AGREEMENT AND PLAN OF MERGER AND REORGANIZATION BY AND AMONG DAIRY FRESH FARMS, INC. AND GREAT BEAR EXPLORATIONS INC. DATED October 23, 2007
BY
AND AMONG
DAIRY
FRESH FARMS, INC.
AND
GREAT
BEAR EXPLORATIONS INC.
DATED
October
23, 2007
This
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
(the
"Agreement") is made and entered into as of October 23, 2007, by and among
DAIRY
FRESH FARMS, INC.,
a
Nevada corporation (“Parent” or “DYFR”), and Great
Bear Explorations Inc.
an
Alberta corporation (the “Company” or “GBE”).
RECITALS
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A.
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The
Boards of Directors of Company, Parent believe it is in the best
interests
of their respective companies and the stockholders of their respective
companies that the Company combine into a single company through
the
statutory merger of GBE with and into the Parent (the “Merger”).
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B.
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Pursuant
to the Merger, among other things, the outstanding shares of Company
Common Stock, no par value (“Company Common Stock”), shall be converted
into the right to receive shares of Parent Common Stock, $.001 par
value
(“Parent Common Stock”), at the rate set forth herein.
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C.
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Company
and Parent desire to make certain representations and warranties
and other
agreements in connection with the Merger.
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D.
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The
parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal
Revenue
Code of 1986, as amended (the “Code”), and to cause the Merger to qualify
as a reorganization under the provisions of Sections 368 of the Code,
so
that such exchange will constitute a tax-free share exchange under
the
Code.
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NOW,
THEREFORE,
in
consideration of the mutual covenants and premises contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby conclusively acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE
1
THE
MERGER
| 1.1. |
THE
MERGER.
At the Effective Time (as defined in Section 1.2) and subject to
and upon
the terms and conditions of this Agreement GBE
will, upon the filing of the Certificate of Merger (the “Effective Date”),
merge with and into the Company, and thereafter the separate existence
of
GBE will cease. As of the Effective Date, DYFR shall succeed to all
of the
rights, privileges, powers and property, including, without limitation,
all rights, privileges, franchises, patents, trademarks, licenses,
registrations, bank accounts, contracts, patents, copyrights and
other
assets of every kind and description of GBE, and DYFR shall assume
all of
the obligations and liabilities of GBE, excepting and excluding,
(i) the
minute books and stock records of GBE insofar as they relate solely
to its
organization and capitalization, and (ii) the rights of GBE arising
out of
this Agreement. The Merger will occur in accordance with the Nevada
Revised Statutes. DYFR
as
the surviving corporation after the Merger is hereinafter sometimes
referred to as the “Surviving Corporation.”
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2
| 1.2. |
PENDING
AND SUBSEQUENT ACTIONS.
GBE will cooperate, and will cause its officers, directors and other
employees to cooperate, with DYFR on and after the Effective Date
(i) in
effecting the collection of receivables (if any) and other items
owing to
GBE and (ii) furnishing financial information for the subsequent
two years
in Securities and Exchange Commission (“SEC”) qualified audited financial
format and other assistance in connection with all actions, proceedings,
arrangements or valuations based upon contracts, arrangements or
acts of
GBE which were in effect or which occurred on or prior to the
Merger.
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| 1.3. |
CLOSING;
EFFECTIVE TIME.
The closing of the transactions contemplated hereby (the “Closing”) shall
take place as soon as practicable after the satisfaction or waiver
of each
of the conditions set forth in Article VI hereof or at such other
time as
the parties hereto agree; however, it is anticipated that the parties
will
close this transaction on November 15, 2007 (the “Closing Date”). The
Closing shall take place at the offices of
Parent,
or at such other location as the parties hereto agree. Simultaneously
with
or as soon as practicable following the Closing, the parties hereto
shall
cause the Merger to be consummated by filing the Certificate of Merger
in
accordance with the relevant provisions of Alberta
Law
(the time of such filing being the “Effective Time”).
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| 1.4. |
EFFECT
OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided
in
this Agreement, the Certificate of Merger and the applicable provisions
of
Alberta Law. Without limiting the generality of the foregoing, and
subject
thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Company shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company shall become the
debts,
liabilities and duties of the Surviving Corporation.
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| 1.5. |
CERTIFICATE
OF INCORPORATION; BYLAWS.
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| 1.5.1. |
At
the Effective Time, the Certificate of Incorporation of Surviving
Corporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by Nevada Revised
Statutes and such Certificate of Incorporation.
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| 1.5.2. |
The
Bylaws of Surviving Corporation, as in effect immediately prior to
the
Effective Time, shall be the Bylaws of the Surviving Corporation
until
thereafter amended.
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| 1.6. |
DIRECTORS
AND OFFICERS.
At the Effective Time, the directors of the Surviving Corporation
shall
remain as directors of the Surviving Corporation, in each case until
their
successors are elected or appointed and qualified or until their
earlier
resignation or removal. The officers of the Surviving Corporation
shall
remain as officers of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified or until their
earlier resignation or removal.
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| 1.7. |
EFFECT
ON CAPITAL STOCK.
By virtue of the Merger:
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| 1.7.1. |
CONVERSION
OF COMPANY COMMON STOCK.
At the Effective Time, all of the Company Common Stock issued and
outstanding immediately prior to the Effective Time will be canceled
and
extinguished and be converted automatically into the right to receive
shares of Parent Common Stock in the aggregate of thirty million
(30,000,000) shares of Company Common Stock distributed pro rata
to the
Company shareholders (the "Exchange Ratio"), subject to any adjustments
made pursuant to Section 1.6.5 (the “Merger Consideration”). Each
certificate evidencing shares represented by the Merger Consideration
issued pursuant to this Section 1.6.1 shall bear the following legend
(in
addition to any legend required under applicable state securities
laws):
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"THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE CORPORATION RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
CORPORATION STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT."
| 1.7.2. |
CANCELLATION
OF COMPANY COMMON STOCK.
At the Effective Time, all shares of Company Common Stock that are
owned
by Company as treasury stock immediately prior to the Effective Time
shall
be canceled and extinguished without any conversion thereof.
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| 1.7.3. |
COMPANY
STOCK OPTIONS, WARRANTS TO PURCHASE COMPANY COMMON STOCK AND CONVERTIBLE
NOTES.
At the Effective Time, there shall be no options to purchase Company
Common Stock outstanding, there shall be no warrants outstanding,
there
shall be no promissory notes convertible into shares of Company Common
Stock outstanding. and there shall be no securities convertible into
shares of Company Common Stock
outstanding.
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| 1.7.4. |
ADJUSTMENTS
TO EXCHANGE RATIO.
The Exchange Ratio shall be adjusted to reflect fully the effect
of any
stock split, reverse split, stock dividend (including any dividend
or
distribution of securities convertible into Parent Common Stock or
Company
Common Stock), reorganization, recapitalization or other like change
with
respect to Parent Common Stock or Company Common Stock occurring
after the
date hereof and prior to the Effective Time, so as to provide holders
of
Company Common Stock and Parent the same economic effect as contemplated
by this Agreement prior to such stock split, reverse split, stock
dividend, reorganization, recapitalization or like change; except
for the
stock split and debt elimination of Parent as contemplated by this
Agreement.
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| 1.7.5. |
NO
FRACTIONAL SHARES.
No fractional shares of Parent Common Stock shall be issued in connection
with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Common Stock who would
otherwise be entitled to receive a fraction of a share of Parent
Common
Stock (after aggregating all fractional shares of Parent Common Stock
issuable to such holder) shall, in lieu of such fraction of a share,
be
rounded up to the nearest whole number of shares of Parent Common
Stock.
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| 1.8. |
SURRENDER
OF CERTIFICATES.
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| 1.8.1. |
EXCHANGE
AGENT.
Parent's transfer agent shall act as exchange agent (the "Exchange
Agent")
in the Merger.
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| 1.8.2. |
PARENT
TO PROVIDE COMMON STOCK.
Promptly after the Effective Time, Parent shall make available to
the
Exchange Agent for exchange in accordance with this Article I, through
such reasonable procedures as Parent may adopt, certificates representing
the shares of Parent Common Stock issuable pursuant to Section 1.7.1
in
exchange for shares of Company Common Stock outstanding immediately
prior
to the Effective Time (provided that delivery of any shares that
are
subject to vesting and/or repurchase rights or other restrictions
shall be
in book entry form until such vesting and/or repurchase rights or
other
restrictions lapse).
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| 1.8.3. |
EXCHANGE
PROCEDURES.
Promptly after the Effective Time, Parent shall cause the Exchange
Agent
to mail to each holder of record of a certificate or certificates
(the
"Certificates") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock, whose shares were converted
into the right to receive shares of Parent Common Stock pursuant
to
Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt of the Certificates by the Exchange
Agent,
and shall be in such form and have such other provisions as Parent
may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates (or book
entries in the case of shares that are subject to vesting and/or
repurchase rights or other restrictions) representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to
the
Exchange Agent or to such other agent or agents as may be appointed
by
Parent, together with such letter of transmittal, duly completed
and
validly executed in accordance with the instructions thereto, the
holder
of such Certificate shall be entitled to receive in exchange therefor
a
certificate (or book entry in the case of shares that are subject
to
vesting and/or repurchase rights or other restrictions) representing
the
number of whole shares of Parent Common Stock which such holder has
the
right to receive pursuant to Section 1.6, and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented
shares of Company Common Stock will be deemed from and after the
Effective
Time, for all corporate purposes, other than the payment of dividends,
to
evidence the ownership of the number of full shares of Parent Common
Stock
into which such shares of Company Common Stock shall have been so
converted.
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| 1.8.4. |
DISTRIBUTIONS
WITH RESPECT TO UNEXCHANGED SHARES.
No dividends or other distributions with respect to Parent Common
Stock
with a record date after the Effective Time will be paid to the holder
of
any unsurrendered Certificate with respect to the shares of Parent
Common
Stock represented thereby until the holder of record of such Certificate
shall surrender such Certificate. Subject to applicable law, following
surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, at the time
of such
surrender, the amount of any such dividends or other distributions
with a
record date after the Effective Time theretofore payable (but for
the
provisions of this Section 1.8.4) with respect to such shares of
Parent
Common Stock.
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| 1.8.5. |
TRANSFERS
OF OWNERSHIP.
If any certificate for shares of Parent Common Stock is to be issued
in a
name other than that in which the Certificate surrendered in exchange
therefor is registered, it will be a condition of the issuance thereof
that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting
such
exchange will have paid to Parent or any agent designated by it any
transfer or other taxes required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name other than
that
of the registered holder of the Certificate surrendered, or established
to
the satisfaction of Parent or any agent designated by it that such
tax has
been paid or is not payable.
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| 1.8.6. |
NO
LIABILITY.
Notwithstanding anything to the contrary in this Section 1.7, none
of the
Exchange Agent, the Surviving Corporation, Parent or any party hereto
shall be liable to any person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or
similar
law. “Person” herein shall mean any individual, corporation, limited
liability company, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, or other
organization, whether or not a legal entity, and any Governmental
Authority.
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| 1.9. |
NO
FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All shares of Parent Common Stock issued upon the surrender for exchange
of shares of Company 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 Company Common Stock, and there shall
be no
further registration of transfers on the records of the Surviving
Corporation of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time,
Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article
I.
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| 1.10. |
LOST,
STOLEN OR DESTROYED CERTIFICATES.
In the event any Certificates shall have been lost, stolen or destroyed,
the Exchange Agent shall issue in exchange for such lost, stolen
or
destroyed Certificates, upon the making of an affidavit of that fact
by
the holder thereof, such shares of Parent Common Stock as may be
required;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen
or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against
Parent, the Surviving Corporation or the Exchange Agent with respect
to
the Certificates alleged to have been lost, stolen or destroyed.
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| 1.11. |
TAX
CONSEQUENCES.
It is intended by the parties hereto that the Merger shall constitute
a
reorganization within the meaning of Section 368 of the Code.
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| 1.12. |
WITHHOLDING
RIGHTS.
Parent and the Surviving Corporation shall be entitled to deduct
and
withhold from the number of shares of Parent Common Stock otherwise
deliverable under this Agreement, such amounts as Parent and the
Surviving
Corporation are required, and Company acknowledges and agrees are
required, to deduct and withhold with respect to such delivery and
payment
under the Code or any provision of state, local, provincial or foreign
tax
law. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes of this Agreement as having been
delivered and paid to the holder of shares of Company Common Stock
in
respect of which such deduction and withholding was made by Parent
and the
Surviving Corporation.
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| 1.13. |
TERMINATION
OF EXCHANGE AGENT FUNDING.
Any certificates for shares of Parent Common Stock held by the Exchange
Agent which have not been delivered to holders of Certificates pursuant
to
this Article I within six months after the Effective Time shall promptly
be delivered to Parent, and thereafter holders of Certificates who
have
not theretofore complied with the exchange procedures set forth in
and
contemplated by Section 1.7 shall thereafter look only to Parent
(subject
to abandoned property, escheat and similar laws) for their claim
for
shares of Parent Common Stock and any dividends or distributions
(with a
record date after the Effective Time) with respect to Parent Common
Stock
to which they are entitled.
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| 1.14. |
TAKING
OF NECESSARY ACTION; FURTHER ACTION.
If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest
the
Surviving Corporation with full right, title and possession to all
assets,
property, rights, privileges, powers and franchises of Company, the
officers and directors of Company are fully authorized in the name
of
their respective corporations or otherwise to take, and will take,
all
such lawful and necessary action, so long as such action is not
inconsistent with this Agreement.
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ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF COMPANY
In
this
Agreement, any reference to any event, change, condition or effect being
"material" with respect to any person means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such person and its subsidiaries, taken
as a whole. In this Agreement, any reference to a "Material Adverse Effect"
with
respect to any person means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of operations of such person and
its subsidiaries, taken as a whole.
In
this
Agreement, any reference to a party's "Knowledge" means such party's actual
knowledge after reasonable inquiry of executive officers and directors (within
the meaning of Rule 405 under the Securities Act of 1933, as amended
("Securities Act")).
Company
represents and warrants to Parent as follows:
| 2.1 |
ORGANIZATION,
STANDING AND POWER.
The Company is a corporation duly organized, validly existing and
in good
standing in Alberta,
and no certificate of dissolution has been filed under the laws of
its
jurisdiction of organization. The Company has the power to own its
properties and to carry on its business as now being conducted and
as
presently proposed to be conducted and is duly authorized and qualified
to
do business and is in good standing in each jurisdiction in which
the
failure to be so qualified and in good standing would have a Material
Adverse Effect on Company. Company has delivered or made available
to
Parent a true and correct copy of the Certificate of Incorporation
(the
"Company Certificate of Incorporation"), and the Bylaws, or other
charter
documents, as applicable, of the Company each as amended to date.
The
Company is not in violation of any of the provisions of its charter
or
bylaws or equivalent organization documents. The Company has delivered
to
Parent correct and complete copies of the minute books (containing
the
records of meetings of the Stockholders, the board of directors and
committees of the board of directors). Such minute books accurately
reflect in all material respects the matters referenced therein.
The
Company has also delivered to Parent correct and complete copies
of the
stock certificate books and the stock record books of the Company
and such
books and records accurately reflect the matters referenced therein.
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| 2.2 |
CAPITAL
STRUCTURE.
All outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid and non-assessable and are free of any
liens or
encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof, and are not subject to preemptive rights
or
rights of first refusal created by statute, the Company Certificate
of
Incorporation or Bylaws of Company or any agreement to which Company
is a
party or by which it is bound. There are no outstanding subscriptions,
options, warrants, rights (including phantom stock or stock appreciation
rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under
any
outstanding security, instrument or agreement (collectively, referred
to
as “Company
Options”),
obligating the Company to issue or sell any shares of capital stock
of the
Company or to grant, extend or enter into any security, instrument
or
agreement with respect thereto.
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| 2.3 |
AUTHORITY.
Company has all requisite corporate power and authority to enter
into this
Agreement and to consummate the transactions contemplated hereby
and
thereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Company,
subject only to the adoption of this Agreement by Company's stockholders
holding a majority of the outstanding shares of Company Common Stock.
This
Agreement has been duly executed and delivered by Company and constitutes
the valid and binding obligation of Company enforceable against Company
in
accordance with its terms, except as enforceability may be limited
by
bankruptcy and other laws affecting the rights and remedies of creditors
generally and general principles of equity. The execution and delivery
of
this Agreement by Company does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result
in any
violation of, or default under (with or without notice or lapse of
time,
or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any
provision
of
the Company Certificate of Incorporation or Bylaws of Company, as
amended,
or (ii) any mortgage, indenture, lease, contract or other agreement
or
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
the
Company or any of its properties or assets. No consent, approval,
order or
authorization of, or registration, declaration or filing with, any
court,
administrative agency or commission or other governmental authority
or
instrumentality ("Governmental Entity") is required by or with respect
to
Company in connection with the execution and delivery of this Agreement
by
Company or the consummation by Company of the transactions contemplated
hereby, except for (i) the filing of the Certificate of Merger as
provided
herein.
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| 2.4 |
GOVERNMENTAL
AUTHORIZATION.
The Company has obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization
of a
Governmental Entity (i) pursuant to which Company currently operates
or
holds any interest in any of its properties or (ii) that is required
for
the operation of Company's business or the holding of any such interest
((i) and (ii) herein collectively called "Company Authorizations"),
and
all of such Company Authorizations are in full force and effect,
except
where the failure to obtain or have any of such Company Authorizations
or
where the failure of such Company Authorizations to be in full force
and
effect would not reasonably be expected to have a Material Adverse
Effect
on Company.
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| 2.5 |
COMPLIANCE
WITH LAWS.
The Company has complied with and is not in violation of, and have
not
received any notices of violation with respect to, any federal, state,
local or foreign statute, law or regulation with respect to the conduct
of
its business, or the ownership or operation of its business, except
for
such violations or failures to comply as would not be reasonably
expected
to have a Material Adverse Effect on Company.
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| 2.6 |
MINUTE
BOOKS.
The minute books of Company made available to Parent contain a complete
and accurate summary of all meetings of directors and stockholders
or
actions by written consent of Company during the past three years
and
through the date of this Agreement, and reflect all transactions
referred
to in such minutes accurately in all material respects.
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| 2.7 |
COMPLETE
COPIES OF MATERIALS.
The Company has delivered or made available true and complete copies
of
each document that has been requested by Parent or its counsel in
connection with their legal and accounting review of Company.
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| 2.8 |
BROKERS'
AND FINDERS' FEES.
The Company has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions
or
investment bankers' fees or any similar charges in connection with
this
Agreement or any transaction contemplated hereby.
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| 2.9 |
VOTE
REQUIRED.
The Company has or will have the affirmative vote of the holders
of at
least a majority of the shares of Company Common Stock outstanding
on the
record date set for the meeting of the Company stockholders (the
“Company
Stockholders Meeting “) and such vote is the only vote of the holders of
any of Company's capital stock necessary to approve this Agreement
and the
transactions contemplated hereby.
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| 2.10 |
BOARD
APPROVAL.
The Board of Directors of Company has (i) approved this Agreement
and the
Merger, (ii) determined that this Agreement and the Merger are advisable
and in the best interests of the stockholders of Company and are
on terms
that are fair to such stockholders and (iii) recommended that the
stockholders of Company adopt and approve this Agreement and the
consummation of the Merger.
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| 2.11 |
REPRESENTATIONS
COMPLETE.
None of the representations or warranties made by Company herein
or in any
Schedule hereto, including the Company Disclosure Schedule, or
certificates furnished by Company pursuant to this Agreement, when
all
such documents are read together in their entirety, contains or will
contain at the Effective Time any untrue statement of a material
fact, or
omits or will omit at the Effective Time to state any material fact
necessary in order to make the statements contained herein or therein,
in
the light of the circumstances under which made, not misleading.
All
projected, forecasted or prospective financial information provided
by
Company to Parent has been prepared in good faith on the basis of
assumptions Company believes are reasonable and supportable.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent
represents and warrants to the Company as follows:
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3.1
|
ORGANIZATION,
STANDING AND POWER.
Parent is a corporation duly organized, validly existing and in good
standing, and no certificates of dissolution have been filed under
the
laws of its jurisdiction of organization. Parent has the power to
own its
properties and to carry on its business as now being conducted and
as
presently proposed to be conducted and is duly authorized and qualified
to
do business and is in good standing in each jurisdiction in which
the
failure to be so qualified and in good standing would have a Material
Adverse Effect on Parent. Parent is not in violation of any of the
provisions of their respective charter or bylaws or equivalent
organization documents. There are no outstanding subscriptions, options,
warrants, puts, calls, rights, exchangeable or convertible securities
or
other commitments or agreements of any character relating to the
issued or
unissued capital stock or other securities of any such subsidiary,
or
otherwise obligating Parent to issue, transfer, sell, purchase, redeem
or
otherwise acquire any such securities, except as disclosed in Parent
SEC
Documents (as defined in Section 3.4).
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|
3.2
|
CAPITAL
STRUCTURE.
The authorized capital stock of Parent consists of 75,000,000 shares
of
which 23,003,549 are
issued and outstanding shares
of common stock, $001 par value, and no shares of preferred stock,
$001
par value. The shares of Parent Common Stock to be issued pursuant
to the
Merger will be duly authorized, validly issued, fully paid, and
non-assessable, free of any liens or encumbrances imposed by Parent.
There
are no other outstanding shares of capital stock or voting securities
and
no outstanding commitments to issue any shares of capital stock or
voting
securities after the date hereof, except as disclosed in Parent SEC
Documents (as defined in Section 3.4). All outstanding shares of
Parent
Common Stock are duly authorized, validly issued, fully paid and
non-assessable and are free of any liens or encumbrances other than
any
liens or encumbrances created by or imposed upon the holders thereof,
and
are not subject to preemptive rights or rights of first refusal created
by
statute, the Certificate of Incorporation or Bylaws of Parent or
any
agreement to which Parent is a party or by which it is bound. There
are no
contracts, commitments or agreements relating to voting, purchase
or sale
of Parent's capital stock (i) between or among Parent and any of
its
stockholders and (ii) to the best of Parent's knowledge, between
or among
any of Parent's stockholders.
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|
3.3
|
AUTHORITY.
Parent has all requisite corporate power and authority to enter into
this
Agreement and to consummate the transactions contemplated hereby.
The
execution and delivery of this Agreement and the consummation of
the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent. This Agreement
has been
duly executed and delivered by Parent and constitutes the valid and
binding obligations of Parent, enforceable against Parent in accordance
with its terms, except as enforceability may be limited by bankruptcy
and
other laws affecting the rights and remedies of creditors generally
and
general principles of equity. The execution and delivery of this
Agreement
do not, and the consummation of the transactions contemplated hereby
will
not, conflict with, or result in any violation of, or default under
(with
or without notice or lapse of time, or both), or give rise to a right
of
termination, cancellation or acceleration of any obligation or loss
of any
benefit under
|
3.3.1
any
provision of the Certificate of Incorporation or Bylaws of Parent, as amended,
or;
3.3.2
any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or its properties or assets.
No consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Entity is required by or with respect to Parent
in
connection with the execution and delivery of this Agreement by Parent or the
consummation by Parent of the transactions contemplated hereby, except for
(i)
the filing of the Certificate of Merger; (ii) the filing of a Form 8-K with
the
SEC within 4 days after the Closing Date; (iii) any filings as may be required
under applicable state securities laws and the securities laws of any foreign
country; and (iv) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Parent and would not prevent or materially alter or delay any of
the
transactions contemplated by this Agreement.
|
3.4
|
SEC
DOCUMENTS; FINANCIAL STATEMENTS.
Parent has made available to the Company a true and complete copy
of each
statement, report, registration statement (with the prospectus in
the form
filed pursuant to Rule 424(b) of the Securities Act), Definitive
proxy
statement, and other documents filed with the SEC by Parent as filed
by
Parent since January 1, 2001, and, prior to the Effective Time, Parent
will have furnished or made available to Company true and complete
copies
of any additional documents filed with the SEC by Parent prior to
the
Effective Time (collectively, the "Parent SEC Documents"). The Company
acknowledges and agrees that all Parent SEC Documents are available
through the XXXXX system. Parent has timely filed all forms, statements
and documents required to be filed by it with the SEC. All documents
required to be filed as exhibits to the Parent SEC Documents have
been so
filed, and all material contracts so filed as exhibits are in full
force
and effect, except those that have expired in accordance with their
terms,
and Parent is not in default thereunder. As of their respective filing
dates, the Parent SEC Documents complied in all respects with the
requirements of the Securities Exchange Act of 1934, as amended (“the
“Exchange Act”) and the Securities Act, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted
to
state a material fact required to be stated therein or necessary
to make
the statements made therein, in light of the circumstances in which
they
were made, not misleading, except to the extent corrected by a
subsequently filed Parent SEC Document. The financial statements
of
Parent, including the notes thereto, included in the Parent SEC Documents
(the "Parent Financial Statements") were complete and correct in
all
material respects as of their respective dates, complied as to form
in all
material respects with applicable accounting requirements and with
the
published rules and regulations of the SEC with respect thereto as
of
their respective dates, and have been prepared in accordance with
GAAP
applied on a basis consistent throughout the periods indicated and
consistent with each other (except as may be indicated in the notes
thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-QSB, as permitted by Form 10-QSB of the SEC).
The
Parent Financial Statements fairly present the consolidated financial
condition and operating results of Parent and its subsidiaries at
the
dates and during the periods indicated therein (subject, in the case
of
unaudited statements, to normal, recurring year-end adjustments).
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|
3.5
|
XXXXXXXX-XXXXX
ACT OF 2002.
There has been no change in Parent accounting policies since December
31,
2006 except as described in the notes to the Parent Financial Statements.
Each required form, report and document containing financial statements
that has been filed with or submitted to the SEC was accompanied
by the
certifications required to be filed or submitted by Parent's chief
executive officer and chief financial officer pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act"), and at the
time of
filing or submission of each such certification, such certification
was
true and accurate and complied with the Xxxxxxxx-Xxxxx Act and the
rules
and regulations promulgated thereunder.
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|
3.6
|
ABSENCE
OF UNDISCLOSED LIABILITIES.
Parent has no material obligations or liabilities of any nature (matured
or unmatured, fixed or contingent) other than (i) those set forth
or
adequately provided for in the Balance Sheet included in the most
recent
Parent SEC Documents Balance Sheet (the "Parent Balance Sheet"),
(ii)
those incurred in the ordinary course of business and not required
to be
set forth in the Parent Balance Sheet under GAAP, (iii) those incurred
in
the ordinary course of business since the Parent Balance Sheet date
and
not reasonably likely to have a Material Adverse Effect on Parent,
and
(iv) those incurred in connection with the execution of this Agreement.
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13
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
3.7
|
RESTRICTIONS
ON BUSINESS ACTIVITIES.
There is no agreement, judgment, injunction, order or decree binding
upon
Parent which has or reasonably could be expected to have the effect
of
prohibiting or materially impairing any business practice of Parent,
any
acquisition of property by Parent or the conduct of business by Parent.
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|
3.8
|
CERTAIN
AGREEMENTS AFFECTED BY THE MERGER.
Neither the execution and delivery of this Agreement nor the consummation
of the transaction contemplated hereby will (i) result in any entitlement,
payment or benefit (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or benefit under any Parent
plan or
policy or otherwise) becoming due to any current or former director
or
employee of Parent, (ii) increase the amount of any entitlements,
payments
or benefits otherwise payable by Parent, or (iii) result in the
acceleration of the time of payment or vesting of any such entitlements,
payments or benefits.
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|
3.9
|
INTERESTED
PARTY TRANSACTIONS.
Parent is not indebted to any director or officer of Parent (except
for
amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses), and no such person is indebted to Parent, and
there
are no other transactions of the type required to be disclosed pursuant
to
Items 402 or 404 of Regulation S-B under the Securities Act and the
Exchange Act.
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|
3.10
|
COMPLIANCE
WITH LAWS.
Parent has complied with, and is not in violation of, and has not
received
any notices of violation with respect to, any federal, state, local
or
foreign statute, law or regulation with respect to the conduct of
its
business, or the ownership or operation of its business, except for
such
violations or failures to comply as would not be reasonably expected
to
have a Material Adverse Effect on Parent.
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|
3.11
|
BROKERS'
AND FINDERS' FEES.
Parent has not incurred, nor will it incur, directly or indirectly,
any
liability for brokerage or finders' fees or agents' commissions or
investment bankers' fees or any similar charges in connection with
this
Agreement or any transaction contemplated hereby.
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|
3.12
|
BOARD
APPROVAL.
The Board of Directors of Parent has (i) approved this Agreement
and the
Merger, and (ii) approved the issuance of the shares of Parent Common
Stock pursuant to this Agreement. The affirmative vote of the Parent's
stockholders is not required to approve the Merger.
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|
3.13
|
STATE
TAKEOVER STATUTES.
The Board of Directors of Parent has taken all actions necessary
so that
the restrictions contained in the Nevada Revised Statutes applicable
to a
"business combination" shall not apply to the execution, delivery
or
performance of this Agreement or the consummation of the Merger or
the
other transactions contemplated by this Agreement. To Parent's Knowledge,
no other "fair practice," "moratorium," "control share acquisition,"
"business combination," or other state takeover statute or similar
statute
or regulation applies to Parent, Company, the Merger, or this Agreement.
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14
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
3.14
|
REPRESENTATIONS
COMPLETE.
None of the representations or warranties made by Parent herein or
in any
Schedule hereto, including the Parent Disclosure Schedule, or certificate
furnished by Parent pursuant to this Agreement, or the Parent SEC
Documents, when all such documents are read together in their entirety,
contains or will contain at the Effective Time any untrue statement
of a
material fact, or omits or will omit at the Effective Time to state
any
material fact necessary in order to make the statements contained
herein
or therein, in the light of the circumstances under which made, not
misleading. All projected, forecasted or prospective financial information
provided by Parent to the Company has been prepared in good faith
on the
basis of assumptions Parent believes are reasonable and supportable.
|
ARTICLE
IV
CONDUCT
PRIOR TO THE EFFECTIVE TIME
|
4.1
|
CONDUCT
OF BUSINESS.
During the period from the date of this Agreement and continuing
until the
earlier of the termination of this Agreement or the Effective Time,
each
of Parent and Company agrees (except to the extent expressly contemplated
by this Agreement or as consented to in writing by the other party),
to
carry on its business in the ordinary course in substantially the
same
manner as heretofore conducted, to pay and to cause its subsidiaries
to
pay debts and taxes (subject to funding) when due subject to good
faith
disputes over such debts or taxes, to pay or perform other obligations
when due, and to use all reasonable efforts consistent with past
practice
and policies to preserve intact its and its subsidiaries' present
business
organizations, use its reasonable best efforts consistent with past
practice to keep available the services of its present officers and
key
employees and use its reasonable best efforts consistent with past
practice to preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings
with it or its subsidiaries, to the end that its and its subsidiaries'
goodwill and ongoing businesses shall be unimpaired at the Effective
Time.
The Parent and Company agree to promptly notify the other of any
material
event or occurrence not in the ordinary course of its or its subsidiaries'
business, and of any event that would have a Material Adverse Effect
on
Parent or Company.
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|
4.2
|
RESTRICTIONS
ON CONDUCT OF BUSINESS.
During the period from the date of this Agreement and continuing
until the
earlier of the termination of this Agreement or the Effective Time,
except
as expressly contemplated by this Agreement, each of Parent and Company
shall not do, cause or permit any of the following, or allow, without
the
prior written consent of the other:
|
4.2.1
CHARTER
DOCUMENTS.
Cause
or permit any amendments to its Certificate of Incorporation or Bylaws;
15
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
4.2.2
DIVIDENDS;
CHANGES IN CAPITAL STOCK.
Declare
or pay any dividends on or make any other distributions (whether in cash, stock
or property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its
capital stock, or repurchase or otherwise acquire, directly or indirectly,
any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its subsidiaries;
4.2.3
STOCK
OPTION PLANS, ETC.
Take
any action to accelerate, amend or change the period of exercisability or
vesting of options or other rights granted under its stock plans or authorize
cash payments in exchange for any options or other rights granted under any
of
such plans;
4.2.4
MATERIAL
CONTRACTS.
Enter
into any contract or commitment, or violate, amend or otherwise modify or waive
any of the terms of any of its contracts, other than in the ordinary course
of
business consistent with past practice and in no event shall such contract,
commitment, amendment, modification or waiver (other than those relating to
sales of products or purchases of supplies in the ordinary course) involve
the
payment by Parent or Company, as applicable, or their respective subsidiaries
in
excess of $150,000;
4.2.5
ISSUANCE
OF SECURITIES.
Issue,
deliver or sell or authorize or propose the issuance, delivery or sale of,
or
purchase or propose the purchase of, any shares of its capital stock or
securities convertible into, or subscriptions, rights, warrants or options
to
acquire, or other agreements or commitments of any character obligating it
to
issue any such shares or other convertible securities, other than the issuance
of shares of its common stock pursuant to the conversion of preferred stock,
or
exercise of stock options, warrants or other rights therefor outstanding as
of
the date of this Agreement;
4.2.6
ACCOUNTING
POLICIES AND PROCEDURES.
Make
any change to its accounting methods, principles, policies, procedures or
practices, except as may be required by GAAP, Regulation S-X promulgated by
the
SEC or applicable statutory accounting principles;
4.2.7
OTHER.
Take or
agree in writing or otherwise to take, any of the actions described in Sections
4.2, or any action which would make any of its representations or warranties
contained in this Agreement untrue or incorrect or prevent it from performing
or
cause it not to perform its covenants hereunder.
|
4.3
|
NO
SOLICITATION BY COMPANY.
Company and the officers, directors, employees or other agents of
Company
(collectively, "Company Representatives") will not, directly or
indirectly, (i) take any action to solicit, initiate or encourage
or agree
to any Company Takeover Proposal ("Company Takeover Proposal" means
any
offer or proposal for, or any indication of interest in, a merger
or other
business combination involving Company or the acquisition of 15%
or more
of the outstanding shares of capital stock of Company, or a significant
portion of the assets of Company, other than the transactions contemplated
by this Agreement, or (ii) subject to the terms of the immediately
following sentence, engage in any discussions or negotiations with,
or
disclose any nonpublic information relating to the Company to, or
afford
access to the properties, books or records of the Company, to any
person
that has advised Company that it may be considering making, or that
has
made, a Company Takeover Proposal. Notwithstanding the immediately
preceding sentence, if, prior to adoption of this Agreement by Company
stockholders, an unsolicited written Company Takeover Proposal shall
be
received by the Board of Directors of Company, then, to the extent
the
Board of Directors of Company believes in good faith (after advice
from
its financial advisor and after considering all terms and conditions
of
such written Company Takeover Proposal, including the likelihood
and
timing of its consummation) that such Company Takeover Proposal would
result in a transaction more favorable to Company's stockholders
from a
financial point of view than the transaction contemplated by this
Agreement (any such more favorable Company Takeover Proposal being
referred to in this Agreement as a "Superior Company Proposal") and
the
Board of Directors of Company determines in good faith after advice
from
outside legal counsel that it is necessary to do so in order for
the Board
of Directors of Company to comply with its fiduciary duties to
stockholders under applicable law, then Company Representatives may
furnish in connection therewith information to the party making such
Superior Company Proposal and, subject to the provisions hereof,
engage in
negotiations with such party, and such actions shall not be considered
a
breach of this Section 4.3 or any other provisions of this Agreement;
provided that in each such event the Company notifies Parent of such
determination by the Company Board of Directors and provides Parent
with a
true and complete copy of the Superior Company Proposal received
from such
third party, and provides (or has provided) Parent with all documents
containing or referring to non-public information of Company that
are
supplied to such third party; provided, however, that Company provides
such non-public information only pursuant to a non-disclosure agreement;
and provided further that Company Representatives shall not agree
to or
endorse any Company Takeover Proposal and the Company Board of Directors
shall not withdraw its recommendation of the Merger and adoption
of this
Agreement unless Company has provided Parent at least three (3) days
prior
notice of any such intent to agree or endorse such Company Takeover
Proposal or to withdraw such recommendation. Company will promptly
(and in
any event within 24 hours) notify Parent after receipt of any Company
Takeover Proposal or any notice that any person is considering making
a
Company Takeover Proposal or any request for non-public information
relating to Company or for access to the properties, books or records
of
Company by any person that has advised Company that it may be considering
making, or that has made, a Company Takeover Proposal, or whose efforts
to
formulate a Company Takeover Proposal would be assisted thereby (such
notice to include the identity of such person or persons), and will
keep
Parent fully informed of the status and details of any such Company
Takeover Proposal notice, request or correspondence or communications
related thereto, and shall provide Parent with a true and complete
copy of
such Company Takeover Proposal notice or any amendment thereto, if
it is
in writing, or a complete written summary thereof, if it is not in
writing. Company shall immediately cease and cause to be terminated
all
existing discussions or negotiations with any persons conducted heretofore
with respect to a Company Takeover Proposal.
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16
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
ARTICLE
V
ADDITIONAL
AGREEMENTS
|
5.1
|
MEETING
OF STOCKHOLDERS.
The Company shall promptly after the date hereof take all action
necessary
in accordance with Alberta Law and its respective Certificate of
Incorporation and Bylaws to convene the Company Stockholders Meeting.
The
Company shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption of this Agreement and
the
Merger and shall take all other action necessary or advisable to
secure
the vote or consent of stockholders required to effect the Merger.
|
|
5.2
|
AUDIT.
On or prior to 75 days following the Effective Date, Financial Statements
of the Company for the years ended December 31, 2005 and December
31,
2006, and the three month periods ended September 30, 2005 and September
30, 2006 shall be delivered to Parent, together with the signed opinion
of
the Company auditor for the respective periods with respect the Financial
Statements of the Company for the years ended December 31, 2005 and
December 31, 2006.
|
|
5.3
|
PUBLIC
DISCLOSURE.
Unless otherwise permitted by this Agreement, Parent and Company
shall
consult with each other before issuing any press release or otherwise
making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make any
such
statement or disclosure without the prior approval of the other (which
approval shall not be unreasonably withheld), except as may be required
by
law, in which case the party proposing to issue such press release
or make
such public statement or disclosure shall use its commercially reasonable
efforts to consult with the other party before issuing such press
release
or making such public statement or disclosure.
|
| 5.4 |
CONSENTS;
COOPERATION.
|
17
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
5.4.1
The
Parent and Company shall promptly apply for or otherwise seek, and use its
reasonable best efforts to obtain, all consents and approvals required to be
obtained by it for the consummation of the Merger, including those required
under the Nevada Revised Statutes. The Company shall use its reasonable best
efforts to obtain all necessary consents, waivers and approvals under any of
its
material contracts in connection with the Merger for the assignment thereof
or
otherwise. The parties hereto will consult and cooperate with one another,
and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the Nevada Revised Statutes or any other
federal or state antitrust or fair trade law.
5.4.2
Each of Parent and Company shall use its reasonable best efforts to resolve
such
objections, if any, as may be asserted by any Governmental Entity with respect
to the transactions contemplated by this Agreement under the Delaware Corporate
Law, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal
Trade
Commission Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict
or
regulate actions having the purpose or effect of monopolization or restraint
of
trade (collectively, "Antitrust Laws").
5.4.3
Notwithstanding anything to the contrary in Section 5, (i) neither Parent nor
the Company shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that would reasonably be expected to have a Material Adverse
Effect on Parent or of Parent combined with the Surviving Corporation after
the
Effective Time.
|
5.5
|
LEGAL
REQUIREMENTS.
Each of Parent and Company will, and will cause their respective
subsidiaries to, take all reasonable actions necessary to comply
promptly
with all legal requirements which may be imposed on them with respect
to
the consummation of the transactions contemplated by this Agreement
and
will promptly cooperate with and furnish information to any party
hereto
necessary in connection with any such requirements imposed upon such
other
party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary
to obtain
(and will cooperate with the other parties hereto in obtaining) any
consent, approval, order or authorization of, or any registration,
declaration or filing with, any Governmental Entity or other person,
required to be obtained or made in connection with the taking of
any
action contemplated by this Agreement.
|
|
5.6
|
INDEMNIFICATION.
|
5.6.1
After the Effective Time, Parent will fulfill and honor in all respects the
obligations of the Company pursuant to the indemnification provisions of
Company's Certificate of Incorporation and Bylaws or any indemnification
agreement with the Company officers and directors to which Company is a party,
in each case in effect on the date hereof; provided that such indemnification
shall be subject to any limitation imposed from time to time under applicable
law. Without limitation of the foregoing, in the event any person so indemnified
(an "Indemnified Party") is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to this
Agreement or the transactions contemplated hereby occurring on or prior to
the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
pay
as incurred such Indemnified Party's reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith to the fullest extent permitted by the Nevada Law upon receipt of
any
undertaking contemplated by Nevada Law. Any Indemnified Party wishing to claim
indemnification under this Section upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent and the
Surviving Corporation, and shall deliver to Parent and the Surviving Corporation
the undertaking contemplated by Nevada Law.
18
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
5.6.2
To
the extent there is any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time) against an Indemnified
Party that arises out of or pertains to any action or omission in his or her
capacity as director, officer, employee, fiduciary or agent of the Company
occurring prior to the Effective Time, or arises out of or pertains to the
transactions contemplated by this Agreement for a period lasting until the
expiration of two years after the Effective Time (whether arising before or
after the Effective Time), in each case for which such Indemnified Party is
indemnified under this Section, such Indemnified Party shall be entitled to
be
represented by counsel, which counsel shall be counsel of Parent (provided
that
if use of counsel of Parent would be expected under applicable standards of
professional conduct to give rise to a conflict between the position of the
Indemnified Person and of Parent, the Indemnified Party shall be entitled
instead to be represented by counsel selected by the Indemnified Party and
reasonably acceptable to Parent) and following the Effective Time the Surviving
Corporation and Parent shall pay the reasonable fees and expenses of such
counsel, promptly after statements therefor are received and the Surviving
Corporation and Parent will cooperate in the defense of any such matter;
provided, however, that neither the Surviving Corporation nor Parent shall
be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made prior to
the
expiration of such two year period, all rights to indemnification in respect
to
any such claim or claims shall continue until the disposition of any and all
such claims. The Indemnified Parties as a group may retain only one law firm
(in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the position of any two or more Indemnified
Parties.
5.6.3
The
provisions of this Section are intended to be for the benefit of, and shall
be
enforceable by, each Indemnified Party, his or her heirs and representatives.
5.6.4
From and after the Time of Closing, the Parent agrees to defend, indemnify
and
hold harmless the Company from and against all indemnifiable damages of the
Company. For this purpose, “indemnifiable damages” of the Company means the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, reasonable attorneys’ fees and court costs)
incurred or suffered by the Company, as a result of or in connection with:
(1)
any inaccurate representation or warranty made by the Parent in or pursuant
to
this Agreement, (2) any default in the performance of any of the covenants
or
agreements made by the Parent in this Agreement, or (3) any failure of the
Parent to pay, discharge or perform any of its liabilities, or any asserted
liability to the extent resulting from any dispute or claim against Company
concerning any of the Excluded Liabilities.
19
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
5.6.5 After
the
Effective Date, the Company agrees to defend, indemnify and hold the Parent
and
their shareholders harmless from and against all indemnifiable damages of the
Parent. For this purpose, “indemnifiable damages” of the Parent means the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, reasonable attorneys’ fees and court costs)
incurred or suffered by the Parent or their respective shareholders as a result
of or in connection with: (1) any inaccurate representation or warranty made
by
the Company in or pursuant to this Agreement, (2) any default in the performance
of any of the covenants or agreements made by the Company in this Agreement,
(3)
the operation of Company’s business after the Effective Date, or any occurrence,
act or omission of the Company or of any shareholder, director, officer,
employee, consultant or agent of the Company or Parent which occurs subsequent
to the Effective Date, and causes damage to the Parent or its shareholders.
The
prevailing party in any claim for indemnification shall be entitled to receive
reasonable attorneys’ fees and expenses from the non prevailing
party.
5.6.6 If
any
party hereto (the “Indemnitee” or “Indemnified Party”) receives notice of any
claim or the commencement of any action or proceeding with respect to which
the
other party or parties is or may be obligated to provide indemnification (the
“Indemnifying Party” or “Indemnitor”), the Indemnitee shall promptly give the
Indemnifying Party notice thereof. Such notice shall state the basis for the
claim, action or proceeding and the amount thereof (to the extent such amount
is
determinable at the time when such notice is given) and shall permit the
Indemnifying Party to assume the defense of such claim, action or proceeding
(including any action or proceeding resulting from any such claim). Failure
to
give such notice shall not affect the Indemnitee’s right to indemnification
unless the Indemnifying Party can demonstrate that such failure has materially
prejudiced the Indemnifying Party’s ability to defend the same and then only to
such extent. The Indemnifying Party may compromise, to the extent provided
below
or, at its election, defend, at such Indemnifying Party’s own expense and by
such Indemnifying Party’s own counsel, any such matter involving the asserted
liability of the Indemnitee. In any event, the Indemnitee, the Indemnifying
Party and the Indemnifying Party’s counsel shall cooperate in the compromise of,
or defense against, any such asserted liability. So long as the Indemnitor
is
defending in good faith any such third party claim, the Indemnitee shall not
settle or compromise such third party claim. Both the Indemnitee and the
Indemnifying Party may participate in the defense of such asserted liability
but
any Indemnitee participation shall be at its own expense and the Indemnifying
Party shall control and make all decisions regarding said defense. Indemnifying
Party may settle or compromise any claim without the consent of the Indemnified
Party only if no monetary obligation is imposed on the Indemnified Party (which
is not reimbursed or paid for by the Indemnitee) and the Indemnified Party
by
reason thereof is not determined to be in violation of any rule, regulation
or
law and the Indemnified Party is not thereby subjected to injunctive or other
equitable relief. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party such books, records
or
other documents within its control.
20
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
5.6.7 In
case
any event shall occur which would otherwise entitle either party to assert
a
claim for indemnification hereunder, no loss, damage or expense shall be deemed
to have been sustained by such party to the extent (1) of any tax savings
realized by such party with respect thereto, or (2) of any proceeds received
or
which should have been received by such party from any insurance policies with
respect thereto.
|
5.7
|
TAX
TREATMENT.
For U.S. federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of the Code, and the
parties hereto intend that the transactions contemplated by this
Agreement
shall constitute a "plan of reorganization" within the meaning of
Section
368 of the Code and Treasury Regulations Sections 1.368-2(g) and
1.368-3(a). Parent will report the Merger on its income tax returns
in a
manner consistent with treatment of the Merger as a Code Section
368(a)
reorganization. Neither Parent, the Company nor any of there respective
affiliates has taken any action, nor will they take any action, that
would
prevent or impede the Merger from qualifying as a reorganization
under
Section 368 of the Code.
|
|
5.8
|
COOPERATION
TO SATISFY GOVERNMENT AUTHORITIES.
Parent and the Company shall cooperate to promptly address and, to
the
extent commercially reasonable or practicable, resolve any concerns
of any
Government Authority in connection with the Merger.
|
|
5.9
|
BOARD
OF DIRECTORS.
The Board of Directors of Parent will take all actions within its
power to
cause the Board of Directors of the Surviving Corporation, effective
upon
the Effective Time, to consist of the current Directors or appointees
of
the Company. This is not a pre-requisite to the closing of this
Agreement.
|
|
5.10
|
BEST
EFFORTS AND FURTHER ASSURANCES.
Each of the parties to this Agreement shall use its best efforts
to
effectuate the transactions contemplated hereby and to fulfill and
cause
to be fulfilled the conditions to closing under this Agreement. Each
party
hereto, at the reasonable request of another party hereto, shall
execute
and deliver such other instruments and do and perform such other
acts and
things as may be necessary or desirable for effecting completely
the
consummation of this Agreement and the transactions contemplated
hereby.
|
21
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE COMPANY
The
Company’s obligation to enter into and complete the Closing is conditioned upon
the satisfaction or waiver in writing by the Company, on or before the Closing
Date, of all of the following conditions:
|
6.1
|
REPRESENTATIONS
AND WARRANTIES.
The representations and warranties made by Parent contained in this
Merger
Agreement, the schedules or exhibits hereto or in any certificate
or document delivered to the Company by Parent in connection with
the
transactions contemplated by this Merger Agreement shall be true
in all
respects (without giving
effect to any materiality qualifications or limitations therein)
on and as
of the Closing Date with the same effect as though such representations
and warranties were made on such date except
for such failures to be true and correct which in the aggregate would
not
reasonably be expected to result in a Material Adverse Effect
on
Parent.
|
|
6.2
|
PERFORMANCE
OF COVENANTS.
Parent shall have performed and complied in all material respects
with all
of the agreements and covenants required by this Merger Agreement
to be
performed and complied with by it prior to or on the Closing
Date.
|
|
6.3
|
LITIGATION.
No
injunction
shall have been issued by any court or Governmental Authority which
restrains or prohibits this Merger Agreement or the consummation
of the
transactions contemplated hereby.
|
|
6.4
|
ANTITRUST
LAWS COMPLIANCE.
There is an applicable exemption to rules and regulations of the
Antitrust
Laws applicable to the transactions contemplated by this Merger
Agreement.
|
|
6.5
|
SHAREHOLDER
APPROVAL.
The Company Shareholder Approval required in connection with the
consummation of the Merger shall have been
obtained.
|
|
6.6
|
DELIVERY
OF DOCUMENTS.
There shall have been delivered to the Company the
following:
|
| 6.6.1 |
A
certificate of Parent, dated the Closing Date, signed by the Chief
Executive Officer of Parent to the effect that the conditions specified
in
Sections 6.1 and 6.2 have been fulfilled;
and
|
| 6.6.2 |
A
certificate of the Secretary or Assistant Secretary of Parent certifying
copies of all requisite corporate resolutions of Parent approving
the
execution and delivery of this Merger Agreement and the consummation
of
the transactions contemplated herein and the identification and signature
of each officer of Parent executing this Merger
Agreement.
|
22
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
6.7
|
MATERIAL
CHANGES.
There shall not have been any change that has had or could reasonably
be
expected to have a Material Adverse Effect on the assets, properties,
condition (financial or otherwise), prospects or results of operations
of
the Parent from the date hereof to the Closing Date, nor shall there
exist
any condition which could reasonably be expected to result in such
a
Material Adverse Effect, and there shall have been delivered to Parent
a
certificate, dated the Closing Date, to such effect signed by an
authorized officer of the Parent.
|
|
6.8
|
CERTIFICATE
OF MERGER.
Prior to the Effective Time, the Certificate of Merger shall be accepted
for filing with the
government of Alberta.
|
ARTICLE
VII
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF
PARENT
The
obligations of Parent to enter into and complete the Closing are conditioned
upon the satisfaction or waiver by Parent, on or before the Closing Date, of
the
following conditions:
|
7.1
|
REPRESENTATIONS
AND WARRANTIES.
The representations and warranties made by the Company contained
in this
Merger Agreement, the schedules or exhibits hereto or in any certificate
or document delivered to Parent by the Company in connection with
the
transactions
contemplated by this Merger Agreement shall be true in all respects
(without giving effect to any materiality qualifications or limitations
therein) on and as of the Closing Date with the same effect as though
such
representations and warranties were made
on such date, except (i) as
otherwise contemplated by this Merger Agreement and (ii) for such
failures
to be true and correct which in the aggregate would not reasonably
be
expected to result in a Material Adverse Effect on the
Company.
|
|
7.2
|
PERFORMANCE
OF COVENANTS.
The Company shall have performed and complied in all material respects
with all of the agreements and covenants required by this Merger
Agreement
to be performed and complied with by it prior to or on the Closing
Date,
except
as otherwise
contemplated by this Merger
Agreement.
|
|
7.3
|
LITIGATION.
No
injunction shall have been issued by any court or Governmental Authority
which restrains or prohibits this Merger Agreement or the consummation
of
the transactions contemplated
hereby.
|
|
7.4
|
ANTITRUST
LAWS ACT COMPLIANCE.
There is an applicable exemption to rules and regulations of the
Antitrust
Laws Act applicable to the transactions contemplated by this Merger
Agreement.
|
23
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
7.5
|
CONSENTS
AND APPROVALS.
The consents and approvals specified herein shall have been obtained
in
form and substance satisfactory to Parent in its reasonable
discretion.
|
|
7.6
|
MATERIAL
CHANGES.
There shall not have been any change that has had or could reasonably
be
expected to have a
Material Adverse Effect on the assets, properties, condition (financial
or
otherwise), prospects or results of operations of the Company from
the
date hereof to the Closing Date, nor shall there exist any condition
which
could reasonably be expected
to result in such a Material Adverse Effect,
and there shall have been delivered to Parent a
certificate, dated the Closing Date, to such effect signed by an
authorized officer of the Company.
|
|
7.7
|
SHAREHOLDER
APPROVAL.
The Company Shareholder Approval required in connection with the
consummation of the Merger shall have been
obtained.
|
| 7.8 |
DELIVERY
OF DOCUMENTS.
There shall have been delivered to Parent the
following:
|
|
7.8.1
|
a
certificate of the Company, dated the Closing Date, signed by its
Chief
Executive Officer, to the effect that the conditions specified in
Sections
7.1 and 7.2 have been fulfilled;
and
|
|
7.8.2
|
a
certificate of the Secretary of the Company certifying copies of
(x) the
Certificate of Incorporation and by-laws of the Company; (y) all
requisite
corporate resolutions of the Company approving the execution and
delivery
of this Merger Agreement and the consummation of the transactions
contemplated herein; and (z) the identification and signature of
each
officer of the Company executing this Merger
Agreement.
|
ARTICLE
VIII
TERMINATION
|
8.1
|
TERMINATION
EVENTS.
This Merger Agreement may be terminated and the Merger may be abandoned
at
any time prior to the Effective Time without prejudice to any other
rights
or remedies either party may have:
|
| 8.1.1 |
by
written agreement, duly authorized by the Boards of Directors of
Parent
and the Company or in the event the Board of Directors for either
Parent
or the Company vote against finalizing the
Merger;
|
| 8.1.2 |
by
Parent or the Company if any Governmental Authority shall have issued
an
order, decree, injunction or judgment or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger
and
such order or other action shall have become final and
nonappealable;
|
24
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
| 8.1.3 |
subject
to the provisions below, by Parent or the Company if the Effective
Time
shall not have occurred on or before the 90th
day following the date of this Agreement; provided
that the right to terminate this Merger Agreement under this Section
8.1.3
shall not be available to any party whose failure to fulfill any
obligation under this Merger Agreement has been the cause of, or
results
in, the failure of the Effective Time to have occurred within such
period;
|
| 8.1.4 |
by
Parent or the Company by notice to the other if the satisfaction
of any
condition to the obligations of the terminating party has been rendered
impossible;
|
|
8.2
|
EFFECT
OF TERMINATION.
In
the event this Merger Agreement is terminated pursuant to Section
8.1, all
further obligations of the parties hereunder shall terminate.
Each party’s right of termination hereunder is in addition to any other
rights it may have hereunder or otherwise and the exercise of a right
of
termination shall not be an election of
remedies.
|
|
8.3
|
AMENDMENT.
To
the extent permitted by applicable law, this Merger Agreement may
be
amended by action taken by or on behalf of the respective Boards
of
Directors of the Company and Parent at any time; provided,
however,
that, following approval by the Stockholders of the Company, no amendment
shall be made.
This Merger Agreement may not be amended except by an instrument
in
writing signed on behalf of all of the parties
hereto.
|
|
8.4
|
WAIVER.
At any time prior to the Effective Time any party hereto may, to
the
extent legally allowed, (i) extend the time for the performance of
any of
the obligations or other acts of the other parties hereto, (ii) waive
any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and
(iii)
waive compliance with any of the agreements or conditions for the
benefit
of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set
forth in
an instrument in writing signed on behalf of such
party.
|
25
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
ARTICLE
IX
MISCELLANEOUS
|
9.1
|
CAPTIONS
AND HEADINGS.
The Article and paragraph 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.
|
|
9.2
|
NO
ORAL CHANGE.
This Agreement and any provision hereof, may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing
signed
by the party against whom enforcement of any waiver, change, modification,
or discharge is sought.
|
|
9.3
|
GOVERNING
LAW.
This Agreement shall be governed by and construed in accordance with
the
laws of the State of Nevada, without regard to the laws that might
otherwise govern under applicable principles of conflicts of law.
Each of
the parties hereto irrevocably consents to the exclusive jurisdiction
of
any court located within the State of Nevada in connection with any
matter
based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of Nevada for such persons and
waives
and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such
process.
|
|
9.4
|
PUBLIC
ANNOUNCEMENTS.
Subject to any requirement of applicable law or stock exchange listing
agreement, all public announcements or similar publicity with respect
to
this Merger Agreement or the transactions contemplated hereby shall
be
issued only with the consent
of Parent and the Company. Unless consented to by each party hereto
in
advance prior to the
Closing, all parties hereto shall keep the provisions of this Merger
Agreement strictly confidential
and make no disclosure thereof to any Person, other than such party’s
respective legal
and financial advisors, subject to the requirements of applicable
law or
securities exchange regulations.
|
|
9.5
|
SUCCESSORS.
This Merger Agreement shall be binding upon and shall inure to the
benefit
of the parties hereto and their respective successors and permitted
assigns.
|
|
9.6
|
FURTHER
ASSURANCES.
Each of the parties hereto agrees that it will, from time to time
after
the date of this Merger Agreement, execute and deliver such other
certificates, documents
and instruments and take such other action as may be reasonably requested
by the other party to carry out the actions and transactions contemplated
by this Merger Agreement.
|
|
9.7
|
CONFIDENTIALITY.
The Confidentiality Agreement between Parent and the Company is
incorporated by reference herein and shall continue in full force
and
effect in accordance with the terms thereof. In the event of termination
or abandonment of the transactions contemplated by this Agreement
pursuant
to Section 8.1, the Confidentiality Agreement shall continue in full
force
and effect. The definition of “Confidential Information” contained in the
Confidentiality Agreement is hereby amended to include this Agreement,
and
all information obtained pursuant to of this
Agreement.
|
26
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
9.8
|
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
notice is
to be given, or on 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 addressed, and by fax, as
follows:
|
If
to
Parent:
000
Xxxxxxxxx Xxxxxx X.,
Xxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0
With
a
copy to:
Xxxxxx
X.
Emas
Attorney
at Law
0000
Xxxxxxxxxx Xxxxxx
Xxxxx
Xxxxx, Xxxxxxx 00000
Telephone:
(000) 000-0000
If
to
the Company:
Great
Bear Explorations Inc.
000-000
00xx Xxx
Xxxxxxx,
Xxxxxxx
Xxxxxx
X0X 0X0
|
9.9
|
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.
|
27
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
|
9.10
|
TIME
OF ESSENCE. Time
is of the essence of this Agreement and of each and every provision
hereof.
|
|
9.11
|
REMEDIES
CUMULATIVE.
Except as otherwise provided herein, any and all remedies herein
expressly
conferred upon a party will be deemed cumulative with and not exclusive
of
any other remedy conferred hereby, or by law or equity upon such
party,
and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
|
|
9.12
|
SEVERABILITY.
If any provision of this Agreement, or the application thereof, becomes
or
is declared by a court of competent jurisdiction to be illegal, void
or
unenforceable, the remainder of this Agreement will continue in full
force
and effect and the application of such provision to other persons
or
circumstances will be interpreted so as reasonably to effect the
intent of
the parties hereto. The parties further agree to replace such void
or
unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable
provision.
|
|
9.13
|
ENTIRE
AGREEMENT.
This Agreement contains the entire Agreement and understanding between
the
parties hereto, and supersedes all prior agreements and
understandings.
|
|
9.14
|
RULES
OF CONSTRUCTION.
The parties hereto agree that they have been or had the right to
be
represented by counsel during the negotiation, preparation and execution
of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities
in
an agreement or other document will be construed against the party
drafting such agreement or document.
|
|
9.15
|
EXPENSES.
Except as expressly otherwise provided herein, each party shall bear
its
own expenses incurred in connection with the preparation, execution
and
performance of this
Merger Agreement and the transactions contemplated hereby, including
all
fees and expenses of agents, representatives, counsel and
accountants.
|
|
9.16
|
COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, all of which
shall
be considered one and the same agreement and shall become effective
when
one or more counterparts have been signed by each of the parties
and
delivered to the other parties, it being understood that all parties
need
not sign the same counterpart.
|
[SIGNATURES
ON FOLLOWING PAGE]
28
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
IN
WITNESS WHEREOF, the parties have executed this Merger Agreement as of the
date
first above written.
| PARENT | THE COMPANY |
| DAIRY FRESH FARMS, INC. | GREAT BEAR EXPLORATIONS INC. |
| By: _____________________ | By: _____________________ |
| Name: | Name: |
| Title: | Title: |
29
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
