MERGER AGREEMENT
by and among
Seaway Valley Capital Corporation,
Seaway Valley Acquisition Corp.,
and
WiseBuys Stores, Inc.
Dated as of October 23, 2007
<PAGE>
MERGER AGREEMENT
Merger Agreement
(the "Agreement") dated as of October 23, 2007 by and
among Seaway Valley Capital Corporation, a corporation formed under the
laws of
the State of Delaware
("SVCC"), Seaway
Valley Acquisition Corp., a corporation
newly formed
under the laws of the State of Delaware and a wholly owned
subsidiary of SVCC (the "Merger Sub"), and WiseBuys Stores,
Inc., a
corporation
formed under the laws of the State of Delaware ("WiseBuys"). Each of SVCC, the
Merger Sub, and WiseBuys is referred to herein individually as a
"Party" and all
are referred to collectively as the "Parties."
PREAMBLE
WHEREAS,
WiseBuys is
engaged in the business of operating retail
merchandise stores;
WHEREAS, SVCC and
WiseBuys have
determined
that a business
combination
between them
is advisable and in the best interests of their respective
companies and
stockholders and
presents an
opportunity for their
respective
companies to achieve long-term strategic and financial
benefits;
WHEREAS, SVCC
has proposed to acquire WiseBuys pursuant to a merger
transaction whereby, pursuant to the terms and subject to the
conditions of this
Agreement, WiseBuys
shall become a wholly owned subsidiary of SVCC through the
merger of WiseBuys with and into the Merger Sub (the "Merger");
and
WHEREAS, in the
Merger, all issued and outstanding shares of capital stock
of WiseBuys shall be cancelled and converted into the right to
receive shares of
Series C Convertible Shares (the "Merger Shares") in the ratios
defined herein;
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, policy, guideline or ordinance applicable to the businesses
of the Parties
or the Merger.
"DGCL" means Delaware General Corporation Law.
"Knowledge" means, in
the case of SVCC or WiseBuys, 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, or any other
restrictions or limitations of any nature whatsoever.
"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, partnership, trust or
unincorporated
organization or a government or any agency or political subdivision
thereof.
"Surviving Entity"
shall mean WiseBuys as the surviving entity in the Merger as
provided in Section 1.03.
"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
STRUCTURE
Upon
the terms and subject to the conditions set forth in this Agreement
and in accordance with the DGCL, at the Effective Time (as
hereinafter defined),
all WiseBuys Shares
(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, counsel to SVCC, shall act as the
exchange agent (the
"Exchange Agent") for the purpose of
exchanging
WiseBuys Shares for
the Merger Shares.
At or prior to the
Closing,
SVCC shall deliver to the Exchange Agent the Merger Shares.
(b)
Prior to the Closing
Date, SVCC shall file with the Secretary of State
of Delaware a
Certificate
of Designation of Series C Convertible
Preferred Stock
(the "Series C Convertible Shares") in the form
annexed hereto as Schedule 1.01(a).
(c)
Conversion of
Securities.
(i) Conversion
of WiseBuys
Securities.
At the Effective Time, by
virtue of the Merger and without any action on the part of
SVCC,
WiseBuys or the
Merger Sub, or the holders of any of their
respective securities:
(A) All of the issued
and outstanding shares of capital stock of
WiseBuys (the
"WiseBuys Shares") shall be converted as a
result of the Merger
as follows:
Each of the
issued and
outstanding shares of
common stock of WiseBuys immediately
prior to the Effective
Time shall be converted into and
represent the right to
receive, and shall be
exchangeable
for, one-eighth
(1/8) of a share of
Series C Convertible
stock of SVCC, and each of the issued and outstanding shares
of Series A Preferred Stock of WiseBuys immediately prior to
the Effective Time shall be converted into and represent the
right to receive, and
shall be exchangeable for, one-fourth
(1/4) of a share of Series C Convertible stock of SVCC.
(B) All WiseBuys
Shares shall no longer be outstanding and shall
automatically be
canceled and retired and shall cease to
exist, and each holder
of a certificate
representing
any
such shares
shall cease to have any rights
with respect
thereto, except the right to receive the Merger Shares to be
issued pursuant
to this Section 1.01(c)(i)(A) upon the
surrender of such
certificate in
accordance
with Section
1.07, without interest. No fractional shares may be
issued;
but each fractional
share that would result from the Merger
will be rounded to the nearest number of whole shares.
(ii) Conversion of Merger Sub Stock. At the Effective Time, by
virtue
of the Merger and
without any action on the part of
WiseBuys,
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.
(d)
Exemption from
Registration.
The Parties intend
that the issuance of
the Merger Shares to
the WiseBuys
Shareholders shall be
exempt from
the registration
requirements
of the Securities Act of 1933 (the
"Securities Act")
pursuant to Section
4(2) of the Securities Act and
the rules and regulations promulgated thereunder.
SECTION 1.02
CLOSING.
The
closing of the Merger (the "Closing") will take place at the
offices of
Robert Brantl, Esq.
within one (1)
business day following the satisfaction or
waiver of the conditions precedent set forth in Article V
or at such other date
as SVCC and WiseBuys shall agree (the "Closing Date"), but in any
event no later
than October
31, 2007 unless extended by a written agreement of SVCC and
WiseBuys.
SECTION 1.03
MERGER; EFFECTIVE TIME.
At the Effective
Time and subject to
and upon the terms and
conditions of
this Agreement, Merger Sub shall, and SVCC shall cause Merger Sub
to, merge with
and into WiseBuys in accordance with the provisions of the DGCL,
the separate
corporate existence of WiseBuys shall cease and the 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 of a Certificate of
Merger, executed
in accordance with the applicable 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 as soon
as
practicable after the Closing.
SECTION 1.04 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 WiseBuys
and Merger Sub shall vest in the Surviving Entity, and
all debts, liabilities
and duties of WiseBuys
and Merger Sub shall
become the
debts, liabilities and duties of the Surviving Entity.
SECTION 1.05
CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS
AND OFFICERS.
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 be the
Certificate of
Incorporation
and Bylaws of the Surviving Entity
immediately following
the Merger, provided
that the Certificate
of
Merger shall declare
that the name of the
Surviving Entity shall
be
WiseBuys Stores, Inc.
(b)
The directors and officers of the
WiseBuys immediately
prior to the
Merger shall be the
directors and officers
of the Surviving
Entity
subsequent to the Merger.
SECTION 1.06
RESTRICTIONS ON RESALE
(a)
The Merger Shares will
not be registered
under the Securities Act, or
the securities
laws of any state, and cannot be transferred,
hypothecated, sold or
otherwise disposed of until: (i) a registration
statement with respect to such securities is declared effective under
the Securities
Act, or (ii) SVCC
receives an opinion of
counsel for
SVCC that an
exemption from the registration requirements of the
Securities Act is available.
The
certificates
representing the
Merger Shares which are being issued to
the WiseBuys Shareholders shall contain a legend substantially as
follows:
"THE SECURITIES
WHICH ARE REPRESENTED
BY THIS CERTIFICATE
HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNTIL
A REGISTRATION
STATEMENT WITH RESPECT
THERETO IS DECLARED
EFFECTIVE
UNDER SUCH ACT, OR
SEAWAY VALLEY
CAPITAL CORPORATION RECEIVES AN
OPINION OF COUNSEL
FOR SEAWAY
VALLEY CAPITAL CORPORATION THAT AN
EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
SECTION 1.07 EXCHANGE
OF CERTIFICATES.
(a)
Exchange of
Certificates.
After the Effective Time, the WiseBuys
Shareholders shall be
required to surrender all their WiseBuys Shares
to the Exchange Agent, and the WiseBuys Shareholders shall be
entitled
upon such surrender
to receive
in exchange therefor certificates
representing the proportionate number of Merger Shares into which
the
WiseBuys Shares theretofore represented by the stock transfer forms
so
surrendered shall have
been exchanged
pursuant to this Agreement.
Until so surrendered, each outstanding certificate which, prior to
the
Effective Time,
represented
WiseBuys Shares shall
be deemed for all
corporate purposes,
subject to the further provisions of this Article
I, to evidence the
ownership of the number of whole Merger Shares for
which such WiseBuys Shares have been so exchanged. No dividend
payable
to holders of Merger Shares of record as of any date subsequent to
the
Effective Time shall
be paid to the owner of any certificate which,
prior to the Effective Time, represented WiseBuys Shares, until such
certificate or
certificates
representing all the
relevant WiseBuys
Shares, together
with a stock
transfer form, are surrendered as
provided in this
Article I or pursuant to letters of transmittal or
other instructions
with respect to lost certificates provided by the
Exchange Agent.
(b)
Full Satisfaction of
Rights. All Merger
Shares for which the WiseBuys
Shares 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 WiseBuys Shares.
(c)
Closing of Transfer
Books. On the Effective Date, the stock
transfer
book of WiseBuys
shall be deemed to be closed and no transfer of
WiseBuys Shares shall thereafter be recorded thereon.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF SVCC
SVCC
and, where
applicable,
the Merger Sub hereby
jointly and
severally
represent and warrant to WiseBuys and to the Shareholders of
WiseBuys, 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 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
enter into and perform this Agreement and to carry out
the transactions contemplated by this Agreement.
SECTION 2.02
SUBSIDIARIES
Except as described
specifically in the
Quarterly Report on Form 10-QSB
filed by SVCC on August 14, 2007 (the "10-QSB"), SVCC does not have
an ownership
interest in any Person. Merger Sub is a recently formed corporation
and prior to
the date hereof 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.
SECTION 2.03
CAPITALIZATION.
(a)
SVCC is authorized to
issue Two Billion, Five Hundred and Five Million
(2,505,000,000) shares
of capital stock,
consisting of Two
Billion,
Five Hundred Million (2,500,000,000) shares of Common Stock, par
value
$.0001 per share, One
Hundred Thousand
(100,000) shares of
Series A
Preferred
Stock, $.0001 per share, One Hundred Thousand (100,000)
shares of Series B Preferred Stock, $.0001 per share, and Four
Million, Eight Hundred Thousand (4,800,000) shares of Preferred
Stock,
par value $.0001 per share. As of the date of this Agreement and as
of
the Closing Date,
there are and will be
more than 421,577,063
SVCC
Common Shares
and 78,250 Series B Preferred Shares issued and
outstanding. The Series B 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 as
provided in this Agreement, and except for the
instruments in favor
of Cornell Capital
Partners, LP granting the
right to convert certain debentures into shares of common
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 Series C Convertible Shares issuable to the
WiseBuys Shareholders
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 each of SVCC
and Merger
Sub 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 each of SVCC and the
Merger Sub,
enforceable against
each of them 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 violate any
provision of
Applicable Law and
will not conflict with or result in any breach
of any of the terms,
conditions, or
provisions
of, or constitute a default
under, SVCC's or
Merger Sub's Certificate of Incorporation, or either of their
Bylaws, in each case
as amended, or, in any
material respect,
any indenture,
lease, loan agreement
or other agreement or instrument to which SVCC is a party
or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to SVCC or Merger
Sub.
SECTION 2.05
FINANCIAL CONDITION
The
financial statements of SVCC and the additional information regarding
the financial
condition of SVCC
contained in the 10-QSB 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 therein misleading in any material respect. The financial statements
included in the 10-QSB
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 June 30,
2007, except as reported in the 10-QSB 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;
(b)
SVCC has not (i)
amended its Certificate of Incorporation, except for
an amendment
filed to change the name of the corporation from GS
Carbon Corporation to Seaway Valley Capital Corporation; (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)
SVCC has not (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 or
transferred, or
agreed to sell or
transfer, any material assets,
properties, or rights,
or canceled, or agreed to cancel, any material
debts or claims; or
(iv) made or permitted any material amendment or
termination of any
contract, agreement,
or license to which it
is a
party.
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.
SECTION 2.08
LITIGATION
There is no
action, suit, investigation, audit or proceeding pending
against, or to the Knowledge of SVCC, threatened against or affecting,
SVCC or
the Merger Sub or any of their respective assets or properties before any
court
or arbitrator or any governmental body, agency or official.
SECTION 2.09
COMPLIANCE WITH APPLICABLE LAWS.
To
the Knowledge of SVCC,
the business of each
of SVCC and the Merger Sub
has not been, and is not being, conducted in violation of any
Applicable Law.
SECTION 2.10
TAX RETURNS AND PAYMENT
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.
Except as disclosed in financial statements filed with the 10-KSB,
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 2.11
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 or is not
subject to removal of its common stock from
the OTC Bulletin Board.
SECTION 2.12
FINDERS' FEES
SVCC
has not incurred,
nor will it incur,
directly or i
