Exhibit 2.1
STOCK EXCHANGE AGREEMENT
AGREEMENT made as of the 24th day of July, 2000, by and between United
Source Corporation, a Delaware corporation ("United Source") having its
principal place of business at 1979 Marcus Avenue, Suite 210, Lake Success, New
York 11042; Hannibal Capital Corp., a Delaware corporation having its principal
place of business at 1244 Main Street, Linfield, Pennsylvania 19468
("Hannibal"); and Biofarm, Inc., a Delaware corporation having its principal
place of business at 1244 Main Street, Linfield, Pennsylvania 19468, which is
the sole shareholder of Hannibal ("Principal Shareholder").
WHEREAS, Hannibal is authorized to issue 50,000,000 shares ("Hannibal
Shares") of its common stock, par value $.001 per share (the "Hannibal Common
Stock") of which 1,400,000 shares are issued and outstanding (the "Outstanding
Hannibal Shares"), and 5,000,000 shares of its preferred stock, $.001 par value
per share (the "Hannibal Preferred Shares"), of which no shares will be issued
and outstanding immediately prior to closing; and
WHEREAS, United Source is authorized to issue (a) 20,000,000 shares (the
"United Source Common Shares") of its common stock, par value $.001 per share
("United Source Common Stock"), of which 10,000,000 will be issued and
outstanding immediately prior to the Closing (as defined in Section 1) (the
"Outstanding United Source Common Shares"), and (b) 2,000,000 shares of its
preferred stock, $.001 par value per share (the "United Source Preferred
Shares"), of which currently approximately 500,000 are issued and outstanding
and up to 1,000,000 will be issued and outstanding immediately prior to closing
(the "Outstanding United Source Preferred Shares")(the Outstanding United Source
Common Shares and the Outstanding United Source Preferred Shares, collectively,
the "Outstanding United Source Shares"), and
WHEREAS, the Principal Shareholder is the sole shareholder of Hannibal and
its shareholders will receive economic benefit from the transactions
contemplated in this Agreement; and
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WHEREAS, it is contemplated that on or prior to the effective date of the
Transaction (the "Effective Date"), the Outstanding United Source Shares are
owned as set forth on Schedule A hereto (the "United Source Shareholders"); and
WHEREAS, Hannibal desires to issue and deliver to the United Source
Shareholders, and each of them desires to receive from Hannibal, certain shares
of Hannibal's authorized and unissued Common Stock, in exchange therefor of an
aggregate of 10,000,000 shares of United Source Common Stock (herein, the
exchange and all all other actions contemplated are called the "Transaction"),
which at the Closing contemplated hereby will together constitute all of the
issued and outstanding shares of the United Source Common Stock; on the terms
and subject to the conditions set forth herein; and
WHEREAS, the parties hereto intend that the issuance of the shares of the
Hannibal Common Stock in exchange for the United Source Common Stock shall
qualify as a "tax-free" reorganization as contemplated by the provisions of
Section 368(a) (1) (B) of the Internal Revenue Code of 1986, as amended; and
WHEREAS, in order to raise working capital, Hannibal will sell 800,000
shares of Hannibal Common Stock at an offering price of $1.50 per Share, subject
to a "lock-up" agreement and shall bear a legend whereby 560,000 of such shares
shall not be hypothecated, transferred or sold by the beneficial holders thereof
for a period of six months from the Effective Date (the "Hannibal Placement"),
resulting in net proceeds of $1,200,000 which shall be available in an
unencumbered bank account of Hannibal at Closing, and Hannibal shall register on
the shelf under Rule 415 with the Securities and Exchange Commission an
additional 1,000,000 shares of Hannibal Common Stock for sale after the Closing,
subject to Hannibal's obligation to file a post-effective amendment at the time
of such proposed subsequent sales by Hannibal (the "Shelf Shares").
NOW, THEREFORE, in consideration of the premises, the parties hereto do
mutually agree as follows:
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1. Vote on Transaction. United Source and Hannibal shall each, as soon as
practicable but in no event after sixty (60) days from the date hereof, time
being of the essence (i) cause a special meeting of its shareholders to be
called to consider and vote upon the Transaction on the terms and conditions
hereinafter set forth, or (ii) obtain such written consent of its shareholders
as is necessary to approve the Transaction. If the Transaction is approved in
accordance with the laws of the State of Delaware, subject to the further
conditions and provisions of this Agreement, a closing of this Agreement shall
be held (the "Closing"), and all documents or instruments deemed necessary or
appropriate by the parties hereto to effect the Transaction shall be executed
and delivered promptly thereafter.
2. Representations and Warranties by United Source. United Source
represents and warrants as follows:
(a) On the Effective Date United Source will be a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware, authorized to issue only the United Source Shares. On the Effective
Date there will be issued and outstanding only the Outstanding United Source
Common Shares and Outstanding United Source Preferred Shares, all of which on
the Effective Date will be, duly authorized, validly issued and fully paid and
nonassessable shares of United Source Common Shares and United Source Preferred
Shares. There are no, and on the Effective Date there will be no, issued or
outstanding rights, options or warrants to purchase United Source Common Shares
or any issued or outstanding securities of any nature convertible into United
Source Common Shares, other than (i) 1,000,000 shares reserved for issuance
under United Source's 2000 Omnibus Stock Incentive Plan (the "Plan"), of which
options for 365,000 shares are currently outstanding, and (ii) up to 1,000,000
of the United Source Common Shares which may be issued upon conversion of the
Outstanding United Source Preferred Shares. The Outstanding United Source Shares
have all been issued pursuant to an appropriate exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and from any applicable registration requirements of the various states.
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(b) United Source has, and on the Effective Date will have, full power and
authority to enter into this Agreement and, subject to shareholder approval in
accordance with the laws of the State of Delaware, to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors and, prior
to the Closing Date, by the shareholders, of United Source. This Agreement has
been duly executed and delivered by United Source and constitutes a valid and
binding obligation of United Source, enforceable against United Source in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights.
(c) United Source is qualified as a foreign corporation in all
jurisdictions where its business or ownership of assets or properties so
requires. The business of United Source does not require it to be registered as
an investment company or investment adviser as such terms are defined under the
Investment Company Act of 1940 and the Investment Advisers Act of 1940, each as
amended.
(d) The financial statements of United Source, consisting of its Balance
Sheet as at March 31, 2000, its Statements of Income (Loss) for the interim
period ended March 31, 2000, its Statement of Stockholders' Equity (Deficit in
Assets) for the interim period March 31, 2000, and its Statements of Cash Flows
for the interim period ended March 31, 2000, fairly present the consolidated
financial position, results of operations and other information purported to be
shown therein of United Source, at the date and for the respective periods to
which they apply. All such financial statements have been prepared in conformity
with generally accepted accounting principles consistently applied throughout
the periods involved and have been adjusted for all normal and recurring
accruals, and are audited without qualification.
(e) Since March 31, 2000, except as set forth on the United Source
Disclosure Schedule attached hereto, the business of United Source has been
operated in the ordinary course. There has not been, and on the Effective Date
there will not have been in the aggregate any material adverse change in the
condition, financial or otherwise, of United Source or any of its
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subsidiaries from that set forth in the United Source Financial Statements,
except as reflected on the United Source Disclosure Schedule attached hereto.
(f) There are, and on the Effective Date will be no liabilities (including,
but not limited to tax liabilities) or claims against United Source or any of
its subsidiaries (whether such liabilities or claims are contingent or absolute,
direct or indirect, matured or unmatured) not appearing on the United Source
Financial Statements, other than liabilities incurred in the ordinary course of
business or taxes incurred since March 31, 2000, except as reflected on Schedule
2(f) attached hereto.
(g) All federal, state, county and local income, excise, property and other
tax returns required to be filed by United Source or any subsidiary have been
filed and all required taxes, fees or assessments have been paid or an adequate
reserve therefor has been established in the United Source Financial Statements.
The income tax returns of United Source and its subsidiaries have never been
audited by any authority empowered to do so.
(h) Except as provided for in the United Source Financial Statements,
United Source has, and on the Effective Date will have, good and marketable
title to all of its furniture, fixtures, equipment and other assets as set forth
in the United Source Financial Statements and such assets are owned free and
clear of all security interests, pledges, liens, restrictions and encumbrances
of every kind and nature, except as set forth in the United Source Financial
Statements.
(i) There are, and on the Effective Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against United Source, or challenging the validity
or propriety of the transactions contemplated by this Agreement (including the
Hannibal Placement and Public Offering) and, to United Source's best knowledge,
there is no reasonable basis for any other proceeding, claim, action or
governmental investigation against United Source or a subsidiary. United Source
or a subsidiary is not a party to any order, judgment or decree which will, or
might reasonably be expected to, materially adversely affect the business,
operations, properties, assets or financial condition of United Source and its
subsidiaries taken as a whole.
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(j) United Source has, and on the Effective Date will have, no patents,
patent applications, trademarks, trademark registrations or applications
therefor, tradenames, copyrights, copyright registrations or applications
therefor, or other registered intellectual property.
(k) Since its inception, United Source has, and on the Effective Date will
have, in all material respects operated its business and conducted its affairs
in compliance with all applicable laws, rules and regulations, except where the
failure to so comply did not have and would not be expected to have a material
adverse effect on its business or property.
(l) During the past five year period, neither United Source nor any officer
or director of United Source or any subsidiary, nor any person intended to
become an officer or director of United Source or any subsidiary, has been the
subject of:
(1) a petition under the Federal bankruptcy laws or any other
insolvency law or has a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(2) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not relate to
driving while intoxicated);
(3) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant,
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any other person regulated by the United States Commodity Futures Trading
Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of
Federal, state or other securities laws or commodities laws;
(4) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such person
to engage in any activity described in the preceding sub-paragraph, or to be
associated with persons engaged in any such activity;
(5) a finding by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission (the "Commission") to have violated
any securities law, regulation or decree and the judgment in such civil action
or finding by the Commission has not been subsequently reversed, suspended or
vacated; or
(6) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
(m) Except for the Plan, United Source has no other pension plan, profit
sharing or similar employee benefit plan.
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(n) Except for the consent and approval of the shareholders of United
Source, no consents or approvals of, or filings or registrations with, any third
party or any public body or authority are necessary in connection with (i) the
execution and delivery by United Source of this Agreement and (ii) the
consummation by United Source of the Transaction and the other transactions
contemplated hereby.
(o) Neither United Source nor any subsidiary knows of any person who
rendered any service in connection with the introduction of Hannibal, or United
Source to each other, other than Atlantis Fund, Ltd. ("Broker"), who is being
compensated through a separate agreement between itself and Hannibal, and that
they know of no claim by anyone other than Broker for a "finder's fee" or
similar type of fee in connection with the Transaction and the other
transactions contemplated hereby.
(p) No employees of United Source are on strike or threatening any strike
or work stoppage. United Source has no obligations under any collective
bargaining or labor union agreements. United Source is not involved in any
material controversy with any of its employees or any organization representing
any of its employees.
(q) The execution and delivery by United Source of this Agreement, the
consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement by United Source will not conflict
with, result in a breach of or constitute a default under any indenture,
mortgage, deed of trust or other agreement, instrument or Contract to which
United Source or any subsidiary is now a party or by which it or any of its
assets or properties is bound or the Certificate of Incorporation, as amended,
or the bylaws of United Source or any subsidiary, in each case as amended, or
any law, order, rule or regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over United Source or any subsidiary or any of its business or
properties.
3. Representations and Warranties relating to Hannibal. Hannibal and
Principal Shareholder, jointly and severally, represent and warrant as follows:
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(a) Hannibal is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware, authorized to issue only
50,000,000 shares of Hannibal Common Stock and 5,000,000 shares of Hannibal
Preferred Stock. Hannibal, on the Effective Date, will be a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware, authorized to issue only 50,000,000 shares of Hannibal Common Stock
and 5,000,000 shares of Hannibal Preferred Stock. On the Effective Date,
immediately prior to the Closing, there will be issued and outstanding 1,400,000
shares of Hannibal Common Stock, all of which will be fully paid and
nonassessable, but subject to a "lock-up" agreement and legend on the share
certificates whereby 1,120,000 of such shares shall not be distributed to or
sold by the beneficial holders thereof for a period of six months from the
Effective Date. Except as contemplated by this Agreement and the Hannibal
Placement, there are no, and on the Effective Date there will be, no issued or
outstanding options, warrants or other rights, contingent or otherwise, to
purchase or acquire shares of Hannibal Common Stock or any issued or outstanding
securities of any nature convertible into shares of Hannibal Common Stock.
(b) Since its inception, the business of Hannibal has been limited to the
search for an acquisition or Transaction partner and, except for transactions
related thereto or related to its status as a publicly held company, it has not
engaged in any other business or activity, except for (i) the filing of its Form
SB-2 and amendments thereto (the "Registration Statement") and (ii) the deposit
in escrow of $1,200,000 from the Hannibal Placement subject to the consummation
of the Public Offering.
(c) Hannibal is, and on the Effective Date will be, duly authorized,
qualified and licensed under any and all applicable laws, regulations,
ordinances, or orders of public authorities to carry on its business in the
places and in the manner as presently conducted. The business of Hannibal does
not require it to be registered as an Investment Company or Investment Advisor
as such terms are defined under the Investment Company Act and the Investment
Advisors Act of 1940.
(d) Hannibal has, and on the Effective Date will have, no subsidiaries.
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(e) The audited financial statements of Hannibal, consisting of its Balance
Sheets as at March 31, 2000, and its Statement of Operations, its Statement of
Stockholders' Equity and its Statement of Cash Flows from inception to March 31,
2000, all together with accompanying notes, have been audited by independent
public accountants. Such financial statements (together, the "Hannibal Financial
Statements") have been delivered to United Source and are true and complete in
all respects.
(f) Since March 31, 2000, the business of Hannibal, as described in
Hannibal's Registration Statement, has been operated only in the ordinary
course. There has not been, and on the Effective Date there will not have been,
any material change in the financial condition of Hannibal from that set forth
in the Hannibal Financial Statements except for (i) transactions in the ordinary
course of business, (ii) the proposed Hannibal Public Offering, and (iii)
transactions relating to this Agreement, and the incurring of expenses or
liabilities relating to this Agreement.
(g) There are, and on the Effective Date will be, no liabilities
(including, but not limited to, tax liabilities) or claims against Hannibal
(whether such liabilities or claims are contingent or absolute, direct or
indirect, and matured or unmatured) not appearing on the Hannibal Financial
Statements, except for (i) liabilities for expenses incurred relating to this
Agreement and the consummation of the transactions contemplated by this
Agreement (ii) liabilities and commitments incurred or made in the ordinary
course of Hannibal's business.
(h) All federal, state, county and local income, excise, property or other
tax returns required to be filed by Hannibal have been filed and all required
taxes, fees or assessments have been paid or an adequate reserve therefor has
been set up in the Hannibal Financial Statements. Hannibal's income tax returns
have never been audited by any authority empowered to do so.
(i) Hannibal has, and on the Effective Date will have, no fixtures,
furniture, equipment, inventory or accounts receivable.
(j) Hannibal, has, and on the Effective Date will have no material
Contracts to which it is, or on the Effective Date will be a Party, except
documents relating to the Hannibal Public
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Offering, except as described in the Hannibal Financial Statements or in the
Hannibal Public Offering, except filing and other requirements associated with
Hannibal's initial public offering of securities under the Registration
statement and its status as a publicly held company.
(k) There are, and on the Effective Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against Hannibal, or challenging the validity or
propriety of the transactions contemplated by this Agreement (including the
Hannibal Public Offering) and there is no reasonable basis for any other
proceeding, claim, action or governmental investigation against Hannibal.
Hannibal is not a party to any order, judgment or decree which will, or might
reasonably be expected to, materially adversely affect the business, operations,
properties, assets or financial condition of Hannibal.
(l) Since March 31, 2000, there have been, and to the Effective Date there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of Hannibal; (ii) no loans made to or transactions
with any officer or director of Hannibal; (iii) no dividends or other
distributions declared or paid by Hannibal; and (iv) no purchase by Hannibal of
any Hannibal Shares.
(m) Since March 31, 2000, Hannibal has not issued or committed itself to
issue, and to the Effective Date will not issue or commit itself to issue, any
additional Common shares or any options, rights, warrants, or other securities
convertible into Common shares, except as contemplated by this Agreement and the
Hannibal Placement.
(n) Hannibal has furnished to United Source true and complete copies,
including exhibits and, as applicable, amendments thereto, of (i) Hannibal's
Registration Statement for its initial public offering; (ii) the Prospectus
contained therein; (iii) the documents for the Hannibal Public Offering; (iv)
copies of all correspondence with the Securities and Exchange Commission in
connection with Hannibal's initial public offering; and (v) copies of all
documents filed pursuant to state "blue sky" laws and rules and regulations
promulgated thereunder and copies of all
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correspondence with state agencies having jurisdiction over the offer and sale
of share of Hannibal Common Stock.
(o) Hannibal has no patents, patent applications, trademarks, trademark
registrations, tradenames, copyrights, copyright registrations or applications
therefor.
(p) Since its inception, Hannibal has, and on the Effective Date, will have
in all material respects operated its business and conducted its affairs in
compliance with all applicable laws, rules and regulations.
(q) There are, and on the Effective Date there will be no loans, leases or
other contracts outstanding between (i) Hannibal and (ii) any officer or
director of Hannibal or any person related to any officer or director of
Hannibal.
(r) During the past five year period, no officer or director of Hannibal
has been the subject of:
(1) a petition under the Federal bankruptcy laws or any other
insolvency law or has a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(2) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not relate to
driving while intoxicated);
(3) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following activities:
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(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States
Commodity Futures Trading Commission or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in connection
with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of
Federal, state or other securities laws or commodities laws;
(4) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such person
to engage in any activity described in the preceding sub-paragraph, or to be
associated with persons engaged in any such activity;
(5) a finding by a court of competent jurisdiction in a civil action
or by the Commission to have violated any securities law, regulation or decree
and the judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or
(6) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
(s) Hannibal has no pension plan, profit sharing or similar employee
benefit plan.
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(t) Except for the consent and approval of the shareholders of Hannibal and
the Securities and Exchange Commission, no consents or approvals of, or filings
or registrations with, any third Party or any public body or authority are
necessary in connection with (i) the execution and delivery by Hannibal of this
Agreement and (ii) the consummation of the Transaction and the other
transactions contemplated hereby.
(u) Hannibal knows of no person who rendered any service in connection with
the introduction of Hannibal or United Source to each other, other than the
Broker who is being compensated through a separate agreement between itself and
Hannibal, and that they know of no claim by anyone other than Broker for a
"finder's fee" or similar type of fee in connection with the Transaction and the
other transactions contemplated hereby.
(v) Hannibal has no employees.
(w) None of the information supplied or to be supplied by or about Hannibal
for inclusion or incorporation by reference in the Registration Statement
concerning the Transaction contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(x) The execution and delivery by Hannibal of this Agreement, the
consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement by Hannibal will not conflict with,
result in a breach of or constitute a default under any indenture, mortgage,
deed of trust or other agreement, instrument or Contract to which Hannibal is
now a party or by which it or any of its assets or properties is bound or the
Certificate of Incorporation, as amended, or the bylaws of Hannibal, in each
case as amended, or any law, order, rule or regulation, writ, injunction,
judgment or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Hannibal or any of its business or
properties.
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4. Representations to Survive Closing. All of the representations and
warranties contained in this Agreement (including all statements contained in
any certificate or other instrument delivered by or on behalf of United Source,
Hannibal or Principal Shareholder pursuant hereto or in connection with the
transactions contemplated hereby) shall survive the closing.
5. Continuing Corporation. Upon Closing, United Source shall continue its
existence as a wholly-owned subsidiary of Hannibal. Its name, identity,
certificate of incorporation, by-laws, existence, purposes, powers, objects,
franchises, rights and immunities shall be unaffected and unimpaired by the
Transaction.
6. Exchange and Treatment of Shares. The terms and conditions of the
Transaction, the mode of carrying the same into effect, and the manner and basis
of converting the common shares and other securities of each of the Constituent
Corporations are as follows:
(a) The 10,000,000 Outstanding United Source Common Shares shall be
exchanged under the Transaction, and at the Effective Date, for a total of
19,800,000 newly issued Hannibal Shares on the basis of 1.98 Hannibal Shares for
each one United Source Share. At the Effective Date, each holder of United
Source Common Shares outstanding prior to the Transaction shall be entitled upon
surrender to receive from Hannibal a certificate representing the number of
Hannibal Shares to which such holder shall be entitled for each United Source
Common Share so surrendered. Until so surrendered, the outstanding certificates
which, prior to the Effective Date, represented United Source Common Shares
shall be deemed for all corporate purposes to evidence ownership of Hannibal
Shares into which such United Source Common Shares shall be converted.
Fractional shares shall be determined based upon the total shares held by each
holder, regardless of the number of certificates representing such United Source
Common Shares. On or before the Effective Date, Hannibal shall adopt a stock
option plan similar in form to the United Source Plan and shall cause to be
issued at the Effective Date from Hannibal's authorized Preferred Stock a series
of newly issued preferred stock having the same designation, rights and
preferences as the Outstanding United Source Preferred Shares.
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(b) There shall be no change in the ownership of the Outstanding
Hannibal Common Shares from that in existence immediately prior to the
Transaction, provided that the Outstanding Hannibal Common Shares shall not
exceed 2,200,000 shares.
(c) Subject to shareholder approval, the name of Hannibal shall be
changed to "United Source Corporation" upon the Closing of the Transaction.
7. Conditions to Obligations to Hannibal. The obligation of Hannibal to
consummate the Transaction is subject to satisfaction of the following
conditions prior to the Effective Date:
(a) That United Source has not suffered an uninsured loss on account of
fire, flood, accident, or other calamity of such a character as to interfere
materially with the continuous operation of its business or materially affect
adversely its condition, financial or otherwise, regardless of whether or not
such loss shall have been insured.
(b) Except as disclosed in this Agreement or in the schedules annexed, that
no material adverse change in the aggregate shall have occurred in the audited
financial condition of United Source since March 31, 2000.
(c) That United Source shall have performed and complied with the
provisions and conditions of this Agreement on its part to be performed and
complied with, and that the representations and warranties made by United Source
and each subsidiary in this Agreement are true and correct, both when made and
as of the Effective Date.
(d) That this Agreement and the transactions contemplated hereby shall have
been approved by appropriate corporate action of United Source and that
corporate votes and resolutions to that effect in form and substance reasonably
satisfactory to Hannibal and its counsel have been delivered to Hannibal.
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(e) That there shall have been full compliance with the applicable federal
securities laws and applicable Blue Sky Laws of any state or other governmental
body having jurisdiction over the Transaction.
(f) That Hannibal shall have received an opinion from counsel to United
Source in form satisfactory to Hannibal's counsel, that
(1) United Source has been duly incorporated and is a validly existing
corporation in good standing under the laws of its state of incorporation with
full corporate power and authority to own and operate their respective
properties and to carry on their respective current and proposed business.
(2) United Source has an authorized and outstanding capitalization as
described in this Agreement.
(3) The Outstanding United Source Common Shares and Outstanding United
Source Preferred Shares are the only shares of outstanding capital stock of
United Source, have been duly and validly issued and are fully paid and
non-assessable and do not have any preemptive rights, subscription rights,
rights of first refusal or similar rights applicable thereto. The United Source
Shareholders are the only shareholders of record of United Source and, to such
counsel's best knowledge, the only beneficial owners of United Source Common
Shares and United Source Preferred Shares other than the beneficial owners of
interests owned by the United Source Shareholders.
(4) This Agreement has been duly authorized, executed and delivered by
United Source, is a valid and binding obligation of United Source and is legally
enforceable against United Source in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
now or hereafter in effect and to general equitable principles.
<PAGE>
(5) Neither the execution, delivery or performance of this Agreement
nor the consummation of the transactions therein contemplated, nor compliance
with the terms of each thereof by United Source do or will conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under the certificate of incorporation, as amended, or the bylaws, as amended,
of United Source any indenture, mortgage, deed of trust or other agreement or
instrument to which such counsel knows, without independent inquiry, United
Source is a party or by which, to the knowledge of such counsel without
independent inquiry, it or any of its assets or properties is bound, or to the
knowledge of such counsel after due inquiry, any law, order, rule or regulation,
judgment, writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over United
Source or its business or any of its properties; and no consent, approvals,
authorizations or orders of agencies, officers or other regulatory authorities
are necessary for the consummation of the Transaction, except under state
securities or "blue sky" laws, as to which no opinion is expressed.
(6) This Agreement and the transactions contemplated hereby have been
duly authorized by appropriate corporate action of United Source and that upon
consummation of the Transaction and the delivery of the Outstanding United
Source Common Stock to Hannibal in exchange for the shares of Hannibal Common
Stock, Hannibal will be the sole owner of all of the issued and outstanding
common shares and other capital stock of United Source; and there will be no
other Outstanding United Source Common Shares, no outstanding rights, options or
warrants to purchase United Source Common Shares, and no outstanding securities
of any nature convertible into United Source Common Shares, except for the
United Source Preferred Shares and the Plan.
(7) The business of United Source and its subsidiaries does not
require any of them to be registered as an investment company or an investment
adviser under the Investment Company Act of 1940 or the Investment Advisers Act
of 1940.
Compliance with the provisions of subparagraphs (a) through (f) of this
paragraph shall be evidenced by the certificate of the President and Secretary
of United Source.
<PAGE>
8. Conditions to Obligations of United Source. The obligations of United
Source to consummate the Transaction are subject to satisfaction of the
following conditions prior to the Effective Date:
(a) Neither Hannibal nor Principal Shareholder shall have suffered any loss
on account of fire, flood, accident, or other calamity of such a character as to
interfere materially with the continuous operation of its business or materially
affect adversely its condition, financial or otherwise, regardless of whether or
not such loss shall have been insured.
(b) That no material transactions shall have been entered into by Hannibal
other than transactions in the ordinary course of business since March 31, 2000,
other than as referred to in this Agreement, except with the prior written
consent of United Source.
(c) That no material adverse change shall have occurred in the audited
financial condition of Hannibal or Principal Shareholder since March 31, 2000
other than as referred to in this Agreement.
(d) That none of the properties or assets of Hannibal or Principal
Shareholder shall have been sold or otherwise disposed of other than in the
ordinary course of business since March 31, 2000, except as disclosed herein or
with the written consent of United Source.
(e) That Hannibal and Principal Shareholder shall each have performed and
complied with the provisions and conditions of this Agreement on its part to be
performed and complied with and that all of the representations and warranties
made by Principal Shareholder and Hannibal herein and in the Agreement are true
and correct as of the Effective Date.
(f) That Hannibal shall have held a meeting of its shareholders, at which
the shareholders shall have approved the change of Hannibal's corporate name to
"United Source Corporation", adopted the 2000 Omnibus Stock Incentive Plan
submitted by United Source for their approval, and otherwise amended and
restated Hannibal's Certificate of Incorporation; and Hannibal's Board of
Directors shall have resigned seriatim and the persons designated by United
Source and
<PAGE>
the one person designated by Hannibal shall have been elected as directors of
Hannibal for a maximum period of one year, all subject to the consummation of
the Transaction.
(g) That the Hannibal Public Offering has been consummated or will be
consummated contemporaneously with the Transaction and there shall be $1,200,000
in unencumbered cash in the bank account of Hannibal at Closing.
(h) That United Source shall have received an opinion from counsel to
Hannibal and Principal Shareholder in form satisfactory to United Source's
counsel, that
(1) Hannibal and Principal Shareholder have been duly incorporated
and is a validly existing corporation in good standing under the laws of the
State of Delaware with full corporate power and authority to own and operate its
properties and to carry on its current and proposed business. Hannibal is
qualified as a foreign corporation in each jurisdiction where it conducts
business, except where the failure to so qualify does not have a material
adverse effect on the business, properties or operations of Hannibal.
(2) All of the issued and outstanding Hannibal Shares, as well as the
Hannibal Shares to be issued to the United Source Shareholders in consideration
for the United Source Common Stock as contemplated by this Agreement, have been
or will be duly authorized and validly issued, represent fully paid and
nonassessable legally outstanding common shares of Hannibal, and do not have any
preemptive rights applicable thereto.
(3) This Agreement has been duly authorized, executed and delivered by
Hannibal and the Principal Shareholder of Hannibal and is a valid and binding
obligation of Hannibal, legally enforceable in accordance with its terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
now or hereafter in effect and to general equitable principles.
(4) To the best of such counsel's knowledge, after due inquiry,
neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions
<PAGE>
therein contemplated, nor compliance with the terms of each thereof by Hannibal
or Principal Shareholder do or will conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under the certificate of
incorporation, as amended, or the bylaws, as amended, of Hannibal or Principal
Shareholder, any indenture, mortgage, deed of trust or other agreement or
instrument to which such counsel knows Hannibal or Principal Shareholder is a
Party or by which it or any of its assets or properties is bound, or any law,
order, rule or regulation, judgment, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over Hannibal or Principal Shareholder or its business or any of
its properties; and no consent, approvals, authorizations or orders of agencies,
officers or other regulatory authorities are necessary for the consummation of
the Transaction, except under state securities or "blue sky" laws, as to which
no opinion is expressed.
(5) This Agreement and the transactions contemplated hereby have been
duly authorized by appropriate corporate action of Hannibal and Principal
Shareholder and no shareholder of Hannibal is entitled to appraisal rights with
respect to the Transaction contemplated by this Agreement.
(i) Hannibal shall have paid the Broker's compensation.
(j) The Registration Statement shall be declared effective by the SEC,
including the 1,000,000 Shelf Shares, and the Hannibal Common Stock shall be
duly approved for quotation on the NASD OTC Bulletin Board. Hannibal shall have
filed all forms, reports, exhibits and other documents required to be filed with
the Securities and Exchange Commission under the Securities Act of 1933, the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder and consummated the actions contemplated in the Registration
Statement.
(k) The requisite number of shareholders of United source shall have
approved the Transaction and the actions contemplated herein.
<PAGE>
Compliance with the provisions of subparagraphs (a) through (g) and (i) through
(j) of this paragraph shall be evidenced by the certificate of the President and
Secretary of Hannibal and the certificate of the President and Secretary of
Principal Shareholder to be delivered at Closing.
9. Closing or Termination. The closing of this Agreement shall be deemed to
take place simultaneously with the closing under the Registration Statement and
approval for quotation on the NASD OTC Bulletin Board. In the event the Closing
of this Agreement shall not take place by sixty (60) days from the date hereof,
time being of the essence, then any Party shall have the right to terminate this
Agreement in which event no Party shall have any further right or obligation as
against any other.
10. Delivery of Corporate Proceedings of Hannibal. At the Closing, Hannibal
shall deliver to United Source's counsel the originals of all of the corporate
proceedings of Hannibal, duly certified by its Secretary, relating to this
Agreement.
11. Delivery of Corporate Proceedings of United Source. At the Closing,
United Source shall deliver to Hannibal's counsel a copy of its corporate
proceedings relating to this Agreement or taken pursuant to the provisions of
this Agreement duly certified by its Secretary or by its Assistant Secretary.
12. Further Agreements.
(A) 1933 and 1934 Act Reporting. Within 15 days after the Effective Date,
Hannibal shall file an appropriate Post-Effective Amendment with respect to the
Transaction pursuant to the Securities Act of 1933, as amended. Hannibal shall
thereafter file such audited and other financial statements pursuant to the
requirements of the 1934 Act, such financial statements to be timely filed
within the applicable time period set forth therein.
13. Limitation of Liability. The representations and warranties made by any
party to this Agreement are intended to be relied upon only by the other parties
to this Agreement and by no other person. Nothing contained in this Agreement
shall be deemed to confer upon any person
<PAGE>
not a party to this Agreement any third party beneficiary rights or any other
rights of any nature whatsoever.
14. Further Instruments and Actions. Each Party shall deliver such further
instruments and take such further action as may be reasonably requested by any
other in order to carry out the intents and purposes of this Agreement.
15. Governing Law. This Agreement is being delivered and is intended to be
performed in the State of New York and shall be construed and enforced in
accordance with the laws of such State, except to the extent that the laws of
the State of Delaware shall be applicable to corporate matters.
16. Notices. All notices or other communications to be sent by any party to
this Agreement to any other party to this Agreement shall be sent by certified
mail, nationwide overnight delivery service or by personal delivery to the
addresses hereinbefore designated, or such other addresses as may hereafter be
designated in writing by a party.
17. Binding Agreement. This Agreement represents the entire agreement among
the parties hereto with respect to the matters described herein and is binding
upon and shall inure to the benefit of the parties hereto and their legal
representatives, successors and permitted assigns. This Agreement may not be
assigned and, except as stated herein, may not be altered or amended except in
writing executed by the party to be charged.
18. Counterparts. This Agreement may be executed in counterparts, all of
which, when taken together, shall constitute the entire Agreement.
19. Severability. The provisions of this Agreement shall be severable, so
that the unenforceability, validity or legality of any one provision shall not
affect the enforceability, validity or legality of the remaining provisions
hereof.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have made and executed this
Agreement as of the day and year first above written.
UNITED SOURCE
CORPORATION
By: /s/ Ralph Bianculli
---------------------------------
Ralph Bianculli, President
HANNIBAL CAPITAL CORP.
By: /s/ David Stith
---------------------------------
David R. Stith, President
BIOFARM, INC.
By: /s/ David Stith
---------------------------------
David R. Stith, President
