SHARE EXCHANGE AGREEMENT
by and among
RIVER CAPITAL GROUP, INC.,
RIVER CAPITAL HOLDINGS LIMITED,
STRATEGY HOLDING COMPANY LIMITED,
LONGVIEW FUND, LP,
LONGVIEW EQUITY FUND, LP,
LONGVIEW INTERNATIONAL EQUITY FUND, LP,
and
CONCORDE CAPITAL LIMITED
Dated as of December 30, 2005
THIS SHARE EXCHANGE AGREEMENT dated as of December 30, 2005 ("Agreement"), by
and among River Capital Group, Inc., a Delaware corporation ("River Group"),
River Capital Holdings Limited, a Barbados corporation ("River Holdings"),
Strategy Holding Company Limited, a Barbados corporation, Longview Fund, LP,
Longview Equity Fund, LP, Longview International Equity Fund, LP, and Concorde
Capital Limited, a Bermuda corporation, (collectively the "Shareholders").
RECITALS
A. The Boards of Directors of River Group has determined that it is in the
best interests of River Group and its shareholders that River Group
acquire River Holdings through a share exchange (the "Share Exchange")
and, in furtherance thereof, have approved the Share Exchange, this
Agreement and the transactions contemplated hereby.
B. Subject to the terms and conditions of this Agreement, each share of
capital stock of River Holdings which are issued and outstanding
immediately prior to Closing (defined in Article VI, Section 1) shall
be converted into the right to receive 13,391.0566829951 Shares of
common stock, $0.001 par value per share, of River Group ("River Group
Common Stock") on the terms and subject to the conditions set forth
herein. River Holdings shall become a wholly-owned subsidiary of River
Group.
C. River Group and the Shareholders desire to make certain
representations, warranties, covenants and agreements in connection
with the Share Exchange.
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
THE SHARE EXCHANGE
1. AGREEMENT OF SHARE EXCHANGE. River Group shall acquire all of the
shares of capital stock of River Holdings which are issued and
outstanding immediately prior to Closing. The Share Exchange shall be a
statutory exchange pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code, as amended.
2. EFFECT OF SHARE EXCHANGE. Upon Closing of the Share Exchange, each
share of River Holdings shall be exchanged for 13,391.0566829951 shares
of common stock, $0.001 par value per share, of River Group ("River
Group Common Stock") on the terms and subject to the conditions set
forth herein. Each Shareholder affected by the Share Exchange shall
receive the number of shares of River Group Common Stock as set forth
on the attached EXHIBIT A. No fractional shares in River Group shall be
issued by reason of the Share Exchange; instead amounts of shares will
be rounded to the nearest whole number.
3. APPROVAL BY DIRECTORS AND SHAREHOLDERS. This Agreement shall be
approved by the board of directors of River Group by adopting
resolutions setting forth the plan of exchange.
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4. EXCHANGE OF CERTIFICATES. On the date of Closing, the Shareholders
shall present to River Group their River Holdings share certificates
evidencing share ownership in the proportions as set forth on EXHIBIT
A. Simultaneously, River Group shall present the River Group Common
Stock share certificates to each Shareholder as set forth on EXHIBIT A.
River Group shall deliver share certificates representing the whole
number of shares of River Group Common Stock into which such River
Holdings Shareholder's shares of River Holdings Common Stock shall have
been exchanged as set forth herein.
5. NO FURTHER OWNERSHIP RIGHTS IN RIVER HOLDINGS COMMON STOCK. All shares
of River Group Common Stock issued upon the surrender for exchange of
shares of River Holdings common stock in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of River Holdings common stock, and
there shall be no further registration of transfers on the records of
River Holdings of shares of its common stock which were outstanding
immediately prior to Closing.
6. EXEMPTION FROM REGISTRATION. The shares of River Group Common Stock to
be issued pursuant to this Agreement will be issued in a transaction
exempt from registration under the Securities Act of 1933, as amended
(including the rules and regulations promulgated thereunder, the
"Securities Act").
7. BOARDS OF DIRECTORS. Xxxx Xxxxxxx and Xxxxxxx Xxxxxx shall resign as
directors of River Group effective upon Closing. Xxxxxxx Xxxxxx shall
resign as an officer of River Group effective two weeks from the date
of Closing. Xxxxxx Xxxxxx shall continue to serve as an officer and
director upon Closing. The officers and directors of River Holdings
shall continue to serve in their respective offices upon Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
1. River Group represents and warrants to River Holdings the following:
a. ORGANIZATION. River Group is a corporation duly organized
under the laws of Delaware and has all the necessary corporate
powers to own property and carry on a business, and is duly
qualified to do business in Delaware.
b. CAPITAL. The authorized capital stock of River Group is
50,000,000 shares of common stock, $0.001 par value, of which
6,271,455 shares are issued and outstanding, (not to include
convertible notes which may be converted into 400,000 shares
and related five-year warrants to purchase 400,000 shares of
stock at $.75 per share). All outstanding shares are fully
paid and non-assessable, free of liens, encumbrances, options,
restrictions, and legal or equitable rights of others not a
party to this Agreement and no preemptive rights are effected
or made operative upon closing of this Share Exchange. At
Closing, there will sufficient shares reserved to effectuate
the Share Exchange pursuant to Article I, Section 2. Other
than as disclosed in EXHIBIT B attached hereto, there will be
no
PAGE 3 OF 20
outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments
obligating River Group to issue or to transfer from the
treasury any additional shares of its capital stock. To the
best of its knowledge, none of the outstanding shares of River
Group are subject to any stock restriction agreements except
Rule 144 restrictions for stock issued within the last two
years. The number of shares subject to Rule 144 and 144(k) are
detailed in EXHIBIT C attached hereto. Upon Closing, the
authorized capital stock of River Group shall be 50,000,000
shares of common stock, $0.001 par value, of which 25,407,275
shares shall be issued and outstanding (not to include
convertible notes which may be converted into 400,000 shares
and related five-year warrants to purchase 400,000 shares of
stock at $.75 per share).
c. ABILITY TO CARRY OUT OBLIGATION. River Group has the right,
power, and authority to enter into and perform its obligations
under this Agreement. The execution and delivery of this
Agreement by River Group and the performance by River Group of
its obligations hereunder will not cause, constitute, or
conflict with or result in (a) any breach or violation or the
provisions of, or constitute a default under any license,
indenture, mortgage, charter, instrument, articles of
incorporation, bylaw, or other agreement or instrument to
which River Group is a party, or by which it may be bound, nor
will any consents or authorizations of any party other than
those hereto be required, (b) any event that would cause River
Group to be liable to any party, or (c) any event that would
result in the creation or imposition or any lien, charge or
encumbrance on any assets of River Group or upon the
securities of River Group to be acquired by the Shareholders.
d. FULL DISCLOSURE. None of the representations and warranties
made by River Group or any certificate or memorandum furnished
or to be furnished by River Group contains or will contain any
untrue statement of a material fact, or omit any material fact
the omission of which would be misleading.
e. COMPLIANCE WITH THE LAWS. River Group has complied with, and
is not in violation of any federal, state or local statue,
law, and/or regulation pertaining to River Group. River Group
has complied with all federal and state securities laws in
connection with the issuance, sale and distribution of its
securities.
f. ENFORCEABILITY. Upon execution, this Agreement shall
constitute the valid, legal and binding agreement of River
Group, enforceable against River Group in accordance with its
terms.
g. LITIGATION. River Group is not (and has not been) a party to
any suit, action, arbitration, or legal, administrative, or
other proceeding, or pending governmental investigation. To
the best of the knowledge of River Group there is no basis for
any such action or proceeding and no such action or proceeding
is threatened against River Group and it is not subject to or
in default with respect to any order, writ, injunction, or
decree of any federal, state, local, or foreign court,
department, agency, or instrumentality.
PAGE 4 OF 20
h. CONDUCT OF BUSINESS. Prior to the closing, River Group shall
conduct business in the normal course, and shall not (a) sell,
pledge, or assign any assets, (b) amend its article of
incorporation or By-laws, (c) declare dividends, redeem or
sell stock or other securities, (d) incur any liabilities, (e)
acquire or dispose of any assets, enter into any contract,
guarantee obligations of any third party, or (f) enter into
any other transaction.
i. CORPORATE DOCUMENTS. Copies of each of the following
documents, which are true, complete and correct in all
material respects, certified by the corporate secretary of
River Group as to the absence of any amendments between the
date of execution of this Agreement and the Closing, will be
attached hereto and made an integral part hereof to this
Agreement:
i. Certificate of Incorporation;
ii. Bylaws;
iii. Board of Directors Minutes certified by the River
Group corporate secretary authorizing this Agreement,
the transactions, and the issuance of shares thereby;
iv. Financial statements for the year ended December 31,
2004, and the nine months ended September 30, 2005;
and
v. A current, accurate list of River Group's
shareholders.
j. DOCUMENTS. All minutes, consents or other documents pertaining
to River Group to be delivered at Closing shall be valid and
in accordance with the laws of the State of Delaware.
k. TITLE. The shares to be issued to the Shareholders will be, at
the closing, free and clear of all liens, security interests,
pledges, charges, claims, encumbrances and restrictions of any
kind with exception to the Regulation 144 hold restrictions
that are mandatory under the Securities Act. The shares will
be issued in a transaction exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended
(including the rules and regulations promulgated thereunder,
the "Securities Act"). None of such shares are or will be
subject to any voting trust or agreement. River Group is not a
party to any agreement which offers or grants to any person
the right to purchase or acquire any of the securities to be
issued to the Shareholders. There is no applicable local,
state or federal law, rule or regulation, or decree which
would, as a result of the issuance of the shares to
Shareholders, impair, restrict, or delay Shareholders' voting
rights with respect to the shares.
l. LISTING. River Group shall use its best efforts to seek a
listing or relisting on the NASDAQ electronic bulletin board,
or another securities market mutually acceptable to the
parties, as soon as is reasonably possible, and to cause River
Group's Common Stock to qualify for such continued listing and
trading.
2. River Holdings and each of the Shareholders severally represent and
warrant to River Group the following:
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a. ORGANIZATION. River Holdings is a corporation duly organized
under the laws of Barbados and has all the necessary corporate
powers to own properties and carry on a business, and is duly
qualified to do business in Barbados.
b. CAPITAL. The authorized capital stock of River Holdings is an
unlimited number of shares of common stock, no par value, of
which 1,429 shares are issued and outstanding and 150 shares
of Voting Cumulative Non-Redeemable Senior Series A Preferred
Shares (the "Preferred Shares"), none of which are issued and
outstanding. All outstanding shares are fully paid and
non-assessable, free of liens, encumbrances, options,
restrictions, and legal or equitable rights of others not a
party to this Agreement. At Closing, there will be no
outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments
obligating River Holdings to issue or to transfer from the
treasury any additional shares of its capital stock. None of
the outstanding shares of River Group are subject to any stock
restriction agreements. All of the Shareholders of River
Holdings have valid title to such shares and acquired their
shares in a lawful transaction and in accordance with the laws
of Barbados.
c. FINANCIAL STATEMENTS. Attached hereto as EXHIBIT D are the
following financial statements for River Holdings: (i)
unaudited balance sheets as of December 31, 2004 and September
30, 2005 and statements of income, changes in stockholders'
equity, and cash flow for the period October 6, 2004
(inception) through December 31, 2004 and the nine months
ended September 30, 2005 (the "Financial Statements"). The
Financial Statements (including the notes thereto) have been
prepared in accordance with International Accounting
Standards, to include the GAAP reconciliation set forth under
Section 17 of Form 20-F, applied on a consistent basis
throughout the periods covered thereby, present fairly the
financial condition of River Holdings as of such dates and the
results of operations of River Holdings for such periods, are
correct and complete, and are consistent with the books and
records of River Holdings (which books and records are correct
and complete).
d. ABILITY TO CARRY OUT OBLIGATION. River Holdings and the
Shareholders have the right, power, and authority to enter
into and perform their obligations under this Agreement. The
execution and delivery of this Agreement by River Group and
the Shareholders and the performance by River Group and the
Shareholders of their obligations hereunder will not cause,
constitute, or conflict with or result in (a) any breach or
violation or the provisions of, or constitute a default under
any license, indenture, mortgage, charter, instrument,
articles of incorporation, bylaw, or other agreement or
instrument to which River Holdings or the Shareholders are a
party, or by which they may be bound, nor will any consents or
authorizations of any party other than those hereto be
required, (b) any event that would cause River Group to be
liable to any party, or (c) any event that would result in the
creation or imposition or any lien, charge or encumbrance on
any assets of River Holdings or upon the securities of River
Holdings to be acquired by River Group.
PAGE 6 OF 20
e. FULL DISCLOSURE. None of the representations and warranties
made by River Holdings or any certificate or memorandum
furnished or to be furnished by River Holdings contains or
will contain any untrue statement of a material fact, or omit
any material fact the omission of which would be misleading.
f. COMPLIANCE WITH THE LAWS. River Holdings has complied with,
and is not in violation of any federal, state or local statue,
law, and/or regulation pertaining to River Holdings. River
Holdings has complied with all federal and state securities
laws in connection with the issuance, sale and distribution of
its securities.
g. ENFORCEABILITY. Upon execution, this Agreement shall
constitute the valid, legal and binding agreement of River
Holdings, enforceable against River Holdings in accordance
with its terms.
h. LITIGATION. River Holdings is not (and has not been) a party
to any suit, action, arbitration, or legal, administrative, or
other proceeding, or pending governmental investigation. To
the best of the knowledge of River Holdings there is no basis
for any such action or proceeding and no such action or
proceeding is threatened against River Holdings and it is not
subject to or in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign
court, department, agency, or instrumentality.
i. CONDUCT OF BUSINESS. Prior to the closing, River Holdings
shall conduct business in the normal course, and shall not (a)
sell, pledge, or assign any assets, (b) amend its article of
incorporation or Bylaws, (c) declare dividends, redeem or sell
stock or other securities, (d) incur any liabilities, (e)
acquire or dispose of any assets, enter into any contract,
guarantee obligations of any third party, or (f) enter into
any other transaction.
j. CORPORATE DOCUMENTS. Copies of each of the following
documents, which are true, complete and correct in all
material respects, certified by the corporate secretary of
River Holdings as to the absence of any amendments between the
date of execution of this Agreement and the Closing, will be
attached hereto and made an integral part hereof to this
Agreement
i. Memorandum of Association;
ii. Minutes of Directors Meetings; and
iii. Stock register and stock records of River Holdings,
including a current, accurate list of River Holdings'
shareholders.
k. DOCUMENTS. All minutes, consents or other documents pertaining
to River Holdings to be delivered at Closing shall be valid
and in accordance with the laws of Barbados.
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l. TITLE. The River Holdings shares to be transferred to River
Group at Closing shall be free and clear of all liens,
security interests, pledges, charges, claims, encumbrances and
restrictions of any kind. None of such shares are or will be
subject to any voting trust or agreement. No person holds or
has any right to receive any proxy or similar instrument with
respect to such shares, except as provided for in this
Agreement and neither River Holdings nor any Shareholder is a
party to any agreement which offers or grants to any person
the right to purchase or acquire any of the securities to be
transferred to River Group. There is no applicable law, rule
or regulation, or decree which would, as a result of the
transfer of the shares to River Group, impair, restrict, or
delay River Group's voting rights with respect to such shares.
ARTICLE III
ACTIONS PRIOR TO CLOSING
1. CORPORATE EXAMINATIONS AND INVESTIGATIONS.
a. At or prior to the date of Closing, each of River Group and
River Holdings shall be entitled to make such investigation of
the assets, properties, business and operations of the other
and such examination of the books, records, tax returns,
financial condition and operations of the other as each may
wish.
b. Until Closing and if Closing shall not occur, thereafter,
River Group, River Holdings, the Shareholders, and their
respective affiliates shall keep confidential and shall not
use in any manner inconsistent with the transactions
contemplated by this Agreement and after termination of this
Agreement, River Group, River Holdings, the Shareholders, and
their respective affiliates shall not disclose, nor use for
their own benefit, any information or documents obtained from
the other concerning its assets, properties, business and
operations, unless such information is: (a) readily
ascertainable from public or published information, or trade
sources, (b) received from a third party not under an
obligation to River Group or River Holdings, as the case may
be, to keep such information confidential or (c) required by
any law, regulation, subpoena or lawful order. If this
transaction does not close for any reason, River Group, River
Holdings, the Shareholders, and their respective affiliates
shall return or destroy all such confidential information of
the other parties hereto and compilations thereof as is
practicable, and shall certify such destruction or return such
confidential information and compilations to River Group or
River Holdings, as the case may be.
2. SECURITIES AND EXCHANGE COMMISSION REPORTS. River Group shall file with
the Securities and Exchange Commission all reports and other documents
that are required by the Exchange Act and the rules and regulations
promulgated thereunder to be filed in connection with this transactions
contemplated by this Agreement.
PAGE 8 OF 20
3. SHAREHOLDER APPROVAL. River Holdings shall, as expeditiously as
possible, take all actions necessary to obtain the approval of the
Shareholders of the transactions contemplated by this Agreement to the
extent required by the laws and regulations of Barbados.
4. OTHER AGREEMENTS. River Group, River Holdings and the Shareholders
agree to take, or cause to be taken, all actions and to do, or cause to
be done, all things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including, without
limitation, the obtaining of all necessary waivers, consents and
approvals and the effecting of all necessary registrations and filings,
including, but not limited to, submissions of information requested by
governmental or regulatory bodies and any other persons required to be
obtained by them for the consummation of the Closing.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
1. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF RIVER GROUP TO COMPLETE
THE CLOSING. The obligations of River Group to enter into and complete
Closing are subject to the fulfillment of the following conditions,
any one or more of which may be waived by River Group:
a. All of the terms, covenants, and conditions of this Agreement
to be complied with or performed by River Holdings and/or the
Shareholders at or before the Closing shall have been duly
complied with and performed in all respects, (ii) the
representations and warranties of River Holdings and/or the
Shareholders set forth in Article II shall be true in all
respects on and as of Closing with the same force and effect
as if such representations and warranties had been made on and
as of the Closing, and (iii) River Group shall have received a
certificate to such effect from River Holdings (the "River
Holdings Closing Certificate").
b. River Holdings must be duly licensed by the Barbados
Supervisor of Insurance as an Insurance Holding Company under
Barbados law and regulations.
c. River Reinsurance Limited ("River Re"), a wholly-owned
subsidiary of River Holdings, must be duly formed as a
Barbados corporation and further must be licensed by the
Barbados Supervisor of Insurance as an "Exempt Insurance
Company" under Barbados law and regulations.
d. All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or governmental
or regulatory bodies required to be obtained by River Holdings
in order to permit the transactions contemplated by this
Agreement to be consummated in accordance with agreements and
court orders applicable to River Holdings and applicable
governmental laws, rules, regulations and agreements shall
have been obtained and any waiting period thereunder shall
have expired or been terminated.
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e. All actions, proceedings, instruments, and documents in
connection with the consummation of the transactions
contemplated by this Agreement, including the forms of all
documents, legal matters, opinions, and procedures in
connection therewith, shall have been approved in form and
substance by counsel for River Group, which approval shall not
be unreasonably withheld.
f. River Holdings shall have furnished such certificates to
evidence compliance with the conditions set forth in this
Article, as may be reasonably requested by River Group or its
counsel.
g. No material information provided or made available to River
Group by or on behalf of River Holdings shall be incorrect in
any material respect.
h. No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened by any state or federal governmental or
regulatory authority, against River Holdings or any of its
affiliates, associates, officers, or directors seeking to
restrain, prevent, or change in any material respect the
transactions contemplated hereby or seeking damages in
connection with such transactions that are material to River
Holdings.
i. River Holdings shall have received the necessary approvals to
proceed with the transactions contemplated herein from the
Shareholders representing 100% of the issued and outstanding
stock of River Holdings.
2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF RIVER HOLDINGS TO COMPLETE
THE CLOSING. The obligations of River Holdings to enter into and
complete Closing are subject to the fulfillment on or prior to the date
of Closing, of the following conditions, any one or more of which may
be waived by River Holdings:
a. All of the terms, covenants, and conditions of this Agreement
to be complied with or performed by River Group at or before
the Closing shall have been duly complied with and performed
in all respects, (ii) the representations and warranties of
River Group set forth in Article II shall be true in all
respects on and as of Closing with the same force and effect
as if such representations and warranties had been made on and
as of the Closing, and (iii) River Holdings shall have
received a certificate to such effect from River Group (the
"River Group Closing Certificate").
b. All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or governmental
or regulatory bodies required to be obtained by River Group in
order to permit the transactions contemplated by this
Agreement to be consummated in accordance with agreements and
court orders applicable to River Group and applicable
governmental laws, rules, regulations and agreements shall
have been obtained and any waiting period thereunder shall
have expired or been terminated.
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c. River Group shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as
may be reasonably requested by River Holdings or its counsel.
d. No material information provided or made available to River
Holdings by or on behalf of River Group shall be incorrect in
any material respect.
e. No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened by any state or federal governmental or
regulatory authority, against River Group or any of its
affiliates, associates, officers, or directors seeking to
restrain, prevent, or change in any material respect the
transactions contemplated hereby or seeking damages in
connection with such transactions that are material to River
Group.
ARTICLE V
INVESTMENT INTENT
1. RESTRICTED SHARE ACKNOWLEDGMENT. The Shareholders hereby acknowledge
that the shares of River Group Common Stock are restricted securities
under the Securities Act and represent that such Shareholder (i) is
acquiring the River Group Common Stock for his or its own account
without a view to distribution within the meaning of the Securities
Act; (ii) has received from River Group its filings with the Securities
and Exchange Commission and all other information that he or it has
deemed necessary to make an informed investment decision with respect
to an investment in River Group in general and the River Group Common
Stock in particular; (iii) is financially able to bear the economic
risks of an investment in River Group; and (iv) has such knowledge and
experience in financial and business matters in general and with
respect to investments of a nature similar to the River Group Common
Stock so as to be capable, by reason of such knowledge and experience,
of evaluating the merits and risks of, and making an informed business
decision with regard to, the acquisition of the River Group Common
Stock. The Shareholders understand and agree that the certificates
evidencing the River Group Common Stock shall bear the usual
restrictive legend pertaining to Rule 144 under the Securities Act and
that the River Group Common Stock will not be transferable except under
an effective registration statement under the Securities Act or in
accordance with available exemptions from registration under the
Securities Act.
ARTICLE VI
CLOSING
1. CLOSING. Closing of this transaction shall be deemed effective upon
receipt or exchange, as the case may be, of the items referenced in
Sections 1 and 2 of this Article VI ("Closing"). Closing shall take
place on or before December 31, 2005, at such place as may be
determined by the parties. Unless Closing takes place on or before Feb
15, 2006, the parties hereto may terminate this Agreement.
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2. DOCUMENTATION TO BE DELIVERED AT CLOSING.
a. By River Group:
(i) Board of Directors Minutes certified by the River
Group corporate secretary authorizing this Agreement
and the transactions contemplated hereby and the
issuance of 19,135,820 common shares registered in
the names of the Shareholders equal to their
proportionate holdings in River Holdings as set forth
on EXHIBIT A;
(ii) Share Certificates issued in the names of the
Shareholders equal to their proportionate holdings in
River Holdings as set forth on EXHIBIT A;
(iii) The "River Group Closing Certificate; and
(iv) Letters of resignation from the officers and
directors of River Group, other than Xxxxxx Xxxxxx.
b. By River Holdings and/or the Shareholders:
(i) Delivery to River Group stock certificates
representing 100% of the ownership of River
Holdings as set forth on EXHIBIT A;
(ii) Board of Directors Minutes certified by the
River Holdings corporate secretary authorizing
this Agreement and the transactions
contemplated hereby consenting to the terms of
this Agreement to the extent required under
Barbados law;
(iii) Shareholder Minutes consenting to the terms of
this Agreement to the extent required under
Barbados law; and
(iv) The River Group Closing Certificate.
ARTICLE VII
MISCELLANEOUS
1. CHOICE OF LAW; VENUE; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of law. The parties hereto
agree that venue and jurisdiction with respect to any matter arising
under this Agreement or any document or agreement referred to herein
shall be exclusively in the state or federal courts, as applicable,
located in the State of Delaware. Each party submits to the
jurisdiction of such courts in the State of Delaware
PAGE 12 OF 20
with respect to any claim or controversy arising under the Agreement
or any document or agreement referred to herein.
2. SURVIVAL AFTER TERMINATION. If this Agreement is terminated pursuant to
Article VI, Section 1, (i) this Agreement shall become null and void
and of no further force and effect, except for the provisions of
Article III, Section 1(b) relating to the obligation to keep
confidential certain information and (ii) there shall be no liability
on the part of River Holdings, River Group, the Shareholders or their
respective affiliates.
3. CAPTIONS AND HEADINGS. The Article and Section headings throughout this
Agreement are for convenience and reference only, and shall in no way
be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
4. NO ORAL CHANGE. The Agreement and any provision hereof, may not be
waived, changes, modified, or discharged orally, but only by agreement
in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
5. NON WAIVER. Except as otherwise expressly provided herein, no waiver of
any covenant, condition, or provision of this Agreement shall be deemed
to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party
to insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise
any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants, or
conditions, (ii) the acceptance of performance of anything required by
this Agreement to be performed with knowledge of the breach or failure
of a covenant, condition or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with respect
to any other or subsequent breach.
6. TIME OF ESSENCE. Time is of the essence of the Agreement and of each
and every provision hereof.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings.
8. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed as original, but all
of which together shall constitute one and the same instrument.
PAGE 13 OF 20
9. NOTICES. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to
whom the notice is to be given, or the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly address, and by
fax, as follows:
River Capital Group, Inc. Redwood Grove Capital
000 Xxxx Xxxxxx Xxxx #0000 Management, LLC
Xxxxxxx, Xxxxxxx Xxxxxx Xxx Xxxxxxxxxxxx Xxxxxxx
X0X 0X0 000 XXxxxxxxxx Xx., 00xx Xxxxx
Facsimile: (000) 000-0000 Xxx Xxxxxxxxx, XX 00000
Facsimile: 415.981.5301
River Capital Holdings Limited Concorde Capital Limited
x/x Xxxxx X. X. Xxxxxx Xxxxx 000, 48 Par La Ville Road
Xxxxxxxx House Xxxxxxxx HM11 Xxxxxxx
Xxx. 0xx Xxxxxx & Xxxxxx Xx. Facsimile: (000) 000 0000
Belleville, St. Xxxxxxx
Barbados, W. I.
Facsimile: (000) 000-0000
Strategy Holding Company
Limited
Sagicor Corporate Centre
Xxxxxx, St. Xxxxxxx BB15113
Barbados, West Indies
Facsimile: (000) 000-0000
[SIGNATURE PAGE TO FOLLOW]
PAGE 14 OF 20
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective
as of the date first above written.
RIVER CAPITAL GROUP, INC., LONGVIEW FUND, LP,
a Delaware corporation a California limited partnership
By: /s/ XXXXXX X. XXXXXX By: /s/ S. XXXXXXX XXXXXXX
----------------------------- -----------------------------------
Name: XXXXXX X. XXXXXX Name: S. XXXXXXX XXXXXXX
--------------------------- ---------------------------------
Title: CEO, DIRECTOR Title: CFO INVESTMENT ADVISOR
-------------------------- --------------------------------
VIKING ASSET MANAGEMENT, LLC
RIVER CAPITAL HOLDINGS LIMITED, LONGVIEW EQUITY FUND, LP,
a Barbados corporation a Delaware limited partnership
By:/s/ XXXXXX XXXXXX XXXXXXXX By: /s/ S. XXXXXXX XXXXXXX
----------------------------- -----------------------------------
Name: XXXXXX XXXXXX XXXXXXXX Name: S. XXXXXXX XXXXXXX
--------------------------- ---------------------------------
Title: DIRECTOR Title: CFO INVESTMENT ADVISOR
-------------------------- --------------------------------
REDWOOD GROVE CAPITAL MANAGEMENT
LLC
STRATEGY HOLDING COMPANY LIMITED, LONGVIEW INTERNATIONAL EQUITY
a Barbados corporation FUND, LP,
a British Virgin Islands limited
partnership
By: /s/ XXXXXX XXXXX By: /s/ S. XXXXXXX XXXXXXX
----------------------------- -----------------------------------
Name: XXXXXX XXXXX Name: S. XXXXXXX XXXXXXX
--------------------------- ---------------------------------
Title: MANAGING DIRECTOR Title: CFO INVESTMENT ADVISOR
-------------------------- --------------------------------
REDWOOD GROVE CAPITAL MANAGEMENT
LLC
CONCORDE CAPITAL LIMITED,
a Bermuda corporation
By: /s/ XXXXXX X. XXXXXX
-----------------------------
Name: XXXXXX X. XXXXXX
---------------------------
Title: CEO, DIRECTOR
--------------------------
PAGE 15 OF 20
EXHIBIT A
--------------------------------------------------------------------------------------------------------------------
NO. OF SHARES NO. OF RIVER CAPITAL
BENEFICIALLY OWNED GROUP, INC. SHARES
RIVER CAPITAL HOLDINGS TO BE ISSUED UPON
SHAREHOLDER NAME LIMITED EXCHANGE RATIO EXCHANGE
--------------------------------------------------------------------------------------------------------------------
Strategy Holding Company 150 13,391.0566829951 2,008,659
Limited
--------------------------------------------------------------------------------------------------------------------
Longview Equity Fund LP 397 13,391.0566829951 5,316,250
--------------------------------------------------------------------------------------------------------------------
Longview International 13,391.0566829951
Equity Fund, LP 160 2,142,569
--------------------------------------------------------------------------------------------------------------------
Longview Fund, LP 172 13,391.0566829951 2,303,261
--------------------------------------------------------------------------------------------------------------------
Concorde Capital Limited 550 13,391.0566829951 7,365,081
--------------------------------------------------------------------------------------------------------------------
Total 1,429 19,135,820
--------------------------------------------------------------------------------------------------------------------
PAGE 16 OF 20
EXHIBIT B
Outstanding Subscriptions, Options, Rights, Warrants, and Convertible Securities
STOCK OPTIONS
1. On February 5, 2004, the Company issued a total of 275,000 options for
shares of River Capital Group Inc.'s common stock, exercisable at $2.00 per
share. All are vested. The options expire February 5, 2009. The option holders
are as follows:
Xxxxxx Xxxxxx, Director - 50,000 options
Xxxxxxx Xxxxxx, Director - 100,000 options
Xxxx Xxxxxxx, Director - 50,000 options
Xxxxxxx Xxxxx, Consultant - 25,000 options
2. On November 1, 2005, the Company issued a total of 350,000 options for
shares of River Capital Group's common stock, exercisable at $0.50 per share.
All are vested. The options expire October 31, 2007. The option holders are as
follows:
Xxxxxx Xxxxxx, Director - 200,000 options
Xxxxxxx Xxxxxx, Director - 100,000 options
Xxxx Xxxxxxx, Director - 50,000 options
CONVERTIBLE SECURITIES AND WARRANTS
On May 23, 2005, the Company entered into a Subscription Agreement with several
accredited investors (the "Subscribers") pursuant to which the Company agreed to
sell, and the Subscribers agreed to purchase in the aggregate, up to $200,000
principal amount of convertible notes and five-year warrants to purchase 400,000
shares of common stock at $0.75 per share. A total of $23,280 was ascribed to
the warrants, valued at estimated fair market value at the date of the warrants
issuance. The resulting discount to the convertible notes will be amortized to
interest expense over the life of the convertible notes (one year).
The convertible notes are secured by a security interest in all of the assets of
River Capital. The convertible notes include the following terms:
o Interest at the greater of (i) the prime rate plus 4% per annum or (ii)
8%, payable quarterly beginning August 1, 2005;
o Term of one year, but the note may be prepaid at 120% of the principal
only if an insurance license shall have been granted to River Reinsurance
Limited and River Reinsurance Limited shall have become a subsidiary of
River Capital;
o Convertible at any time by the holders into shares of River Capital
common stock at a price equal to $0.50; and
PAGE 17 OF 20
o Anti-dilution protections.
River Capital has granted a one-time demand registration right to register the
resale of the shares issuable upon conversion of the notes and the shares
issuable upon exercise of the warrants.
PAGE 18 OF 20
EXHIBIT C
Rule 144 and 144(k) Shares
As of December 21, 2005, of the 6,271,455 issued and outstanding shares of River
Capital Group Inc. common stock, 1,313,180 such shares are free trading and
4,958,275 are restricted.
PAGE 19 0F 20
EXHIBIT D
Financial Statements - River Capital Holdings Limited
PAGE 20 OF 20
