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AMENDED AND RESTATED
MERGER AGREEMENT
by and among
North Country Hospitality, Inc.,
Christopher Swartz,
and
Seaway Valley Capital Corporation
Dated as of June 1, 2008
AMENDED AND RESTATED MERGER AGREEMENT
Amended and
Restated Merger Agreement (the “ Agreement
”) dated as of June 1, 2008 by and among Seaway Valley
Capital Corporation, a corporation formed under the laws of the
State of Delaware (“ SVCC
”), North Country Hospitality Inc. , a
corporation formed under the laws of the State of Nevada (“
North
Country ”) and Christopher Swartz, an individual
residing in Watertown, New York (“ Principal
Shareholder”) .
Each of SVCC North Country and the Principal Shareholder is
referred to herein individually as a “ Party,
” and all are referred to collectively as the “
Parties
.”
PREAMBLE
WHEREAS
, North Country is the sole member of Harbor Acquisition, LLC, a
Florida limited liability company ( “Harbor
Acquisition” ), which owns and operates certain
restaurants, hotels and other real and personal property
assets;
WHEREAS
, on April 1, 2008 SVCC and North Country entered into a Merger
Agreement contemplating the merger of Harbor Acquisition into North
Country Operating Corp., a Delaware corporation that is a
wholly-owned subsidiary of SVCC (the “ Merger
Sub ”);
WHEREAS
, the parties wish to amend and restate the Merger Agreement on the
terms set forth herein; and
WHEREAS
, in the merger of Harbor Acquisition into the Merger Sub (the
“ Merger
”), all of the membership interest in Harbor Acquisition
shall be cancelled and converted into the right to receive shares
of Series D Convertible Preferred Stock of SVCC having a
liquidation preference of Five Million, Two Hundred and Fifty
Thousand Dollars ($5,250,000) (the “ Merger
Shares”);
NOW,
THEREFORE , in consideration of the premises and the mutual
covenants, representations and warranties contained herein, the
Parties, intending to be legally bound, hereby agree as
follows:
CERTAIN DEFINITIONS
As
used in this Agreement, the following terms shall have the
meanings set forth below:
“
Applicable
Law ” means any domestic or foreign law, statute,
regulation, rule or ordinance applicable to the businesses of
the Parties or the Merger.
“
DGCL”
means Delaware General Corporation Law.
“FLLCA”
means the Florida Limited Liability Company
Act.
“Knowledge”
means, in the case of SVCC or North Country, a particular fact or
other matter of which its Chief Executive Officer or Chief
Financial Officer is actually aware or which a prudent individual
serving in such capacity could be expected to discover or otherwise
become aware of in the course of conducting a reasonable review or
investigation of the corporation and its business and
affairs.
“
Lien
” means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, claim,
encumbrance, royalty interest, any other adverse claim of any
kind in respect of such property or asset.
“
Material
Adverse Effect ” with respect to any entity or
group of entities means any event, change or effect that has
or would have a materially adverse effect on the financial
condition, business or results of operations of such entity or
group of entities, taken as a whole.
“
Person
” means any individual, corporation, limited liability
company, partnership, trust or unincorporated organization or
a government or any agency or political subdivision
thereof.
“
Surviving
Entity ” shall mean Merger Sub as the surviving
entity in the Merger as provided in Section 1.05.
“
Tax
” (and, with correlative meaning, “ Taxes
” and “ Taxable
”) means:
(i)
any income, alternative or add-on minimum tax, gross receipts
tax, sales tax, use tax, ad valorem tax, transfer tax,
franchise tax, profits tax, license tax, withholding tax,
payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall
profit tax, custom, duty or other tax, impost, levy,
governmental fee or other like assessment or charge of any
kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect
thereto by any governmental or Tax authority responsible for
the imposition of any such tax (domestic or foreign),
and
(ii)
any liability for the payment of any amounts of the type
described in clause (i) above as a result of being a member of
an affiliated, consolidated, combined or unitary group for any
Taxable period, and
(iii)
any liability for the payment of any amounts of the type
described in clauses (i) or (ii) above as a result of any
express or implied obligation to indemnify any other
person.
“
Tax
Return ” means any return, declaration, form,
claim for refund or information return or statement relating
to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE I
THE MERGER
SECTION
1.01 ORGANIZATION
OF SUBSIDIARIES
(a)
Merger
Sub . Prior to the Closing Date, SVCC has
organized North Country Operating Corp. (“Merger
Sub”) as a Delaware corporation. SVCC shall
be the sole shareholder of Merger Sub. Merger Sub
shall not engage in any business nor acquire any assets or
liabilities prior to the Closing Date.
(b)
Assignment
and Assumption Agreement . Prior to the
Closing Date, North Country and Harbor Acquisition have (i)
entered into an Assignment and Assumption Agreement in the
form annexed hereto as Appendix A, and (ii) shall effect the
transfers of assets called for in the Assignment and
Assumption Agreement.
SECTION
1.02 MERGER
SHARES
SVCC
has filed with the Secretary of State a Certificate of
Designation of Series D Convertible Preferred Stock, in the
form annexed hereto as Appendix B. The Certificate
of Designations authorizes the issuance of 1,050,000 shares of
Series D Preferred Shares, each of which shall have a
liquidation preference of Five Dollars ($5.00), and shall
entitle the holder to convert the Series D shares into SVCC
Common Stock with a market value (as defined in the
Certificate of Designations, equal to $5.00. The
shares of Series D Convertible Preferred Stock are herein
identified as the “ Merger
Shares .”
SECTION
1.03 STRUCTURE
OF MERGER
Upon
the terms and subject to the conditions set forth in this
Agreement and in accordance with Applicable Law, at the
Effective Time (as hereinafter defined), all of the membership
interest in Harbor Acquisition (as hereinafter defined) shall
be cancelled and converted into the right to receive the
Merger Shares. In connection therewith, the
following terms shall apply:
(a) Exchange
Agent. Robert Brantl, Esq., counsel to SVCC,
shall act as the exchange agent (the “ Exchange
Agent ”) solely for the purpose of exchanging the
membership interest in Harbor Acquisition for the Merger
Shares. At or prior to the Closing, SVCC
shall deliver to the Exchange Agent the Merger
Shares.
(b) Conversion
of Securities.
(i) Conversion
of Membership Interest. At the Effective Time, by
virtue of the Merger and without any action on the part of
SVCC, North Country or the Merger Sub, or the holders of any
of their respective securities:
(A) All
of the membership interest in Harbor Acquisitions immediately
prior to the Effective Time shall be converted into and
represent the right to receive, and shall be exchangeable for,
the Merger Shares.
(B) The
membership interest in Harbor Acquisition shall no longer be
outstanding and shall automatically be canceled and retired
and shall cease to exist, and the holder of a membership
interest in Harbor Acquisitions shall cease to have any rights
with respect thereto, except the right to receive the Merger
Shares to be issued pursuant to Section
1.03(b)(i)(A).
(ii) Conversion
of Merger Sub Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of
North Country, SVCC, the Merger Sub, or the holders of any of
their respective securities, each share of capital stock of
Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of the common stock of the
Surviving Entity and the shares of common stock of the
Surviving Entity so issued in such conversion shall constitute
the only outstanding shares of capital stock of the Surviving
Entity, and the Surviving Entity shall be a wholly owned
subsidiary of SVCC.
SECTION
1.04 CLOSING.
The
closing of the Merger (the “ Closing
”) will take place at the offices of SVCC simultaneous
with the execution of this amended and restated agreement,
subject to the satisfaction or waiver of the conditions
precedent set forth in Article V (the “ Closing
Date ”).
SECTION
1.05 MERGER;
EFFECTIVE TIME.
At
the Effective Time and subject to and upon the terms and
conditions of this Agreement, Harbor Acquisition shall, and
North Country shall cause Harbor Acquisition to, merge with
and into Merger Sub in accordance with the provisions of the
DGCL and the FLLCA, the separate corporate existence of Harbor
Acquisition shall cease and Merger Sub shall continue as the
Surviving Entity. The Effective Time shall occur
upon the filing with the Secretary of State of the State of
Delaware a Certificate of Merger, executed in accordance with
the provisions of the DGCL (the “ Effective
Time ”). The date on which the
Effective Time occurs is referred to as the “
Effective
Date .” Provided that this Agreement
has not been terminated pursuant to Article VI, the Parties
will cause the Certificate of Merger to be filed in Delaware
as soon as practicable after the Closing.
SECTION
1.06 EFFECT
OF THE MERGER.
The
Merger shall have the effect set forth in Title 8, Section 259
of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of
Harbor Acquisition and Merger Sub shall vest in the Surviving
Entity, and all debts, liabilities and duties of Harbor
Acquisition shall become the debts, liabilities and duties of
the Surviving Entity.
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SECTION 1.07
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CERTIFICATE OF INCORPORATION AND
BYLAWS; DIRECTORS
AND OFFICERS.
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Pursuant
to the Merger:
(a) The
Certificate of Incorporation and Bylaws of the Merger Sub as
in effect immediately prior to the Effective Time shall remain
the Certificate of Incorporation and Bylaws of the Surviving
Entity immediately following the Merger, and the name of the
Surviving Entity shall be changed to North Country Hospitality
Corp.
(b) The
directors and officers of Harbor Acquisition immediately prior
to the Merger shall be the directors and officers of the
Surviving Entity subsequent to the Merger. Those
officers and directors will be:
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Thomas
Scozzafava
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Director
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Christopher
Swartz
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Director,
Chief Executive Officer
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Gary
Baker
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Chief
Operating Officer
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Dan
Patterson
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Secretary
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SECTION 1.08
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FULL SATISFACTION OF RIGHTS
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All
Merger Shares for which the membership interest in Harbor
Acquisition shall have been exchanged pursuant to this Article
I shall be deemed to have been issued in full satisfaction of
all rights pertaining to the membership interest in Harbor
Acquisition. North Country hereby waives all
appraisal rights that it may have by reason of the
Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SVCC
SVCC
and Thomas Scozzafava hereby represent and warrant, jointly
and severally, to North Country, as of the date of this
Agreement, as of the Closing Date and as of the Effective
Time, as follows:
SECTION
2.01 ORGANIZATION,
STANDING AND POWER.
SVCC
is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has
corporate power and authority to conduct its business as
presently conducted by it and to enter into and perform this
Agreement and to carry out the transactions contemplated by
this Agreement. Merger Sub will be a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with
corporate power and authority to carry out the transactions
contemplated by this Agreement.
SECTION
2.02 BUSINESS
OF MERGER SUB
Prior
to and through the Effective Date, Merger Sub shall not
conduct any operating business, become a party to any
agreements, or incur any liabilities or obligations. None of
the warranties made herein with respect to the authority of
SVCC to enter into this agreement and its compliance with the
procedural requirements attendant thereto will be untrue with
respect to Merger Sub as of the Closing Date.
SECTION
2.03 CAPITALIZATION.
(a) There
are Two Billion, Five Hundred and Five Million (2,505,000,000)
shares of capital stock of SVCC authorized, consisting of Two
Billion, Five Hundred Million (2,500,000,000) shares of Common
Stock, par value $.0001 per share (the “
SVCC
Common Shares ”) , One Hundred Thousand (100,000)
shares of Series A (non-convertible) Preferred Stock, par
value $.0001 per share, One Hundred Thousand (100,000) shares
of Series B Convertible Preferred Stock, $.0001 per share, par
value $.0001, One Million, Six Hundred Thousand (1,600,000)
shares of Series C Convertible Preferred Stock, par value
$.0001, One Million Fifty Thousand (1,050,000) shares of
Series D Convertible Preferred Stock, $.0001 per share, par
value $.0001, One Hundred Thousand (100,000) shares of Series
E Convertible Preferred Stock, $.0001 per share, par value
$.0001, and Two Million, Fifty Thousand (2,050,000) shares of
Preferred Stock, par value $.0001 per share (“
SVCC
Preferred Shares”) . As of the date of
this Agreement, there are more than one billion SVCC Common
Shares, 100,000 Series E Preferred Shares, and 1,458,236
Series C Preferred Shares issued and
outstanding. The Series E Preferred Shares are
entitled to cast 80% of the votes at any meeting of the SVCC
shareholders.
(b) No
SVCC Common Shares or SVCC Preferred Shares have been reserved
for issuance to any Person, and there are no outstanding
rights, warrants, options or agreements for the purchase of
SVCC Common or Preferred Shares except (i) as provided in this
Agreement, (ii) as provided for in the instruments in favor of
YA Global Investments, LP granting the right to convert
certain debentures into shares of common stock, (iii) as
provided for in the instruments in favor of Golden Gate
Investors, Inc. granting the right to convert certain
debentures into shares of common stock, and (iv) as provided
to the holders of the Series E and Series C Preferred
Stock.
(c) All
outstanding SVCC Common Shares are validly issued, fully paid,
non-assessable, not subject to pre-emptive rights and have
been issued in compliance with all state and federal
securities laws or other Applicable Law. The Merger
Shares issuable to North Country pursuant to the Merger will,
when issued pursuant to this Agreement, be duly and validly
authorized and issued, fully paid and
non-assessable.
SECTION
2.04 AUTHORITY
FOR AGREEMENT.
The
execution, delivery, and performance of this Agreement by SVCC
have been duly authorized by all necessary corporate and
shareholder action, and this Agreement, upon its execution by
the Parties, will constitute the valid and binding obligation
of SVCC, enforceable against it in accordance with and subject
to its terms, except as enforceability may be affected by
bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors’
rights. The execution and consummation of the
transactions contemplated by this Agreement and compliance
with its provisions by SVCC and Merger Sub will not
(a) violate any provision of Applicable Law, (b) conflict with
or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, SVCC’s
Certificate of Incorporation or Bylaws, or under any operating
agreement of any subsidiary, in each case as amended, (c)
conflict with, or result in a breach or violation or loss of
any benefit under, any indenture, franchise agreement, service
agreement, license agreement, lease, loan agreement or other
agreement instrument to which SVCC or any subsidiary is a
party or by which any of them or any of their
respective properties are bound or any decree, judgment,
order, statute, rule or regulation applicable to SVCC or any
subsidiary; (d) conflict with, or result in any violation of
or default or loss of any benefit under, any permit,
concession, grant, franchise, law, rule or regulation to which
SVCC or any subsidiary is a party or to which any of its
property is subject; or (iv) result in the suspension,
revocation, impairment, forfeiture or nonrenewal of any
material permit, license, authorization or approval applicable
to SVCC or any subsidiary, its business or operations or any
of its assets or properties.
SECTION
2.05 FINANCIAL
CONDITION
The
financial statements of SVCC and the additional information
regarding the financial condition of SVCC contained in the
Annual Report on Form 10-KSB filed by SVCC for the year ending
on December 31, 2007 and the Quarterly Report filed by SVCC
for the quarter ended March 31, 2008 (collectively, the
“SVCC
Filings” ) are true, correct and
complete in all material respects, are not misleading and do
not omit to state any material fact which is necessary to make
the statements and information contained in the SVCC Filings
not misleading in any material respect. The
financial statements included in the SVCC Filings were
prepared in accordance with generally accepted accounting
principles and fairly reflect the financial condition of SVCC
as of the dates stated and the results of its operations for
the periods presented.
SECTION
2.06
ABSENCE OF
CERTAIN CHANGES OR EVENTS .
Since March 31, 2008, except as reported in
Current Reports on Form 8-K filed with the Securities and
Exchange Commission, and except as contemplated by this
Agreement:
(a) there
has not been any Material Adverse Change in the business,
operations, properties, assets, or condition of SVCC;
and
(b) SVCC
has not (i) amended its Certificate of
Incorporation; (ii) declared or made, or agreed to
declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any outstanding
capital stock; (iii) made any material change in its method of
management, operation, or accounting; (iv) entered into any
material transaction; or (v) made any accrual or arrangement
for payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former
officer or employee.
(c) Neither
SVCC nor any subsidiary has (i) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (ii)
paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or
shown on the most recent SVCC balance sheet, and current
liabilities incurred since that date in the ordinary course of
business; (iii) sold, transferred or otherwise disposed of, or
pledged, mortgaged or encumbered in any way any of its assets
or rights or any revenues derived therefore, other than sales
of products and services in the ordinary course of business;
(iv) canceled any material debts or claims; (v)
made or permitted any material amendment or termination of any
contract, agreement, or license to which it is a party; (vi)
adopted or amended any employee benefit plan, compensation
commitment, severance agreement or employment contract (other
than employment at-will arrangements that do not require
severance or termination payments) to which any director,
officer or employee of SVCC or any subsidiary is a party or a
participant; (vii) accepted the resignation of or terminated
the employment of any director, officer or employee of SVCC or
any subsidiary; (viii) made any material change in any
accounting principle or method or election for federal income
tax purposes used by SVCC; (ix) acquired any assets or
property or made any capital expenditures, additions or
improvements or commitments for the same, except those which
do not exceed $50,000 in the aggregate; or (x)
agreed to do any of the foregoing.
SECTION
2.07
GOVERNMENTAL AND THIRD PARTY
CONSENTS
No
consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency or commission or other federal, state,
county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party,
including a party to any agreement with SVCC or Merger Sub, is
required by or with respect to SVCC or Merger Sub in
connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby,
except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may
be required under (i) applicable securities laws, or
(ii) the DGCL.
There
are no legal actions, lawsuits, proceedings or investigations,
administrative or judicial, pending or, to SVCC’s
Knowledge, threatened, against or affecting SVCC or any
subsidiary or against SVCC or any subsidiary’s Managers,
Officers, or Directors that arose out of their operation of
such company’s business. Neither SVCC, any
subsidiary, nor any of SVCC’s or any
subsidiary’s Managers, Officers or Directors are subject
to any order, writ, judgment, injunction, decree,
determination or award of any court, arbitrator or
administrative, governmental or regulatory authority or body
which would be likely to have a Material Adverse Effect on the
business of SVCC or the subsidiary. There is no action,
suit or proceeding by SVCC or any subsidiary currently pending
or that SVCC or any subsidiary intends to
initiate.
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SECTION 2.09
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INTERESTED PARTY TRANSACTIONS
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Except as set forth in Schedule 2.09 to be
delivered after the Closing, SVCC is not indebted to any
officer or director of SVCC, and no such person is indebted
to SVCC.
SECTION
2.10 COMPLIANCE
WITH APPLICABLE LAWS.
SVCC’s
and each subsidiary’s operations have been conducted in
all material respects in accordance with all applicable
statutes, laws, rules and regulations. Neither SVCC
nor any subsidiary is in violation of any law, ordinance or
regulation of any other jurisdiction, the violation of which
would be likely to have a Material Adverse
Effect.
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SECTION 2.11
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TAX RETURNS AND PAYMENT
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SVCC
has duly and timely filed all material Tax Returns required to
be filed by it and has duly and timely paid all Taxes shown
thereon to be due. There is no material claim for
Taxes that is a Lien against the property of SVCC other than
Liens for Taxes not yet due and payable, none of which is
material. SVCC has not received written
notification of any audit of any Tax Return of SVCC being
conducted or pending by a Tax authority, no extension or
waiver of the statute of limitations on the assessment of any
Taxes has been granted by SVCC which is currently in effect,
and SVCC is not a party to any agreement, contract or
arrangement with any Tax authority or otherwise, which may
result in the payment of any material amount in excess of the
amount reflected on the above referenced SVCC financial
statements.
SECTION 2.12
INTELLECTUAL
PROPERTY
(a) All
Patent Rights, Trademark Rights and copyright registrations or
applications therefor that are now or were at any time in the
past registered, issued or filed in the name of SVCC or any of
its subsidiaries, alone or jointly with others, or that were
assigned to SVCC or any subsidiary (the " SVCC
Registered
Intellectual Property”) are valid, enforceable
and subsisting. All issuance, renewal, maintenance
and other payments that are or have become due with respect to
the Registered Intellectual Property have been timely
paid.
(b) Each
of SVCC and its subsidiaries owns or has the right to use all
Intellectual Property that is used in its business as now
conducted and as currently proposed to be
conducted. No Person has any ownership interest,
royalty interest, security interest, license right or other
interest in or to, or any Lien against, any SVCC Owned
Intellectual Property.
(c) To
SVCC's Knowledge, SVCC's and each subsidiary’s business
as now conducted, or as currently proposed to be conducted,
does not infringe or violate, or constitute a misappropriation
of, any Intellectual Property rights of any
Person. There are no complaints, claims and notices
and threats thereof alleging any such infringement, violation
or misappropriation. No Person is infringing,
violating or misappropriating any SVCC Owned Intellectual
Property.
(d) Neither
SVCC nor any subsidiary has licensed, distributed or otherwise
granted any rights to any Person with respect to any
Intellectual Property Rights.
(e) With
respect to SVCC Licensed Intellectual Property, the licenses
or agreements granting SVCC or any subsidiary the right to use
such Intellectual Property are in full force and effect on the
date hereof and valid and enforceable by the licensee in
accordance with their respective terms.
(f) For
purposes of this Agreement, the following terms shall have the
following meanings:
"Intellectual
Property" means the following subsisting throughout the
world: (1) patents, patent applications, and registrations thereof
(the " Patent
Rights "); (2) registered or common law trademarks and
service marks, trade dress, Internet domain names, logos, trade
names and corporate names and all registrations and applications
for registration of the foregoing (the " Trademark
Rights "), and all goodwill in the foregoing; (3)
copyrights, data and database rights and registrations and
applications for registration thereof; (4) mask works and
registrations and applications for registration thereof; (5)
inventions, designs, trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not
reduced to practice, and know-how; (6) other proprietary
rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein
under the laws of all jurisdictions); and (7) copies and
tangible embodiments thereof.
"SVCC
Intellectual Property" shall mean SVCC or subsidiary Owned
Intellectual Property and SVCC or subsidiary Licensed Intellectual
Property.
"SVCC
Licensed Intellectual Property" shall mean all Intellectual
Property that is licensed to SVCC or any subsidiary by third
parties.
"SVCC Owned
Intellectual Property" shall mean all Intellectual Property
owned or purported to be owned by SVCC or any subsidiary, in whole
or in part.
SECTION
2.13
EMPLOYEES AND
EMPLOYEE MATTERS.
Each
of SVCC and its subsidiaries has complied with all federal,
state and local laws relating to the hiring of employees,
consultants and advisors and the employment of labor,
including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social
security and other taxes. There are no collective
bargaining agreements or other labor union or guild contracts
governing the relationship between SVCC or any subsidiary and
any of its employees. Neither SVCC nor any subsidiary is
delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation
for any services performed by them to date or amounts required
to be reimbursed to such employees or upon any termination of
the employment of any such employees. Neither SVCC
nor any subsidiary has breached or otherwise failed to comply
with any provision of any collective bargaining agreement or
other labor union contract applicable to any of its
employees. No consent of any union (or any similar
group or organization) is required in connection with the
consummation of the transactions contemplated
hereby.
Schedule
2.13, which will be delivered after the Closing, sets forth a
list of the names of all of SVCC's and each subsidiary’s
officers, directors and employees and the position and
compensation of each such person.
SECTION
2.14 TITLE
TO PROPERTY AND ASSETS.
Schedule
2.14, which will be delivered after the Closing, will contain
a list of the real property owned by SVCC or any of its
subsidiaries, including street address and block and
lot. Except as set forth on Schedule 2.14, SVCC and
each Subsidiary has good and marketable title to all of its
property and assets and owns such property and assets free and
clear of any Liens, except for Liens reflected in the
Financial Statements and, with respect to real property owned
by SVCC or any subsidiary, except for encumbrances, defects,
restrictions and reservations of record. With
respect to the property and assets it leases, SVCC or the
subsidiary which is a party to each such lease is in
compliance with such lease and holds a valid leasehold
interest free and clear of any Lien.
SECTION
2.15
ENVIRONMENTAL
AND SAFETY LAWS.
(a) Neither SVCC nor any subsidiary (each a
“ Company
Owner” ) has generated, used, transported,
treated, stored, released or disposed of, and has not
suffered or permitted anyone else to generate, use,
transport, treat, store, release or dispose of any Hazardous
Substance (as defined below) in violation of any
Environmental Laws (as defined below); (b) there has not been
any generation, use, transportation, treatment, storage,
release or disposal of any Hazardous Substance resulting from
the conduct of the Company Owner or the use of any property
or facility by the Company Owner or, to SVCC's Knowledge, any
nearby or adjacent properties or facilities, that has created
or could reasonably be expected to create any liability on
the part of the Company Owner under the Environmental Laws or
that would require reporting to or notification by the
Company Owner to any local, state or federal governmental
authority; and (c) any Hazardous Substance handled or dealt
with in any way in connection with the business of any
Company Owner, whether before or during such Company
ownership, has been and is being handled or dealt with in all
respects in compliance with the Environmental Laws in effect
at the time such activities were being
conducted. " Environmental
Laws" shall mean all laws, rules, regulations,
statutes, ordinances, decrees or orders of any local, state
or federal governmental authority relating to (i) the control
of any potential pollutant or protection of the air, water or
land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation and
(iii) exposure to Hazardous Substances and includes, without
limitation, final and binding requirements related to the
foregoing imposed by (A) the terms and conditions of any
license, permit, approval or other authorization by any
local, state or federal governmental authority and (B)
applicable judicial, administrative or other regulatory
decrees, judgments and orders of any local, state or federal
governmental authority. "Hazardous
Substances" shall mean any toxic or hazardous
materials or substances, solid wastes, including asbestos,
buried contaminants, chemicals, flammable or explosive
materials, radioactive materials, petroleum wastes and spills
or releases of petroleum products and any other chemical,
pollutant, contaminant, substance or waste that is regulated
by any local, state or federal governmental authority under
any Environmental Law.
SECTION
2.16 SECURITY
LISTING
SVCC
is a fully compliant reporting company under the Securities
Exchange Act of 1934, as amended (the “ Exchange
Act ”), and all SVCC public filings required
under the Exchange Act have been made. The common
stock of SVCC is listed for quotation on the OTC Bulletin
Board. To the Knowledge of SVCC, SVCC has not been
threatened and is not subject to removal of its common stock
from the OTC Bulletin Board.
SECTION
2.17
FINDERS’ FEES
SVCC
has not incurred, nor will it incur, directly or indirectly,
any liability for brokers’ or finders’ fees or
agents’ commissions or investment bankers’ fees or
any similar charges in connection with this Agreement or any
transaction contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTH COUNTRY
North
Country and the Principal Shareholder hereby represent and
warrant, jointly and severally, to SVCC, as of the date of
this Agreement and as of the Effective Time (except as
otherwise indicated), as follows:
SECTION
3.01 ORGANIZATION,
STANDING AND POWER.
North
Country is a publicly held corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Nevada, and has full corporate power and authority to
conduct its business as presently conducted by it and to enter
into and perform this Agreement and to carry out the
transactions contemplated by this
Agreement. North Country is duly
qualified to transact business and is in good standing in the
State of New York and in each other jurisdiction in which the
failure to so qualify could have a Material Adverse
Effect.
SECTION
3.02 SUBSIDIARIES.
Schedule
3.02, attached hereto, sets forth the legal names and
jurisdictions of existence of all Persons (collectively, the
“Subsidiaries”
or each individually a “ Subsidiary”)
in which North Country owns of record or beneficially,
directly or indirectly, (i) any shares of capital stock,
securities convertible into capital stock or any other equity
interest or debt security of any corporation or (ii) any
equity interest or debt security in any partnership, limited
liability company, joint venture or other non-corporate Person
or which North Country controls, directly or
indirectly. Each of the Subsidiaries is duly
formed, validly existing and in good standing under the laws
of the state of its existence, and has full corporate or other
power and authority to conduct its business as presently
conducted. Each Subsidiary is duly qualified to
transact business and is in good standing in each other
jurisdiction in which the failure to so qualify could have a
Material Adverse Effect. North Country is the
registered and beneficial owner of that percentage of the
capital stock or other equity interest of each Subsidiary
stated on Schedule 3.02; and North Country owns such stock or
other equity interest free and clear of all Liens and
restrictions whatsoever. No Person has any
right to acquire capital stock or other equity interests of
any Subsidiary, whether by tender of consideration or
otherwise.
SECTION
3.03 AUTHORITY
FOR AGREEMENT.
The
execution, delivery and performance of this Agreement by North
Country have been duly authorized by all necessary corporate
action, and this Agreement constitutes the valid and binding
obligation of North Country, enforceable against North Country
in accordance with its terms, except as enforceability may be
affected by bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditors'
rights. The execution and consummation of the
transactions contemplated by this Agreement and compliance
with its provisions by North Country will not (a) violate any
provision of Applicable Law, (b) conflict with or result in
any breach of any of the terms, conditions, or provisions of,
or constitute a default under, North Country’s
Certificate of Incorporation or Bylaws, or under any operating
agreement of any Subsidiary, in each case as amended, (c)
conflict with, or result in a breach or violation or loss of
any benefit under, any indenture, franchise agreement, service
agreement, license agreement, lease, loan agreement or other
agreement instrument to which North Country or any Subsidiary
is a party or by which any of them or any of their
respective properties are bound or any decree, judgment,
order, statute, rule or regulation applicable to North Country
or any Subsidiary; (d) conflict with, or result in any
violation of or default or loss of any benefit under, any
permit, concession, grant, franchise, law, rule or regulation
to which North Country or any Subsidiary is a party or to
which any of its property is subject; or (iv) result in the
suspension, revocation, impairment, forfeiture or nonrenewal
of any material permit, license, authorization or approval
applicable to North Country or any Subsidiary, its business or
operations or any of its assets or properties.
SECTION
3.04 GOVERNMENTAL
OR THIRD PARTY CONSENT
No
consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency or commission or other federal, state,
county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party,
including any manager or member of any limited liability
company, any franchisor or lessor, or any
other party to any agreement with North Country or
with any Subsidiary, is required by or with respect to North
Country or such Subsidiary in connection with the execution
and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for such consents,
waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under (i)
applicable securities laws, (ii) the DGCL, or (iii) the
FLLCA.
SECTION
3 .05
FINANCIAL
STATEMENTS
North
Country has delivered to SVCC (a) its audited balance
sheet as at October 31, 2006 and its audited statement of
income and cash flows for the twelve months ending
October 31, 2006, and (b) its audited balance sheet
as at October 31, 2007 and its audited consolidated statement
of income and cash flows for the twelve-month period ended on
October 31, 2007 (collectively, the " Financial
Statements "). The Financial Statements are
complete and correct and have been prepared in accordance with
United States generally accepted accounting principles applied
on a consistent basis throughout the periods indicated and
with each other except that the unaudited Financial Statements
do not reflect all normal year-end adjustments.
SECTION
3.06
.
CORPORATE
RECORDS.
All of the books and records of North Country and each of the
Subsidiaries including, without limitation, its or such
Subsidiary’s books of account, corporate records, minute
book, stock certificate books and other records are up-to-date,
complete and reflect accurately and fairly the conduct of its
business in all material respects since its date of incorporation
or formation. All reports, returns and statements
currently required to be filed by either North Country or any
Subsidiary with any government agency with respect to the business
and operations of North Country or such Subsidiary have been filed
or valid extensions have been obtained in accordance with normal
procedures and all governmental reporting requirements have been
complied with. North Country has delivered to SVCC true,
correct and complete copies of the Operating Agreement of each
Subsidiary that is a limited liability company (each, an
“LLC
Operating Agreement”), and each such LLC Operating
Agreement is legal, valid and binding and in full force
and effect .
SECTION
3.07
ABSENCE OF
CERTAIN CHANGES OR EVENTS .
Since
October 31, 2007, except as set forth in Schedule 3.07, which
will be delivered after the Closing, and except as
contemplated by this Agreement:
(a) there
has not been any Material Adverse Change in the business,
operations, properties, assets, or condition of North Country
or any Subsidiary;
(b) North
Country has not amended its Certificate of Incorporation, and
neither North Country nor any Subsidiary has (i)
declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind
whatsoever to stockholders (other than the payment of upstream
dividends to North Country) or purchased or redeemed, or
agreed to purchase or redeem, any outstanding capital stock;
(iii) made any material change in its method of management,
operation, or accounting; (iv) entered into any material
transaction; or (v) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer
or employee;
(c) Neither
North Country nor any Subsidiary has (i) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (ii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent North Country
balance sheet, and current liabilities incurred since that date in
the ordinary course of business; (iii) sold, transferred or
otherwise disposed of, or pledged, mortgaged or encumbered in any
way any of its assets or rights or any revenues derived therefore,
other than sales of products and services in the ordinary course of
business; (iv) canceled any material debts or
claims; (v) made or permitted any material amendment or
termination of any contract, agreement, or license to which it is a
party; (vi) adopted or amended any employee benefit plan,
compensation commitment, severance agreement or employment contract
(other than employment at-will arrangements that do not require
severance or termination payments) to which any director, officer
or employee of North Country or any Subsidiary is a party or a
participant; (vii) accepted the resignation of or
terminated
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