AMENDMENT NO. 1 to
AGREEMENT AND PLAN OF MERGER
THIS IS AMENDMENT NO.
1 to the AGREEMENT AND PLAN OF MERGER, dated March 1, 2007, by and
among SFG Financial Corporation, a Delaware corporation ("SFG"),
COESfx Acquisition Corp., a New York , corporation and wholly-owned
subsidiary of SFG ("Merger Subsidiary"), and COESfx Holdings, Inc.,
a New York corporation ("COESfx") (the “Amendment
Agreement”).
RECITALS
COESfx, SFG and
Merger Subsidiary have previously entered into an Agreement and
Plan of Merger (the “Merger Agreement”) and wish to
change one of the provisions of the Merger Agreement.
NOW THEREFORE, in
consideration of the mutual covenants and agreements hereinafter
set forth, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as
follows:
1. Section 1.3(b) of
the Merger Agreement shall be amended to read in its entirety as
follows:
“(b) All stock
options, warrants, convertible debt, other convertible securities
or other rights to acquire COESfx Common Stock at an exercise or
conversion, as applicable, price of no less than $0.20 per share
(collectively, the “COES Convertible Securities”) and
Non-Exempt COESfx Convertible Securities outstanding at the
Effective Time, whether or not vested (all of which are listed on
Schedule 1.3(b) hereto), shall remain outstanding following the
Effective Time but shall be assumed by SFG. Non-Exempt COESfx
Convertible Securities and COESfx Convertible Securities shall
continue to have, and be subject to, the same terms and conditions
as set forth in the documents underlying such Non-Exempt COESfx
Convertible Securities and COESfx Convertible Securities.
Non-Exempt COESfx Convertible Securities and COESfx Convertible
Securities will be convertible into SFG Shares at the rate of
8.0808554 SFG Shares for each share of COESfx Common Stock to which
they would otherwise be entitled, which shares shall be issued from
a reserve set aside for such purpose from the Merger Consideration.
COESfx Convertible Securities will be exercisable or convertible,
as appropriate, as set forth in the underlying documents and shall
be an obligation of SFG without regard to the reserve set aside
from the Merger Consideration. Notwithstanding anything else
contained in this Agreement, shares of COESfx Series A
Participating Convertible Preferred Stock (the “Preferred
Stock”) shall remain issued and outstanding and registered
and owned by the holder thereof immediately prior to the Effective
Time and shall not be considered “Non-Exempt COESfx
Convertible Securities.”
2. Section 1.4(e) of
the Merger Agreement shall be amended to read in its entirety as
follows:
“(e)
Immediately prior to the Effective Time, SFG will have no more than
5,513,856 shares of SFG common stock outstanding. Immediately prior
to the Closing, SFG will have no stocks, options, warrants,
convertible debt, other convertible securities or other rights to
acquire any equity of SFG shares outstanding other than rights
granted to COESfx shareholders and Concord pursuant to this
Agreement, rights to receive SFG Shares upon conversion of the
Preferred Stock described in Section 6.2(m), the irrevocable rights
to Concord in Section 1.3(c), rights to Concord as described
Section 6.2(m) upon completion of the Financing and warrants issued
to Concord and SFG as described in Section 6.2(n). Immediately
after the Closing, there will be approximately 367,590,400 common
shares of SFG Shares issued and outstanding (including shares to be
issued under the Irrevocable Rights) and the Concord rights
described in Section 1.3(c) exclusive of shares held in a reserve
for issuance in connection with the exercise or conversion, as
appropriate, of the COESfx Convertible Securities, the warrants
issued pursuant to Section 6.2(n) and the Preferred Stock. In
addition, upon the filing of the Amend COI, additional shares will
be issued to Concord pursuant to Section 6.2(m).”
3. Section 1.9 of the
Merger Agreement shall be amended to read in its entirety as
follows:
“1.9 Amendments
to SFG’s Articles of Incorporation. As soon as practicable
after the Effective Time, SFG shall amend its Articles of
Incorporation to (i) change its name to XLFX Holdings Inc. (ii)
increase its authorized capital stock from 100,000,000 to
500,000,000 common shares; and (iii) approve a 1 for 7.351808
reverse split of the issued and outstanding SFG shares outstanding
immediately after the Effective Time (“Reverse Split”).
The Articles of Amendment to be filed pursuant to this. Section 1.9
shall be substantially in the form of Exhibit B attached hereto
(the “Amended COI”).”
4. Section 3.6 of the
Merger Agreement shall be amended to read in its entirety as
follows:
“3.6 Best
Efforts to Obtain Shareholder Approval. Each party shall promptly
upon execution
