AGREEMENT AND PLAN OF MERGER
AGREEMENT, dated as of March 28, 2001, by and
between VILLAGE II ACQUISITION CORP., a
Florida corporation (the "Buyer"), and
CAPSOURCE FINANCIAL, INC., a Colorado
corporation (the "Target"). The Buyer and the
Target are referred to collectively herein as
the "Parties".
This Agreement contemplates a tax-free merger
of the Target with and into the Buyer in a
reorganization pursuant to IRS code section
368(a)(1)(A). In connection with such
transaction, the Target Stockholders (as
hereinafter defined) will receive capital
stock in the Buyer in exchange for their
capital stock in the Target. The Parties
expect that the Merger will further certain of
their business objectives including, without
limitation, the continued development of its
equipment leasing and distribution businesses
of Target as a publicly held company.
NOW, THEREFORE, in consideration of the
premises and the mutual promises herein made,
and in consideration of the representations,
warranties, and covenants herein contained,
the Parties agree as follows.
Section 1. Definitions.
"Affiliate" has the meaning set forth in Rule
12b-2 of the regulations promulgated under the
Securities Exchange Act.
"Buyer" has the meaning set forth in the
preface above.
"Buyer Share" means any share of the Common
Stock, $.001 par value, of the Buyer.
"Closing" has the meaning set forth in Section
2(b) below.
"Closing Date" has the meaning set forth in
Section 2(b) below.
"Colorado Corporation Code" means the Colorado
Corporation Code, as amended.
"Confidential Information" means any
information concerning the businesses and
affairs of the Target and its Subsidiaries
that is not already generally available to the
public.
"Conversion Ratio" has the meaning set forth
in Section 2(d)(v) below.
"Disclosure Schedule" has the meaning set
forth in Section 3 below.
"Effective Time" has the meaning set forth in
Section 2(d)(i) below.
"Florida Business Corporation Act" means the
Florida Business Corporation Act, as amended.
"GAAP" means United States generally accepted
accounting principles as in effect from time
to time.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after
reasonable investigation.
"Merger" has the meaning set forth in Section
2(a) below.
"Ordinary Course of Business" means the
ordinary course of business consistent with
past custom and practice (including with
respect to quantity and frequency).
"Party" has the meaning set forth in the
preface above.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock
company, a trust, a joint venture, an
unincorporated organization, or a governmental
entity (or any department, agency, or
political subdivision thereof).
"Prospectus" means the final prospectus
relating to the registration of the Buyer
Shares under the Securities Act.
"Registration Statement" has the meaning set
forth in Section 5(c)(i) below.
"Requisite Buyer Shareholder Approval" means
the affirmative vote of the holders of a
majority of the Buyer Shares in favor of this
agreement and the Merger.
"Requisite Target Stockholder Approval" means
the affirmative vote of the holders of a
majority of the Target Shares in favor of this
agreement and the Merger.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of
1933, as amended.
"Securities Exchange Act" means the Securities
Exchange Act of 1934, as amended.
"Security Interest" means any mortgage,
pledge, lien, encumbrance, charge, or other
security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens
for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith
through appropriate proceedings, (c) purchase
money liens and liens securing rental payments
under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of
Business and not incurred in connection with
the borrowing of money.
"Surviving Corporation" has the meaning set
forth in Section 2(a) below.
"Target" has the meaning set forth in the
preface above.
"Target Balance Sheet" has the meaning set
forth in Section 3(f) below.
"Target Share" means any share of the Common
Stock, $01 par value, of the Target.
"Target Stockholder" means any Person who or
which holds any Target Shares.
Section 2. Basic Transaction.
(a) The Merger. On and subject to the terms
and conditions of this agreement, the Target
will merge with and into the Buyer (the
"Merger") at the Effective Time. The Buyer
shall be the corporation surviving the Merger
(the "Surviving Corporation").
(b) The Closing. The Closing of the
transactions contemplated by this agreement
(the "Closing") shall take place at the
offices of Xxxx Xxxxxxxx & Company in West
Palm Beach, Florida, commencing at 9:00 a.m.
local time on the second business day
following the satisfaction or waiver of all
conditions to the obligations of the Parties
to consummate the transactions contemplated
hereby (other than conditions with respect to
actions the respective Parties will take at
the Closing itself) or such other date as the
Parties may mutually determine (the "Closing
Date"); provided, however, that the Closing
Date shall be no later than July 31, 2001.
(c) Actions at the Closing. At the Closing,
(i) the Target will deliver to the Buyer the
various certificates, instruments, and
documents referred to in Section 6(a) below,
(ii) the Buyer will deliver to the Target the
various certificates, instruments, and
documents referred to in Section 6(b) below,
(iii) the Buyer and the Target will file with
the Secretary of State of the State of
Florida, Division of Corporations, Articles of
Merger in the form attached hereto as Exhibit
A, and will file with the Secretary of State
of the State of Colorado, Articles of Merger
in the form attached hereto as Exhibit B, and
(iv) the Buyer will deliver to the Target in
the manner provided below in this Section 2
the certificates evidencing the Buyer Shares
issued in the Merger.
(d) Effect of Merger.
(i) General. The Merger shall become
effective at the time (the "Effective Time")
the Buyer and the Target file the respective
Articles of Merger with the Secretary of State
of the State of Florida, Division of
Corporations, and the Secretary of State of
the State of Colorado. The Merger shall have
the effect set forth in the Florida Business
Corporation Act. The Surviving Corporation
may, at any time after the Effective Time,
take any action (including executing and
delivering any document) in the name and on
behalf of either the Buyer or the Target in
order to carry out and effectuate the
transactions contemplated by this agreement.
(ii) Articles of Incorporation. The Articles
of Incorporation of the Buyer in effect at and
as of the Effective Time will remain the
Articles of Incorporation of the Surviving
Corporation without any modification or
amendment in the Merger, except that the name
of the Surviving Corporation is to be changed
to CapSource Financial, Inc. until thereafter
amended as provided by Florida law.
(iii) Bylaws. The Bylaws of the Buyer in
effect at and as of the Effective Time will
remain the Bylaws of the Surviving Corporation
without any modification or amendment in the
Merger, until thereafter amended as provided
by Florida law, the Certificate of
Incorporation of the Surviving Corporation and
such By-Laws.
(iv) Directors and Officers. The directors
and officers of Buyer shall resign at Closing
and the directors and officers of the Target
in office at and as of the Effective Time will
become the directors and officers of the
Surviving Corporation (retaining their
respective positions and terms of office as
are then in effect with the Target).
(v) Conversion of Target Shares. Upon the
Closing, each share of Target common stock
shall be converted into not less than
1.5663532 shares of Buyer common stock
("Conversion Ratio") such that after the
possible merger, the shareholders of Buyer
would own not more than 9.8% ("Buyer
Percentage") of the Post-Merger Company
representing $157,613 ("Buyer Shareholders'
Equity". The Buyer Percentage will be
subject to adjustment as follows: On the
Closing, the Conversion Ratio shall be
adjusted so that the Buyer Percentage shall be
that percentage of the outstanding shares of
the Post-Merger Company such that the Buyer
Shareholder's Equity shall remain $157,613.
Specifically, the Buyer Percentage shall be
equal to $157,613 divided by Target's
shareholder's equity, as of the Closing. For
the purposes of the calculation in the
preceding sentence, Target's shareholders'
equity shall not include depreciation between
December 31, 1999 and the Closing date.
No Target Share shall be deemed to be
outstanding or to have any rights other than
those set forth above in this Section 2(d)(v)
after the Effective Time.
(vi) No Fractional Shares. No certificates or
scrip representing fractional shares of Buyers
Common Stock shall be issued upon the
surrender for exchange of certificates
representing Target Shares, and such
fractional share interests will not entitle
the owner thereof to vote or to any rights of
a stockholder of Buyer. Notwithstanding any
other provision of this agreement, each holder
of Target Shares exchanged pursuant to the
Merger who would otherwise have been entitled
to receive a fraction of a Buyer Share (after
taking into account all certificates delivered
by such holder) shall receive only the whole
number of Buyer Shares to which he is entitled
in accordance with the Conversion Ratio, with
no additional consideration for fractional
shares.
(vii) Buyer Shares. Each Buyer Share issued
and outstanding at and as of the Effective
Time will remain issued and outstanding.
(e) Procedure for Payment.
(i) Immediately after the Effective Time,
(A) the Buyer will furnish to the Surviving
Corporation a stock certificate or stock
certificates issued in the names of the
respective shareholders of the Target in
proportion to their holdings of the Target
Shares representing that number of Buyer
Shares equal to the product of (I) the
Conversion Ratio times (II) the number of
outstanding Target Shares and (B) each of the
shareholders of Target and each record holder
of outstanding Target Shares will surrender
the certificates which represented his or its
Target Shares, duly endorsed for transfer, in
exchange for a certificate representing the
number of Buyer Shares to which he or it is
entitled.
(ii) The Surviving Corporation will not pay
any dividend or make any distribution on Buyer
Shares (with a record date at or after the
Effective Time) to any record holder of
outstanding Target Shares until the holder
surrenders for exchange his or its
certificates which represented Target Shares.
The Buyer instead will hold the dividend or
the distribution in trust for the benefit of
the holder pending surrender and exchange.
In no event, however, will any holder of
outstanding Target Shares be entitled to any
interest or earnings on the dividend or
distribution pending receipt.
(iii) The Surviving Corporation may return any
Buyer Shares and dividends and distributions
thereon remaining unclaimed 180 days after the
Effective Time, and thereafter each remaining
record holder of outstanding Target Shares
shall be entitled to look to the Surviving
Corporation (subject to abandoned property,
escheat, and other similar laws) as a general
creditor thereof with respect to the Buyer
Shares and dividends and distributions thereon
to which he or it is entitled upon surrender
of his or its certificates.
(f) Closing of Transfer Records. After the
close of business on the Closing Date,
transfers of Target Shares outstanding prior
to the Effective Time shall not be made on the
stock transfer books of the Surviving
Corporation.
Section 3. Representations and Warranties
of Target.
The Target represents and warrants to the
Buyer that the statements contained in this
Section 3 are correct and complete as of the
date of this agreement and will be correct and
complete as of the Closing Date (as though
made then and as though the Closing Date were
substituted for the date of this agreement
throughout this Section 3), except as set
forth in the disclosure schedule accompanying
this agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs
corresponding to the lettered and numbered
paragraphs contained in this Section 3.
(a) Organization, Qualification, and
Corporate Power. The Target is a corporation
duly organized, validly existing, and in good
standing under the laws of the State of
Colorado. The Target is duly authorized to
conduct business and is in good standing under
the laws of each jurisdiction where such
qualification is required. The Target has
full corporate power and authority to carry on
the businesses in which it is engaged and to
own and use the properties owned and used by
it.
(b) Capitalization. The entire authorized
capital stock of the Target consists of
100,000,000 Target Shares, of which 6,776,962
Target Shares are issued and outstanding and
no Target Shares are held in treasury. All of
the issued and outstanding Target Shares have
been duly authorized and are validly issued,
fully paid and non-assessable. There are no
outstanding or authorized options, warrants,
purchase rights, subscription rights,
conversion rights, exchange rights, or other
contracts or commitments that could require
the Target to issue, sell, or otherwise cause
to become outstanding any of its capital
stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit
participation, or similar rights with respect
to the Target.
(c) Authorization of Transaction. The
Target has full power and authority (including
full corporate power and authority) to execute
and deliver this agreement and to perform its
obligations hereunder; provided, however, that
the Target cannot consummate the Merger unless
and until it receives the Requisite Target
Stockholder Approval. This agreement
constitutes the valid and legally binding
obligation of the Target, enforceable in
accordance with its terms and conditions.
(d) Noncontravention. Neither the execution
and the delivery of this agreement, nor the
consummation of the transactions contemplated
hereby, will (i) violate any constitution,
statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or
other restriction of any government,
governmental agency, or court to which the
Target is subject or any provision of the
Articles of Incorporation or Bylaws of the
Target or (ii) conflict with, result in a
breach of, constitute a default under, result
in the acceleration of, create in any party
the right to accelerate, terminate, modify, or
cancel, or require any notice under any
agreement, contract, lease, license,
instrument or other arrangement to which the
Target is a party or by which it is bound or
to which any of its assets is subject (or
result in the imposition of any Security
Interest upon any of its assets) other than in
connection with the provisions of the Colorado
Corporation Code, the Securities Exchange Act,
the Securities Act, and the state securities
laws, the Target does not need to give any
notice to, make any filing with, or obtain any
authorization, consent, or approval of any
government or governmental agency in order for
the Parties to consummate the transactions
contemplated by this agreement
(e) Filings with the SEC. Target is a
privately-held company, is not subject to the
reporting requirements of the SEC and is not
required to make any filings with the SEC.
(f) Financial Statements. Target has
heretofore furnished Buyer with a true and
complete copy of the financial statements
listed on Exhibit 3 (f) of the Disclosure
Schedule. The financial statements, together
with the notes thereto reflect all known
liabilities of Target, fixed or contingent,
required to be stated therein. Such financial
statements (including the related notes and
schedules) have been prepared in accordance
with GAAP applied on a consistent basis
throughout the periods covered thereby, and
present fairly the financial condition of
Target at said dates and the results of
operations and cash flows of Target for the
periods then ended. Such financial statements
are correct and complete in all respects and
are consistent with the books and records of
the Target. The balance sheet of Target at
May 31, 2001, is herein sometimes referred to
as the "Target Balance Sheet".
(g) Events Subsequent to Date of Target
Balance Sheet. Since the date of the Target
Balance Sheet, there has not been any material
adverse change in the business, financial
condition, operations results of operations or
future prospects of the Target.
(h) Undisclosed Liabilities. The Target
does not have any liability (whether known or
unknown, whether asserted or unasserted,
whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become
due), including any liability for taxes,
except for (i) liabilities set forth on the
face of the Target Balance Sheet (rather than
in any notes thereto) and (ii) liabilities
which have arisen after the date of the Target
Balance Sheet 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).
(i) Brokers' Fees. The Target has no
liability or obligation to pay any fees or
commissions to any broker, finder, or agent
with respect to the transactions contemplated
by this Agreement.
(j) Continuity of Business Enterprise. The
Target operates at least one significant
historic business line, or owns at least a
significant portion of its historic business
assets, in each case within the meaning of IRS
regulation section 1.368-1(d).
(k) Disclosure; Registration Statement.
None of the information that the Target will
supply specifically for use in the
Registration Statement or the Prospectus will
contain any untrue statement of a material
fact or omit to state a material fact
necessary in order to make the statements made
therein, in the light of the circumstances
under which they will be made, not misleading.
(l) Filing of Returns Target has
filed all federal, state, local and foreign
tax returns and reports required to be filed
by them through the date hereof and shall
timely file all returns and reports required
on or before the Closing.
Section 4. Representations and Warranties
of Buyer.
Buyer represents and warrants to Target that
the statements contained in this Section 4 are
correct and complete as of the date of this
Agreement and will be correct and complete as
of the Closing Date (as though made then and
as though the Closing Date were substituted
for the date of this Agreement throughout this
Section 4), except as set forth in the
Disclosure Schedule. The Disclosure Schedule
will be arranged in paragraphs corresponding
to the numbered and lettered paragraphs
contained in this Section 4.
(a) Organization, Qualification, and
Corporate Power. The Buyer is a corporation
duly organized, validly existing, and in good
standing under the laws of the State of
Florida. Buyer is duly authorized to conduct
business and is in good standing under the
laws of each jurisdiction where such
qualification is required. Buyer has full
corporate power and authority to carry on the
businesses in which it is engaged and to own
and use the properties owned and used by it.
(b) Capitalization. The entire authorized
capital stock of the Buyer consists of
100,000,000 Buyer Shares, of which 980,000
Buyer Shares are issued and outstanding and no
Buyer Shares are held in treasury. All of
the issued and outstanding Buyer Shares have
been duly authorized and are validly issued,
fully paid and nonassessable. There are no
outstanding or authorized options, warrants,
purchase rights, subscription rights,
conversion rights, exchange rights, or other
contracts or commitments that could require
the Buyer to issue, sell or otherwise cause to
become outstanding any of its capital stock.
There are no outstanding or authorized stock
appreciation, phantom stock, profit
participation, or similar rights with respect
to Buyer Shares.
Buyer agrees that it will not declare a
dividend, issue Shares, split its Shares, etc.
from the date of this agreement until the
Closing.
All of the Buyer Shares to be issued in the
Merger have been duly authorized and, upon
consummation of the Merger, will be validly
issued, fully paid and nonassessable.
(c) Authorization of Transaction. The Buyer
has full power and authority (including full
corporate power and authority) to execute and
deliver this agreement and to perform its
obligations hereunder; provided, however, that
the Buyer cannot consummate the Merger unless
and until it receives the Requisite Buyer
Shareholder Approval. This agreement
constitutes the valid and legally binding
obligation of the Buyer, enforceable in
accordance with its terms and conditions.
(d) Noncontravention. To the Knowledge of
any director or officer of the Buyer, neither
the execution and the delivery of this
agreement, nor the consummation of the
transactions contemplated hereby, will (i)
violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any
government, governmental agency, or court to
which the Buyer is subject or any provision of
the Articles of Incorporation or Bylaws of the
Buyer or (ii) conflict with, result in a
breach of, constitute a default under, result
in the acceleration of, create in any party
the right to accelerate, terminate, modify, or
cancel, or require any notice under any
agreement, contract, lease, license,
instrument or other arrangement to which the
Buyer is a party or by which it is bound or to
which any of its assets is subject except
where the violation, conflict, breach,
default, acceleration, termination,
modification, cancellation, or failure to give
notice would not have a material adverse
effect on the ability of the Parties to
consummate the transactions contemplated by
this agreement. To the Knowledge of any
director or officer of the Buyer, and other
than in connection with the provisions of the
Florida Business Corporation Act, the
Securities Exchange Act, the Securities Act
and the state securities laws, the Buyer does
not need to give any notice to, make any
filing with, or obtain any authorization,
consent, or approval of any government or
governmental agency in order for the Parties
to consummate the transactions contemplated by
this agreement, except where the failure to
give notice, to file, or to obtain any
authorization, consent, or approval would not
have a material adverse effect on the ability
of the Parties to consummate the transactions
contemplated by this agreement.
(e) Filings with the SEC. Buyer is
currently in registration with the SEC. It is
not yet subject to the reporting requirements
of the Exchange Act of 1934 and is not
required to make any filings with the SEC.
(f) Financial Statements. Buyer has
heretofore furnished Targer with a true and
complete copy of the financial statements
listed on Exhibit 3 (f) of the Disclosure
Schedule. The financial statements, together
with the notes thereto reflect all known
liabilities of Buyer, fixed or contingent,
required to be stated therein. Such financial
statements (including the related notes and
schedules) have been prepared in accordance
with GAAP applied on a consistent basis
throughout the periods covered thereby, and
present fairly the financial condition of
Buyer at said dates and the results of
operations and cash flows of Buyer for the
periods then ended. Such financial statements
are correct and complete in all respects and
are consistent with the books and records of
the Buyer. The balance sheet of Buyer at
December 31, 2000, is herein sometimes
referred to as the "Buyer Balance Sheet".
(g) Events Subsequent to Date of Buyer
Balance Sheet. Since the date of the Buyer
Balance Sheet, there has not been any material
adverse change in the business, financial
condition, operations results of operations or
future prospects of the Buyer.
(h) Undisclosed Liabilities. Buyer does not
have any liability (whether known or unknown,
whether asserted or unasserted, whether
absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including
any liability for taxes, except for (i)
liabilities set forth on the face of the Buyer
Balance Sheet (rather than in any notes
thereto) and (ii) liabilities which have
arisen after the date of the Buyer Balance
Sheet 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).
(i) Brokers' Fees. The Buyer does not have
any liability or obligation to pay any fees or
commissions to any broker, finder, or agent
with respect to the transactions contemplated
by this agreement for which the Target could
become liable or obligated.
(j) Disclosure, Registration Statement.
Buyer shall prepare an amendment to the
current filing with the SEC to reflect this
transaction. The Registration Statement and
the Prospectus will comply with the Securities
Act in all material respects. The
Registration Statement and the Prospectus will
not contain any untrue statement of a material
fact or omit to state a material fact
necessary in order to make the statements made
therein, in the light of the circumstances
under which they will be made, not misleading;
provided, however, that the Buyer makes no
representation or warranty with respect to any
information that the Target will supply
specifically for use in the Registration
Statement or the Prospectus.
(k) Filing of Returns Buyer has filed
all federal, state, local and foreign tax
returns and reports required to be filed by
them through the date hereof and shall timely
file all returns and reports required on or
before the Closing.
(l) Compensation Buyer will not
increase compensation, xxxxx xxxxxxxxx
packages or make any other compensation
related agreements from the date of the
agreement until the Closing.
(m) Actions other than in Ordinary
Course Buyer will not take any actions other
than in the ordinary course of business from
the date of the agreement until the Closing.
Section 5. Covenants.
The Parties hereby covenant as follows with
respect to the period from and after the
execution of this agreement to the Closing.
(a) General. Each of the Parties will use
its reasonable best efforts to take all action
and to do all things necessary, proper or
advisable in order to consummate and make
effective the transactions contemplated by
this agreement (including satisfaction, but
not waiver, of the Closing conditions set
forth in Section 6 below).
(b) Notices and Consents. The Target will
give any notices to third parties, and will
use its reasonable best efforts to obtain any
third party consents, that the Buyer
reasonably may request in connection with the
matters referred to in Section 3(d) above.
(c) Regulatory Matters and Approvals. Each
of the Parties will give any notices to, make
any filings with, and use its reasonable best
efforts to obtain any authorizations,
consents, and approvals of governments and
governmental agencies in connection with the
matters referred to in Section 3(d) and
Section 4(d) above. Without limiting the
generality of the foregoing:
(i) Securities Act and State Securities
Laws. The Buyer will prepare and file with
the SEC a registration statement under the
Securities Act relating to the offering and
issuance of the Buyer Shares (the
"Registration Statement"). The Buyer will use
its reasonable best efforts to respond to the
comments of the SEC thereon and will make any
further filings (including amendments and
supplements) in connection therewith that may
be necessary, proper or advisable. The Target
will provide the Buyer with whatever
information and assistance in connection with
the foregoing filings that the Buyer
reasonably may request. The Buyer will take
all actions that may be necessary, proper, or
advisable under state securities laws in
connection with the offering and issuance of
the Buyer Shares.
(ii) State Laws. The Target will obtain as
soon as reasonable practicable the Target
Requisite Shareholder Approval of the Merger
by the written consent of the Target
Stockholders adopting this agreement and
approving of the Merger in accordance with the
Colorado Corporation Code. The Buyer will
obtain as soon as reasonably practicable the
Buyer Requisite Shareholder Approval of the
Merger by the written consent of the Buyer
Shareholders adopting this agreement and
approving the Merger in accordance with the
Florida Business Corporation Act.
(d) Listing of Buyer Shares. The Buyer will
use its reasonable best efforts to cause the
Buyer Shares that will be issued in the Merger
to be approved for listing on the electronic
Bulletin Board prior to the Effective Time.
(e) Operation of Business. The Target will
not engage in any practice, take any action,
or enter into any transaction outside the
Ordinary Course of Business. Without limiting
the generality of the foregoing:
(i) the Target will not authorize or effect
any change in its Articles of Incorporation or
Bylaws;
(ii) the Target will not grant any options,
warrants, or other rights to purchase or
obtain any of its capital stock or issue,
sell, or otherwise dispose of any of its
capital stock (except upon the conversion or
exercise of options, warrants and other rights
currently outstanding);
(iii) the Target will not declare, set aside
or pay any dividend or distribution with
respect to its capital stock (whether in cash
or in kind), or redeem, repurchase, or
otherwise acquire any of its capital stock, in
either case outside the Ordinary Course of
Business;
(iv) the Target will not issue any note, bond
or other debt security or create, incur,
assume or guarantee any indebtedness for
borrowed money or capitalized lease obligation
outside the Ordinary Course of Business;
(iii) the Target will not impose any
Security Interest upon any of its assets
outside the Ordinary Course of Business;
(iv) the Target will not make any capital
investment in, make any loan to, or acquire
the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) the Target will not make any change in
employment terms for any of its directors,
officers, and employees outside the Ordinary
Course of Business; and
(viii) the Target will not commit to any
of the foregoing.
(f) Full Access. The Target will permit
representatives of the Buyer to have full
access at all reasonable times, and in a
manner so as not to interfere with the normal
business operations of the Target, to all
premises, properties, personnel, books,
records (including tax records), contracts,
and documents of or pertaining to Target. The
Buyer will treat and hold as such any
Confidential Information it receives from
Target in the course of the reviews
contemplated by this Section 5(f), will not
use any of the Confidential Information except
in connection with this agreement, and, if
this agreement is terminated for any reason
whatsoever, agrees to return to the Target all
tangible embodiments (and all copies) thereof
which are in its possession.
(g) Notice of Developments. Each Party will
give prompt written notice to the other of any
material adverse development causing a breach
of any of its own representations and
warranties in Section 3 and Section 4 above.
No disclosure by any Party pursuant to this
Section 5(g), however, shall be deemed to
amend or supplement the Disclosure Schedule or
to prevent or cure any misrepresentation,
breach of warranty or breach of covenant.
(h) Exclusivity. The Target will not
solicit, initiate, or encourage the submission
of any proposal or offer from any Person
relating to the acquisition of all or
substantially all of the capital stock or
assets of the Target (including any
acquisition structured as a merger,
consolidation, or share exchange); provided,
however, that the Target and its directors and
officers will remain free to participate in
any discussions or negotiations regarding,
furnish any information with respect to,
assist or participate in, or facilitate in any
other manner any effort or attempt by any
Person to do or seek any of the foregoing to
the extent their fiduciary duties may require.
The Target shall notify the Buyer immediately
if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the
foregoing.
(i) Indemnification. The Buyer, as the
Surviving Corporation in the Merger, will
observe any indemnification provisions now
existing in the Articles of Incorporation or
Bylaws of the Target for the benefit of any
individual who served as a director or officer
of the Target at any time prior to the
Effective Time.
Section 6. Conditions to Obligation to
Close.
(a) Conditions to Obligation of the Buyer.
The obligation of the Buyer to consummate the
transactions to be performed by it in
connection with the Closing is subject to
satisfaction of the following conditions:
(i) this agreement and the Merger shall have
received the Requisite Target Stockholder
Approval;
(ii) the Target shall have procured all of
the third party consents specified in Section
5(b) above;
(iii) the representations and warranties
set forth in Section 3 above shall be true and
correct in all material respects at and as of
the Closing Date;
(iv) the Target shall have performed and
complied with all of its covenants hereunder
in all material respects through the Closing;
(v) no action, suit, or proceeding shall be
pending or threatened before any court or
quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an
unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions
contemplated by this Agreement, (B) cause any
of the transactions contemplated by this
Agreement to be rescinded following
consummation, (C) affect adversely the right
of the Surviving Corporation to own the former
assets and to operate the former businesses of
the Target, (D) affect adversely the right of
the Target to own its assets and to operate
its businesses (and no such injunction,
judgment, order, decree, ruling, or charge
shall be in effect); or (E) there shall not be
any judgment, order, decree, stipulation,
injunction, or charge in effect preventing
consummation of any of the transactions
contemplated by this Agreement;
(vi) the Target shall have delivered to the
Buyer a certificate to the effect that each of
the conditions specified above in Section
6(a)(i)-(v) is satisfied in all respects;
(vii) this Agreement and the Merger shall
have received the Requisite Buyer Shareholder
Approval;
(viii) the Registration Statement shall
have become effective under the Securities
Act;
(ix) the Buyer Shares that will be issued in
the Merger shall have been approved for
listing on the electronic Bulletin Board;
(x) all actions to be taken by the Target in
connection with consummation of the
transactions contemplated hereby and all
certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably
satisfactory in form and substance to the
Buyer.
The Buyer may waive any condition specified in
this Section 6(a) if it executes a writing so
stating at or prior to the Closing.
(b) Conditions to Obligation of the Target.
The obligation of the Target to consummate
the transactions to be performed by it in
connection with the Closing is subject to
satisfaction of the following conditions:
(i) this Agreement and the Merger shall have
received the Requisite Buyer Shareholder
Approval;
(ii) the Registration Statement shall have
become effective under the Securities Act;
(iii) the Buyer Shares that will be
issued in the Merger shall have been approved
for listing on the electronic Bulletin Board;
(iv) the representations and warranties set
forth in Section 4 above shall be true and
correct in all material respects at and as of
the Closing Date;
(v) the Buyer shall have performed and
complied with all of its covenants hereunder
in all material respects through the Closing;
(vi) no action, suit, or proceeding shall be
pending or threatened before any court or
quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an
unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions
contemplated by this Agreement, (B) cause any
of the transactions contemplated by this
Agreement to be rescinded following
consummation, (C) affect adversely the right
of the Surviving Corporation to own the former
assets and to operate the former businesses of
the Target, (D) affect adversely the right of
the Target to own its assets and to operate
its businesses (and no such injunction,
judgment, order, decree, ruling, or charge
shall be in effect); or (E) there shall not be
any judgment, order, decree, stipulation,
injunction, or charge in effect preventing
consummation of any of the transactions
contemplated by this Agreement;
(vii) the Buyer shall have delivered to
the Target a certificate to the effect that
each of the conditions specified above in
Section 6(b)(i)-(vi) is satisfied in all
respects;
(viii) this Agreement and the Merger shall
have received the Requisite Target Stockholder
Approval;
(ix) the Target shall have received the
resignations, effective as of the Closing, of
each director and officer of the Buyer other
than those whom the Target shall have
specified in writing at least five business
days prior to the Closing; and
(x) all actions to be taken by the Buyer in
connection with consummation of the
transactions contemplated hereby and all
certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably
satisfactory in form and substance to the
Target.
The Target may waive any condition specified
in this Section 6(b) if it executes a writing
so stating at or prior to the Closing.
Section 7. Termination.
(a) Termination of Agreement. Either of the
Parties may terminate this Agreement with the
prior authorization of its Board of Directors
(whether before or after shareholder approval)
as provided below:
(i) the Parties may terminate this Agreement
by mutual written consent at any time prior to
the Effective Time;
(ii) the Buyer may terminate this Agreement
by giving written notice to the Target at any
time prior to the Effective Time (A) in the
event the Target has breached any material
representation, warranty, or covenant
contained in this Agreement in any material
respect, the Buyer has notified the Target of
the breach, and the breach has continued
without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall
not have occurred on or before April 30, 2001,
by reason of the failure of any condition
precedent under Section 6(a) hereof (unless
the failure results primarily from the Buyer
breaching any representation, warranty or
covenant contained in this Agreement);
(iii) the Target may terminate this Agreement
by giving written notice to the Buyer at any
time prior to the Effective Time (A) in the
event the Buyer has breached any material
representation, warranty, or covenant
contained in this Agreement in any material
respect, the Target has notified the Buyer of
the breach, and the breach has continued
without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall
not have occurred on or before October 31,
2000, by reason of the failure of any
condition precedent under Section 6(b) hereof
(unless the failure results primarily from the
Target breaching any representation, warranty
or covenant contained in this Agreement);
(iv) any Party may terminate this Agreement
by giving written notice to the other Party at
any time in the event this Agreement and the
Merger fail to receive the Requisite Buyer
Shareholder Approval or the Requisite Target
Stockholder Approval, respectively.
(b) Effect of Termination. If any Party
terminates this Agreement pursuant to Section
7(a) above, all rights and obligations of the
Parties hereunder shall terminate without any
liability of any Party to any other Party
(except for any liability of any Party then in
breach); provided, however, that the
confidentiality provisions contained in
Section 5(f) above shall survive any such
termination.
Section 8. Miscellaneous.
(a) Survival. None of the representations,
warranties, and covenants of the Parties shall
survive the Effective Time (other than the
provisions in Section 2 above concerning
issuance of the Buyer Shares, and the
provisions in Section 5(i) above concerning
indemnification).
(b) Press Releases and Public Announcements.
No Party shall issue any press release or
make any public announcement relating to the
subject matter of this agreement without the
prior written approval of the other Party;
provided, however, that any Party may make any
public disclosure it believes in good faith is
required by applicable law or any listing or
trading agreement concerning its
publicly-traded securities (in which case the
disclosing Party will use its reasonable best
efforts to advise the other Party prior to
making the disclosure).
(c) No Third Party Beneficiaries. This
agreement shall not confer any rights or
remedies upon any Person other than the
Parties and their respective successors and
permitted assigns; provided, however, that (i)
the provisions in Section 2 above concerning
issuance of the Buyer Shares and are intended
for the benefit of the Target Stockholders and
(ii) the provisions in Section 5(i) above
concerning indemnification are intended for
the benefit of the individuals specified
therein and their respective legal
representatives.
(d) Entire Agreement. This Agreement
(including the documents referred to herein)
constitutes the entire agreement between the
Parties and supersedes any prior
understandings, agreements, or representations
by or between the Parties, written or oral, to
the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This
Agreement shall be binding upon and inure to
the benefit of the Parties named herein and
their respective successors and permitted
assigns. No Party may assign either this
Agreement or any of its rights, interests, or
obligations hereunder without the prior
written approval of the other Party.
(f) Counterparts. This Agreement may be
executed in several counterparts, each of
which shall be deemed an original but all of
which together will constitute one and the
same instrument.
(g) Headings. The section headings
contained in this Agreement are inserted for
convenience only and shall not affect in any
way the meaning or interpretation of this
Agreement.
(h) Notices. All notices, requests,
demands, claims, and other communications
hereunder will be in writing. Any notice,
request, demand, claim, or other communication
hereunder shall be deemed duly given if (and
then two business days after) it is sent by
registered or certified mail, return receipt
requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to the Target:
CapSource Financial, Inc.
0000 Xxxxxxx Xxxxx
Xx Xxxx,Xx 00000
Telephone: (000)-000-0000
Attn: Xxxxxx X. Xxxxxxxx, Vice
President and Legal Counsel
If to the Buyer:
Village I Acquisition Corp.
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Copy to:
Xxxx X. Xxxxxx
Attorney at Law
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
Any Party may send any notice, request,
demand, claim, or other communication
hereunder to the intended recipient at the
address set forth above using any other means
(including personal delivery, expedited
courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other
communication shall be deemed to have been
duly given unless and until it actually is
received by the intended recipient. Any Party
may change the address to which notices,
requests, demands, claims, and other
communications hereunder are to be delivered
by giving the other Party notice in the manner
herein set forth.
(i) Governing Law. This Agreement shall be
governed by and construed in accordance with
the domestic laws of the State of Florida
without giving effect to any choice or
conflict of law provision or rule (whether of
the State of Florida or any other
jurisdiction) that would cause the application
of the laws of any jurisdiction other than the
State of Florida.
(j) Amendments and Waivers. The Parties may
mutually amend any provision of this Agreement
at any time prior to the Effective Time with
the prior authorization of their respective
Boards of Directors; provided, however, that
any amendment effected subsequent to
stockholder approval will be subject to the
restrictions contained in the Florida Business
Corporation Act. No amendment of any
provision of this Agreement shall be valid
unless the same shall be in writing and signed
by both of the Parties. No waiver by any
Party of any default, misrepresentation, or
breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to
extend to any prior or subsequent default,
misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any
rights arising by virtue of any prior or
subsequent such occurrence.
(k) Severability. Any term or provision of
this Agreement that is invalid or
unenforceable in any situation in any
jurisdiction shall not affect the validity or
enforceability of the remaining terms and
provisions hereof or the validity or
enforceability of the offending term or
provision in any other situation or in any
other jurisdiction.
(l) Expenses. Each of the Parties will bear
its own costs and expenses (including legal
fees and expenses) incurred in connection with
this Agreement and the transactions
contemplated hereby.
(m) Construction. The Parties have
participated jointly in the negotiation and
drafting of this Agreement. In the event an
ambiguity or question of intent or
interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties
and no presumption or burden of proof shall
arise favoring or disfavoring any Party by
virtue of the authorship of any of the
provisions of this Agreement. Any reference
to any federal, state, local, or foreign
statute or law shall be deemed also to refer
to all rules and regulations promulgated
thereunder, unless the context otherwise
requires. The word "including" shall mean
including without limitation.
(n) Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference
and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement as of the date first
above written.
VILLAGE II ACQUISITION CORP.
By: /s/Xxxxx Xxxxxxxx
Title: Secretary
CapSource Financial, INC.
By: /s/ Xxxx X. Xxxxxxxxx
Title: President
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