or made with regard to any
material contract, material license, or material agreement to which the Company
or Company Sub is a party;
(f) any acquisition or disposition by the Company or Company
Sub of any property or asset, whether real or personal, having a fair market
value in an amount greater than $1,000, except in the ordinary course of
business and in conformity with past practice;
(g) any mortgage, pledge, or subjection to lien, charge, or
encumbrance of any kind or on any of the respective properties or assets of the
Company or Company Sub, except to secure borrowings in the ordinary course of
business and in conformity with past practice;
(h) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee, or
agent of the Company or Company Sub, or any bonus payment or similar arrangement
made to or with any of such officers, directors, employees, or agents, other
than (except in the case of directors and officers) routine increases made in
the ordinary course of business and in conformity with past practice;
(i) any incurrence of, guarantee of, assumption of, or taking
any property subject to, any liability, except for liabilities incurred or
assumed or property taken in the ordinary course of business and in conformity
with past practice;
(j) any adoption of a plan or agreement or amendment to any
plan or agreement providing any new or additional benefits for officers,
directors, or employees;
(k) any material alteration in the manner of keeping the
books, accounts, or records of the Company or Company Sub, or in the accounting
practices therein reflected;
(l) any release or discharge of any obligation or liability of
any Person to the Company or Company Sub of any nature whatsoever, except in the
ordinary course of business and in conformity with past practice and except in
cases that have not had and could not have a Material Adverse Effect;
(m) any increase or decrease of (i) any amounts charged for
services rendered or products sold by the Company or Company Sub; or (ii)
inventory ordered, except, in either case, in the ordinary course of business
and in conformity with past practice;
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(n) any facts or circumstances that may reasonably result in
the loss of customers, suppliers, or vendors of the Company or Company Sub,
including without limitation, any notices, statements, or circumstances
indicating that any customer, supplier, or vendor has or will terminate or alter
its business relationship with the Company or Company Sub;
(o) any loan by the Company or Company Sub to any officer or
director of the Company or Company Sub, or any Affiliate (as defined in Article
XI below) thereof;
(p) any other event or condition of any character which has
had or could have a Material Adverse Effect; or
(q) any agreement or authorization to do any of the above.
3.12. Tax Matters.
(a) within the times and in the manner prescribed by law, each
of the Company and Company Sub has filed all federal, state, local and foreign
tax returns for which the Company and Company Sub has had the responsibility for
filing, and has timely paid all taxes, penalties, and interest (hereinafter
collectively referred to as "Taxes") shown to be due and payable on such
returns, except as set forth on Schedule 3.10 hereto;
(b) to the Knowledge of the Company and Company Sub, all tax
returns filed by the Company and Company Sub constitute complete and accurate
representations of its tax liabilities for such years and accurately sets forth
all items (to the extent required to be included or reflected in such returns)
relevant to its future tax liabilities, including the tax bases of its
properties and assets;
(c) to the Knowledge of the Company and Company Sub, each of
the Company and Company Sub has not waived or extended any applicable statute of
limitations relating to the assessment of federal, state, local, or foreign
taxes;
(d) to the Knowledge of the Company and Company Sub, no
examination of the federal, state, local or foreign tax returns of the Company
or Company Sub is currently in progress, nor, to the Knowledge of the Company
and Company Sub, is any such examination threatened, except relating to the tax
matters described in Schedule 3.10 hereto; and
(e) to the Knowledge of the Company and Company Sub, neither
the Company or Company Sub has received any communication from any taxing
authority regarding any tax return of the Company or Company Sub with respect to
any matter that has not been closed, settled, waived, or fully concluded, or
would otherwise have a Material Adverse Effect, except relating to the tax
matters described in Schedule 3.10 hereto.
3.13. No Litigation. There are no investigations, actions, suits,
judgments, or claims
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outstanding, pending or, to the Knowledge of the Company or Company Sub,
threatened against the Company or Company Sub or involving any of its properties
or assets, whether at law or in equity, before or by any foreign, federal,
state, municipal, or other governmental court, department, commission, board,
bureau, agency, instrumentality, or other person (a "Proceeding"), which may
result in a material liability to the Company or Company Sub or affect the
Company Stock or Company Sub Stock, except for those matters set forth in
Schedule 3.10 hereto.
3.14. Transactions with Affiliates. Except as set forth in the
Company's Form 10-QSB for the quarter ended September 30, 2003 and/or the
Company's Form 10-KSB for the fiscal year ended December 31, 2002, there are no
prior transactions by either the Company or the Company Sub with their
respective officers, directors, employees, or any affiliates thereof, and no
such person has any interest in any property owned or used by the Company or
Company Sub.
3.15. Contracts. Except as set forth in the Company's Form 10-QSB for
the quarter ended September 30, 2003 and/or the Company's Form 10-KSB for the
fiscal year ended December 31, 2002, neither the Company or Company Sub is a
party to any oral or written: (a) contract for the employment or compensation of
any officer or employee or consultant; (b) agreement, contract, or indenture
relating to the borrowing of money by the Company or Company Sub; (c) guaranty
of any obligations for the borrowing of money or otherwise; (d) management
agreement, consulting agreement, independent contractor agreement, or other
similar contract or arrangement; (e) collective bargaining or labor agreement;
(f) agreement with any present or former officer, director, or shareholder; (g)
employee pension, profit-sharing, or other benefit plan or arrangement; (h)
lease for real or personal property; (i) any contract or agreement that will
terminate upon a change in control of the Company or Company Sub; (j) any
contract or agreement obligating the Company or Company Sub to provide products
or services for a period of one year or more; (k) any contract relating to
pending capital expenditures by the Company or Company Sub; (l) any
non-competition or confidentiality agreements restricting the Company or Company
Sub in any manner; (m) other material contracts or understandings, irrespective
of subject matter and whether or not in writing, and not otherwise disclosed; or
(n) contract, agreement, or other commitment that involved a payment, or
requires the payment by, the Company or Company Sub of more than $1,000 in any
12- month period not otherwise previously disclosed in writing to RRI .
3.16. Employment Matters. To the Knowledge of the Company and Company
Sub, there is no activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any employees of the
Company or Company Sub, or to effectuate or threaten to effectuate a strike,
slowdown, work stoppage, or lockout with regard to the Company or Company Sub.
3.17. Compliance with Law.
(a) To the Knowledge of each of the Company and Company Sub,
except for the tax related matters set forth on Schedule 3.10 hereto, the
conduct of the business of each of the Company and Company Sub to date and
through the Closing Date does not and will not violate any
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federal, state, local or foreign laws, statutes, ordinances, rules, regulations,
decrees, orders, permits, or other similar items in force on the date hereof or
through the Closing Date (including, but not limited to, any of the foregoing
relating to employment discrimination, employment practices, withholding of
taxes and other sums from employees, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and environmental protection or conservation),
the enforcement of which could have a Material Adverse Effect on the Company
and/or Company Sub, nor has the Company or Company Sub received any notice of
any such violation.
(b) No prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), has occurred or is continuing with respect to any employee pension
benefit plan (as defined in Section 3(2) of ERISA) maintained by the Company or
any welfare benefit plan (as defined in Section 3(1) of ERISA) maintained by the
Company. The Company has no employee benefit plans or any welfare benefits plans
and no contributions are required to be made by the Company with respect to any
such plans.
(c) The Company has filed with the SEC all reports (including
all amendments thereto) and maintained all books and records required to be
maintained by it under applicable federal and state securities laws,
regulations, and rulings, including the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder. All
information contained in such filings was true and complete on the date such
filings were made, except for any filed amendments thereto. Neither the Company
or the Company Sub is subject to a formal or informal agreement or enforcement
action or proceeding or, to its/their Knowledge, formal or informal
investigation or inquiry, by any regulatory or self-regulatory agency (including
but not limited to the National Association of Securities Dealers, Inc) or
authority having jurisdiction over it, nor are any of the foregoing pending, or
to its/their Knowledge, threatened or contemplated. To their Knowledge, the
Company's and Company Sub's respective securities issuances since inception have
been made in material compliance with all applicable U.S., state and foreign
securities laws, rules and regulations.
3.18. Absence of Unethical Business Practices. To their Knowledge,
neither the Company or Company Sub or any director or officer thereof has
directly or indirectly given or agreed to give any gift or similar benefit to
any customer, contractor, government, employee, or other Person who was or is in
a possible position to help or hinder the Company or Company Sub, which gift or
benefit (a) might subject the Company or Company Sub to any damages or penalties
in any civil or criminal proceeding; (b) might have had a Material Adverse
Effect on the Company or Company Sub; or (c) might have a Material Adverse
Effect on the Company or Company Sub if not continued.
3.19. No Conflict With Other Instruments. The consummation of the
Merger in accordance with the terms, conditions, and provisions of this
Agreement will not be in material conflict with, or result in a material breach
of, any term, condition, or provision of, or constitute a material default
under, any contract, indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company and/or Company Sub is a party and
will not constitute an event that with the
12
lapse of time or action by a third party could result in any material default
under any of the foregoing, or result in the creation of any lien, charge, or
encumbrance upon any of the assets or properties of the Company or the Company
Stock or Company Sub or Company Sub Stock.
3.20. Insurance. Neither the Company or Company Sub has any insurance
of any type.
3.21. Intellectual Property.
(a) Each of the Company and Company Sub has full and exclusive
right, title, and interest in and to, or license rights to, as to the Company,
the license agreement dated June 8, 2000 by and between the Company and Xxxxx
Xxxxxx, as amended (including an amendment thereto pursuant to a Termination
Agreement by and between the Company, the estate of Xxxxx Xxxxxx, deceased, by
and through the estate's personal representative, Xxxxxx Xxxxxx, Medical
Marketing Innovations, Inc. and Global Medical Marketing, Inc.), and otherwise
all patents, patent applications, registered or unregistered trademarks, service
marks, and trade names, registered or unregistered copyrights and applications
therefor, licenses, approvals, or governmental authorizations to conduct its
business as now conducted, know-how, proprietary rights and processes, trade
secrets, customer lists, methodologies (to the extent protectable), proprietary
development and marketing information and know-how, inventions, inventors' notes
(to the extent such notes exist), drawings, designs associated with the
foregoing, and other confidential information (collectively, "Intellectual
Property") relating to its business or otherwise used in or necessary for the
proper conduct of its business, free and clear of all liens, security interests,
claims and encumbrances of any nature; and each of the Company and Company Sub
has no obligation to any other person or entity with respect to the Intellectual
Property or any product or process of the Company or Company Sub utilizing or
embodying any Intellectual Property.
(b) There is (i) no infringement, misuse, or misappropriation
of any Intellectual Property owned, licensed or controlled by any third party
arising out of any product or process now being used, manufactured, or
distributed, or ever having been used, manufactured, or distributed at any time
previously, by or on behalf of the Company or Company Sub; (ii) no pending or,
to the Knowledge of the Company and Company Sub, threatened claim or challenge
of or proceeding for infringement, misuse or misappropriation of or interference
with any Intellectual Property owned, licensed, or controlled by any third party
arising out of any product or process now being used, manufactured, or
distributed, or ever having been used, manufactured, or distributed at any time
previously, by or on behalf of the Company or Company Sub ; (iii) no pending or
threatened or potential claim, challenge or proceeding by the Company or Company
Sub against any third party for infringement, misuse, or misappropriation of or
interference with any Intellectual Property owned, licensed, or controlled by
the Company or Company Sub; or (iv) no notice or facts or information rendering
any Intellectual Property owned, controlled, or licensed by the Company or
Company Sub invalid or unenforceable, nor is there any allegation that any such
Intellectual Property is invalid or unenforceable.
13
3.22. Real and Personal Property.
(a) The Company has good and marketable title to each of the
items of real and personal tangible and intangible property recorded as owned in
the Financial Statements (except for property sold or otherwise disposed of
since September 30, 2003 in the ordinary course of business and in conformity
with past practice), free and clear of all mortgages, liens, security interests,
conditional sales contracts, encumbrances, leases, equities, claims, charges,
easements, rights-of- way, covenants, conditions, and restrictions, except (i)
those incurred or created in conformity with past practice; (ii) mortgages and
other encumbrances reflected in the Financial Statements; (iii) liens for
current taxes not yet due and payable; and (iv) such imperfections of title and
encumbrances as do not detract from, or interfere with, the present use of the
properties subject thereto or affected thereby, or otherwise impair the value
thereof or the operations thereat; and
(b) no officer, director, or employee of the Company, nor any
spouse, child, or other relative or Affiliate thereof, owns directly or
indirectly in whole or in part, any of such real property or tangible or
intangible personal property.
3.23. Environmental Compliance.
(a) The Company and any Property owned or operated by it are
in compliance with all applicable Environmental Laws and have obtained and are
in compliance with all permits, licenses, and other authorizations required
under any Environmental Law. There is no past or present event, condition, or
circumstance that is likely to interfere with the conduct of the business of the
Company in the manner now conducted relating to such entity's compliance with
Environmental Laws or constitute a material violation thereof or which would
have a Material Adverse Effect;
(b) The Company does not now or has not leased, operated,
owned, or exercised managerial functions at any facilities or real property with
respect to which such entity, facility, or real property is subject to any
actual proceeding under any Environmental Law, and the Company is not aware of
any facts or circumstances that could give rise to such a proceeding;
(c) there are no actions or proceedings pending or, to the
Knowledge of the Company, threatened against the Company under any Environmental
Law, and the Company has not received any notice (whether from any regulatory
body or private person) of any violation, or potential or threatened violation,
of any Environmental Law;
(d) there are no actions or proceedings pending or, to the
Knowledge of the Company, threatened under any Environmental Law involving the
release or threat of release of any Polluting Substances at or on (i) any
property currently or in the past owned, operated, or leased by the Company or
over which the Company exercised managerial functions; or (ii) at any property
where Polluting Substances generated by the Company have been disposed;
(e) there is no Property for which the Company is or was
required to obtain any permit under an Environmental Law to construct, demolish,
renovate, occupy, operate, or use such property or any portion of it;
14
(f) to the Company's Knowledge, the Company has not generated
any Polluting Substances;
(g) there has been no release of Polluting Substances by the
Company in violation of any Environmental Law which would require any report or
notification to any governmental or regulatory authority in or on any property;
(h) neither the Company nor any property is subject to
investigation or, to the Knowledge of the Company, threatened or pending
litigation by federal, state, or local officials or a private litigant as a
result of any previous on-site management, treatment, storage, release, or
disposal of Polluting Substances or exposure to any Polluting Substances;
(i) there are no underground or above ground storage tanks on
or under any property which are not in conformity with any Environmental Law and
any property previously containing such tanks has been remediated in compliance
with all Environmental Laws; and
(j) to the Knowledge of the Company, there is no asbestos
containing material on any Property owned or operated by the Company.
3.24. Minute Books. The minute books of the Company and Company Sub
accurately reflect material actions taken by the stockholders of the Company and
its Board of Directors and the stockholder of Company Sub and its Board of
Directors.
3.25. Xxxx-Xxxxx. Within the meaning of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the applicable regulations thereunder,
16 C.F.R. Parts 801-803 (collectively, "Xxxx-Xxxxx"), neither the Company nor
Company Sub nor any of their respective Affiliates (i) is engaged in
manufacturing; (ii) has total assets of $10 million or more; or (iii) has annual
net sales of $100 million or more.
3.26. Articles of Incorporation; Bylaws. The Company's and Company
Sub's respective Articles of Incorporation (as amended in the case of the
Company) and bylaws (in the case of the Company), true and complete copies of
which have previously been reviewed by RRI, have not been rescinded, amended or
modified in any respect, except as previously and publicly disclosed.
3.27. Broker's Agents and Finder's Fees. There is no agent's, broker's,
or finder's fee or commission payable, or that will be payable, in connection
with the transactions contemplated by this Agreement by virtue of, or resulting
from, any action or agreement by each of the Company and Company Sub or any
affiliate thereof.
15
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF RRI AND RRI SUBSIDIARY
Each of RRI and RRI Subsidiary hereby jointly and severally represents
and warrants to the Company and Company Sub as of the date hereof, which shall
also be true as of the Closing Date, as follows:
4.01. Organization and Qualification. Each of RRI and RRI Subsidiary:
(a) is a corporation duly incorporated, validly existing under the laws of the
State of Florida whose status is active, and has all requisite corporate power
and authority to own, operate, and lease its properties and to carry on its
business as it is currently being conducted; and (b) is qualified to do business
in every jurisdiction in which the character and location of the assets owned by
it or the nature of its business require such qualification.
4.02. Licenses and Permits. Each of RRI and RRI Subsidiary has all
licenses, permits, consents, orders, approvals, and other authorizations
necessary for the conduct of its business as now being conducted and proposed to
be conducted. Except as provided in Section 5.04 below, no approval, consent,
authorization, or other order of, and no designation, filing, registration,
qualification, or recording with any governmental authority, domestic or
foreign, is required for RRI's and/or RRI Subsidiary's performance of this
Agreement or the consummation of the transactions contemplated hereby.
4.03. Capitalization. The authorized capital stock of RRI consists of:
(a) 50,000,000 shares of RRI Stock, of which 43,941,800 shares are currently
issued and outstanding; and (b)10,000,000 shares of blank check preferred stock,
no par value per share of which 40,000 shares of Class A Preferred Stock have
been authorized and 36,301 shares of Class A Preferred Stock are currently
issued and outstanding as of the date hereof; and warrants issued and
outstanding to purchase 225,000 shares of RRI Stock. There are no other
securities of RRI authorized, issued and/or outstanding, and no other
instruments, agreements and/or other documents convertible into, exchangeable
for, or exercisable for any shares of RRI Stock and/or any other RRI securities,
or which grant any right, contingent or otherwise, to receive shares of RRI
Stock and/or any other RRI Securities, other than the Class A Preferred Stock
which is convertible into RRI stock as provided for in RRI's articles of
incorporation, as amended, and previously filed with the Florida Secretary of
State's Office.
The authorized capital stock of RRI Subsidiary consists of 7,500 shares
of common stock, $1.00 par value per share of which 100 shares of common stock
are issued and outstanding and owned by RRI. RRI owns all of such share
beneficially and of record, there are no liens, claims, and/or encumbrances
thereon or relating thereto, and nothing herein shall cause such shares to be or
become subject to any lien, claim and/or encumbrance. There are no other
securities of RRI Subsidiary authorized, issued and/or outstanding, including
but not limited to options and/or warrants relating thereto, and there are no
other instruments, agreements and/or other documents
16
convertible into, exchangeable for, or exercisable for any shares of RRI
Subsidiary common stock and/or any other RRI Subsidiary securities, or which
grant any right, contingent or otherwise, to receive shares of RRI Subsidiary
common stock and/or any other RRI Subsidiary securities.
4.04. Options, Warrants, and Subscriptions.
(a) Each of RRI and RRI Subsidiary has: (i) no options,
warrants, subscriptions, or other rights to purchase from RRI and/or RRI
Subsidiary any capital stock of RRI and /or RRI Subsidiary currently authorized,
issued and outstanding, except for warrants issued by RRI to purchase 205,000
shares of RRI Stock exercisable at $.10 per share through November 30, 2006 and
warrants issued by RRI to purchase 20,000 shares of RRI Stock exercisable at
$.50 per share through August 31, 2006; (ii) no securities convertible into or
exchangeable for capital stock of RRI and/or RRI Subsidiary other than the RRI
Class A Preferred Stock which is convertible on the basis as described in RRI's
articles of incorporation, as amended; and (iv) no other commitments of any kind
for the issuance of additional shares of capital stock or options, warrants, or
any other securities of RRI and/or RRI Subsidiary.
(b) No Person, including, but not limited to, any officer or
director of RRI and/or RRI Subsidiary has any right (preemptive or otherwise) to
acquire any capital stock of RRI and/or RRI Subsidiary.
4.05. Subsidiaries. There is no corporation, partnership, limited
liability company, or other business enterprise in which RRI and/or RRI
Subsidiary has any direct or indirect equity interest, except for: (i) in the
case of RRI, RRI Subsidiary, which is wholly-owned by RRI; and (ii) each of
Xxxxx' Ribs Canada, Inc., a Canadian corporation ("RRC"), Xxxxxxxxx One Group,
Inc., a Florida corporation ("Xxxxxxxxx") , and StaySteele LLC, a Georgia
limited liability company ("StaySteele"), in which RRI has a direct investment
interest of 50%, 51% and 50%, respectively. RRC is a development stage company
with no material business operations to date, Xxxxxxxxx is a recently opened
restaurant located in Tampa, Florida, and StaySteele is a currently
non-operating limited liability company. Neither RRC, Xxxxxxxxx or StaySteele is
subject to any adverse claims, actions, proceedings, and/or investigations by
any third party, none of such entities individually and/or in the aggregate
has/have any material liabilities, contingent or otherwise, or material
commitments to any third party, none of such entities is in material breach of
any agreement, arrangement and/or understanding with any third party, and the
execution of this Agreement by RRI and RRI Subsidiary and their consummation of
the transactions contemplated hereby will not cause any of the foregoing to
occur. Each of such entities has paid all taxes due and owing through the date
hereof.
4.06. Authorization, Execution, and Delivery. Ech of RRI and RRI
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. No proceedings
on the part of RRI and/or RRI Subsidiary are necessary to authorize the
execution and delivery of this Agreement and, except as provided in Section 5.04
below, the consummation of such transactions. This Agreement and all other
agreements herein contemplated to be executed by RRI and/or RRI Subsidiary have
been duly
17
executed and delivered by each of RRI and RRI Subsidiary and constitute legal,
valid, and binding obligations of each of RRI and RRI Subsidiary enforceable
against each of RRI and Subsidiary in accordance with their respective terms,
subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and to the application of equitable principles and
judicial discretion.
4.07. No Conflict With Judgments and Decrees. The consummation of the
Merger in accordance with the terms, conditions, and provisions of this
Agreement will not conflict with, or result in a breach of, any term, condition,
or provision of any judgment, order, injunction, decree, writ, or ruling of any
court or tribunal, either domestic or foreign, to which each of RRI and RRI
Subsidiary or any RRI and/or RRI Subsidiary stockholder is subject.
4.08. Government Approvals. No consent, approval, order, or
authorization of, or registration, declaration, or filing with, any federal,
state, or local governmental authority is required to be made or obtained by RRI
and/or RRI Subsidiary in connection with the execution and delivery of this
Agreement by each of RRI and RRI Subsidiary or the consummation by each of RRI
and RRI Subsidiary of the transactions contemplated hereby.
4.09. Financial Statements. RRI has previously delivered to the Company
true, correct, and complete copies of the following financial statements (the
"RRI Financial Statements"): unaudited financial statements comprised of a
balance sheet as of December 31, 2003 and income statement for the twelve months
ended December 31, 2002 for each of (and on a consolidated basis) RRI and RRI
Subsidiary. RRI represents and warrants that the RRI Financial Statements, as
well as RRI's financial statements for its fiscal year ended December 31, 2001
(and since inception if RRI is determined by RRI management to be a development
stage company) shall be audited in accordance with GAAP and filed on a
consolidated basis with the SEC within the requisite time period required by the
SEC's rules and regulations following consummation of the Merger.
RRI's fiscal year end is December 31. Except as set forth in this
Section 4.09, the RRI Financial Statements (a) are and will continue to be a
true and correct reflection of the financial condition of RRI as of the dates
therein; (b) were and will continue to be through the Closing Date of the Merger
prepared in accordance with GAAP; (c) were and will continue to be through the
Closing Date of the Merger prepared in accordance with the books and records of
RRI; (d) fairly present RRI 's financial condition and the results of its
operations at the relevant dates thereof and for the years or periods covered
thereby, subject in the case of the unaudited interim financial statements, to
normal year end audit adjustments; (e) contain and reflect all necessary
adjustments and accruals for a fair presentation of its financial condition and
the results of its operations for the periods covered by such financial
statements; and (f) contain and reflect reasonable provisions for reserves and
for all reasonably anticipated liabilities for all taxes, federal, state, or
local, with respect to the periods then ended and all prior periods. All of the
receivables of RRI, net of any allowance for doubtful accounts, reflected in the
balance sheets for the unaudited interim financial statements are valid and
legally binding, represent bona fide transactions, arose in the ordinary course
of business, and are collectible in accordance with the terms of such
receivables, without setoff or counterclaim.
18
4.10. Internal Accounting Controls. Each of RRI and RRI Subsidiary (a)
keeps books, records, and accounts that accurately, fairly, and in reasonable
detail reflect its assets and transactions; and (b) maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are accurately and promptly recorded; (ii) transactions are
executed in accordance with management's specific or general authorizations; and
(iii) access to its assets is permitted only in accordance with management's
general or specific authorization.
4.11. No Undisclosed Liabilities. Except as set forth in the RRI
Financial Statements, neither RRI nor RRI Subsidiary has no liabilities or
obligations of any nature, whether absolute, accrued, contingent, or otherwise,
and whether due or to become due (including without limitation any liability for
taxes and interest, penalties, and other charges payable with respect to any
such liability or obligation) which have had or could have a Material Adverse
Effect.
4.12. Absence of Certain Changes. Since December 31, 2003, there has
not been with respect to RRI and/or RRI Subsidiary (which representations below
shall also be deemed to apply to each of RRC, Xxxxxxxxx and StaySteele):
(a) any transaction not in the ordinary course of business
that has had or could have a Material Adverse Effect;
(b) any change in the business, property, assets, liabilities
(whether absolute, accrued, contingent, or otherwise), operations, liquidity,
income, condition (financial or otherwise), prospects, or net worth of RRI
and/or RRI Subsidiary that has had or could have a Material Adverse Effect;
(c) except for a recent dividend payment to the RRI Class A
Preferred Stockholders paid in shares of RRI Class A Preferred Stock, a
declaration, or an agreement to declare or make any payment of dividends or
distributions of any assets of any kind to the stockholders of RRI and/or RRI
Subsidiary, or a redemption, or agreement or authorization to redeem any of RRI
Stock and/or any RRI Subsidiary common stock;
(d) any damage, destruction, or loss, extraordinary or
otherwise and whether or not covered by insurance, that has had or could have a
Material Adverse Effect;
(e) any amendment permitted or made with regard to any
material contract, material license, or material agreement to which RRI and/or
RRI Subsidiary is a party;
(f) any acquisition or disposition by RRI and/or RRI
Subsidiary of any property or asset, whether real or personal, having a fair
market value in an amount greater than $5,000, except in the ordinary course of
business and in conformity with past practice;
19
(g) any mortgage, pledge, or subjection to lien, charge, or
encumbrance of any kind or on any of the respective properties or assets of RRI
and/or RRI Subsidiary, except to secure borrowings in the ordinary course of
business and in conformity with past practice;
(h) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee, or
agent of RRI and/or RRI Subsidiary, or any bonus payment or similar arrangement
made to or with any of such officers, directors, employees, or agents, other
than (except in the case of directors and officers) routine increases made in
the ordinary course of business and in conformity with past practice;
(i) any incurrence of, guarantee of, assumption of, or taking
any property subject to, any liability, except for liabilities incurred or
assumed or property taken in the ordinary course of business and in conformity
with past practice;
(j) any adoption of a plan or agreement or amendment to any
plan or agreement providing any new or additional benefits for officers,
directors, or employees;
(k) any material alteration in the manner of keeping the
books, accounts, or records of RRI and/or RRI Subsidiary, or in the accounting
practices therein reflected;
(l) any release or discharge of any obligation or liability of
any Person to RRI and/or RRI Subsidiary of any nature whatsoever, except in the
ordinary course of business and in conformity with past practice and except in
cases that have not had and could not have a Material Adverse Effect;
(m) any delay by RRI and/or RRI Subsidiary in paying any debt,
charge, or amount owed by RRI in excess of 30 days past the date such amount was
due;
(n) any increase or decrease of (i) any amounts charged for
services rendered or products sold by RRI and/or RRI Subsidiary; or (ii)
inventory ordered, except, in either case, in the ordinary course of business
and in conformity with past practice;
(o) any facts or circumstances that may reasonably result in
the loss of customers, suppliers, or vendors of RRI and/or RRI Subsidiary,
including without limitation, any notices, statements, or circumstances
indicating that any customer, supplier, or vendor has or will terminate or alter
its business relationship with RRI;
(p) any loan by RRI and/or RRI Subsidiary to any officer or
director of RRI and/or RRI Subsidiary or any Affiliate thereof; Messrs. Xxxxxxxx
and Xxxxx, RRI's Chief Executive Officer and President, respectively, are owed
by RRI in the aggregate approximately $285,000 for accrued salary and expenses
incurred by them in connection with their employment with RRI and RRI
Subsidiary, which monies are planned to be paid to them from time to time in the
reasonable discretion of management as cash flow from operations may permit.
20
(q) any other event or condition of any character which has
had or could have a Material Adverse Effect; or
(R)) any agreement or authorization to do any of the above.
4.13. Real and Personal Property.
(a) Each of RRI and RRI Subsidiary has good and marketable
title to each of the items of real and personal tangible and intangible property
recorded as owned in the RRI Financial Statements (except for property sold or
otherwise disposed of since December 31, 2003 in the ordinary course of business
and in conformity with past practice), free and clear of all mortgages, liens,
security interests, conditional sales contracts, encumbrances, leases, equities,
claims, charges, easements, rights-of-way, covenants, conditions, and
restrictions, except (i) those incurred or created in conformity with past
practice; (ii) mortgages and other encumbrances reflected in the RRI Financial
Statements; (iii) liens for current taxes not yet due and payable; and (iv) such
imperfections of title and encumbrances as do not detract from, or interfere
with, the present use of the properties subject thereto or affected thereby, or
otherwise impair the value thereof or the operations thereat; and
(b) no officer, director, or employee of RRI and/or RRI
Subsidiary, nor any spouse, child, or other relative or Affiliate thereof, owns
directly or indirectly in whole or in part, any of such real property or
tangible or intangible personal property.
4.14. Environmental Compliance.
(a) Each of RRI and RRI Subsidiary and any of their
respective franchisees and any Property owned or operated by it/them directly or
indirectly are in compliance with all applicable Environmental Laws and have
obtained and are in compliance with all permits, licenses, and other
authorizations required under any Environmental Law. There is no past or present
event, condition, or circumstance that is likely to interfere with the conduct
of the business of RRI and/or RRI Subsidiary in the manner now conducted
relating to such entity's compliance with Environmental Laws or constitute a
material violation thereof or which would have a Material Adverse Effect;
(b) Each of RRI and RRI Subsidiary does not now or has not
leased, operated, owned, or exercised managerial functions at any facilities or
real property with respect to which such entity, facility, or real property is
subject to any actual proceeding under any Environmental Law, and RRI is not
aware of any facts or circumstances that could give rise to such a proceeding;
(c) there are no actions or proceedings pending or, to the
Knowledge of RRI and/or RRI Subsidiary, threatened against RRI and/ro RRI
Subsidiary under any Environmental Law, and each of RRI and RRI Subsidiary has
not received any notice (whether from any regulatory body or private person) of
any violation, or potential or threatened violation, of any Environmental Law;
21
(d) there are no actions or proceedings pending or, to the
Knowledge of RRI and/or RRI Subsidiary, threatened under any Environmental Law
involving the release or threat of release of any Polluting Substances at or on
(i) any property currently or in the past owned, operated, or leased by RRI
and/or RRI Subsidiary or over which RRI and/or RRI Subsidiary exercised
managerial functions; or (ii) at any property where Polluting Substances
generated by RRI and/or RRI Subsidiary have been disposed;
(e) there is no Property for which RRI and/or RRI Subsidiary
and/or any of their franchisees is or was required to obtain any permit under an
Environmental Law to construct, demolish, renovate, occupy, operate, or use such
property or any portion of it;
(f) neither RRI nor RRI Subsidiary nor any of their
franchisees has generated any Polluting Substances;
(g) there has been no release of Polluting Substances in
violation of any Environmental Law which would require any report or
notification to any governmental or regulatory authority in or on any property;
(h) neither RRI nor RRI Subsidiary or any of its/their
Property is subject to investigation or, to the Knowledge of RRI and/or RRI
Subsidiary, threatened or pending litigation by federal, state, or local
officials or a private litigant as a result of any previous on-site management,
treatment, storage, release, or disposal of Polluting Substances or exposure to
any Polluting Substances;
(i) there are no underground or above ground storage tanks on
or under any Property owned, used or otherwise operated by RRI., RRI Subsidiary
or any franchisee thereof, which are not in conformity with any Environmental
Law and any Property previously containing such tanks has been remediated in
compliance with all Environmental Laws; and
(j) to RRI's and RRI Subsidiary's respective Knowledge, there
is no asbestos containing material on any Property owned or operated, or to be
operated by RRI, RRI Subsidiary and/or any franchisee thereof.
4.15. Tax Matters.
(a) within the times and in the manner prescribed by law,
each of RRI and RRI Subsidiary has accurately prepared and filed all federal,
state, and local tax returns for which each of RRI and RRI Subsidiary has had
the responsibility for filing, and has timely paid all taxes shown to be due and
payable on such returns; however, RRI will be filing an amended federal tax
return for fiscal year 2002 shortly to correct immaterial inconsistencies with
RRI's anticipated fiscal year 2003 federal tax return filing.
(b) except as set forth in (a) above, all tax returns filed by
each of RRI and RRI
22
Subsidiary constitute complete and accurate representations of its tax
liabilities for such years and accurately sets forth all items (to the extent
required to be included or reflected in such returns) relevant to its future tax
liabilities, including the tax bases of its properties and assets;
(c) each of RRI and RRI Subsidiary has not waived or extended
any applicable statute of limitations relating to the assessment of federal,
state, local, or foreign taxes;
(d) no examination of the federal, state, or local tax returns
of RRI and/or RRI Subsidiary is currently in progress, nor, to the Knowledge of
each of RRI and RRI Subsidiary, is any such examination threatened; and
(e) to the Knowledge of each of RRI and RRI Subsidiary, each
of RRI and RRI Subsidiary has not received any communication from any taxing
authority regarding any tax return of RRI and/or RRI Subsidiary with respect to
any matter that has not been closed, settled, waived, or fully concluded, or
would otherwise have a Material Adverse Effect.
4.16. No Litigation. To the Knowledge of each of RRI and RRI
Subsidiary, there are no investigations, actions, suits, judgments, or claims
outstanding, pending or, to the Knowledge of each of RRI and RRI Subsidiary,
threatened against RRI and/or RRI Subsidiary or involving any of its/their
properties or assets, whether at law or in equity, before or by any foreign,
federal, state, municipal, or other governmental court, department, commission,
board, bureau, agency, instrumentality, or other person (a "Proceeding"), which
may result in a material liability to RRI and/or RRI Subsidiary or affect the
RRI Stock or the stock of any RRI subsidiaries and/or other entities in which
RRI has a direct or indirect equity interest.
4.17. Transactions with Affiliates. Except for existing employment
agreements by and between RRI and Xxxx Xxxxx and RRI and Xxxxx Xxxxxxxx and
approximately $285,000 owed collectively to Messrs. Xxxxx and Xxxxxxxx for prior
accrued salaries and unreimbursed business expenses, there are no transactions
by either RRI and/or RRI Subsidiary with its/their officers, directors,
employees, or any Affiliates thereof, which have been consummated, are pending
or contemplated, and no such person has any interest in any property owned or
used by RRI and/or RRI Subsidiary.
4.18. Personnel. To the Knowledge of each of RRI and RRI Subsidiary, no
employee of, or party or person providing services to RRI and/or RRI Subsidiary
has any present intention to terminate his, her, or its relationship with RRI
and/or RRI Subsidiary, or, in the case of employees, leave the employ of RRI
and/or RRI Subsidiary.
4.19. Contracts. Neither RRI nor RRI Subsidiary is a party to any
material oral or written contracts, other than those provided or otherwise
disclosed to the Company. Each of RRI and RRI Subsidiary has furnished the
Company with a true and complete copy of each such contract, including all
amendments thereto made through the date hereof or otherwise disclosed same.
Each of such contracts is a valid and binding agreement of RRI and/or RRI
Subsidiary and all other parties
23
thereto; there has not occurred any material default under any of the material
terms and conditions thereof, nor has any event occurred that with the giving of
notice or lapse of time, or both, would constitute any such material default.
4.20. Employment Matters. To the Knowledge of each of RRI and RRI
Subsidiary, there is no activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any employees of RRI
and/or RRI Subsidiary or any franchisee thereof, or to effectuate or threaten to
effectuate a strike, slowdown, work stoppage, or lockout with regard to RRI
and/or RRI Subsidiary and/or any franchisee.
4.21. Compliance with Law.
(a) To the Knowledge of each of RRI and RRI Subsidiary, the
conduct of the business of each of RRI, RRI Subsidiary, RRC, Xxxxxxxxx and
StaySteele and any franchisees to date does not violate any federal, state, or
local laws, statutes, ordinances, rules, regulations, decrees, orders, permits,
or other similar items in force on the date hereof (including, but not limited
to, any of the foregoing relating to employment discrimination, employment
practices, withholding of taxes and other sums from employees, ERISA, and
environmental protection or conservation), the enforcement of which could have a
Material Adverse Effect on RRI and/or RRI Subsidiary, nor has RRI, RRI
Subsidiary, RRC, Xxxxxxxxx and/or StaySteele and/or any franchisee received any
notice of any such violation.
(b) Neither RRI or RRI Subsidiary maintains any employee
pension benefit plan as defined in Section 3(2) of ERISA), or otherwise, or any
welfare benefit plan(as defined in Section 3(1) of ERISA, or otherwise. No
contributions are required to be made by RRI with respect to any employee
pension benefit plan.
(c) Neither RRI or RRI Subsidiary is subject to a formal or
informal agreement or enforcement action by any regulatory agency or authority
having jurisdiction over it.
4.22. Employee Benefits.
(a) To the Knowledge of each of RRI and RRI Subsidiary,
neither RRI, RRI Subsidiary, nor any ERISA Affiliate, as determined under
Section 414(b), (c), or (m) of the Code, sponsors, maintains, or otherwise is a
party to, or is currently in default under, or has any current accrued
obligations under any pension, profit sharing, or other retirement plan, fringe
benefit plan, health, group insurance, or other welfare benefit plan, or other
similar plan, agreement, policy, or understanding, including, without
limitation, any "employee benefit plan" within the meaning of Section 3(3) of
the ERISA, whether formal or informal and whether legally binding or not under
which RRI or an ERISA Affiliate has any current or future obligation or
liability or under which any present or future employee of RRI, RRI Subsidiary,
or an ERISA Affiliate, or such present or former employee's dependents or
beneficiaries, has any current or future rights to benefits (each such plan,
agreement, policy, or understanding being hereinafter referred to individually
as a "Plan"). Neither
24
RRI, RRI Subsidiary nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Plan or modify or
change any existing Plan that would affect any present or former employee of RRI
or RRI Subsidiary, or such present or former employee's dependents or
beneficiaries. Neither RRI nor RRI Subsidiary is now, or been, a part of a
controlled group of corporations within the meaning of Section 414(b) of the
Code or a group of trades or businesses under common control within the meaning
of Section 414(c) of the Code.
(b) Neither RRI, RRI Subsidiary nor any ERISA Affiliate has
ever sponsored, adopted, maintained, or been obligated to contribute to a single
employer, multiple employer, or multiemployer defined benefit pension plan which
is, or ever was, subject to the provisions of Title IV of ERISA. Neither RRI,
RRI Subsidiary nor any ERISA Affiliate has ever sponsored, adopted, maintained,
or been obligated to contribute to a Plan which is, or ever was, subject to the
minimum funding standards of Section 302 of ERISA and Section 412 of the Code.
Neither RRI, RRI Subsidiary nor any ERISA Affiliate has any obligation in
connection with any Plan pursuant to the terms of a collective bargaining
agreement. RRI, RRI Subsidiary and all ERISA Affiliates have made or will make
all contributions required to be made by RRI and all ERISA Affiliates under each
Plan for all periods through and including the Effective Date or adequate
accruals therefore have been made or will be provided.
(c) Each Plan, if any, has been maintained and administered in
all material respects in accordance with applicable laws, including, but not
limited to, the Age Discrimination in Employment Act, as amended, Title X of the
COBRA, ERISA, and the Code. All reports required by any governmental agency with
respect to each Plan, if any, have been timely filed. RRI and RRI Subsidiary
shall each cooperate in full with any action deemed reasonably necessary by the
Company to ensure compliance with any federal or state law applicable to a Plan,
whether such action occurs prior to, on, or after the Effective Date. There are
no pending, or to the Knowledge of RRI and RRI Subsidiary, threatened or
anticipated, claims or actions with respect to any Plan (other than routine
claims for benefits by employees covered under any such Plan and their
beneficiaries). No "prohibited transaction" as defined in Section 406 of ERISA
or Section 4975 of the Code has occurred with respect to any Plan, excluding
transactions effected pursuant to a statutory or administrative exemption. No
tax under Section 4980B of the Code has been incurred, or is reasonably expected
to be incurred, in respect of any Plan that is a group health plan as defined in
Section 162(i)(2) of the Code. No lien has been filed by any person or entity on
the assets of RRI, RRI Subsidiary or any ERISA Affiliate relating to the
operation or maintenance of a Plan, and no lien exists by operation of law or
otherwise on the assets of RRI and/or RRI Subsidiary, as a result of the
operation or maintenance of a Plan or any other similar plan or plans, and
neither RRI, RRI Subsidiary nor any ERISA Affiliate has Knowledge of the
existence of facts or circumstances that could result in the imposition of such
a lien.
(d) Each Plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, both as to form and
operation and all necessary governmental approvals, including a favorable
determination as to the qualification under the Code of each such Plan, and each
amendment thereto, have been obtained.
25
(e) Neither RRI, RRI Subsidiary nor any ERISA Affiliate has
any current or projected liability in respect of post-employment or
post-retirement benefits for retired or former employees of RRI, RRI Subsidiary
or an ERISA Affiliate, or such present or former employees' dependents or
beneficiaries, except as required to avoid excise tax under Section 4980B of the
Code. With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of RRI and/or RRI Subsidiary, as of
the Effective Date, under any such insurance policy or ancillary agreement with
respect to such insurance policy.
(f) A true and complete copy of each Plan, if any, that covers
any employee or former employee of RRI and/or RRI Subsidiary (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished to the Company, together with (i)
the most recent favorable determination letter, if any, with respect to each
Plan; (ii) the two most recent annual reports prepared in connection with any
such Plan (Form 5500, including all applicable schedules); (iii) the most recent
actuarial valuation report, if any, prepared in connection with any such Plan;
and (iv) the most recently disseminated summary plan description and an
explanation of any material plan modifications made after the date thereof.
4.23. Absence of Unethical Business Practices. Neither RRI nor RRI
Subsidiary, nor any director or officer thereof, has directly or indirectly
given or agreed to give any gift or similar benefit to any customer, contractor,
government, employee, or other Person who was or is in a possible position to
help or hinder RRI and/or RRI Subsidiary, which gift or benefit (a) might
subject RRI and/or RRI Subsidiary to any damages or penalties in any civil or
criminal proceeding; (b) might have had a Material Adverse Effect; or (c) might
have a Material Adverse Effect if not continued.
4.24. No Conflict With Other Instruments. The consummation of the
Merger in accordance with the terms, conditions, and provisions of this
Agreement will not be in material conflict with, or result in a material breach
of, any term, condition, or provision of, or constitute a material default
under, any contract, indenture, mortgage, deed of trust, or other material
agreement or instrument to which RRI and/or RRI Subsidiary is a party and will
not constitute an event that with the lapse of time or action by a third party
could result in any material default under any of the foregoing, or result in
the creation of any lien, charge, or encumbrance upon any of the assets or
properties of RRI or RRI Stock, or RRI Subsidiary or the common stock of RRI.
4.25. Insurance. Each of RRI, RRI Subsidiary and Xxxxxxxxx has policies
of insurance in effect in such amounts as are adequate to protect its assets and
properties and consistent with its past practices There are no pending claims
under any insurance policy of RRI, RRI Subsidiary or Xxxxxxxxx, nor, to the
Knowledge of each of RRI and RRI Subsidiary, any facts or circumstances that may
cause the cancellation of any insurance policy held by RRI, RRI Subsidiary or
Xxxxxxxxx or the repudiation of any claims thereunder, nor prevent the insurance
policies it presently has in force from being renewed or require onerous
conditions to renewal that are not currently in effect with regard to such
insurance policies.
4.26. Accounts Receivable. The accounts receivable of each of RRI and
RRI Subsidiary
26
have arisen in the ordinary course of business and are valid and enforceable
subject to no defenses, setoffs, or counterclaims.
4.27. Intellectual Property.
(a) Schedule 4.27 sets forth a true and complete list of
intellectual property owned or licensed by each of RRI and RRI Subsidiary (other
than off-the-shelf software). Except as indicated on Schedule 4.27, each of RRI
and RRI Subsidiary has full and exclusive right, title, and interest in and to,
or license rights to, all patents, patent applications, registered or
unregistered trademarks, service marks, and trade names, registered or
unregistered copyrights and applications therefor, licenses, approvals, or
governmental authorizations to conduct its business as now conducted, know-how,
proprietary rights and processes, trade secrets, customer lists, methodologies
(to the extent protectable), proprietary development and marketing information
and know-how, inventions, inventors' notes (to the extent such notes exist),
drawings, designs associated with the foregoing, and other confidential
information (collectively, "Intellectual Property") relating to its business or
otherwise used in or necessary for the proper conduct of its business, free and
clear of all liens, security interests, claims and encumbrances of any nature;
and neither RRI nor RRI Subsidiary has any obligation to any other Person or
entity with respect to the Intellectual Property or any product or process of
RRI and/or RRI Subsidiary utilizing or embodying any Intellectual Property.
(b) There is (i) no infringement, misuse, or misappropriation
of any Intellectual Property owned, licensed or controlled by any third party
arising out of any product or process now being used, manufactured, or
distributed, or ever having been used, manufactured, or distributed at any time
previously, by or on behalf of RRI and/or RRI Subsidiary; (ii) no pending or, to
the Knowledge of each of RRI and RRI Subsidiary, threatened claim or challenge
of or proceeding for infringement, misuse or misappropriation of or interference
with any Intellectual Property owned, licensed, or controlled by any third party
arising out of any product or process now being used, manufactured, or
distributed, or ever having been used, manufactured, or distributed at any time
previously, by or on behalf of RRI and/or RRI Subsidiary; (iii) except as set
forth in Schedule 4.27 hereto, no pending or threatened or potential claim,
challenge or proceeding by RRI against any third party for infringement, misuse,
or misappropriation of or interference with any Intellectual Property owned,
licensed, or controlled by RRI and/or RRI Subsidiary; or (iv) no notice or facts
or information rendering any Intellectual Property owned, controlled, or
licensed by RRI and/or RRI Subsidiary invalid or unenforceable, nor is there any
allegation that any such Intellectual Property is invalid or unenforceable.
(c) neither RRI nor RRI Subsidiary has disclosed any material
confidential information developed or utilized by RRI and/or RRI Subsidiary to
any third party except on a confidential basis, pursuant to a confidentiality
agreement, and with no intention to entitle such third party to use such
information other than for the purposes set forth in such confidentiality
agreement. To the Knowledge of each of RRI and RRI Subsidiary, no third party
has disclosed confidential information developed or utilized by RRI and/or RRI
Subsidiary to any Person except as specifically authorized by RRI and/or RRI
Subsidiary.
27
4.28. Minute Books. The minute books of each of RRI and RRI Subsidiary,
full and complete copies of which have been provided to the Company and its
representatives, accurately reflect all material actions taken by the
stockholders of each of RRI and RRI Subsidiary and their respective Boards of
Directors since their respective inception.
4.29. Xxxx-Xxxxx. Within the meaning of Xxxx-Xxxxx, neither RRI, RRI
Subsidiary nor any of its Affiliates (i) is engaged in manufacturing; (ii) has
total assets of $10 million or more; or (iii) has annual net sales of $100
million or more.
4.30. Sufficiency of Assets. The assets and properties currently owned
and operated by each of RRI and RRI Subsidiary constitute, in the aggregate, all
of the assets and properties used in the conduct of RRI's and RRI Subsidiary's
business in the manner in which and to the extent to which such business is
currently being conducted. Neither RRI nor RRI Subsidiary has received any
notice from any current supplier of items essential to the conduct of its
business that such supplier intends to terminate or materially alter a business
relationship for any reason, and no such supplier intends to terminate or
materially alter any such business relationship with RRI and/or RRI Subsidiary.
Neither RRI nor RRI Subsidiary has received any notice from any customer that
such customer intends to discontinue purchases of products or services from RRI
and/or RRI Subsidiary, and, to the Knowledge of each of RRI and RRI Subsidiary,
no such customer intends to discontinue or cancel purchases or orders.
4.31. Broker's Agents and Finder's Fees. There is no agent's, broker's,
or finder's fee or commission payable, or that will be payable, in connection
with the transactions contemplated by this Agreement by virtue of, or resulting
from, any action or agreement by RRI, RRI Subsidiary or any Affiliate thereof.
4.32. Disclosure. The information with respect to each of RRI and RRI
Subsidiary heretofore provided and to be provided by each of RRI and RRI
Subsidiary pursuant to this Agreement, including any Exhibits and/or Schedules
hereto, and each of the representations, agreements, documents, certificates and
writings to be delivered by each of RRI, RRI Subsidiary or its/their
representatives at the Closing, do not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated herein
or therein or necessary in order to make the statements and writings contained
herein or therein not false or misleading in the light of the circumstances
under which they were made.
ARTICLE V
---------
COVENANTS OF RRI AND RRI SUBSIDIARY
RRI and RRI Subsidiary each hereby covenants and agrees with the
Company and Company Sub to the following as of the date hereof to the Effective
Time:
28
5.01. Affirmative Covenants of RRI and RRI Subsidiary. Each of RRI and
RRI Subsidiary will operate its business only in the usual, regular, and
ordinary manner, and to the extent consistent with such operations, each of RRI
and RRI Subsidiary will use its best efforts to (a) preserve intact its present
business organizations; (b) keep available all the services of its present
officers and employees; (c) preserve its present business relationships with
depositors, borrowers, and others having business dealings with it; (d) maintain
and keep its material properties in good repair and condition as at present,
except for deterioration due to ordinary wear and tear and damage due to
casualty; (e) maintain, in full force and effect, insurance comparable in amount
and in scope of coverage to that now maintained by it, including, but not
limited to, bankers' blanket bond and director and officer liability insurance
policies as may be in effect as of the date of this Agreement; (f) perform all
of its material obligations under contracts, leases, and documents relating to
or affecting its assets, properties, and businesses; and (g) comply with and
perform all material obligations and duties imposed upon it by federal, state,
and local laws, and all rules, regulations, and orders imposed by federal,
state, or local governmental authorities, except as may be contested by it in
good faith by appropriate proceedings.
5.02. Negative Covenants of RRI and RRI Subsidiary. Unless RRI and/or
RRI Subsidiary shall have received the prior written consent of the Company and
Company Sub, which consent shall not be unreasonably withheld, neither RRI nor
RRI Subsidiary shall do or cause to have done any of the following except for
those previously disclosed to the Company and Company Sub:
(a) enter into any transaction not in the ordinary course of
business that could have a Material Adverse Effect;
(b) make or allow any change in the business, Property,
assets, liabilities (whether absolute, accrued, contingent, or otherwise),
operations, liquidity, income, condition (financial or otherwise), prospects, or
net worth of RRI and/or RRI Subsidiary that could have a Material Adverse
Effect;
(c) authorize the issuance of or issue any RRI Stock or any
other RRI securities, or any common stock of RRI Subsidiary or any other RRI
Subsidiary securities, declare or make any payment of dividends or distributions
of any assets of any kind to the stockholders of RRI and/or RRI Subsidiary, or
redeem or authorize the redemption of any of RRI Stock and/or of any securities
of RRI Subsidiary;
(d) amend any material contract, material license, or material
agreement to which RRI and/or RRI Subsidiary is a party;
(e) acquire or dispose of any Property or asset, whether real
or personal, having a fair market value in an amount greater than $5,000, except
in the ordinary course of business and in conformity with past practice;
(f) mortgage, pledge, or subject to any lien, charge, or
encumbrance of any kind
29
any of the properties or assets of RRI and/or RRI Subsidiary, except to secure
borrowings in the ordinary course of business and in conformity with past
practice;
(g) increase, or commit to increase, the compensation payable
or to become payable to any officer, director, employee, or agent of RRI and/or
RRI Subsidiary, or any bonus payment or similar arrangement made to or with any
of such officers, directors, employees, or agents, other than (except in the
case of directors and officers) routine increases made in the ordinary course of
business and in conformity with past practice;
(h) incur, guarantee, assume, or take any Property subject to
any liability, except for liabilities incurred or assumed or Property taken in
the ordinary course of business and in conformity with past practice;
(i) adopt a plan or agreement or amend any plan or agreement
providing any new or additional benefits for officers, directors, or employees;
(j) make or allow any material alteration in the manner of
keeping the books, accounts, or records of RRI and/or any RRI Subsidiary, or in
the accounting practices therein reflected;
(k) release or discharge any obligation or liability of any
Person to RRI and/or RRI Subsidiary of any nature whatsoever, except in the
ordinary course of business and in conformity with past practice and except in
cases that have not had and could not have a Material Adverse Effect;
(l) delay in paying any material debt, charge, or amount owed
by RRI and/or RRI Subsidiary in excess of 30 days past the date such amount was
due;
(m) amend, restate, or rescind the Articles of Incorporation
or Bylaws of RRI and/or RRI Subsidiary;
(n) make any loan to any officer or director of RRI, RRI
Subsidiary or any Affiliate thereof; or
(o) enter into any agreement or authorization to do any of the
above.
5.03. Information for Applications. Each of RRI and RRI Subsidiary will
cooperate with and will use reasonable efforts to furnish the Company with all
the information concerning RRI and RRI Subsidiary required for inclusion in (a)
all applications filed or to be filed by the Company with the SEC and any other
governmental or regulatory agency or department for authority to consummate the
transactions contemplated by this Agreement; and (b) any other application or
statement to be made by the Company to any governmental body in connection with
such matters. Each of RRI and RRI Subsidiary represents and warrants that all
information so furnished for such statements and
30
applications shall be true and correct in all material respects without omission
of any material fact required to be stated to make the information stated
therein not misleading.
5.04. Shareholder Approval and Best Efforts. As soon as is practical
but in no event later than February13, 2004, each of RRI and RRI Subsidiary will
cause a special meeting of shareholders to be duly called and held or a written
consent of majority shareholders to be executed to authorize, approve, and adopt
this Agreement and the transactions contemplated hereby. The Board of Directors
of each of RRI and RRI Subsidiary will (a) recommend approval of this Agreement
to its shareholders; and (b) use its best efforts to take or cause to be taken
all other actions necessary, proper, or advisable to consummate this Agreement.
ARTICLE VI
----------
COVENANTS OF THE COMPANY AND COMPANY SUB
The Company and Company Sub each hereby covenants and agrees with RRI
and RRI Subsidiary to the following as of the date hereof through the Effective
Time:
6.01. Affirmative Covenants of the Company and Company Sub. Each of the
Company and Company Sub will operate its business only in the usual, regular,
and ordinary manner, and to the extent consistent with such operations, each of
the Company and Company Sub will use its best efforts to (a) preserve intact its
present business organizations; (b) keep available all the services of its
present officers and employees; (c) preserve its present business relationships
with depositors, borrowers, and others having business dealings with it; (d)
maintain and keep its material properties in good repair and condition as at
present, except for deterioration due to ordinary wear and tear and damage due
to casualty; (e) perform to the best of their ability all of their material
obligations under contracts, leases, and documents relating to or affecting its
assets, properties, and businesses; (g) comply to the best of their ability with
and perform to the best of their ability all material obligations and duties
imposed upon them by federal, state, and local laws, and all rules, regulations,
and orders imposed by federal, state, or local governmental authorities, except
as may be contested by it in good faith by appropriate proceedings; (f) maintain
to the best of their ability the Company's current listing in good standing on
the Over the Counter Bulletin Board ("OTCBB"); (g) deliver all funds in the
Company's bank account(s), if any, to RRI on or prior to the Effective Time,
close all such bank account(s) and provide evidence thereof satisfactory to RRI
on or prior to the Effective Time; and (h) deliver the Company's and Company
Sub's corporate books and records to the Company's officers and directors as of
the Effective Time.
6.02. Negative Covenants of the Company and Company Sub. Unless the
Company or Company Sub shall have received the prior written consent of RRI,
which consent shall not be unreasonably withheld, the Company and Company Sub,
as the case may be, shall use their best efforts not to or cause to have done
any of the following:
(a) enter into any transaction not in the ordinary course of
business that could have a Material Adverse Effect;
31
(b) make or allow any change in the business, Property,
assets, liabilities (whether absolute, accrued, contingent, or otherwise),
operations, liquidity, income, condition (financial or otherwise), prospects, or
net worth of the Company or Company Sub that could have a Material Adverse
Effect;
(c) declare or make any payment of dividends or distributions
of any assets of any kind to the stockholders of the Company or Company Sub,
issue any additional Company securities or any additional Company Sub
Securities, or enter into any agreements, arrangements or understandings in
connection therewith, other than as provided for herein, or redeem or authorize
the redemption of any of the Company Stock or Company Sub Stock;
(d) amend any material contract, material license, or material
agreement to which the Company or Company Sub is a party;
(e) acquire or dispose of any Property or asset, whether real
or personal, having a fair market value in an amount greater than $1,000 not
previously disclosed in writing to RRI, except in the ordinary course of
business and in conformity with past practice;
(f) mortgage, pledge, or subject to any lien, charge, or
encumbrance of any kind any of the properties or assets of the Company or of the
Company Sub, except to secure borrowings in the ordinary course of business and
in conformity with past practice;
(g) increase, or commit to increase, the compensation payable
or to become payable to any officer, director, employee, or agent of the Company
or Company Sub, or any bonus payment or similar arrangement made to or with any
of such officers, directors, employees, or agents, other than (except in the
case of directors and officers) routine increases made in the ordinary course of
business and in conformity with past practice;
(h) incur, guarantee, assume, or take any Property subject to
any liability, except for liabilities incurred or assumed or Property taken in
the ordinary course of business and in conformity with past practice;
(i) adopt a plan or agreement or amend any plan or agreement
providing any new or additional benefits for officers, directors, or employees;
(j) make or allow any material alteration in the manner of
keeping the books, accounts, or records of the Company or Company Sub, or in the
accounting practices therein reflected;
(k) release or discharge any obligation or liability of any
Person to the Company or Company Sub of any nature whatsoever, except in the
ordinary course of business and in
32
conformity with past practice and except in cases that have not had and could
not have a Material Adverse Effect;
(l) amend, restate, or rescind the Articles of Incorporation
or Bylaws of the Company or Company Sub, except and to the extent as previously
amended;
(m) make any loan to any officer or director of the Company or
Company Sub, or any Affiliate thereof;
(n) delisting of Company Stock from the OTCBB; or
(o) enter into any agreement or authorization to do any of the
above.
6.03. Securities Laws Filings. The Company will use its best efforts to
file with the SEC (a) all requisite Form 10-QSB quarterly and other Exchange Act
filings until the Closing Date of this Agreement, at which time, the then
current management of the Company will be responsible for all filings and (b)
will utilize its best efforts to file with any other governmental or regulatory
or self- regulatory agency or department, including but not limited to the
National Association of Securities Dealers, Inc. ("NASD"), or department any
other application or statement to be made by the Company necessary to consummate
the transactions contemplated by this Agreement and to maintain its current
listing on the OTCBB. The Company represents and warrants that all information
so furnished for such statements and applications shall be true and correct in
all material respects without omission of any material fact required to be
stated to make the information stated therein not misleading.
6.04. Approvals and Best Efforts. On or before February 13, 2004, the
Company will, in accordance with applicable laws, rules and regulations, use its
best efforts to take or cause to be taken such actions as are necessary, proper,
or advisable to consummate this Agreement and the transactions described herein,
including but not limited to obtaining required approvals of the NASD and OTCBB,
and shall obtain the approval thereof of the Board of Directors of each of the
Company and Company Sub and the approval thereof by written consent of the
Company as the sole shareholder of the Company Sub. No approvals of any type are
required of the Company's shareholders in connection with the consummation of
the transactions contemplated hereby.
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF THE COMPANY
AND COMPANY SUB TO CLOSE
The obligations of the Company and of the Company Sub to cause the
Merger to be consummated shall be subject to the satisfaction on or before the
Closing Date of all of the following conditions, except as the Company and
Company Sub may waive such conditions in writing:
33
7.01. Approval by Directors and Shareholders of RRI and RRI Subsidiary.
Pursuant to the written consent of each of RRI's and RRI Subsidiary's directors
and at a meeting of shareholders of each of RRI and RRI Subsidiary duly called
and held for such purpose, or pursuant to a written consent of the majority of
the issued and outstanding shares of each of RRI Stock and the common stock of
RRI Subsidiary, this Agreement and the transactions described herein shall have
been duly approved by the requisite vote of such directors and shareholders.
7.02. Regulatory Approvals. Orders, consents, and approvals in form and
substance reasonably satisfactory to the Company shall have been entered by the
SEC, NASD/OTCBB and any other applicable governmental or regulatory or
self-regulatory agency/agencies granting the authority necessary for
consummation of the transactions contemplated by this Agreement.
7.03. Litigation. On the Closing Date, there shall not be pending or
threatened litigation in any court or any proceeding by any governmental
commission, board, or agency with a view to seeking, or in which it is sought,
to restrain or prohibit consummation of the Merger, or in which it is sought to
obtain divestiture, rescission, or damages in connection with the Merger or the
consummation of the Merger, and to the Knowledge of any of the parties hereto,
no investigation by any governmental agency shall be pending or threatened that
might result in any such suit, action, or other proceeding.
7.04. Representations and Warranties; Absence of Material Changes in
Schedules. All representations and warranties of each of RRI and RRI Subsidiary
contained in this Agreement shall be true in all material respects on and as of
the Closing Date, and each of RRI and RRI Subsidiary shall have performed all
agreements and covenants required by this Agreement to be performed by it on or
prior to the Closing Date. Each of RRI and RRI Subsidiary shall not have updated
or amended its Schedules to reflect or disclose a material adverse effect in its
business, financial condition, results of operations, or future prospects.
7.05. Fulfillment of Covenants. Each of RRI and RRI subsidiary shall
have fulfilled all of the covenants set forth in Article V in all material
respects.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF RRI AND RRI SUBSIDIARY TO CLOSE
The obligation of each of RRI and RRI Subsidiary to cause the Merger to
be consummated shall be subject to the satisfaction on or before the Closing
Date of all the following conditions, except as RRI and RRI Subsidiary may waive
such conditions in writing:
8.01. Approval by Directors of Company and Company Sub; Approval of
Company Sub Shareholder. Pursuant to the written consent of the directors of
each of the Company and Company Sub and the written consent of the Company as
the sole shareholder of the Company Sub, this Agreement and the transactions
described herein shall have been duly approved by the requisite vote of such
directors and shareholder.
34
8.02. Regulatory Approvals. Orders, consents, and approvals in form and
substance reasonably satisfactory to RRI and RRI Subsidiary shall have been
entered by the SEC, NASD/OTCBB and any other applicable governmental or
regulatory or self-regulatory agency/agencies granting the authority necessary
for consummation of the transactions contemplated by this Agreement.
8.03. Litigation. On the Closing Date, there shall not be pending or
threatened litigation in any court or any proceeding by any governmental
commission, board, or agency with a view to seeking, or in which it is sought,
to restrain or prohibit consummation of the Merger or other transactions
described herein, or in which it is sought to obtain divestiture, rescission, or
damages in connection with the Merger or the consummation of the Merger or other
transactions described herein, and to the Knowledge of any of the parties
hereto, no investigation by any governmental agency shall be pending or
threatened that might result in any such suit, action, or other proceeding.
8.04. Representations and Warranties; Absence of Material Changes in
Schedules. All representations and warranties of the Company and of Company Sub
contained in this Agreement shall be true in all material respects on and as of
the Closing Date, and each of the Company and Company Sub shall have performed
all agreements and covenants required by and terms and conditions of this
Agreement to be performed by it on or prior to the Closing Date. Each of the
Company and Company Sub shall not have updated or amended any of its Schedules
to reflect or disclose a material adverse effect in its business, financial
condition, results of operations, or future prospects.
8.05. Fulfillment of Covenants. Each of the Company and Company Sub
shall have fulfilled all of the covenants set forth in Article VI in all
material respects.
8.06. RRI's Dissenters'/Appraisal Rights. No dissenters'/appraisal
rights are exercised by any of RRI's shareholders..
ARTICLE IX
----------
EXPENSES
Costs and expenses relating to the negotiation and drafting of this
Agreement and the transactions contemplated hereby shall be borne and paid by
the Surviving Corporation pursuant to such arrangement as may be agreed to by
the various professionals acting on behalf of their respective client parties
hereto.
35
ARTICLE X
---------
CLOSING DATE AND EFFECTIVE TIME
The closing of this Agreement and the transactions contemplated hereby
shall be held on a mutually agreed upon time, date and place. The "Closing Date"
shall be the later of: (a) the fulfillment of all of the conditions to be met by
the Company and Company Sub and all other conditions as set forth in Article
VIII above and the fulfillment of all of the conditions to be met by RRI and RRI
Subsidiary set forth in Article VII above; (b) such later date as the presidents
of the Company, Company Sub, RRI, and RRI Subsidiary, respectively, may agree
upon in writing; or (c) with respect to any of the above, if such date is not a
business day, then the next business day following. Subject to the terms and
upon satisfaction on or before the Closing Date of all requirements of law and
conditions specified in this Agreement, the Company, Company Sub and RRI shall,
at the Closing Date, execute, acknowledge, and deliver such other documents and
instruments and take such further action as may be necessary or appropriate to
consummate the Merger. Immediately thereafter, the Company and RRI shall file,
or cause to be filed, with the SEC, OTCBB, the Florida Secretary of State, and
any other governmental or regulatory or self-regulatory agency all necessary
documents and instruments to consummate the Merger. The "Effective Time" is the
date on which the Merger is effective, which shall be on the date specified in
the Articles of Merger to be issued by the Florida Secretary of State, and if no
date is specified in such certificate, then the Effective Time shall be the time
of the opening of business on the date the Articles of Merger are recorded by
the Florida Secretary of State.
At the closing, the following documents shall be delivered:
(a) each of the Company and Company Sub shall deliver or cause to be
delivered to RRI and RRI Subsidiary:
(i) a certificate executed by the President and Secretary of
each of the Company and Company Sub, in form and substance satisfactory to the
RRI, confirming as of the Closing Date that all representations, warranties and
covenants made by each of the Company and Company Sub are true and correct as of
the closing, and that all of the terms and conditions of the Agreement have been
fully complied with by the Company and Company Sub;
(ii) a certificate from each of the Secretary of State of
Nevada and Florida dated at or about the date the date of closing to the effect,
as to each of the Company and the Company Sub, respectively, that it is in good
standing under the laws of the State of Nevada and Florida, respectively;
(iii) such other instruments, documents and certificates, if
any as are required to be delivered pursuant to the terms and provisions of this
Agreement;
(iv) executed copies of the Articles of Merger for filing with
the Secretary of State of Florida and certified copies of resolutions by the
directors of the Company and Company Sub, and the Company as the sole
shareholder of Company Sub authorizing the execution, delivery and performance
of this Agreement and the consummation of the transactions described herein;
36
(v) resignations of all officers and directors of the Company
and Company Sub (see Exhibit B re: officers and directors of each of Company
Sub. and Surviving Corporation);
(vi) stock certificates representing those shares of Company
Stock to be issued as a part of the exchange described in Article II hereof; and
(vii) all other items, the delivery of which is a condition
precedent to the obligations of RRI and RRI Subsidiary, as set forth in Article
VIII hereof.
(b) each of RRI and RRI Subsidiary shall deliver or cause to be
delivered to the Company and Company Sub:
(i) a certificate executed by the President and Secretary of
each of RRI and RRI Subsidiary, in form and substance satisfactory to the
Company and Company Sub, confirming as of the Closing Date that all
representations, warranties, covenants and covenants made by each of RRI and RRI
Subsidiary are true and correct as of the closing, and that all of the terms and
conditions of the Agreement have been fully complied with by each of RRI and RRI
Subsidiary;
(ii) a certificate from the Secretary of State of Florida
dated at or about the date of closing to the effect that the status of each of
RRI and RRI Subsidiary is active under the laws of such state;
(iii) such other instruments, documents and certificates, if
any as are required to be delivered pursuant to the terms and provisions of this
Agreement;
(iv) executed copies of the Articles of Merger for filing with
the Secretary of State of Florida, and certified copies of resolutions by the
directors of each of RRI and RRI Subsidiary and a majority of the shareholders
of RRI and the sole shareholder of RRI Subsidiary authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions described herein; and
(v) all other items, the delivery of which is a condition
precedent to the obliga- tions of the Company and Company Sub as set forth in
Article VII hereof.
ARTICLE XI
----------
DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth below:
37
"Affiliate" shall mean, as to any Person, any Person controlled by,
controlling, or under common control with such Person, and, in the case of a
Person who is an individual, a member of the family of such individual
consisting of a spouse, sibling, in-law, lineal descendant, or ancestor
(including by adoption), and the spouses of any such individuals. For purposes
of this definition, control (including the terms, controlling, controlled by,
and under common control with) of a Person means the possession, directly or
indirectly, alone or in concert with others, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of securities, by contract or otherwise, and no Person shall be deemed
in control of another solely by virtue of being a director, officer or holder of
voting securities of any entity. A Person shall be presumed to control any
partnership of which such Person is a general partner.
"Environmental Laws" shall mean laws, including, without limitation,
federal, state, local, or foreign laws, ordinances, rules, regulations,
interpretations, and orders of courts or administrative agencies or authorities
relating to pollution, environmental protection, health and safety, or similar
laws (including, without limitation, ambient air, surface water, ground water,
land surface, and subsurface strata), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Federal Clean Water Act ("CWA"), the Safe Drinking Water
Act ("SDWA"), the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Clean Air Act ("CAA"), the Emergency Planning and Community Right
to Know Act ("EPCRA"), the Occupational Safety and Health Act ("OSHA"), and
other laws relating to pollution or protection of the environment, or to the
manufacturing, processing, distribution, use, treatment, handling, storage,
disposal, or transportation of Polluting Substances.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Knowledge" shall mean, with respect to RRI, the actual knowledge of
its officers and directors, and shall mean, with respect to the Company, the
actual knowledge of its officers and directors. An individual shall be deemed to
have "knowledge" of a particular fact or other matter if such individual is
actually aware of such fact or other matter.
"Material Adverse Effect" means any development, change, or effect that
is materially adverse to the business, properties, tangible or intangible
assets, net worth, condition (financial or other), results of operations, or
prospects of the entity to which it refers, or any subsidiary thereof.
"Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d)(3) and 14(d)(2) of such
act.
"Polluting Substances" shall be construed broadly to include (a)
asbestos, (b) petroleum products or wastes, (c) biomedical or biological wastes,
and (d) all pollutants, contaminants, chemicals, or industrial, toxic, or
hazardous substances or wastes and shall include, without
38
limitation, any flammable explosives, radioactive materials, oil, hazardous
materials, hazardous or solid wastes, hazardous or toxic substances or regulated
materials defined in CERCLA, CWA, SDWA, RCRA, EPCRA, and CAA and/or any other
Environmental Laws, as amended, and in the regulations adopted and publications
promulgated thereto; provided, to the extent that the laws of the State of
Florida establish a meaning for, hazardous substance, hazardous waste, hazardous
materials, solid waste, or toxic substance, which is broader than that specified
in any of CERCLA, CWA, SDWA, RCRA, EPCRA, and CAA or other Environmental Laws
such broader meaning shall apply.
"Property" includes any property (whether real or personal) which the
entity to which it refers currently or in the past has leased, operated, owned,
or managed in any manner, including, without limitation, any property acquired
by foreclosure or deed in lieu thereof and property held as security for a loan
or other indebtedness by the Company and/or Company Sub, RRI and/or RRI
Subsidiary on the date hereof.
ARTICLE XII
-----------
AMENDMENTS
This Agreement may be amended only by written agreement duly authorized
by the boards of directors of the parties hereto prior to the Closing Date,
provided that any amendments that are not material to the transactions
contemplated by this Agreement may be approved by written agreement executed by
the presidents of the Company, Company Sub, RRI, and RRI Subsidiary,
respectively. After the meetings of shareholders of RRI, the shareholder of RRI
Subsidiary, and by the shareholders of the Company Sub (or votes taken by
written consent of the majority of the outstanding shares of RRI Stock, the
common stock of RRI Subsidiary, and Company Sub Stock, as applicable) wherein
this Agreement is considered and approved, no amendment hereto shall be made
that would change the exchange rate specified in Section 2.02 above for which
each share of RRI Stock and RRI Class A Preferred Stock shall be exchanged for
Company Stock immediately prior to the consummation of the Merger.
ARTICLE XIII
------------
TERMINATION
This Agreement shall terminate automatically if the Merger shall not
become effective on or before February 27, 2004, unless the parties hereto,
acting pursuant to the authority of their respective boards of directors, shall
have otherwise agreed in writing on or prior to that date to extend such date.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after action thereon has been taken by the shareholders of RRI
or the stockholder of Company Sub, as follows:
(a) By mutual consent of the Company, Company Sub, RRI and RRI
Subsidiary
39
acting pursuant to the authority of their respective boards of directors;
(b) By the Company and Company Sub, if any of the
representations and warranties of RRI and/or RRI Subsidiary contained in this
Agreement shall be false in any material respect as of the Closing Date, or RRI
and/or RRI Subsidiary shall, as of the Closing Date, have failed to comply with
any of its/their agreements or covenants contained in this Agreement to be
performed at or prior to the Closing Date, or any conditions to the obligations
of the Company and Company Sub contained in this Agreement shall not have been
satisfied or waived as of the Closing Date;
(c) By RRI and RRI Subsidiary, if any of the representations
and warranties of the Company and/or Company Sub contained in this Agreement
shall be false in any material respect as of the Closing Date, or the Company
and/or Company Sub shall, as of the Closing Date, have failed to comply with any
of its/their agreements or covenants contained in this Agreement to be performed
at or prior to the Closing Date, or if any of the conditions to the obligations
of RRI and RRI Subsidiary contained in this Agreement shall not have been
satisfied or waived as of the Closing Date; or
(d) By RRI and RRI Subsidiary on or prior to the Effective
Time, if its due diligence on the Company, Company Sub and the transactions
contemplated by the parties hereto is not to its satisfaction, in its sole
discretion and for any reason.
Should this Agreement be terminated for any reason, such termination
shall not prevent the respective boards of directors of the Company, Company
Sub, RRI and RRI Subsidiary from renegotiating the terms of this Agreement. An
election by a party to this Agreement to terminate this Agreement and abandon
the Merger as provided in Paragraphs (a) through (d) above shall be exercised on
behalf of the Company, Company Sub, RRI and RRI Subsidiary by its/their board of
directors and shall become effective when conveyed in writing and received by
the other party. In the event of a termination of this Agreement pursuant to
Paragraphs (a) through (d) above, this Agreement shall become void and shall
have no effect and create no liability on the part of any of the parties hereto
or their respective directors, officers, shareholders, employees or agents.
ARTICLE XIV
-----------
NOTICES
All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time either personally delivered or sent by registered or certified mail,
postage prepaid, or deposited with a nationally recognized overnight courier
service with written instructions given for next business day delivery or via
telecopier (in which case notice shall be deemed to have been duly given upon
the sender's receipt of a printed confirmation reflecting receipt by the
recipient) as follows:
40
If to the Company P.D.C. Innovative Industries, Inc.
or Company Sub: 0000 XX 000xx Xxxxxxx
Xxxxx Xxxxxxx, Xxxxxxx
Attention: Chief Executive Officer/President
Telecopier No. (000) 000-0000
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 XX Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxxx, Esq.
Telecopier No. (000) 000-0000
If to RRI: Xxxxx' Ribs International, Inc.
or RRI Subsidiary: 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxx, Xxxxxxx 00000
Attention: President
Telecopier No. (000) 000-0000
ARTICLE XV
----------
MISCELLANEOUS
15.01. Execution Via Telecopier and in Counterparts. This Agreement may
be executed via telecopier and in multiple counterparts, each of which shall be
deemed an original and all of which together shall constitute one agreement.
15.02. Entire Agreement; Severability. This Agreement and all other
instruments, documents and Agreements executed and delivered in connection with
this Agreement embody the final, entire Agreement among the parties hereto and
supersede any and all prior commitments, agreements, representations and
understandings, whether written or oral, relating to this Agreement, and may not
be contradicted or varied by evidence of prior, contemporaneous or subsequent
oral agreements or discussions of the parties hereto. There are no oral
agreements among the parties hereto. If any part of this Agreement is deemed to
be unenforceable by a court of competent jurisdiction, the balance of the
Agreement shall remain in full force and effect.
15.03. Applicable Law; Jurisdiction; Venue. This Agreement shall be
governed by, and construed solely in accordance with, the laws of the State of
Nevada, except to the extent that the Florida Business Corporation Act applies.
Jurisdiction and venue for any action and/or proceeding brought hereunder shall
be solely in the state or federal courts located in Broward County, Florida. The
prevailing party/parties in any such action and/or proceeding shall be entitled
to recover its reasonable attorneys' fees and costs from the other
party/parties.
41
15.04. Binding Nature of Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; the parties hereby may not assign or transfer rights or
obligations under this Agreement without the prior written consent of the other
parties hereto.
15.05. Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires.
15.06. Section Headings. The section headings in this Agreement are for
convenience only and form no part of this Agreement and shall not affect its
interpretation.
15.07. Omissions or Delays. No omission or delay by the Company,
Company Sub, RRI, or RRI Subsidiary in exercising any right or power under this
Agreement shall impair such right or power or be construed to be a waiver of any
default or acquiescence therein, and any single or partial exercise of any such
right or power will not preclude other or further exercise of any right. No
waiver will be valid unless in writing and signed by the party to be bound
thereby, and then only to the extent specified.
15.08. Survivability of Representations and Warranties. The respective
representations and warranties of the parties hereto contained in this Agreement
shall survive the consummation of the Merger.
15.09. Rule of Construction That Ambiguities to be Construed Against
Drafter Not Appli- cable. As all parties to this Agreement have had an
opportunity to review this Agreement and the transactions contemplated hereby
with their respective counsel, the rule of construction that ambiguities shall
be construed against the drafter shall not be applicable.
IN WITNESS WHEREOF, the duly authorized officers of the parties hereto
have caused this Agreement to be executed as of the date first written above.
P.D.C. INNOVATIVE INDUSTRIES, INC.
By:/s/ Xxxxxxx Xxxxx
-------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
STATE OF FLORIDA )
)ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 13th day of
February 2004 by Xxxxxxx Xxxxx, as Chief Executive Officer of P.D.C. Innovative
Industries, Inc., a Nevada
42
corporation, on behalf of such corporation, who is personally known to me or has
produced ____________________________ as identification and did/did not take an
oath.
Notary Public:
sign /s/ Xxxxxx Xxxxxxx
--------------------------------
print________________________________
State of Florida at Large (Seal)
My Commission Expires:
PDC ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx, President
STATE OF FLORIDA )
)ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 13th day of
February 2004 by Xxxxxxx Xxxxx, as President of PDC Acquisition Corp., a Florida
corporation, on behalf of such corporation, who is personally known to me or has
produced ____________________________ as identification and did/did not take an
oath.
Notary Public:
sign: /s/ Xxxxxx Xxxxxxx
--------------------------------
print_________________________________
State of Florida at Large (Seal)
My Commission Expires:
XXXXX' RIBS, INC.
By: /s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx, President
43
STATE OF FLORIDA )
)ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 13th day of
February 2004 by Xxxx Xxxxx, as President of Xxxxx' Ribs, Inc., a Florida
corporation, on behalf of such corporation who is personally known to me or has
produced ____________________________ as identification and did/did not take an
oath.
Notary Public:
sign /s/ Xxxxxx Xxxxxxx
--------------------------------
print________________________________
State of Florida at Large (Seal)
My Commission Expires:
XXXXX' RIBS FRANCHISE CORP.
By: /s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx, President
STATE OF FLORIDA )
)ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me on this 13th day of
February 2004 by Xxxx Xxxxx, as President of Xxxxx' Ribs Franchise Corp., a
Florida corporation, on behalf of such corporation who is personally known to me
or has produced ____________________________ as identification and did/did not
take an oath.
Notary Public:
sign /s/ Xxxxxx Xxxxxxx
--------------------------------
print________________________________
State of Florida at Large (Seal)
My Commission Expires:
44
