EXHIBIT 10.1
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of OCTOBER 18,
2006, by and among GS AGRIFUELS CORPORATION, a Delaware corporation (the
"Company"), GS ACQUISITION, INC. ("Acquisition") and GS ENERGY CORPORATION, a
Delaware corporation ("GSEG").
RECITALS
WHEREAS, Acquisition is a wholly-owned subsidiary of the Company which has been
recently formed for the purpose of facilitation a merger with GSEG, and
Acquisition has not engaged in any business activities and has no assets or
liabilities; and
WHEREAS, the Company and GSEG desire to merge Acquisition with and into GSEG
whereby GSEG shall be the surviving entity pursuant to the terms and conditions
set forth herein and whereby the transaction is intended to qualify as a tax
free reorganization pursuant to Section 368(a) of the Internal Revenue Code of
1986, as amended (the "IRC"), to the extent permitted by applicable law; and
WHEREAS, in furtherance of such combination, the Boards of Directors of the
Company, Acquisition and GSEG have each approved the merger of Acquisition with
and into GSEG (the "Merger"), upon the terms and subject to the conditions set
forth herein, in accordance with the applicable provisions of the Delaware
General Corporation Law (the "DGCL").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined) and subject to
and upon the terms and conditions of this Agreement and the DGCL,
Acquisition shall be merged with and into GSEG. Following the Merger, GSEG
shall continue as the surviving corporation (the "Surviving Corporation")
and the separate corporate existence of Acquisition shall cease. As part of
the Merger and as more fully described in Section 2.1, (i) the issued and
outstanding shares of the GSEG Common Stock and GSEG Preferred Stock shall
be exchanged for Company Common Stock and Company Preferred Stock at the
relevant Common and Preferred Exchange Ratios (as defined below) and (ii)
each share of Acquisition's issued and outstanding shares of common stock,
par value $0.001 per share (the "Acquisition Capital Stock"), shall be
converted into one validly issued, fully paid and non-assessable share of
common stock, par value $0.001 per share, of the Surviving Corporation (the
"Surviving Corporation Capital Stock").
1.2 Effective Time. The Merger shall be consummated as promptly as practicable
after satisfaction of all conditions to the Merger set forth herein, by
filing with the Secretary of State of the State of Delaware of a
certificate of merger or similar document (the "Certificate of Merger"),
and all other appropriate documents, executed in accordance with the
relevant provisions of the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of the State of the
State of Delaware. The time of such filing shall be referred to herein as
the "Effective Time."
1.3 Effects of the Merger. At the Effective Time, all the rights, privileges,
immunities, powers and franchises of Acquisition and GSEG and all property,
real, personal and mixed, and every other interest of, or belonging to or
due to each of Acquisition and GSEG shall vest in the Surviving
Corporation, and all debts, liabilities, obligations and duties of
Acquisition and GSEG shall become the debts, liabilities, obligations and
duties of the Surviving Corporation without further act or deed, all in the
manner and to the full extent provided by the DGCL. Whenever a conveyance,
assignment, transfer, deed or other instrument or act is necessary to vest
any property or right in the Surviving Corporation, the directors and
officers of the respective constituent corporations shall execute,
acknowledge and deliver such instruments and perform such acts, for which
purpose the separate existence of the constituent corporations and the
authority of their respective directors and officers shall continue,
notwithstanding the Merger.
1.4 Certificate of Incorporation. The Certificate of Incorporation of GSEG, as
in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation and thereafter may be amended
or repealed in accordance with its terms and applicable law.
1.5 By-Laws. At the Effective Time and without any further action on the part
of the Surviving Corporation, the By-laws of GSEG shall be the By-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the
Surviving Corporation and as provided by law.
1.6 Directors. The directors of GSEG at the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
1.7 Officers. The officers of GSEG at the Effective Time shall be the officers
of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly appointed and
qualified, as the case may be.
1.8 Tax-Free Reorganization. The parties intend that the Merger shall be
treated as a tax-free reorganization pursuant to Section 368(a) of the IRC,
to the extent permitted by applicable law.
ARTICLE II
CONVERSION OF GSEG SHARES
2.1 Conversion and Cancellation of GSEG Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
Company, Acquisition or GSEG or the holders of any shares of the capital
stock of GSEG:
(a) GSEG Common Stock. Subject to the provisions of Sections 2.2 and 2.3,
each share of GSEG common stock (the "GSEG Common Stock Shares")
issued and outstanding immediately prior to the Effective Time (other
than shares canceled in accordance with Section 2.1(c)) shall be
converted on a 1,000 to 1 basis, or into 0.001 (the "Common Stock
Exchange Ratio") of a validly issued, fully paid and nonassessable
share of Company Common Stock (the "Company Common Stock Shares"). As
of the Effective Time, each GSEG Common Stock Share shall no longer be
outstanding and shall automatically be canceled and cease to exist,
and each holder of a certificate representing any GSEG Common Stock
Share shall cease to have any rights with respect thereto other than
the right to receive Company Common Stock Shares to be issued in
exchange therefor upon the surrender of such certificate, properly
endorsed to the Company.
(b) GSEG Preferred Stock. Subject to the provisions of Sections 2.2 and
2.3, each share of GSEG preferred stock (the "GSEG Preferred Stock
Shares") issued and outstanding immediately prior to the Effective
Time (other than shares canceled in accordance with Section 2.1(c))
shall be converted on a 1 to 1 basis, or into 1 (the "Preferred Stock
Exchange Ratio") validly issued, fully paid and nonassessable share of
Company Preferred Stock (the "Company Preferred Stock Shares") having
the same rights and privileges with respect to the Surviving
Corporation as the GSEG Preferred Stock Shares have with respect to
GSEG. As of the Effective Time, each GSEG Preferred Stock Share shall
no longer be outstanding and shall automatically be canceled and cease
to exist, and each holder of a certificate representing any GSEG
Preferred Stock Share shall cease to have any rights with respect
thereto other than the right to receive Company Preferred Stock Shares
to be issued in consideration therefor upon the surrender of such
certificate, properly endorsed to the Company.
(c) Each share of GSEG Capital Stock held in the treasury of the GSEG
shall be canceled without any conversion thereof and no payment,
distribution or other consideration shall be made with respect
thereto.
2.2 Adjustment of the Exchange Ratio. In the event that, prior to the Effective
Time, any stock split, combination, reclassification or stock dividend with
respect to the Company Common Stock or GSEG Common Stock, any change or
conversion of Company Common Stock or GSEG Common Stock or into other
securities or any other dividend or distribution with respect to the
Company Common Stock or GSEG Common Stock should occur or, if a record date
with respect to any of the foregoing should occur, appropriate and
proportionate adjustments shall be made to the Exchange Ratio, and
thereafter all references to an Exchange Ratio shall be deemed to be to
such Exchange Ratio as so adjusted.
2.3 No Fractional Shares. No certificates or scrip representing fractional
shares of Company Common Stock shall be issued upon the surrender for
exchange of certificates and such fractional share shall not entitle the
record or beneficial owner thereof to vote or to any other rights as a
stockholder of the Company. Any fractional shares held by a shareholder of
GSEG as a result of the Merger shall be rounded up to one full Company
Common Stock Share.
2.4 Further Assurances. If at any time after the Effective Time the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties
or assets of GSEG or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors
or their designees shall be authorized (to the fullest extent allowed under
applicable law) to execute and deliver, in the name and on behalf of GSEG,
all such deeds, bills of sale, assignments and assurances and do, in the
name and on behalf of GSEG, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of GSEG, as applicable, and otherwise to carry out the
purposes of this Agreement.
ARTICLE III
CLOSING
Subject to satisfaction of the conditions to closing set forth in this Agreement
and unless this Agreement is otherwise terminated in accordance with the
provisions contained herein, the closing of the Merger and the Contemplated
Transactions (the "Closing") shall take place at the offices of the Company, at
Xxx Xxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx as promptly as practicable after
satisfaction of the conditions set forth in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. Except as disclosed in the
Reports (as defined below) or in a document of even date herewith referring
to the representations and warranties in this Agreement and delivered by
Company to GSEG prior to the execution and delivery of this Agreement (the
"Company Disclosure Schedule"), the Company hereby make the following
representations and warranties to GSEG, all of which shall survive the
Closing:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to conduct
its business as it is now being conducted, to own or use the
properties and assets that it owns or uses, and to perform all its
obligations under this Agreement. Company has no subsidiaries other
than as set forth on the Company Disclosure Schedule (individually, a
"Subsidiary" and collectively, the "Subsidiaries"). The Company is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for such failures
to be so qualified or in good standing that would not have a Material
Adverse Effect.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection herewith
by Company constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability is limited
by bankruptcy, insolvency and other laws affecting the rights of
creditors and by general equitable principles. The Company has
the absolute and unrestricted right, power, authority and
capacity to execute and deliver this Agreement and any agreement
executed by it in connection herewith and to perform its
obligations hereunder and thereunder.
ii. Neither the execution and delivery of this Agreement by the
Company, nor the consummation or performance by it of any of its
obligations contained in this Agreement or in connection with the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
a. contravene, conflict with or result in a violation of (x)
any provision of the Organizational Documents of the
Company, or (y) any resolution adopted by the board of
directors or the stockholders of the Company, as the case
may be;
b. contravene, conflict with or result in a material violation
of, or give any governmental body or other Person the right
to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company or any of the
assets owned or used by the Company may be subject;
c. contravene, conflict with or result in a violation or breach
of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or
modify, this Agreement, or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material
assets owned or used by the Company;
e. cause the Company to become subject to, or to become liable
for the payment of, any tax; or
f. cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other
governmental body.
(c) Capitalization. The capitalization of the Company as of June 30, 2006
is as set forth in the Form 10-QSB for the period ended June 30, 2006,
and increased as set forth in the next sentence. The Company has not
issued any capital stock since that date other than pursuant to (i)
employee benefit plans disclosed in the Reports (as defined in Section
4.1(d)) or (ii) outstanding warrants, options or other securities
disclosed in the Reports, except as set forth on Company Disclosure
Schedule, or (iii) pursuant to a compensation agreement. All of the
issued and outstanding shares of the Company Capital Stock have been
duly authorized and validly issued and are fully paid and
non-assessable. None of the outstanding Company Capital Stock was
issued in violation of the Securities Act or any other legal
requirement.
(d) Financial Statements. The Company has delivered or made available to
GSEG copies of its Form 10-KSB Annual Report for the fiscal year ended
December 31, 2005 and copies of its quarterly reports on Form 10-QSB
for the quarters ended March 31, 2006 and June 30, 2006, each as filed
with the SEC and including, in each case, any amendments thereto
(collectively, the "Reports"). The financial statements contained are
in all material respects in accordance with the books and records of
the Company and have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated, all as more
particularly set forth in the notes to such statements. The
consolidated balance sheets contained in such Reports (the "Company
Balance Sheets") present fairly in all material respects as of their
dates the consolidated financial condition of the Company and its
subsidiaries. Except as and to the extent reflected or reserved
against in the Company Balance Sheets (including the notes thereto),
the Company did not have, as of the date of any such Company Balance
Sheet, any material liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance sheet or
the notes thereto. The consolidated statements of operations,
consolidated statements of stockholders' equity and changes in
consolidated statements of cash flows present fairly in all material
respects the results of operations and changes in financial position
of the Company and its subsidiaries for the periods indicated.
(e) SEC Filings. The Company has filed all reports required to be filed
with the SEC under the rules and regulations of the SEC and all such
reports have complied in all material respects, as of their respective
filing dates and effective dates, as the case may be, with all the
applicable requirements of the Securities Exchange Act of 1934, as
amended. As of the respective filing and effective dates, none of such
reports (including without limitation, the Reports) contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(f) Absence of Material Adverse Change. Since the date of the latest
Company Balance Sheets, there have been no events, changes or
occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
(g) Issuance of Company Securities. The Company Common Stock Shares, when
issued in accordance with this Agreement, shall be duly authorized,
validly issued, fully-paid and nonassessable. Except as set forth in
the Reports, there is no equity line of credit or convertible security
or instrument outstanding of the Company.
(h) Undisclosed Liabilities. Except as disclosed in any Schedule to this
Agreement, the Company has no material obligations and liabilities
(contingent or otherwise) except those liabilities (i) that are
reflected in the Company Balance Sheets or in the notes thereto, or
disclosed in the notes therein in accordance with GAAP or, in
accordance with GAAP, are not required to be so reflected or
disclosed, or (ii) that were incurred after the date of the Company
Balance Sheets in the Ordinary Course of Business, none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law or could reasonably be expected to
have a Material Adverse Effect.
(i) Taxes.
i. The Company has filed or caused to be filed on a timely basis all
tax returns that are or were required to be filed by it pursuant
to applicable Legal Requirements. The Company has paid, or made
provision for the payment of, all taxes that have or may have
become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by the Company, except such
taxes, if any, as are listed in the Company Disclosure Schedule
and are being contested in good faith as to which adequate
reserves have been provided in the Company Balance Sheets.
ii. All tax returns filed by the Company are true, correct and
complete in all material respects.
(j) Employee Benefits. Except as disclosed in the Reports, the Company
does not sponsor or otherwise maintain a "pension plan" within the
meaning of Section 3(2) of ERISA or any other retirement plan other
than the Company Profit Sharing and 401(k) Plan and Trust that is
intended to qualify under Section 401 of the Code, nor do any unfunded
liabilities exist with respect to any employee benefit plan, past or
present. No employee benefit plan, any trust created thereunder or any
trustee or administrator thereof has engaged in a "prohibited
transaction," as defined in Section 4975 of the Code, which may have a
Material Adverse Effect.
(k) Governmental Authorizations. The Company has all permits that are
legally required to enable them to conduct their business in all
material respects as now conducted.
(l) Legal Proceedings; Orders.
i. Except as set forth in the Reports, there is no material pending
Proceeding:
a. that has been commenced by or against the Company or any of
the assets owned or used by the Company; or
b. that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in the Reports:
a. there is no material Order to which the Company or any of
the assets owned or used by the Company is subject; and
b. no officer, director, agent, or employee of the Company is
subject to any material Order that prohibits such offer,
director, agent or employee from engaging in or continuing
any conduct, activity or practice relating to the business
of the Company.
(m) Absence of Certain Changes and Events. Except as set forth in the
Reports, since the date of the most recent Company Balance Sheets,
except as heretofore set forth, the Company, since the date of its
inception, has conducted its business only in the Ordinary Course of
Business, and other than as contemplated by this Agreement or the
Contemplated Transactions there has not been any:
i. damage to or destruction or loss of any material asset or
property of the Company, whether or not covered by insurance,
causing a Material Adverse Effect;
ii. receipt of notice that any of its substantial customers have
terminated or intends to terminate their relationship, which
termination would have a Material Adverse Effect;
iii. sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property
of the Company or mortgage, pledge, or imposition of any lien or
other encumbrance on any material asset or property of the
Company;
iv. cancellation or waiver of any claims or rights with a value to
the Company in excess of $10,000;
v. material change in the accounting methods used by the Company; or
vi. agreement, whether oral or written, by the Company to do any of
the foregoing.
(n) No Default or Violation. The Company (i) is in material compliance
with all applicable material terms and requirements of each material
contract under which they have or had any obligation or liability or
by which it or any of the assets owned or used by it is or was bound
and (ii) is not in material violation of any Legal Requirement.
(o) Certain Payments. Since the most recent date of the Company Balance
Sheets, neither the Company, nor any director, officer, agent or
employee of the Company has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback
or other payment to any Person, private or public, regardless of form,
whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the Company
or (iv) in violation of any Legal Requirement, or (b) established or
maintained any fund or asset that has not been recorded in the books
and records of the Company.
(p) Brokers or Finders. The Company has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other similar payment in connection with this
Agreement.
4.2 Representations and Warranties of GSEG. GSEG hereby makes the following
representations and warranties to the Company, all of which shall survive
the Closing:
(a) Organization, Good Standing and Purpose. GSEG is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to conduct its
businesses as it is now being conducted, to own or use the properties
and assets that it owns or uses, and to perform all of its obligations
under this Agreement. GSEG is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which
either the ownership or use of the properties owned or used by it, or
the nature of the activities conducted by it, requires such
qualification, except for such failures to be so qualified or in good
standing would not have a Material Adverse Effect.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection herewith
have been duly authorized by all required action of GSEG and
constitute the legal, valid and binding obligations of GSEG,
enforceable against GSEG in accordance with their respective
terms. GSEG has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and any
agreements executed in connection herewith and to perform its
obligations hereunder and thereunder.
ii Neither the execution and delivery of this Agreement by GSEG, nor
the consummation or performance by it of any of its obligations
contained in this Agreement or in connection with the
Contemplated Transactions by the Company will, directly or
indirectly (with or without notice or lapse of time):
a. contravene, conflict with or result in a violation of (x)
any provision of the Organizational Documents of GSEG or (y)
any resolution adopted by the board of directors or the
stockholders of GSEG;
b. contravene, conflict with or result in a violation of, or
give any governmental body or other Person the right to
challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which GSEG or any of the assets
owned or used by GSEG may be subject;
c. contravene, conflict with or result in a violation or breach
of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or
modify, this Agreement, the Purchase Agreement or any
Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material
assets owned or used by GSEG;
e. cause GSEG to become subject to, or to become liable for the
payment of, any tax; or
f. cause any of the assets owned by GSEG to be reassessed or
revalued by any taxing authority or other governmental body.
iii. GSEG is not required to obtain any consent from any Person in
connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated
Transactions, other than the requisite approval of its
shareholders.
(c) Capitalization. The entire authorized GSEG Capital Stock consists of
5,000,000,000 shares GSEG Common Stock, of which 2,527,163,844 shares
are issued and outstanding, and 10,000,000 shares of GSEG Preferred
Stock, of which 2,150,000 shares are issued and outstanding. With the
exception of the GSEG Common Stock Shares and GSEG Preferred Stock
Shares, there are no other outstanding equity or debt securities of
the Company. No legend or other reference to any purported encumbrance
appears upon any certificate representing the GSEG Capital Stock
Shares, other than applicable Securities Act legends. The GSEG Capital
Stock Shares have been duly authorized and validly issued and are
fully paid and non-assessable. Except as provided for in Schedule
4.2(c), there are no outstanding options, voting agreements or
arrangements, warrants, script, rights to subscribe to, registration
rights, calls or commitments of any character whatsoever relating to,
or, securities, rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire, any
shares of GSEG Capital Stock or other securities, or contracts,
commitments, understandings, or arrangements by which GSEG is or may
become bound to issue additional shares of GSEG Capital Stock or other
securities, or securities or rights convertible or exchangeable into
shares of GSEG Capital Stock or other securities. Except as set forth
in this Section 4.2(c), GSEG has no outstanding equity, debt, debt or
equity equivalent security, or debt or equity lines of credit. None of
the outstanding GSEG Capital Stock Shares were issued in violation of
the Securities Act or any other legal requirement. GSEG does not own,
and has no contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership
interest in any other business.
(d) Financial Statements. GSEG has delivered or made available to the
Company copies of its Form 10-KSB Annual Report for the fiscal year
ended December 31, 2005 and copies of its quarterly reports on Form
10-QSB for the quarters ended March 31, 2006 and June 30, 2006, each
as filed with the SEC and including, in each case, any amendments
thereto (collectively, the "GSEG Reports"). The financial statements
contained are in all material respects in accordance with the books
and records of the Company and have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated,
all as more particularly set forth in the notes to such statements.
The consolidated balance sheets contained in such GSEG Reports (the
"GSEG Balance Sheets") present fairly in all material respects as of
their dates the consolidated financial condition of GSEG and its
subsidiaries. Except as and to the extent reflected or reserved
against in the GSEG Balance Sheets (including the notes thereto), GSEG
did not have, as of the date of any such GSEG Balance Sheet, any
material liabilities or obligations (absolute or contingent) of a
nature customarily reflected in a balance sheet or the notes thereto.
The consolidated statements of operations, consolidated statements of
stockholders' equity and changes in consolidated statements of cash
flows present fairly in all material respects the results of
operations and changes in financial position of GSEG and its
subsidiaries for the periods indicated.
(e) Absence of Material Adverse Change. Since the date of the most recent
GSEG Balance Sheet provided under Section 4.2(d) hereof, there have
been no events, changes or occurrences which have had or are
reasonably likely to have, individually or in the aggregate, a
material adverse effect on GSEG.
(f) Books and Records. The books of account, minute books, stock record
books, and other records of GSEG, all of which have been made
available to the Company and original copies of which will be
delivered to the Company at the Closing, are complete and correct and
have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls.
The minute books of GSEG contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the
Board of Directors, and any committees of the Board of Directors of
GSEG.
(g) Title to Properties; Encumbrances. GSEG has good and marketable title
to all the properties, interest in such properties and assets, real
and personal, reflected in the GSEG Balance Sheet or acquired after
the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances except (i) mortgages and other
encumbrances referred to in the notes to the GSEG Balance Sheet.
(h) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.2(h) hereto, there is no
pending Proceeding:
a. that has been commenced or threatened by or against GSEG or
any of its officers, directors, agents or employees as such
or that otherwise relates to or may affect the business of,
or any of the assets owned or used by, GSEG; or
b. that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in Schedule 4.2(h) hereto:
a. there is no Order to which GSEG, or any of the assets owned
or used by GSEG, is subject; and
b. no officer, director, agent, or employee of GSEG is subject
to any Order that prohibits such offer, director, agent or
employee from engaging in or continuing any conduct,
activity or practice relating to the business of GSEG.
(i) Brokers or Finders. GSEG has incurred no liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or
other similar payment in connection with this Agreement.
(j) Taxes.
i. GSEG has filed or caused to be filed on a timely basis all tax
returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. GSEG has paid, or made provision
for the payment of, all taxes that have or may have become due
pursuant to those tax returns or otherwise, or pursuant to any
assessment received by GSEG, except such taxes, if any, as are
listed in Schedule 4.2(j) hereto and are being contested in good
faith as to which adequate reserves have been provided in the
GSEG Balance Sheets.
ii. All tax returns filed by GSEG are true, correct and complete in
all material respects and no taxes are currently owed or tax
returns due by or on behalf of GSEG.
(k) Absence of Certain Changes and Events. Except as set forth in Schedule
4.2(k) hereto, since the date of the GSEG Balance Sheet, GSEG has
conducted its business only in the Ordinary Course of Business, there
has not been any material adverse effect on GSEG's business or
operations, and there has not been any:
i. damage to or destruction or loss of any material asset or
property of the Company, whether or not covered by insurance,
causing a Material Adverse Effect;
ii. receipt of notice that any of their substantial customers have
terminated or intends to terminate their relationship, which
termination would have a Material Adverse Effect;
iii. sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property
of the Company or mortgage, pledge, or imposition of any lien or
other encumbrance on any material asset or property of the
Company;
iv. cancellation or waiver of any claims or rights with a value to
the Company in excess of $10,000;
v. material change in the accounting methods used by the Company; or
vi. agreement, whether oral or written, by the Company to do any of
the foregoing.
(l) Compliance with Law. Except as set forth in Schedule 4.2(l) hereto:
i. GSEG has complied in all material respects with, and is not in
violation of, in any material respect, any Law to which it or its
business is subject; and
ii. GSEG has obtained all licenses, permits, certificates or other
governmental authorizations (collectively "Authorizations")
necessary for the ownership or use of its assets and properties
or the conduct of its business; and
iii GSEG has not received written notice of violation of, or knows of
any material violation of, any Laws to which it or its business
is subject or any Authorization necessary for the ownership or
use of its assets and properties or the conduct of its business.
(m) Environmental Laws. GSEG has not received any notice or claim (and is
not aware of any facts that would form a reasonable basis for any
claim), or entered into any negotiations or agreements with any other
Person, and, to the best knowledge of GSEG, GSEG is not the subject of
any investigation by any governmental or regulatory authority,
domestic or foreign, relating to any material or potentially material
liability or remedial action under any Environmental Laws. There are
no pending or, to the knowledge of GSEG, threatened, actions, suits or
proceedings against GSEG or any of its properties, assets or
operations asserting any such material liability or seeking any
material remedial action in connection with any Environmental Laws.
(n) Intellectual Property.
(i) GSEG owns, or is validly licensed or otherwise has the right to
use, all patents, and patent rights ("Patents") and all
trademarks, trade secrets, trademark rights, trade names, trade
name rights, service marks, service xxxx rights, copyrights and
other proprietary intellectual property rights and computer
programs (the "Intellectual Property Rights"), in each case,
which are material to the conduct of the business of GSEG.
(ii) To the best knowledge of GSEG, GSEG has not interfered with,
infringed upon (without license to infringe), misappropriated or
otherwise come into conflict with any Patent of any other Person.
GSEG has not interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property
Rights of any other Person. GSEG has not received any written
charge, complaint, claim, demand or notice alleging any such
interference, infringement, is appropriation or violation
(including any claim that GSEG must license or refrain from using
any Patents or Intellectual Property Rights of any other Person)
which has not been settled or otherwise fully resolved. To the
best knowledge of GSEG, no other Person has interfered with,
infringed upon (without license to infringe), misappropriated or
otherwise come into conflict with any Patents or Intellectual
Property Rights of GSEG.
(o) Employee Benefit Plans. There are no "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA) maintained, or contributed to,
by GSEG for the benefit of any current or any former employees,
officers or directors of GSEG.
ARTICLE V
COVENANTS
5.1 Covenants of the Company.
(a) Conduct of Business. Between the date hereof and up to and including
the Closing Date, the Company shall conduct its business only in the
Ordinary Course of Business.
(b) Further Assurances. Prior to the Closing Date, with the cooperation of
GSEG where appropriate, each of the Company shall use commercially
reasonable efforts to:
i. promptly comply with all filing requirements which federal, state
or local law may impose on the Company, as the case may be, with
respect to the Contemplated Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing and
obtain any consent, authorization or approval of or exemption by
any governmental authority, regulatory agency or any other third
party (including without limitation, any landlord or lessor of
the Company and any party to whom notification is required to be
delivered or from whom any form of consent is required) which is
required to be filed or obtained by the Company or Acquisition in
connection with the Contemplated Transactions by this Agreement.
5.2 Covenants of GSEG.
(a) Conduct of Business. Between the date hereof and up to and including
the Closing Date, GSEG shall conduct its business only in the Ordinary
Course of Business.
(b) Further Assurances. Prior to the Closing Date, with the cooperation of
the Company where appropriate, GSEG shall:
i. promptly comply with all filing requirements which federal, state
or local law may impose on GSEG with respect to the Contemplated
Transactions by this Agreement and cooperate with the Company
regarding the same; and
ii. take all actions necessary to be taken, make any filing and
obtain any consent, authorization or approval of or exemption by
any governmental authority, regulatory agency or any other third
party (including without limitation, any landlord or lessor of
GSEG and any party to whom notification is required to be
delivered or from whom any form of consent is required) which is
required to be filed or obtained by GSEG in connection with the
Contemplated Transactions by this Agreement.
(c) Actions by GSEG. GSEG shall take no action or enter into any
agreements or arrangements outside the Ordinary Course of Business
except as may be required by this Agreement.
(d) Access to Additional Agreements and Information. Prior to the Closing
Date, GSEG shall make available to the Company any and all agreements,
contracts, documents, other instruments and personnel material of
GSEG's business, including without limitation, those contracts to
which GSEG is a party and those by which its business or any of GSEG's
assets are bound.
(e) Further Assurances. Prior to the Closing Date, with the cooperation of
the Company where appropriate, GSEG shall use commercially reasonable
efforts to:
i. promptly comply with all filing requirements which federal, state
or local law may impose on GSEG with respect to the Contemplated
Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing and
obtain any consent, authorization or approval of or exemption by
any governmental authority, regulatory agency or any other third
party (including without limitation, any landlord or lessor of
GSEG and any party to whom notification is required to be
delivered or from whom any form of consent is required) which is
required to be filed or obtained by GSEG in connection with the
Contemplated Transactions by this Agreement.
5.3 Governmental Filings and Consents. The Company, Acquisition and GSEG shall
cooperate with one another in filing any necessary applications, reports or
other documents with any federal or state agencies, authorities or bodies
having jurisdiction with respect to the business of the Company,
Acquisition or GSEG and in seeking any necessary approval, consultation or
prompt favorable action of, with or by any of such agencies, authorities or
bodies.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of GSEG. The obligation of GSEG to consummate the
Contemplated Transactions is subject to the fulfillment of each of the
following conditions, any of which may be waived by GSEG in its sole
discretion:
(a) Shareholder Approval. The shareholders of GSEG shall have given
approval to the Contemplated Transactions pursuant to Section 228 of
the DGCL, and an information statement pursuant to SEC Schedule 14C
shall have been filed with the SEC and mailed to the shareholders of
GSEG, and twenty days shall have passed since the mailing date,
(b) Copies of Resolutions. At the Closing (i) the Company shall have
furnished GSEG with a certificate of its CEO or President, as the case
may be, in the form of Exhibit 6.1(b-1) annexed hereto, certifying
that attached thereto are copies of resolutions duly adopted by the
board of directors of the Company authorizing the execution, delivery
and performance of this Agreement and all other necessary or proper
corporate action to enable the Company to comply with the terms of
this Agreement and (ii) Acquisition shall have furnished GSEG with a
certificate of its CEO or President, as the case may be, in the form
of Exhibit 6.1(b-2) annexed hereto, certifying that attached thereto
are copies of resolutions duly adopted by the board of directors of
Acquisition authorizing the execution, delivery and performance of
this Agreement and all other necessary or proper corporate action to
enable Acquisition to comply with the terms of this Agreement.
(c) Opinion of Company's Counsel. The Company shall have furnished to
GSEG, at the Closing, an opinion of its legal counsel, dated as of the
Closing Date, substantially in the form of Exhibit 6.1(b) annexed
hereto.
(d) Accuracy of Representations and Warranties; Performance of Covenants.
Each of the representations and warranties of the Company and
Acquisition set forth in this Agreement was true, correct and complete
in all material respects when made (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true, correct and complete in all material
respects as of such date) and shall also be true, correct and complete
in all material respects at and as of the Closing Date (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true, correct and complete in
all material respects as of such date), with the same force and effect
as if made at and as of the Closing Date. The Company shall have
performed and complied in all material respects with all agreements
and covenants required by this Agreement to be performed by the
Company and Acquisition at or prior to the Closing Date.
(e) Delivery of Certificate. (A) The Company shall have delivered to GSEG
a certificate, in the form of Exhibit 6.1(e-1) annexed hereto, dated
the Closing Date, and signed by the CEO or President of the Company
affirming that the representations and warranties as set forth in
Section 4.1 were and are true, correct and complete as required by
Section 6.1(d) and (B) Acquisition shall have delivered to GSEG a
certificate, in the form of Exhibit 6.1(e-2) annexed hereto, dated the
Closing Date, and signed by the CEO or President of Acquisition
affirming that the representations and warranties as set forth in
Section 4.1 were and are true, correct and complete as required by
Section 6.1(d).
(f) Consents and Waivers. At the Closing, any and all necessary consents,
authorizations, orders or approvals shall have been obtained.
(g) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to the Company issued by a court or
governmental agency (or other governmental or regulatory authority) of
competent jurisdiction restraining or prohibiting the consummation of
the Contemplated Transactions or making consummation thereof unduly
burdensome to GSEG. On the Closing Date and immediately prior to
consummation of the Contemplated Transactions, no proceeding or
lawsuit shall have been commenced, be pending or have been threatened
by any governmental or regulatory agency or authority or any other
Person restraining or prohibiting the consummation of the Contemplated
Transactions.
(h) Delivery of Documents and Other Information. Prior to the Closing
Date, the Company and Acquisition shall have made available or
delivered to GSEG all of the agreements, contracts, documents and
other instruments requested by GSEG.
6.2 Conditions to Obligations of the Company and Acquisition. The obligations
of the Company and Acquisition to consummate the Contemplated Transactions
are subject to the fulfillment of each of the following conditions, any of
which may be waived by the Company and Acquisition, in their sole
discretion:
(a) Copies of Resolutions. At the Closing, GSEG shall have furnished the
Company with a certificate of its President, in the form of Exhibit
6.2(a) annexed hereto, certifying that attached thereto are (i) copies
of resolutions duly adopted by the board of directors of GSEG
authorizing the execution, delivery and performance of the terms of
this Agreement and all other necessary or proper corporate action to
enable GSEG to comply with the terms of this Agreement and (b) a copy
of the resolution duly adopted by the shareholders of GSEG approving
the Contemplated Transactions.
(b) Opinion of GSEG's Counsel. GSEG shall have furnished to the Company,
at the Closing, with an opinion of counsel to GSEG, dated as of the
Closing Date, substantially in the form of Exhibit 6.2(b) annexed
hereto.
(c) Accuracy of Representations and Warranties; Performance of Covenants.
Each of the representations and warranties of GSEG was true, correct
and complete in all material respects when made (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true, correct and complete in
all material respects as of such date) and shall also be true, correct
and complete in all material respects at and as of the Closing Date
(except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true, correct and
complete in all material respects as of such date), with the same
force and effect as if made at and as of the Closing Date. GSEG shall
have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be performed by
GSEG at or prior to the Closing Date.
(d) Delivery of Certificate. GSEG shall have delivered to the Company a
certificate, in the form of Exhibit 6.2(d) annexed hereto, dated the
Closing Date and signed by the CEO or President of GSEG, affirming
that the representations and warranties of GSEG as set forth in
Section 4.2 were and are true, correct and complete and GSEG's
agreements and covenants have been performed as required by Section
6.2(c).
(e) Consents and Waivers. On or prior to the Closing Date, any and all
necessary consents, authorizations, orders or approvals shall have
been obtained, except as the same shall have been waived by the
Company.
(f) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to GSEG issued by a court or governmental
agency (or other governmental or regulatory authority) of competent
jurisdiction restraining or prohibiting the consummation of the
Contemplated Transactions or making the consummation thereof unduly
burdensome to the Company or GSEG. On the Closing Date, no proceeding
or lawsuit shall have been commenced, threatened or be pending or by
any governmental or regulatory agency or authority or any other person
with respect to the Contemplated Transactions.
(g) Delivery of Documents and Other Information. Prior to the Closing
Date, GSEG shall have made available or delivered to the Company all
of the agreements, contracts, documents and other instruments required
to be delivered pursuant to the provisions of this Agreement.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Agreement. This Agreement may be terminated at any
time by mutual consent of the parties hereto, provided that such consent to
terminate is in writing and is signed by each of the parties hereto.
ARTICLE VIII
DEFINITIONS
The following terms, which are capitalized in this Agreement, shall have
the meanings set forth below for the purpose of this Agreement.
"Applicable Contract" means any Contract (a) to which the Company is a
party and under which the Company has or may acquire any material rights, (b)
under which the Company or GSEG, as the case may be, is a party and has or may
become subject to any material obligation or material liability or (c) by which
the Company or GSEG, as the case may be, or any of the material assets owned or
used by it is or may become bound.
"Contemplated Transactions" means all of the transactions contemplated by
this Agreement, including, without limitation:
(1) the Merger; and
(2) the performance by the parties of their respective covenants and
obligations under this Agreement.
"Environmental Laws" means all applicable federal, state, local or foreign
laws, rules and regulations, orders, decrees, judgments, permits, filings and
licenses relating (i) to protection and clean-up of the environment and
activities or conditions related thereto, including those relating to the
generation, handling, disposal, transportation or release of hazardous
substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
"ERISA" means the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to such law or any
successor law.
"GAAP" means generally accepted accounting principles in the United States,
applied on a consistent basis.
"Law" means all applicable laws, statutes, ordinances, rules, regulations,
orders, writs, injunctions, judgments or decrees entered, enacted, promulgated,
enforced or issued by any court or other governmental or regulatory authority,
domestic or foreign.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational or other administrative law, ordinance, principle
of common law, regulation, statute, treaty, court or arbitrator.
"Material Adverse Effect" means a material adverse effect upon the business
or financial condition of the Company (when used in Section 4.1) or GSEG (when
used in Section 4.2), taken as a whole with any subsidiaries.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a Person where:
(1) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such
Person;
(2) such action is not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar
authority); and
(3) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any
Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the
same line of business as such Person.
"Organizational Documents" means the articles or certificate of
incorporation and the by-laws of a corporation and any amendment thereto.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body.
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any governmental body or arbitrator.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE IX
MISCELLANEOUS
9.1 Fees and Expenses. Except as otherwise provided in this Agreement, each
party hereto will bear its own legal, accounting and other fees and
expenses incident to the Contemplated Transactions herein. Any fees and
expenses required to be paid by any party hereunder shall be limited to
reasonable and necessary fees and expenses
9.2 Modification, Amendments and Waiver. The parties hereto may amend, modify
or otherwise waive any provision of this Agreement by mutual consent,
provided that such consent and any amendment, modification or waiver is in
writing and is signed by each of the parties hereto.
9.3 Assignment. Neither the Company nor GSEG shall have the authority to assign
its respective rights or obligations under this Agreement.
9.4 Successors. This Agreement shall be binding upon and, to the extent
permitted in this Agreement, shall inure to the benefit of the parties and
their respective successors and permitted assigns.
9.5 Entire Agreement. This Agreement and the exhibits, schedules and other
documents referred to herein contain the entire agreement among the parties
hereto with respect to the Contemplated Transactions and supersede all
prior agreements with respect thereto, whether written or oral.
9.6 Governing Law. This Agreement and the exhibits hereto shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts or choice of laws thereof. Any
action to enforce the terms of this Agreement or any of its exhibits shall
be brought exclusively in the state and/or federal courts situated in the
County and State of New York. Service of process in any action by either
party to enforce the terms of this Agreement may be made by serving a copy
of the summons and complaint, in addition to any other relevant documents,
by commercial overnight courier to the other party at its principal address
set forth in this Agreement.
9.7 Notices. Any notice, request, demand, waiver, consent, approval, or other
communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered
to the party personally or sent to the party by facsimile upon electronic
confirmation of receipt (promptly followed by a hard-copy delivered in
accordance with this Section 9.7) or three days after being mailed by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, or if sent by
nationally recognized overnight courier, one day after being mailed,
addressed to the party at its address or to such other persons or addresses
as may be designated in writing by the party to receive such notice. If
mailed as aforesaid, the day of mailing or transmission shall be the date
any such notice shall be deemed to have been delivered.
9.8 Rights Cumulative. All rights, powers and privileges conferred hereunder
upon the parties, unless otherwise provided, shall be cumulative and shall
not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other
party shall not constitute a waiver of any party's right to demand exact
compliance with any of the terms or provisions hereof.
9.9 Severability of Provisions. The provisions of this Agreement shall be
considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions
shall be automatically replaced by other provisions which are valid and
enforceable and which are as similar as possible in term and intent to
those provisions deemed to be invalid, void or otherwise unenforceable and
the remaining provisions hereof shall remain enforceable to the fullest
extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or have
caused this Agreement to be executed and delivered on the date and year first
above written.
GS AGRIFUELS CORPORATION
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
Chairman and Chief Executive Officer
GS ENERGY CORPORATION
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
Chairman and Chief Executive Officer
