Document/Exhibit Description Pages Size
1: 8-K Current Report 3 11K
2: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 21 76K
Liquidation or Succession
EX-2.2 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into on this
___________ day of July 2005 (the "Execution Date"), by and between Nannaco,
Inc., a Texas corporation ("Nannaco"), Nannaco Acquisition Inc., a Washington
corporation ("Acquisition Sub"), and Amenni Inc., a Maryland corporation
("Amenni").
RECITALS
A. Nannaco wishes to merge with Amenni the ("Merger"), on the terms and
conditions set forth in this Agreement; and
B. Upon consummation of the Merger (defined in Section 1.2 below), Acquisition
Sub shall merge with and into Amenni, and Amenni shall become a wholly-owned
subsidiary of Nannaco; and
C. Existing shareholders of Amenni shall receive shares of common stock of
Nannaco as provided herein; and
D. All Amenni Shares issued and outstanding (other than shares to be canceled in
accordance with Section 1.1(b)) shall be converted fully paid and nonassessable
shares of common stock, par value $0.001 per share, of Nannaco representing, on
a pro rata basis, 97% of the fully diluted number of shares of common stock of
Nannaco to be issued and outstanding immediately after Closing (the "Nannaco
Shares"). As of the Effective Time (defined in Section 1.2), all outstanding
Amenni Shares shall no longer be outstanding and shall automatically be canceled
and shall cease to exist, and each holder of an Amenni Share shall cease to have
any rights with respect thereto, except the right to receive the portion of the
Nannaco Shares to be issued in consideration therefore in accordance with this
Agreement.
E. It is the intent of the parties that the Merger qualify as a tax-free
corporate reorganization under Section [368(a)(2)(E)] of the Internal Revenue
Code of 1986, as amended (the "Code").
Accordingly, the parties hereby agree as follows:
1. MERGER.
1.1. Effect on Capital Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any of Amenni Shares or any
shares of capital stock of Acquisition Sub:
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(a) Capital Stock of Acquisition Sub. Each issued and outstanding share of
capital stock of Acquisition Sub shall be converted into one share of Treasury
Stock of Amenni.
(b) Cancellation of Treasury Stock of Amenni owned by Amenni. Each share of
Amenni that is owned by Amenni shall automatically be cancelled and shall cease
to exist, and no consideration shall be delivered or deliverable in exchange
therefore.
(c) Conversion of the Amenni Shares. All Amenni Shares (other than shares to be
canceled in accordance with Section 1.1(b)) shall be converted into fully paid
and nonassessable shares of common stock, par value $0.001 per share, of the
Nannaco Shares necessary to give effect to the relative ownership of Nannaco
Shares by Amenni Share holders expressed above in Recital D. As of the Effective
Time, all the Amenni Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Amenni Shares shall cease to have
any rights with respect thereto, except the right to receive the portion of the
Nannaco Shares to be issued in consideration therefore in accordance herewith.
1.2 Articles of Merger. The Merger shall be effectuated at the Effective Time
pursuant to the Articles of Merger ("Articles of Merger") filed in accordance
with applicable provisions of Maryland, Washington law and Texas (the
"Applicable Law"). The Articles of Merger shall be filed together with any other
filings or recordings required by the Applicable Law in connection with the
Merger as soon as practicable after the Closing (as defined below in Section
2.1). The term "Effective Time" as used in this Agreement means the time at
which the Merger becomes effective under the laws of Washington and shall occur
as soon as practicable following the 20th day after Nannaco's filing of Schedule
14C in definitive form that has been approved by the Securities and Exchange
Commission (the "SEC"), which shall be filed, in part, in connection with the
necessary Nannaco shareholder approval, of this Agreement, in definitive form
(the "Schedule 14C," further described below").
1.3 Procedure. Each and all of the Amenni Shares outstanding immediately prior
to the Effective Time shall, immediately after the Effective Time, be exchanged
for a certificate or certificates evidencing ownership of the applicable number
of the Nannaco Shares. At the Closing (as defined below in Section 2.1) Amenni
Shares shall cease to be outstanding and shall be converted into and exchanged
for the Nannaco Shares. The Nannaco Shares exchanged for Amenni Shares shall be
referred to herein as the "Closing Shares".
1.4 Name Change. At the Effective Time, the articles of incorporation of Nannaco
shall be amended such that the name "Nannaco, Inc." shall become "Amenni Inc."
2. CLOSING AND SUBSEQUENT CONDITIONS.
2.1 Date, Time and Place of Closing. The Merger contemplated by this Agreement
shall take place at a closing to be held at The Otto Law Group, PLLC, and shall
be deemed effective upon the execution of this Agreement (the "Closing"), and
shall remain subject to completion and satisfaction of certain conditions
subsequent to the Closing (the "Conditions Subsequent"). The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date."
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2.2 Amenni Conditions Subsequent. Following the Closing and prior to the
Effective Time, unless otherwise stated herein, Amenni shall deliver the
following documents to Nannaco (collectively, the "Amenni Closing Documents"):
2.2.1 Amenni Share Certificates. Certificates, or equivalent documentation
thereof, representing all of Amenni Shares;
2.2.2 Articles of Merger. The Articles of Merger (to be prepared by the
Otto Law Group, PLLC (the "OLG")) to be filed with the state of Washington and,
in necessary, with the state of Maryland, executed by Amenni;
2.2.3 Amenni Officer's Certificate. A certificate (to be prepared by the
OLG with the assistance of Amenni)) dated as of the Closing Date executed by a
duly authorized officer of Amenni certifying that all necessary actions have
been taken by Amenni's shareholders and directors to authorize the transactions
contemplated by this Agreement and that all representations and warranties made
by Amenni in this Agreement are complete and correct in all material respects as
of the Closing Date as if made on the Closing Date;
2.2.4 Resolutions. Copies of signed resolutions of the board of directors
and the shareholders of Amenni approving the Merger with Acquisition Sub and
Amenni Inc. and the execution by Amenni of this Agreement;
2.2.5 Appraisal Rights.In the event that shareholders of Amenni are
entitled to "appraisal rights" pursuant to Maryland or Washington law, copies of
all written appraisal notices and forms sent by Amenni to the shareholders of
Amenni as required by Maryland or Washington law, including any waiver of
"appraisal rights" by Amenni Shareholders;
2.2.6 Other Documents and Instruments. Such other documents and
instruments as Nannaco's counsel may deem to be necessary or advisable to effect
the transactions contemplated by this Agreement.
2.3 Nannaco Closing Documents. Following the Closing and prior to the
Effective Time, Nannaco shall deliver or cause to be delivered to Amenni the
following documents (collectively, the "Nannaco Closing Documents"):
2.3.1 Articles and Certificate of Merger. The Certificate of Merger to be
filed with the State of Washington, executed by Nannaco and Acquisition Sub,
respectively;
2.3.2 Nannaco Share Certificates. Executed minutes of a special meeting of
the board of directors of Nannaco authorizing the issuance of one or more stock
certificates in the name of each of Amenni Shareholders representing such Amenni
Shareholder's ownership of the Nannaco Shares;
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2.3.3 Good Standing Certificate. A certificate issued by the Texas
Secretary of State indicating that Nannaco is qualified and in good standing
within such jurisdiction and a certificate issued by the Washington Secretary of
State indicating that the Nannaco Acquisition, Inc., is qualified and in good
standing within such jurisdiction;
2.3.4 Nannaco Officer's Certificate. A certificate dated as of the
Effective Time executed by a duly authorized officer of Nannaco certifying that
all necessary actions have been taken by Nannaco's officers and directors to
authorize the transactions contemplated by this Agreement and that all
representations and warranties made by Nannaco in this Agreement are complete
and correct in all material respects as of the Closing Date as if made on the
Closing Date;
2.3.5 Resolutions. Copies of signed resolutions of the board of directors
and documented evidence of shareholders of Nannaco approving the Merger with;
2.3.6 Appraisal Rights.In the event that shareholders of Nannaco are
entitled to "appraisal rights" pursuant to Texas law, copies of all written
appraisal notices and forms sent by Nannaco to the shareholders of Nannaco as
required by Texas law;
2.3.7 Such other documents and instruments as Amenni's counsel may deem to
be necessary or advisable to effect the transactions contemplated by this
Agreement.
2.4 Schedule 14C. Upon Execution of this Agreement, Nannaco shall prepare and
file with the SEC a Schedule 14C to disclose to shareholder approval of the
following:
(1) Nannaco's authority to enter into, consummate, and take all action
necessary and proper to effect this Agreement, and
(2) A reverse split of the issued and outstanding Nannaco common stock
on a one thousand to one (1,000:1) basis, or as otherwise determined
by the parties, while leaving the number of common stock that
Nannaco is authorized to issue at 500,000,000 shares.
2.5 Board of Directors. The parties hereto agree that Steve Careaga, the current
director of Nannaco, Inc., shall retain a seat on the board of Directors of the
merged entity for a period of not less than the time between the Effective Time
and the next election of the board of directors of the merger entity. Any change
to the composition of the board of directors shall require the mutual agreement
of both parties.
3. REPRESENTATIONS AND WARRANTIES OF AMENNI.
Amenni represents and warrants to Nannaco that the statements contained in this
Section 3 are correct and complete as of the date of this Agreement in all
material respects.
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3.1 Organization of Amenni. Amenni is a Maryland corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland.
Amenni has all the requisite power and authority to own, lease and operate all
of its properties and assets and to carry on its business as currently conducted
and as proposed to be conducted. Amenni is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it makes such licensing or qualification necessary and
where the failure to be so qualified would, individually or in the aggregate,
have a Material Adverse Effect upon it. As used in this Agreement, the term
"Material Adverse Effect" with respect to any party, shall mean any change or
effect that is reasonably likely to be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets or
liabilities of such party and such party's subsidiaries taken as a whole.
3.2 Authorization. Subject to the approval of its shareholders, Amenni has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and Amenni Closing Documents and to perform its
obligations hereunder and thereunder. This Agreement constitutes, and Amenni
Closing Documents will constitute, valid and legally binding obligations of
Amenni, enforceable in accordance with their respective terms and conditions.
3.3 Noncontravention. Neither the execution and the delivery of this Agreement
or Amenni Closing Documents, nor the consummation of the transactions
contemplated hereby or thereby by Amenni, 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
Amenni is subject or any provision of its articles of incorporation or bylaws,
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 Amenni is a party or by which
it is bound or to which any of its assets is subject. Amenni 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.
3.4 Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
3.5 Capitalization. The authorized capital stock of Amenni Inc., at the Closing
Date, shall consist of 50,000,000 shares of capital stock, of which 20,000,000
shares are common stock and zero (0) shares are designated Preferred Stock, all
of which at the Closing Date shall be deemed issued and outstanding. All issued
and outstanding shares of Amenni stock have been duly authorized and validly
issued, and are fully paid and nonassessable. All of the outstanding shares of
common stock (and options to purchase common stock) and other outstanding
securities of Amenni have been duly and validly issued in compliance with
federal and state securities laws. Except as set forth on Schedule 3.5 there are
no outstanding or authorized subscriptions, options, warrants, plans or, except
for this Agreement and as contemplated by this Agreement, other agreements or
rights of any kind to purchase or otherwise receive or be issued, or securities
or obligations of any kind convertible into, any shares of capital stock or
other securities of Amenni, and there are no dividends which have accrued or
been declared but are unpaid on the capital stock of Amenni. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to Amenni. Amenni Shares are duly authorized and validly issued,
fully paid and nonassessable. Amenni Shares are not subject to any preemptive
rights or other similar restrictions.
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3.6 Tax Treatment. As of the date of this Agreement, Amenni has no reason to
believe that the Merger, in its entirety, will not qualify as a "reorganization"
within the meaning of Section 368(a) of the Code.
3.7 Noncontravention. Neither the execution and the delivery of this Agreement
or the Amenni Closing Documents, nor the consummation of the transactions
contemplated hereby or thereby, by Amenni 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
Amenni is subject, 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
Amenni is a party or by which Amenni is bound or to which Amenni is subject.
Amenni 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.
3.8 Financial Statements and Financial Condition. Each of the financial
statements (the "Financial Statements") submitted in connection with filing the
post-Merger entities consolidated and audited financial statements to be
included on a Form 8-K filed within 71 days following the filing of a Form 8-K
disclosing this Agreement (such documents, to the extent necessary to comply
with the Rules and Regulations of the SEC, deemed the "Reports") with the
Securities and Exchange Commission ("SEC") shall be prepared from, and is in
accordance with, the books and records of Amenni, shall comply with all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, and shall be prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
results of operations and cash flows (and changes in financial position, if any)
of Amenni, as at the date(s) thereof or for the period(s) presented therein.
3.9 Absence of Material Change. Following the Closing Date and prior to the
Effective Time, there have been no change in the business, operations, financial
condition or liabilities of Amenni as stated in the Reports that would result in
a Material Adverse Effect on Amenni.
3.10 Litigation. Except as provided in the Reports and Financial Statements, or
otherwise disclosed to Nannaco prior to the Effective Time on Schedule 3.10,
there shall have been actions, suits, claims, inquiries, proceedings or
investigations before any court, tribunal, commission, bureau, regulatory,
administrative or governmental agency, arbitrator, body or authority pending or
threatened against Amenni which would reasonably be expected to result in any
liabilities, including defense costs, in excess of $10,000 U.S. in the
aggregate. Amenni is not the named subject of any order, judgment or decree and
is not in default with respect to any such order, judgment or decree.
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3.11 Taxes and Tax Returns. Except as provided in the Reports and Financial
Statements, or otherwise disclosed to Nannaco prior to the Effective Time,
Amenni has timely and correctly filed tax returns and reports (collectively,
"Returns") required by applicable law to be filed (including, without
limitation, estimated tax returns, income tax returns, excise tax returns, sales
tax returns, use tax returns, property tax returns, franchise tax returns,
information returns and withholding, employment and payroll tax returns) and all
such returns were (at the time they were filed) correct in all material
respects, and have paid all taxes, levies, license and registration fees,
charges or withholdings of any nature whatsoever reflected on such Returns to be
owed and which have become due and payable except for any that is being
contested in good faith.
3.12 Compliance with Applicable Law.
3.12.1 Amenni holds all licenses, certificates, franchises, permits and
other governmental authorizations ("Permits") necessary for the lawful conduct
of its business and such Permits are in full force and effect, and Amenni is in
all material respects complying therewith, except where the failure to possess
or comply with such Permits would not have, in the aggregate, a Material Adverse
Effect on Amenni.
3.12.2 Amenni is and for the past three years has been in compliance with
all foreign, federal, state and local laws, statutes, ordinances, rules,
regulations and orders applicable to the operation, conduct or ownership of its
business or properties except for any noncompliance which is not reasonably
likely to have, in the aggregate, a Material Adverse Effect on Amenni.
3.13 Contracts and Agreements. Amenni is not a party to or bound by any
commitment, contract, agreement or other instrument which limits the freedom of
Amenni to compete in any line of business or with any person, except to the
extent disclosed on Schedule 3.13. Amenni is not in default on any material
contract, agreement or other instruments.
3.14 Affiliate Transactions.
3.14.1 Except as otherwise disclosed on Schedule 3.14, Amenni has not
engaged in, and is not currently obligated to engage in (whether in writing or
orally), any transaction with any Affiliated Person (as defined below) involving
aggregate payments by or to Amenni of $10,000 U.S. or more.
3.14.2 For purposes of this Section 3.14, "Affiliated Person" means:
(a) a director, executive officer or Controlling Person (as defined
below) of Amenni;
(b) a spouse of a director, executive officer or Controlling Person
of Amenni;
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(c) a member of the immediate family of a director, executive
officer, or Controlling Person of Amenni who has the same home as such person;
(d) any corporation or organization (other than Amenni) of which a
director, executive officer or Controlling Person of Amenni is a chief executive
officer, chief financial officer, or a person performing similar functions or is
a Controlling Person of such other corporation or organization;
(e) any trust or estate in which a director, executive officer, or
Controlling Person of Amenni or the spouse of such person has a substantial
beneficial interest or as to which such person or his spouse serves as trustee
or in a similar fiduciary capacity; and
(f) for purposes of this Section 3.14, "Controlling Person" means
any person or entity which, either directly or indirectly, or acting in concert
with one or more other persons or entities owns, controls or holds with power to
vote, or holds proxies representing ten percent or more of the outstanding
common stock or equity securities.
3.15 Limited Representations and Warranties. Except for the representations and
warranties of Nannaco expressly set forth in Section 4, Amenni has not relied
upon any representation and warranty made by or on behalf of Nannaco in making
its determination to enter into this Agreement and consummate the transactions
contemplated by this Agreement.
3.16 Disclosure. No representation or warranty made by a Amenni contained in
this Agreement, and no statement contained in the Schedules delivered by Amenni
hereunder, contains any untrue statement of a material fact or omits any
material fact necessary in order to make a statement herein or therein, in light
of the circumstances under which it is made, not misleading.
3.17 Title to Property.
3.17.1 Real Property. Amenni does not own or lease, directly or
indirectly, any real property, except as otherwise disclosed to Nannaco on
Schedule 3.17.1.
3.17.1 Environmental Matters. Amenni does not have any financial liability
under any environmental laws except as otherwise disclosed to Nannaco on
Schedule 3.17.2.
3.19 Appraisal Rights. Amenni agrees that, within forty-five (45) days following
the Closing, it shall have has complied in full with any and all provisions of
Maryland law relating to "appraisal rights".
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4. REPRESENTATIONS AND WARRANTIES OF NANNACO
Nannaco hereby represents and warrants to Amenni that the statements contained
in this Section 4 are correct and complete as of the date of this Agreement in
all material respects.
4.1 Organization. Nannaco is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas. Nannaco has all the
requisite power and authority to own, lease and operate all of its properties
and assets and to carry on its business as currently conducted and as proposed
to be conducted. Nannaco is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such licensing or qualification necessary and where the failure to
be so qualified would, individually or in the aggregate, have a Material Adverse
Effect upon it.
4.2 Authorization of Transaction. Nannaco has full power and authority to
execute and deliver this Agreement and the Nannaco Closing Documents and to
perform all obligations hereunder and thereunder. This Agreement constitutes,
and the Nannaco Closing Documents will constitute, the valid and legally binding
obligation of Nannaco enforceable in accordance with their respective terms and
conditions.
4.3 Capitalization. The authorized capital stock of Nannaco consists of
500,000,000 shares of common stock, $.001 par value, of which approximately zero
shares are issued and outstanding, and 100,000,000 shares of preferred stock,
$.001 par value, of which approximately 450,000,000 shares of common stock are
issued outstanding and zero (0) shares of preferred stock currently designated
are issued and outstanding. All issued and outstanding shares of Nannaco stock
have been duly authorized and validly issued, and are fully paid and
nonassessable. To the extent necessary to consummate the post-Merger
capitalization as determined by the parties hereto, Nannaco shall obtain
requisite shareholder approval of it shareholders as part of the Nannaco
Shareholders approval of the merger. All of the outstanding shares of common
stock (and options to purchase common stock) and other outstanding securities of
Nannaco have been duly and validly issued in compliance with federal and state
securities laws. With the exception of the convertible debentures executed by
Nannaco, copies of which have been provided to Amenni, there are no outstanding
or authorized subscriptions, options, warrants, plans or, except for this
Agreement and as contemplated by this Agreement, other agreements or rights of
any kind to purchase or otherwise receive or be issued, or securities or
obligations of any kind convertible into, any shares of capital stock or other
securities of Nannaco, and there are no dividends which have accrued or been
declared but are unpaid on the capital stock of Nannaco. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to Nannaco. The Nannaco Shares are duly authorized and validly
issued, fully paid and nonassessable. The Nannaco Shares are not subject to any
preemptive rights or other similar restrictions.
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4.4 Subsidiaries. Except for the Acquisition Sub created in connection with this
Agreement, and Nazz Acquisition Sub, through which Nannaco retains a pending 5%
interest in Nazz Productions Inc., a Pennsylvania corporation, and which
transaction is required in order to effect this Agreement. Nannaco does not own,
directly or indirectly, any capital stock or other equity interest in any
corporation, partnership or other entity.
4.5 Noncontravention. Neither the execution and the delivery of this Agreement
or the Nannaco Closing Documents, nor the consummation of the transactions
contemplated hereby or thereby, by Nannaco 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
Nannaco is subject, 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
Nannaco is a party or by which Nannaco is bound. Nannaco 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.
4.6 Financial Statements and Financial Condition. Each of the financial
statements (the "Financial Statements") included in the reports (the "Reports")
filed with the Securities and Exchange Commission ("SEC") has been prepared
from, and is in accordance with, the books and records of Nannaco, currently
complies with all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, has
been prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presents in all material respects the
consolidated results of operations and cash flows (and changes in financial
position, if any) of Nannaco, as at the date(s) thereof or for the period(s)
presented therein.
4.7 Absence of Material Change. As of the Execution Date, there has been no
change in the business, operations, financial condition or liabilities of
Nannaco as stated in the Financial Statements that would result in a Material
Adverse Effect on Nannaco.
4.8 Litigation. Except as provided in the Reports and Financial Statements, or
otherwise disclosed to Amenni on Schedule 4.8 prior to the Execution Date, there
are no actions, suits, claims, inquiries, proceedings or investigations before
any court, tribunal, commission, bureau, regulatory, administrative or
governmental agency, arbitrator, body or authority pending or threatened against
Nannaco which would reasonably be expected to result in any liabilities,
including defense costs, in excess of $10,000 U.S. in the aggregate. Nannaco is
not the named subject of any order, judgment or decree and is not in default
with respect to any such order, judgment or decree.
4.9 Taxes and Tax Returns. Except as provided in the Reports and Financial
Statements, or otherwise disclosed to Amenni on Schedule 4.9 prior to the
Execution Date, Nannaco has timely and correctly filed tax returns and reports
(collectively, "Returns") required by applicable law to be filed (including,
without limitation, estimated tax returns, income tax returns, excise tax
returns, sales tax returns, use tax returns, property tax returns, franchise tax
returns, information returns and withholding, employment and payroll tax
returns) and all such returns were (at the time they were filed) correct in all
material respects, and have paid all taxes, levies, license and registration
fees, charges or withholdings of any nature whatsoever reflected on such Returns
to be owed and which have become due and payable except for any that is being
contested in good faith. Any unpaid U.S. Federal income taxes, interest and
penalties of Nannaco do not exceed $5,000 U.S. in the aggregate.
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4.10 Employees. Nannaco has one (1) employee, Mr. Steve Careaga, Chief Executive
Officer.
4.11 Compliance with Applicable Law. Nannaco affirms that:
4.11.1 Nannaco holds all licenses, certificates, franchises, permits and
other governmental authorizations ("Permits") necessary for the lawful conduct
of its business and such Permits are in full force and effect, and Nannaco is in
all material respects complying therewith, except where the failure to possess
or comply with such Permits would not have, in the aggregate, a Material Adverse
Effect on Nannaco.
4.11.2 Nannaco is and for the past three years has been in compliance with
all foreign, federal, state and local laws, statutes, ordinances, rules,
regulations and orders applicable to the operation, conduct or ownership of its
business or properties except for any noncompliance which is not reasonably
likely to have, in the aggregate, a Material Adverse Effect on Nannaco.
4.12 Contracts and Agreements. Nannaco is not a party to or bound by any
commitment, contract, agreement or other instrument which involves or could
involve aggregate future payments by Nannaco of more than $10,000 U.S., (ii)
Nannaco is not a party to or bound by any commitment, contract, agreement or
other instrument which is material to the business, operations, properties,
assets or financial condition of Nannaco, and (iii) no commitment, contract,
agreement or other instrument, other than charter documents, to which Nannaco is
a party or by which Nannaco is bound, limits the freedom of Nannaco to compete
in any line of business or with any person. Nannaco is not in default on any
contract, agreement or other instruments.
4.13 Affiliate Transactions.
4.13.1 Except as otherwise disclosed on Schedule 4.13, Nannaco has not
engaged in, and is not currently obligated to engage in (whether in writing or
orally), any transaction with any Affiliated Person (as defined below) involving
aggregate payments by or to Nannaco of $10,000 U.S. or more.
4.13.2 For purposes of this Section 4.13, "Affiliated Person" means:
(a) a director, executive officer or Controlling Person (as defined
below) of Nannaco;
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(b) a spouse of a director, executive officer or Controlling Person
of Nannaco;
(c) a member of the immediate family of a director, executive
officer, or Controlling Person of Nannaco who has the same home as such person;
(d) any corporation or organization (other than Nannaco) of which a
director, executive officer or Controlling Person of Nannaco is a chief
executive officer, chief financial officer, or a person performing similar
functions or is a Controlling Person of such other corporation or organization;
(e) any trust or estate in which a director, executive officer, or
Controlling Person of Nannaco or the spouse of such person has a substantial
beneficial interest or as to which such person or his spouse serves as trustee
or in a similar fiduciary capacity; and
(f) for purposes of this Section 4.13, "Controlling Person" means
any person or entity which, either directly or indirectly, or acting in concert
with one or more other persons or entities owns, controls or holds with power to
vote, or holds proxies representing ten percent or more of the outstanding
common stock or equity securities.
4.14 Limited Representations and Warranties. Except for the representations and
warranties of Amenni expressly set forth in Section 3, Nannaco has not relied
upon any representation and warranty made by or on behalf of Amenni in making
its determination to enter into this Agreement and consummate the transactions
contemplated by this Agreement.
4.15 Disclosure. No statement contained in the Schedules delivered by Nannaco
hereunder contains any untrue statement of a material fact or omits any material
fact necessary in order to make a statement herein or therein, in light of the
circumstances under which it is made, not misleading.
4.16 Title to Property.
4.16.1 Real Property. Nannaco does not own or lease, directly or
indirectly, any real property.
4.16.2 Environmental Matters. Nannaco does not have any financial
liability under any environmental laws.
4.17 Personal Property. Nannaco does not own any personal property the current
fair market value of which is more than $1,000 U.S. in the aggregate.
4.18 Intellectual Property. Nannaco does not own or lease, directly or
indirectly, any Intellectual Property. "Intellectual Property", for purposes of
this Agreement, shall mean: patents, patent applications, trademarks, trademark
registrations, applications for trademark registration, trade names, service
marks, registered Internet domain names, licenses and other agreements with
respect to any of the foregoing to which Nannaco is licensor or licensee. In
addition, there are no pending or threatened, claims against Nannaco by any
person as to any of the Intellectual Property, or their use, or claims of
infringement by Nannaco on the rights of any person and no valid basis exists
for any such claims.
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4.19 Insurance. Nannaco does not own, directly or indirectly, any insurance
policies with respect to the business and assets of Nannaco.
4.20 Powers of Attorney. Nannaco does not have any powers of attorney
outstanding other than those in the ordinary course of business with respect to
routine matters.
4.21 Product Claims. No product or service liability claim is pending against
Nannaco or against any other party with respect to the products or services of
Nannaco.
4.22 SEC Reports and Financial Statements. Nannaco has filed with the SEC, and
has heretofore made available to Amenni, complete and correct copies of all
forms, reports, schedules, statements and other documents required to be filed
by Nannaco under the Securities Act, and the Exchange Act (as such documents
have been amended or supplemented since the time of their filing) (collectively,
the "SEC Reports"). As of their respective dates, the SEC Reports (including
without limitation, any financial statements or schedules included therein) (a)
did not contain any untrue statement of a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and (b) complied
in all material respects with the applicable requirements of the Securities Act
and Exchange Act (as the case may be) and all applicable rules and regulations
of the SEC promulgated thereunder. Each of the financial statements included in
the SEC Reports has been prepared from, and is in accordance with, the books and
records of Nannaco, complies with all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, has been prepared in accordance with U.S. generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly presents in all material respects the consolidated results of
operations and cash flows (and changes in financial position, if any) of
Nannaco, as at the date(s) thereof or for the period(s) presented therein.
4.23 Appraisal Rights. Nannaco has complied and is in full compliance with any
and all provisions of Texas law relating to "appraisal rights".
5. COVENANTS OF THE PARTIES.
5.1 Conduct of the Business of Nannaco. During the period from the Closing Date,
and the Effective Time, Nannaco will conduct its business and engage in
transactions only in the ordinary course consistent with past practice. During
such period, Nannaco will use its best efforts to (a) preserve its business
organization intact, and (b) maintain its current status as a company whose
shares are traded on the Over The Counter Bulletin Board. In addition, without
limiting the generality of the foregoing, Nannaco agrees that from the date of
this Agreement to the Closing Date, except as otherwise consented to or approved
by Amenni in writing (which consent or approval shall not be unreasonably
withheld, delayed or conditioned) or as permitted or required by this Agreement
or as required by law, Nannaco will not:
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5.1.1 grant any severance or termination pay to or enter into or amend any
employment agreement with, or increase the amount of payments or fees to, any of
its employees, officers or directors other than salary increases to employees
consistent with past increases;
5.1.2 guarantee the obligations of any person except in the ordinary
course of business consistent with past practice;
5.1.3 enter into or amend or terminate any long term (one year or more)
contract (including real property leases);
5.1.4 engage or participate in any material transaction or incur or
sustain any material obligation otherwise than in the ordinary course of
business;
5.1.5 increase the number of employees;
5.1.6 acquire any real property; or
5.1.7 agree to do any of the foregoing.
5.2 No Solicitation and Liquidated Damages. During the period from the Closing
Date, and the Effective Time, neither Nannaco nor any of its directors,
officers, shareholders, representatives, agents or other persons controlled by
any of them, shall, directly or indirectly encourage or solicit, or hold
discussions or negotiations with, or provide any information to, any persons,
entity or group other than Amenni concerning any merger, sale of substantial
assets not in the ordinary course of business, sale of shares of capital stock
or similar transactions involving Nannaco. Nannaco will promptly communicate to
Amenni the identity of any interested or inquiring party, all relevant
information surrounding the interest or inquiry, as well as the terms of any
proposal that Nannaco may receive in respect of any such transaction. If this
Agreement is terminated by Nannaco due to uncured breach of this Section 5.2,
then Amenni shall be entitled to Twenty-Five Thousand Dollars ($25,000) U.S.
from Nannaco as liquidated damages. Such liquidated damages shall constitute
full payment and the exclusive remedy for any damages suffered by Amenni by
reason of such breach and the terms of this Agreement. Nannaco and Amenni agree
that actual damages would be difficult to ascertain and that $25,000 U.S. is a
fair and equitable amount to reimburse Amenni for such damages and the
termination of this Agreement.
5.3 Access to Properties and Records; Confidentiality.
5.3.1 Nannaco shall permit Amenni and its representatives reasonable
access to its properties and shall disclose and make available to Amenni all
books, papers and records relating to the assets, stock, ownership, properties,
obligations, operations and liabilities of Nannaco, including but not limited
to, all books of account (including the general ledger), tax records, minute
books of directors and stockholders meetings, organizational documents, bylaws,
material contracts and agreements, filings with any regulatory authority,
accountants work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which Amenni may have a reasonable
interest, in each case during normal business hours and upon reasonable notice.
Nannaco shall not be required to provide access to or disclose information where
such access or disclosure would jeopardize the attorney-client privilege or
would contravene any law, rule, regulation, order, judgment, decree or binding
agreement entered into prior to the date of this Agreement. The parties will use
all reasonable efforts to make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
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5.3.2 All information furnished by Nannaco to Amenni or the
representatives or affiliates of Amenni pursuant to, or in any negotiation in
connection with, this Agreement shall be treated as the sole property of Nannaco
until consummation of the Merger and if the Merger shall not occur Amenni and
its affiliates, agents and advisors shall upon written request return to Nannaco
all documents or other materials containing, reflecting, referring to such
information, and shall keep confidential all such information and shall not
disclose or use such information for competitive purposes for a period of two
(2) years. The obligation to keep such information confidential shall not apply
to (i) any information which (w) Amenni can establish by evidence was already in
its possession (subject to no obligation of confidentiality) prior to the
disclosure thereof by Nannaco; (x) was then generally known to the public; (y)
becomes known to the public other than as a result of actions by Amenni or by
the directors, officers, employees, agents or representatives of Amenni; or (z)
was disclosed to Amenni, or to the directors, officers, employees or
representatives of Amenni, solely by a third party not bound by any obligation
of confidentiality; or (ii) disclosure in accordance with the federal securities
laws, a federal banking laws, or pursuant to an order of a court or agency of
competent jurisdiction.
5.4 Regulatory Matters.
5.4.1 The parties will cooperate with each other and use all reasonable
efforts to prepare all necessary documentation, to effect all necessary filings
and to obtain all necessary permits, consents, approvals, and authorizations of
all third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement including, without limitation, those
that may be required from the SEC, other regulatory authorities, or Amenni's
shareholders. Nannaco and Amenni shall each have the right to review reasonably
in advance all information relating to Nannaco or Amenni, as the case may be,
and any of their respective subsidiaries, together with any other information
reasonably requested, which appears in any filing made with or written material
submitted to any governmental body in connection with the transactions
contemplated by this Agreement.
5.4.2 Nannaco and Amenni will promptly furnish each other with copies of
written communications received by Nannaco or Amenni or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any governmental
body in respect of the transactions contemplated by this Agreement.
15
5.5 Further Assurances. Subject to the terms and conditions of this Agreement,
each of the parties agrees to use all commercially reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
5.6 Public Announcements. Prior to the Effective Time, no party will issue or
distribute any information to its shareholders or employees, any news releases
or any other public information disclosures with respect to this Agreement or
any of the transactions contemplated by this Agreement without the consent of
the other parties or their designated representative, except as may be otherwise
required by law.
5.7 Appraisal and Dissenters' Rights. Notwithstanding any other provision in
this Agreement to the contrary, Amenni agrees to be responsible for any and all
payments required to be made by Nannaco to shareholders of Nannaco in connection
with the "appraisal" and/or "dissenters" rights provided to Nannaco shareholders
under Texas law.
6. CONDITIONS PRECEDENT TO AMENNI'S OBLIGATIONS.
The obligations of Amenni to consummate the transactions contemplated by this
Agreement are subject to satisfaction of the following conditions at or before
the Effective Time and may be waived only in writing by Amenni:
6.1 Nannaco's Covenants, Representations and Warranties. All the covenants,
terms and conditions of this Agreement to be complied with or performed by
Nannaco at or before the Effective Time shall have been complied with and
performed in all respects. The representations and warranties made by Nannaco in
this Agreement shall be complete and correct at and as of the Effective Time
with the same force and effect as though such representations and warranties had
been made at and as of the Effective Time.
6.2 Delivery of Documents by Nannaco. Nannaco shall have duly executed and
delivered, or caused to be executed and delivered this Agreement and the Nannaco
Closing Documents.
6.3 Nannaco Shareholder Approval. This Agreement shall have been approved and
adopted by the affirmative votes of that amount of Nannaco's outstanding capital
stock necessary for the consummation of the Merger pursuant to Texas law.
6.4 Other Approvals. All authorizations, consents, orders or approvals of any
United States federal or state governmental agency necessary for the
consummation of the Merger or the transactions contemplated by this Agreement
(other than such actions, approvals or filings which, pursuant to the terms of
this Agreement, are to take place on or after the Closing) shall have been
filed, occurred or been obtained.
16
6.5 No Litigation. No administrative investigation, action, suit or proceeding
seeking to enjoin the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
6.6 Current Liabilities of Nannaco. Nannaco's liabilities shall not materially
deviate from that reflected in its Form 10-KSB for the year ended September 30,
2004 nor from that reflected in its most recently filed Form 10-QSB filed prior
to the Execution Date and/or most recently Financial Statement and the Reports.
6.7 Appraisal Rights. Nannaco shall have complied with any and all provisions of
the Texas General Business Law relating to "appraisal rights".
6.8 Absence of Material Change. There shall have been no change in the business,
operations, financial condition or liabilities of Nannaco as stated in the
Financial Statements that has had a Material Adverse Effect on Nannaco.
6.9 Certificate. A certificate issued by the Texas Secretary of State indicating
that Nannaco is qualified and in good standing within such jurisdiction shall
have been delivered to Amenni.
6.10 Due Diligence. Amenni shall be satisfied with its due diligence review of
Nannaco and all of Nannaco's affiliated entities including, but not limited to,
any subsidiaries, parents or brother or sister corporations of Nannaco.
6.11 Closing Schedules. Nannaco shall, along with and as part of the requisite
Closing Documents, submit a schedule of outstanding liabilities to be satisfied
in accordance with Amenni's expectations as set forth in this Agreement prior
to, and as a condition of, the closing.
7. CONDITIONS PRECEDENT TO NANNACO'S OBLIGATIONS.
The obligations of Nannaco to consummate the transactions contemplated by this
Agreement are subject to satisfaction of the following conditions at or before
the Effective Time and may be waived only in writing by Nannaco:
7.1 Amenni's Covenants, Representations and Warranties. All the covenants, terms
and conditions of this Agreement to be complied with or performed by Amenni on
or before the Effective Time shall have been complied with and performed in all
respects. The representations and warranties made by Amenni in this Agreement
shall be complete and correct at and as of the Effective Time with the same
force and effect as though such representations and warranties had been made at
and as of the Effective Time.
7.2 Delivery of Documents by Amenni. Amenni shall have duly executed and
delivered, or caused to be executed and delivered, to Nannaco, or at its
direction, this Agreement, Amenni Shares and Amenni Closing Documents.
17
7.3 Other Approvals. All authorizations, consents, orders or approvals of any
United States federal or state governmental agency necessary for the
consummation of the Merger or the transactions contemplated by this Agreement
(other than such actions, approvals or filings which, pursuant to the terms of
this Agreement, are to take place on or after the Closing) shall have been
filed, occurred or been obtained.
7.4 Amenni Shareholder Approval. This Agreement shall have been approved and
adopted by the affirmative votes of that amount of Amenni's outstanding capital
stock necessary for the consummation of the Merger pursuant to the Applicable
Law.
7.5 No Litigation. No administrative investigation, action, suit or proceeding
seeking to enjoin the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
7.6 Due Diligence. Nannaco shall be satisfied with its due diligence review of
Amenni and all of Amenni's affiliated entities including, but not limited to,
any subsidiaries, parents or brother or sister corporations of Amenni.
8. TERMINATION.
8.1 Termination of Agreement. This Agreement shall terminate as follows:
(a) at any time prior to the Effective Time by the mutual written
agreement of all parties;
(b) by Amenni, in the event of a breach of any of the representations or
warranties or covenants made by Nannaco in this Agreement that has not been
cured within 30 days after notice of such breach as delivered to Nannaco by
Amenni;
(c) by Nannaco in the event of any of the representations or warranties
made by Amenni in this Agreement that has not been cured within 30 days after
notice of such breach as delivered to Amenni by Nannaco; or
(d) by either Nannaco or Amenni if the Effective shall have not occurred
by October 22, 2005 (the "Upset Date") provided, however, that the right to
terminate this Agreement pursuant to this clause shall not be available to any
party whose failure to fulfill any obligation of this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to have been reached
on or prior to such date.
9. MISCELLANEOUS.
9.1 Tax Treatment by the Parties. Unless otherwise required by law, the parties
shall treat the Merger as a reorganization under Section 368 of the Code for all
tax reporting purposes; furthermore, the parties shall not take, and have not
taken, any action that is inconsistent with reorganization treatment under
Section 368 of the Code.
18
9.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person or entity other than the parties and their respective
successors and assigns.
9.3 Successors and Assigns. No party may assign either this Agreement or any of
its rights, interests, or obligations under this Agreement without the prior
written consent of all other parties. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns.
9.4 Notices. All notices, requests, demands, claims, consents and other
communications required or permitted under this Agreement shall be in
writing. Any notice, request, demand, claim, communication or consent
under this Agreement shall be deemed duly given if (and shall be
effective two business days after) it is sent by certified mail, return
receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Amenni:
Patrick Lochrie
110 East Broward Boulevard, Ste. 1700
Fort Lauderdale, FL 33301
The Otto Law Group
With a copy (which shall not 601 Union Street, Suite 4500
constitute notice) to: Seattle, WA 98101
Attention: David M. Otto
If to Nannaco: Mr. Steve Careaga
C.E.O.
4916 Point Fosdick Dr., Suite 102
Gig Harbor, WA 98335
With a copy (which shall not The Otto Law Group
constitute notice) to: 601 Union Street, Suite 4500
Seattle, WA 98101
Attention: David M. Otto
9.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Washington without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Washington or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Washington.
19
9.6 Amendments and Waivers. This Agreement may be amended or waived only in a
writing signed by the party against which enforcement of the amendment or waiver
is sought.
9.7 Survival of Representations and Warranties. The representations and
warranties set forth in Sections 3 and 4 of this Agreement shall survive the
Effective Time and continue in full force and effect for a period of two years
after the Effective Time.
9.8 Severability. Any term or provision of this Agreement that is found to be
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of its remaining terms and provisions or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.9 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.
9.10 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 requires otherwise. The word "including" shall
mean including without limitation.
9.11 Incorporation of Schedules. The Schedules referred to in and/or attached to
this Agreement are incorporated in this Agreement by this reference.
9.12 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same document. This Agreement may be executed by
facsimile.
9.13 Entire Agreement. This Agreement (including the Schedules referred to in
and/or attached to this Agreement), which constitutes the entire agreement among
the parties, supersedes any prior understandings, agreements, or representations
by or among the parties, written or oral to the extent they relate in any way to
the subject matter of this Agreement, and may only be changed by a writing
signed by both parties.
9.14. No Finders and Brokers. No agent, broker, person or firm acting on behalf
of Nannaco or Amenni under its authority is or will be entitled to any
commission, broker, finder, or financial advisory fees from any of the parties
hereto in connection with any of the transactions contemplated herein.
20
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first listed above.
Nannaco:
Nannaco, Inc.:
By: /s/ Steve Careaga
---------------------
Name: Steve Careaga
Title: Chief Executive Officer
Amenni:
AMENNI, INC.
By: /s/ Patrick Lochrie
----------------------
Name: Patrick Lochrie
Title: President and Chief Executive Officer
ACQUISITION SUB:
NANNACO ACQUISITION, INC.
By: /s/ Steve Careaga
-----------------------
Name: Steve Careaga
Title: President and Secretary
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Dates Referenced Herein and Documents Incorporated by Reference
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