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ACQUISITION AGREEMENT AND PLAN OF MERGER

Asset Purchase Agreement

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Title: ACQUISITION AGREEMENT AND PLAN OF MERGER
Governing Law: Nevada     Date: 8/3/2009

ACQUISITION AGREEMENT AND PLAN OF MERGER, Parties: stoecklein law group
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ACQUISITION AGREEMENT AND PLAN OF MERGER

 

DATED AS OF July 6, 2009

 

BY AND AMONG

 

ALCANTARA BRANDS CORP. (ALCANTARA), a Nevada corporation,

 

ALCANTARA SUB CO (SUB CO), a Nevada corporation

 

AND

 

CHALACO LORETO S.A.C. (LORETO), a Peruvian corporation

 

 

 

 


 

TABLE OF CONTENTS

 

ARTICLE 1.

The Merger

1

Section 1.1.

The Merger

1

Section 1.2.

Effective Time

1

Section 1.3.

Closing of the Merger

2

Section 1.4.

Effects of the Merger

2

Section 1.5.

Articles of Incorporation; Bylaws

2

Section 1.6.

Board of Directors and Officers

2

Section 1.7.

Conversion of Shares

2

Section 1.8.

Exchange of Certificates

4

Section 1.9.

Stock Options

5

Section 1.10.

Warrants

5

Section 1.11.

Taking of Necessary Action; Further Action

6

 

 

 

 

ARTICLE 2.

Representations and Warranties of ALCANTARA

6

Section 2.1.

Organization and Qualification

6

Section 2.2.

Capitalization of ALCANTARA

7

Section 2.3.

Authority Relative to this Agreement; Recommendation.

8

Section 2.4.

SEC Reports; Financial Statements

8

Section 2.5.

Information Supplied

9

Section 2.6.

Consents and Approvals; No Violations

9

Section 2.7.

No Default

10

Section 2.8.

No Undisclosed Liabilities; Absence of Changes

10

Section 2.9.

Litigation

11

Section 2.10.

Compliance with Applicable Law

11

Section 2.11.

Employee Benefit Plans; Labor Matters

11

Section 2.12.

Environmental Laws and Regulations

13

Section 2.13.

Tax Matters

14

Section 2.14.

Title To Property

15

Section 2.15.

Intellectual Property

14

Section 2.16.

Insurance

15

Section 2.17.

Vote Required

15

Section 2.18.

Tax Treatment

16

Section 2.19.

Affiliates

16

Section 2.20.

Certain Business Practices

16

Section 2.21.

Insider Interests

16

Section 2.22.

Opinion of Financial Adviser

16

Section 2.23.

Brokers

16

Section 2.24.

Disclosure

16

Section 2.25.

No Existing Discussion

16

Section 2.26.

Material Contracts

17

 

 

 

ARTICLE 3.

Representations and Warranties of LORETO.

18

Section 3.1.

Organization and Qualification

18

Section 3.2.

Capitalization of LORETO

18

Section 3.3.

Authority Relative to this Agreement; Recommenda­tion

19

Section 3.4.

SEC Reports; Financial Statements

20

Section 3.5.

Information Supplied

20

Section 3.6.

Consents and Approvals; No Violations

20

Section 3.7.

No Default

20

Section 3.8

No Undisclosed Liabilities; Absence of Changes

21

Section 3.9.

Litigation

21

Section 3.10.

Compliance with Applicable Law

21

Section 3.11.

Employee Benefit Plans; Labor Matters

22

Section 3.12.

Environmental Laws and Regulations

23

Section 3.13.

Tax Matters

24

Section 3.14.

Title to Property

24

Section 3.15.

Intellectual Property

24

Section 3.16.

Insurance

25

Section 3.17.

Vote Required

25

Section 3.18.

Tax Treatment

25

Section 3.19.

Affiliates

25

Section 3.20.

Certain Business Practices

25

Section 3.21.

Insider Interests

25

Section 3.22.

Opinion of Financial Adviser

26

Section 3.23.

Brokers

26

Section 3.24.

Disclosure

26

Section 3.25.

No Existing Discussions

26

Section 3.26.

Material Contracts

26

 

 

 

ARTICLE 4.

Covenants

27

Section 4.1.

Conduct of Business of ALCANTARA

27

Section 4.2.

Conduct of Business of LORETO

29

Section 4.3.

Preparation of 8-K

32

Section 4.4.

Other Potential Acquirers

32

Section 4.5.

Meetings of Stockholders

32

Section 4.6.

FINRA OTC:BB Listing

32

Section 4.7.

Access to Information

32

Section 4.8.

Additional Agreements; Reasonable Efforts.

33

Section 4.9.

Employee Benefits; Stock Option and Employee Purchase Plans

33

Section 4.10.

Public Announcements

33

Section 4.11.

Indemnification

34

Section 4.12.

Notification of Certain Matters

35

 

 

 

ARTICLE 5.

Conditions to Consummation of the Merger

35

Section 5.1.

Conditions to Each Party’s Obligations to Effect the Merger

35

Section 5.2.

Conditions to the Obligations of ALCANTARA and SUB CO

36

Section 5.3.

Conditions to the Obligations of LORETO

37

 

 

 

ARTICLE 6.

Termination; Amendment; Waiver

37

Section 6.1.

Termination

37

Section 6.2.

Effect of Termination

39

Section 6.3.

Fees and Expenses

39

Section 6.4.

Amendment

39

Section 6.5.

Extension; Waiver

39

 

 

 

ARTICLE 7.

Miscellaneous

39

Section 7.1.

Non-survival of Representations and Warranties

39

Section 7.2.

Entire Agreement; Assignment

39

Section 7.3.

Validity

39

Section 7.4.

Notices

40

Section 7.5.

Governing Law

40

Section 7.6.

Descriptive Headings

40

Section 7.7.

Parties in Interest

41

Section 7.8.

Certain Definitions

41

Section 7.9.

Personal Liability

41

Section 7.10.

Specific Performance

42

Section 7.11.

Counterparts

42

Section 7.12.

Conflict Waiver

41

 

 

 

 

 

 

Signatures

 

42

 

 

 

 

 


 

 

AGREEMENT AND PLAN OF MERGER

 

This Agreement and Plan of Merger (this “Agreement”), dated as of July 6, 2009, is by and among Alcantara Brands Corp, a Nevada corporation (“ALCANTARA”), Alcantara Sub Co, a Nevada corporation (“SUB CO”) and wholly owned subsidiary of ALCANTARA and CHALACO LORETO S.A.C., a Peruvian corporation (“LORETO”), SUB CO and LORETO being the constituent entities in the Merger.

 

Whereas, the Boards of Directors of ALCANTARA, SUB CO and LORETO each have, in light of and subject to the terms and conditions set forth herein, (i) determined that the Merger (as defined below) is fair to their respective stockholders and in the best interests of such stockholders and (ii) approved the Merger in accordance with this Agreement;

 

Whereas, this Agreement constitutes the entire, final and complete agreement between ALCANTARA, SUB CO, and LORETO and supersedes and replaces all prior or existing written and oral agreements, between ALCANTARA, SUB CO, and LORETO with respect to the subject matter hereof;

 

Whereas, for Federal income tax purposes, it is intended that the Merger qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”); and

 

Whereas, ALCANTARA, SUB CO and LORETO desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

 

Now, therefore, in consideration of the premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, ALCANTARA, SUB CO and LORETO hereby agree as follows:

 

ARTICLE I

 

The Merger

 

Section 1.1. The Merger . At the Effective Time (as defined below) and upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Nevada (the “NGCL”), SUB CO shall be merged with and into LORETO (the “Merger”). Following the Merger, LORETO shall continue as the surviving corporation (the “Surviving Corporation”), shall continue to be governed by the laws of the jurisdiction of its incorporation or organization and the separate corporate existence of SUB CO shall cease. LORETO shall continue its existence as a wholly owned subsidiary of ALCANTARA.  The Merger is intended to qualify as a tax-free reorganization under Section 368 of the Code as relates to the non-cash exchange of stock referenced herein.

 

Section 1.2. Effective Time . Subject to the terms and conditions set forth in this Agreement, a Certificate of Merger (the “Merger Certificate”) shall be duly executed and acknowledged by each of LORETO, SUB CO and ALCANTARA, and thereafter the Merger Certificate reflecting the Merger shall be delivered to the Secretary of State of the State of Nevada for filing pursuant to the NGCL on the Closing Date (as defined in Section 1.3). The Merger shall become effective on September 6, 2009, as set forth in the Merger Certificate (the time at which the Merger becomes effective shall be referred to herein as the “Effective Time”).

 

 

1


 

Section 1.3. Closing of the Merger . The closing of the Merger (the “Closing”) will take place on September 6, 2009 upon satisfaction of the conditions set forth in Article 5 (the “Closing Date”), at the offices of Stoecklein Law Group, 402 West Broadway, Suite 690, San Diego, California 92101, unless another time, date or place is agreed to in writing by the parties hereto.

 

Section 1.4. Effects of the Merger . The Merger shall have the effects set forth in the NGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers of SUB CO shall vest in the Surviving Corporation, and all debts, liabilities and duties of SUB CO shall become the debts, liabilities and duties of the Surviving Corporation. Concurrently, LORETO shall remain a wholly owned subsidiary of ALCANTARA.

 

Section 1.5. Articles of Incorporation and Bylaws . The Articles of Incorporation and Bylaws of LORETO in the respective forms delivered by LORETO to ALCANTARA prior to the date of this Agreement will remain in full force and effect and will be the Articles of Incorporation and Bylaws of the Surviving Corporation.

 

Section 1.6. Board of Directors and Officers .

 

 

(a)

Board of Directors of SUB CO . At or prior to the Effective Time, ALCANTARA agrees to take such action as is necessary (i) to cause the number of directors comprising the full Board of Directors of SUB CO to be one (1) person and (ii) to cause Carlos Alcantara,  (the “ALCANTARA Designee”) to be elected as the sole director of SUB CO.

 

 

(b)

Board of Directors of ALCANTARA . At or prior to the Effective Time, each of LORETO and ALCANTARA agrees to take such action as is necessary (i) to cause the number of directors comprising the full Board of Directors of ALCANTARA to be one (1) person and (ii) to cause Carlos Alcantara (the “LORETO Designee”) to remain as the sole director of ALCANTARA. If the LORETO Designee shall decline or be unable to serve as a director prior to the Effective Time, LORETO shall nominate another person to serve in such person’s stead, which such person shall be subject to approval of the other party. From and after the Effective Time, and until successors are duly elected or appointed and qualified in accordance with applicable law, Carlos Alcantara shall be Chief Executive Officer, President, Secretary and Treasurer of the Surviving Corporation.

 

 

2


 

Section 1.7. Conversion of Shares .

 

 

(a)

At the Effective Time, each share of common stock, par value $.001 per share of LORETO (individually a "LORETO Share" and collectively, the "LORETO Shares") issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of LORETO, ALCANTARA, or the holder thereof, be converted into and shall become fully paid and nonassessable ALCANTARA common shares determined by dividing (i) Three Million (3,000,000), by (ii) the total number of shares of LORETO, One-Thousand (1,000) outstanding immediately prior to the Effective Time (such quotient, the “Exchange Ratio”). The holder of one or more shares of LORETO common stock shall be entitled to receive in exchange therefor a number of shares of ALCANTARA Common Stock equal to the product of (x) (the number of shares of LORETO common stock (3,000,000)), times (y) (the Exchange Ratio. ALCANTARA Shares and LORETO Shares are sometimes referred to collectively herein as "Shares." By way of example, 3,000,000 / 1,000 = 3,000:1 (the Exchange Ratio). The number of shares of LORETO common stock held by a stockholder (assume 100 shares) times the Exchange Ratio of 3,000 equals 300,000 shares of ALCANTARA Shares to be issued. In the event that, subsequent to the date of this Agreement but prior to the Effective Time, the outstanding shares of ALCANTARA Common Stock or LORETO Common Stock are changed into a different number of shares or a different class as a result of a stock split, reverse stock split, stock dividend, subdivision, reclassification, combination, exchange, recapitalization or similar transaction, the number of shares of ALCANTARA Common Stock into which each share of LORETO Common Stock will be converted as a result of the Merger will be adjusted appropriately.

 

 

(b)

LORETO hereby acknowledges that (i) the ALCANTARA Shares have not been and will not be registered under the Securities Act of 1933 (“1933 Act”) or under the securities laws of any state and, therefore, the ALCANTARA Shares cannot be resold unless they are subsequently registered under said laws or exemptions from such registrations as are available; and (ii) the transferability of the Shares is restricted and that a legend shall be placed on the certificates representing the securities substantially to the following effect:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.

 

 

3


 

 

(c)

At the Effective Time, each LORETO Share held in the treasury of LORETO, by LORETO immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of LORETO, SUB CO or ALCANTARA be canceled, retired and cease to exist and no payment shall be made with respect thereto.

 

Section 1.8. Exchange of Certificates .

 

 

(a)

Prior to the Effective Time, ALCANTARA shall enter into an agreement with, and shall deposit with, Stoecklein Law Group or such other agent or agents as may be satisfactory to ALCANTARA and LORETO (the “Exchange Agent”), for the benefit of the holders of LORETO Shares, for exchange through the Exchange Agent in accordance with this Article I: (i) certificates representing the appropriate number of ALCANTARA Shares to be issued to holders of LORETO Shares issuable pursuant to Section 1.7 in exchange for outstanding LORETO Shares.

 

 

(b)

As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding LORETO Shares (the “Certificates”) whose shares were converted into the right to receive ALCANTARA Shares pursuant to Section 1.7: (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as LORETO and ALCANTARA may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing ALCANTARA Shares. Upon surrender of a Certificate to the Exchange Agent, together with such letter of transmittal, duly executed, and any other required documents, the holder of such Certificate shall be entitled to receive in exchange therefore a certificate representing that number of whole ALCANTARA Shares and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of LORETO Shares which are not registered in the transfer records of LORETO, a certificate representing the proper number of ALCANTARA Shares may be issued to a transferee if the Certificate representing such LORETO Shares is presented to the Exchange Agent accompanied by all documents required by the Exchange Agent or ALCANTARA to evidence and effect such transfer and by evidence that any applicable stock transfer or other taxes have been paid. Until surrendered as contemplated by this Section 1.8, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the certificate representing ALCANTARA Shares as contemplated by this Section 1.8.

 

 

4


 

 

(c)

No dividends or other distributions declared or made after the Effective Time with respect to ALCANTARA Shares with a record date after the Effective Time shall be paid to the holder of any un-surrendered Certificate with respect to the ALCANTARA Shares represented thereby until the holder of record of such Certificate shall surrender such Certificate.

 

 

(d)

In the event that any Certificate for LORETO Shares or ALCANTARA Shares shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange therefor, upon the making of an affidavit of that fact by the holder thereof such ALCANTARA Shares and cash in lieu of fractional ALCANTARA Shares, if any, as may be required pursuant to this Agreement; provided, however, that ALCANTARA or the Exchange Agent, may, in its respective discretion, require the delivery of a suitable bond, opinion or indemnity.

 

 

(e)

All ALCANTARA Shares issued upon the surrender for exchange of LORETO Shares in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such LORETO Shares. There shall be no further registration of transfers on the stock transfer books of either of LORETO or ALCANTARA of the LORETO Shares or ALCANTARA Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to ALCANTARA for any reason, they shall be canceled and exchanged as provided in this Article I.

 

 

(f)

No fractional ALCANTARA Shares shall be issued in the Merger, but in lieu thereof each holder of LORETO Shares otherwise entitled to a fractional ALCANTARA Share shall, upon surrender of its, his or her Certificate or Certificates, be entitled to receive an additional share to round up to the nearest round number of shares.

 

Section 1.9. Stock Options . At the Effective Time, each outstanding option to purchase LORETO Shares, if any (a “LORETO Stock Option” or collectively, “LORETO Stock Options”) issued pursuant to any LORETO Stock Option Plan or LORETO Long Term Incentive Plan whether vested or unvested, shall be cancelled.

 

Section 1.10. Warrants . At the Effective Time, each outstanding warrant to purchase LORETO Shares, if any (a “LORETO Warrant” or collectively, “LORETO Warrants”) issued and pursuant to any LORETO Warrant Agreement as disclosed in Schedule 3.2 shall convert to the right to receive replacement ALCANTARA Warrants, adjusted to reflect the proportionate reduction in number of shares as set forth in section 1.7 above. The Exercise Price per Warrant Share in effect at the time of the record date for the determination of Stockholders entitled to receive shares pursuant to section 1.7 shall be adjusted so that it shall equal the price determined by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such action, and the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action.  Such adjustment shall be made successively whenever any event listed above shall occur and shall become effective at the close of business on such record date or at the close of business on the date immediately preceding such effective date, as applicable.

 

 

5


 

Section 1.11. Taking of Necessary Action; Further Action . If, at any time after the Effective Time, LORETO or ALCANTARA reasonably determines that any deeds, assignments, or instruments or confirmations of transfer are necessary or desirable to carry out the purposes of this Agreement and to vest ALCANTARA with full right, title and possession to all assets, property, rights, privileges, powers and franchises of LORETO, the officers and directors of ALCANTARA and LORETO are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary or desirable action.

 

ARTICLE 2

 

Representations and Warranties of ALCANTARA

 

Except as set forth on the Disclosure Schedule delivered by ALCANTARA and SUB CO to LORETO (the “ALCANTARA Disclosure Schedule”), ALCANTARA and SUB CO hereby represent and warrant to LORETO as follows:

 

Section 2.1. Organization and Qualification .

 

 

(a)

Each of ALCANTARA and SUB CO is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and each has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not have a Material Adverse Effect (as defined below) on ALCANTARA. When used in connection with ALCANTARA, the term “Material Adverse Effect” means any change or effect (i) that is or is reasonably likely to be materially adverse to the business, results of operations, condition (financial or otherwise) or prospects of ALCANTARA, other than any change or effect arising out of general economic conditions unrelated to any business in which ALCANTARA is engaged, or (ii) that may impair the ability of ALCANTARA to perform its obligations hereunder or to consummate the transactions contemplated hereby.

 

 

(b)

ALCANTARA has heretofore delivered to LORETO accurate and complete copies of the Articles of Incorporation and Bylaws (or similar governing documents), as currently in effect, of ALCANTARA. Except as set forth on Schedule 2.1 of the ALCANTARA Disclosure Schedule, ALCANTARA is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not have a Material Adverse Effect on ALCANTARA.

 

 

6


 

Section 2.2. Capitalization of ALCANTARA .

 

 

(a)

The authorized capital stock of ALCANTARA consists of: (i) One Million (100,000,000) ALCANTARA Common Shares, par value $0.001 per share, of which, as of March 31, 2009, approximately 14,000,000 ALCANTARA Shares were issued and outstanding; and (ii) Ten Million (10,000,000) ALCANTARA Preferred Shared, par value $0.001 per share, were authorized, of which no Preferred Shares were issued. The authorized capital stock of SUB CO consists of One Million (1,000,000) shares of common stock ("SUB CO Shares"), of which, as of the date of this Agreement, One thousand (1,000) shares were issued and outstanding.  All of the outstanding ALCANTARA Shares and SUB CO Shares have been duly authorized and validly issued, and are fully paid, nonassessable and free of preemptive rights. Except as set forth herein, as of the date hereof, there are no outstanding (i) shares of capital stock or other voting securities of ALCANTARA or SUB CO, (ii) securities of ALCANTARA convertible into or exchangeable for shares of capital stock or voting securities of ALCANTARA or SUB CO, (iii) options or other rights to acquire from ALCANTARA or SUB CO and, except as described in the ALCANTARA SEC Reports (as defined below), no obligations of ALCANTARA or SUB CO to issue any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of ALCANTARA or SUB CO, and (iv) equity equivalents, interests in the ownership or earnings of ALCANTARA or SUB CO or other similar rights (collectively, “ALCANTARA Securities”). As of the date hereof, except as set forth on Schedule 2.2(a) of the ALCANTARA Disclosure Schedule there are no outstanding obligations of ALCANTARA or its subsidiaries to repurchase, redeem or otherwise acquire any ALCANTARA Securities or stockholder agreements, voting trusts or other agreements or understandings to which ALCANTARA is a party or by which it is bound relating to the voting or registration of any shares of capital stock of ALCANTARA. For purposes of this Agreement, ‘‘Lien” means, with respect to any asset (including, without limitation, any security) any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset.

 

 

(b)

The ALCANTARA Shares constitute the only class of equity securities of ALCANTARA registered under the Exchange Act.

 

 

7


 

 

(c)

Other than its 100% ownership of SUB CO, ALCANTARA does not own directly or indirectly more than fifty percent (50%) of the outstanding voting securities or interests (including membership interests) of any entity, other than as specifically disclosed in the disclosure documents.

 

Section 2.3. Authority Relative to this Agreement; Recommendation .

 

 

(a)

ALCANTARA and SUB CO have all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, have been duly and validly authorized by the Board of Directors of ALCANTARA (the “ALCANTARA Board”) and the Board of Directors of SUB CO and no other corporate proceedings on the part of ALCANTARA or SUB CO are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, except, as referred to in Section 2.3(b) and Section 2.17, the approval and adoption of this Agreement by the holders of at least a majority of the then outstanding SUB CO Shares, and the adoption of this Agreement by the holders of at least a majority of the then outstanding ALCANTARA Shares. This Agreement has been duly and validly executed and delivered by ALCANTARA and SUB CO and constitutes a valid, legal and binding agreement of ALCANTARA and SUB CO, enforceable against ALCANTARA and SUB CO in accordance with its terms.

 

 

8


 

 

(b)

The ALCANTARA Board has resolved to recommend that ALCANTARA, the sole stockholder of SUB CO, approve and adopt this Agreement. Additionally, the Board has resolved to recommend that ALCANTARA stockholders approve and adopt this Agreement, and the actions required to be taken to effectuate the terms and conditions set forth in this Agreement.

 

Section 2.4. SEC Reports; Financial Statements .

 

 

(a)

ALCANTARA has filed all required forms, reports and documents with the Securities and Exchange Commission (the “SEC”) from the Company’s inception through the period ended March 31, 2009, each of which has complied in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act (and the rules and regulations promulgated thereunder, respectively), each as in effect on the dates such forms, reports and documents were filed. ALCANTARA has heretofore delivered or promptly will deliver prior to the Effective Date to LORETO, in the form filed with the SEC (including any amendments thereto but excluding any exhibits), (i) its Annual Report on Form 10-K for the year ended December 31, 2008, (ii) its Quarterly Report on Form 10-Q for the period ended March 31, 2009, (iii) all definitive proxy statements relating to ALCANTARA’s meetings of stockholders (whether annual or special) held since December 31, 2007, if any, and (iv) all other reports or registration statements filed by ALCANTARA with the SEC since December 31, 2007.  None of such ALCANTARA SEC Reports, including, without limitation, any financial statements or schedules included or incorporated by reference therein, contained, when filed, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements of ALCANTARA included in the ALCANTARA SEC Reports fairly present, in conformity with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto), the financial position of ALCANTARA as of the dates thereof and its results of operations and changes in financial position for the periods then ended. All material agreements, contracts and other documents required to be filed as exhibits to any of the ALCANTARA SEC Reports have been so filed.

 

 

(b)

ALCANTARA has heretofore made available or promptly will make available to LORETO a complete and correct copy of any amendments or modifications which are required to be filed with the SEC but have not yet been filed with the SEC, to agreements, documents or other instruments which previously had been filed by ALCANTARA with the SEC pursuant to the Exchange Act.

 

Section 2.5. Information Supplied . None of the information supplied or to be supplied by ALCANTARA for inclusion or incorporation by reference in connection with the Merger will at the date filed with the SEC and made available to stockholders of ALCANTARA, contain any untrue statement of a material fact or omit 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.

 

Section 2.6. Consents and Approvals; No Violations . Except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Act, the Exchange Act, state securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of 1916, as amended (the ‘‘HSR Act’’), the rules of the Financial Industry Regulatory Authority (“FINRA”), the filing and recordation of the Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6 of the ALCANTARA Disclosure Schedule no filing with or notice to, and no permit, authorization, consent or approval of, any court or tribunal or administrative, governmental or regulatory body, agency or authority (a “Governmental Entity”) is necessary for the execution and delivery by ALCANTARA and SUB CO of this Agreement or the consummation by ALCANTARA and SUB CO of the transactions contemplated hereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have a Material Adverse Effect on ALCANTARA or SUB CO.

 

 

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Except as set forth in Section 2.6 of the ALCANTARA Disclosure Schedule, neither the execution, delivery and performance of this Agreement by ALCANTARA and SUB CO nor the consummation by ALCANTARA or SUB CO of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the respective Articles of Incorporation or Bylaws (or similar governing documents) of ALCANTARA or SUB CO, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or Lien) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which ALCANTARA is a party or by which any of its properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to ALCANTARA or any of its properties or assets, except in the case of (ii) or (iii) for violations, breaches or defaults which would not have a Material Adverse Effect on ALCANTARA or SUB CO.

 

Section 2.7. No Default . Except as set forth in Section 2.7 of the ALCANTARA Disclosure Schedule, neither ALCANTARA nor SUB CO is in breach, default or violation (and no event has occurred which with notice or the lapse of time or both would constitute a breach, default or violation) of any term, condition or provision of (i) its Articles of Incorporation or Bylaws (or similar governing documents), (ii) any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which ALCANTARA is now a party or by which any of its respective properties or assets may be bound or (iii) any order, writ, injunction, decree, law, statute, rule or regulation applicable to ALCANTARA or any of its respective properties or assets, except in the case of (ii) or (iii) for violations, breaches or defaults that would not have a Material Adverse Effect on ALCANTARA or SUB CO. Except as set forth in Section 2.7 of the ALCANTARA Disclosure Schedule, each note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which ALCANTARA is now a party or by which its respective properties or assets may be bound that is material to ALCANTARA or SUB CO and that has not expired is in full force and effect and is not subject to any material default thereunder of which ALCANTARA or SUB CO is aware by any party obligated to ALCANTARA thereunder.

 

Section 2.8. No Undisclosed Liabilities; Absence of Changes . Except as set forth in Section 2.8 of the ALCANTARA Disclosure Schedule and except as and to the extent publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, as of March 31, 2009, ALCANTARA does not have any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by generally accepted accounting principles to be reflected on a balance sheet of ALCANTARA (including the notes thereto) or which would have a Material Adverse Effect on ALCANTARA. Except as publicly disclosed by ALCANTARA, since March 31, 2009, ALCANTARA has not incurred any liabilities of any nature, whether or not accrued, contingent or otherwise, which could reasonably be expected to have, and there have been no events, changes or effects with respect to ALCANTARA having or which reasonably could be expected to have, a Material Adverse Effect on ALCANTARA. Except as and to the extent publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports and except as set forth in Section 2.8 of the ALCANTARA Disclosure Schedule, since March 31, 2009, there has not been (i) any material change by ALCANTARA in its accounting methods, principles or practices (other than as required after the date hereof by concurrent changes in generally accepted accounting principles), (ii) any revaluation by ALCANTARA of any of its assets having a Material Adverse Effect on ALCANTARA, including, without limitation, any write-down of the value of any assets other than in the ordinary course of business or (iii) any other action or event that would have required the consent of any other party hereto pursuant to Section 4.1 of this Agreement had such action or event occurred after the date of this Agreement.

 

 

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Section 2.9. Litigation . Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, there is no suit, claim, action, proceeding or investigation pending or, to the knowledge of ALCANTARA, threatened against ALCANTARA or any of its subsidiaries or any of their respective properties or assets before any Governmental Entity which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on ALCANTARA or could reasonably be expected to prevent or delay the consummation of the transactions contemplated by this Agreement. Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, ALCANTARA is not subject to any outstanding order, writ, injunction or decree which, insofar as can be reasonably foreseen in the future, could reasonably be expected to have a Material Adverse Effect on ALCANTARA or could reasonably be expected to prevent or delay the consummation of the transactions contemplated hereby.

 

Section 2.10. Compliance with Applicable Law . Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, ALCANTARA and SUB CO hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the “ALCANTARA Permits”), except for failures to hold such permits, licenses, variances, exemptions, orders and approvals which would not have a Material Adverse Effect on ALCANTARA. Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, ALCANTARA is in compliance with the terms of the ALCANTARA Permits, except where the failure to so comply would not have a Material Adverse Effect on ALCANTARA. Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, the business of ALCANTARA is not being conducted in violation of any law, ordinance or regulation of any Governmental Entity except that no representation or warranty is made in this Section 2.10 with respect to Environmental Laws (as defined in Section 2.12 below) and except for violations or possible violations which do not, and, insofar as reasonably can be foreseen, in the future will not, have a Material Adverse Effect on ALCANTARA. Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, no investigation or review by any Governmental Entity with respect to ALCANTARA is pending or, to the knowledge of ALCANTARA, threatened, nor, to the knowledge of ALCANTARA, has any Governmental Entity indicated an intention to conduct the same, other than, in each case, those which ALCANTARA reasonably believes will not have a Material Adverse Effect on ALCANTARA.

 

Section 2.11. Employee Benefit Plans; Labor Matters .

 

 

(a)

Except as set forth in Section 2.11(a) of the ALCANTARA Disclosure Schedule with respect to each employee benefit plan, program, policy, arrangement and contract (including, without limitation, any “employee benefit plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), maintained or contributed to at any time by ALCANTARA or any entity required to be aggregated with ALCANTARA pursuant to Section 414 of the Code (each, a “ALCANTARA Employee Plan”), no event has occurred and to the knowledge of ALCANTARA, no condition or set of circumstances exists in connection with which ALCANTARA could reasonably be expected to be subject to any liability which would have a Material Adverse Effect on ALCANTARA.

 

 

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(b)

(i) No ALCANTARA Employee Plan is or has been subject to Title IV of ERISA or Section 412 of the Code; and (ii) each ALCANTARA Employee Plan intended to qualify under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code is the subject of a favorable Internal Revenue Service determination letter, and nothing has occurred which could reasonably be expected to adversely affect such determination.

 

 

(c)

Section 2.11(c) of the ALCANTARA Disclosure Schedule sets forth a true and complete list, as of the date of this Agreement, of each person who holds any ALCANTARA Stock Options, together with the number of ALCANTARA Shares which are subject to such option, the date of grant of such option, the extent to which such option is vested (or will become vested as a result of the Merger), the option price of such option (to the extent determined as of the date hereof), whether such option is a nonqualified stock option or is intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code, and the expiration date of such option. Section 2.11(c) of the ALCANTARA Disclosure Schedule also sets forth the total number of such incentive stock options and such nonqualified options. ALCANTARA has furnished LORETO with complete copies of the plans pursuant to which the ALCANTARA Stock Options were issued. Other than the automatic vesting of ALCANTARA Stock Options that may occur without any action on the part of ALCANTARA or its officers or directors, ALCANTARA has not taken any action that would result in any ALCANTARA Stock Options that are unvested becoming vested in connection with or as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

 

(d)

ALCANTARA has made available to LORETO (i) a description of the terms of employment and compensation arrangements of all officers of ALCANTARA and a copy of each such agreement currently in effect; (ii) copies of all agreements with consultants who are individuals obligating ALCANTARA to make annual cash payments in an amount exceeding $60,000; (iii) a schedule listing all officers of ALCANTARA who have executed a non-competition agreement with ALCANTARA and a copy of each such agreement currently in effect; (iv) copies (or descriptions) of all severance agreements, programs and policies of ALCANTARA with or relating to its employees, except programs and policies required to be maintained by law; and (v) copies of all plans, programs, agreements and other arrangements of ALCANTARA with or relating to its employees which contain change in control provisions all of which are set forth in Section 2.11(d) of the ALCANTARA Disclosure Schedule.

 

 

12


 

 

(e)

There shall be no payment, accrual of additional benefits, acceleration of payments, or vesting in any benefit under any ALCANTARA Employee Plan or any agreement or arrangement disclosed under this Section 2.11 solely by reason of entering into or in connection with the transactions contemplated by this Agreement.

 

 

(f)

There are no controversies pending or, to the knowledge of ALCANTARA, threatened, between ALCANTARA and any of their employees, which controversies have or could reasonably be expected to have a Material Adverse Effect on ALCANTARA. Neither ALCANTARA nor any of its subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by ALCANTARA or any of its subsidiaries (and neither ALCANTARA nor any of its subsidiaries has any outstanding material liability with respect to any terminated collective bargaining agreement or labor union contract), nor does ALCANTARA know of any activities or proceedings of any labor union to organize any of its or its subsidiaries employees. ALCANTARA has no knowledge of any strike, slowdown, work stoppage, lockout or threat thereof, by or with respect to any of its employees.

 

Section 2.12. Environmental Laws and Regulations .

 

 

(a)

Except as publicly disclosed by ALCANTARA in the ALCANTARA SEC Reports, (i) ALCANTARA is in material compliance with all applicable federal, state, local and foreign laws and regulations relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) (collectively, “Environmental Laws”), except for non-compliance that would not have a Material Adverse Effect on ALCANTARA, which compliance includes, but is not limited to, the possession by ALCANTARA of all material permits and other governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof; (ii) ALCANTARA has not received written notice of, or, to the knowledge of ALCANTARA, is the subject of, any action, cause of action, claim, investigation, demand or notice by any person or entity alleging liability under or non-compliance with any Environmental Law (an “Environmental Claim”) that could reasonably be expected to have a Material Adverse Effect on ALCANTARA; and (iii) to the knowledge of ALCANTARA, there are no circumstances that are reasonably likely to prevent or interfere with such material compliance in the future.

 

 

13


 

 

(b)

Except as publicly disclosed by ALCANTARA, there are no Environmental Claims which could reasonably be expected to have a Material Adverse Effect on ALCANTARA that are pending or, to the knowledge of ALCANTARA, threatened against ALCANTARA or, to the knowledge of ALCANTARA, against any person or entity whose liability for any Environmental Claim ALCANTARA has or may have retained or assumed either contractually or by operation of law.

 

Section 2.13. Tax Matters .

 

 

(a)

Except as set forth in Section 2.13 of the ALCANTARA Disclosure Schedule: (i) ALCANTARA has filed or has had filed on its behalf in a timely manner (within any applicable extension periods) with the appropriate Governmental Entity all income and other material Tax Returns (as defined herein) with respect to Taxes (as defined herein) of ALCANTARA and all Tax Returns were in all material respects true, complete and correct; (ii) all material Taxes with respect to ALCANTARA have been paid in full or have been provided for in accordance with GAAP on ALCANTARA’s most recent balance sheet which is part of the ALCANTARA SEC Documents; (iii) there are no outstanding agreements or waivers extending the statutory period of limitations applicable to any federal, state, local or foreign income or other material Tax Returns required to be filed by or with respect to ALCANTARA; (iv) to the knowledge of ALCANTARA none of the Tax Returns of or with respect to ALCANTARA is currently being audited or examined by any Governmental Entity; and (v) no deficiency for any income or other material Taxes has been assessed with respect to ALCANTARA which has not been abated or paid in full.

 

 

(b)

For purposes of this Agreement, (i) “Taxes” shall mean all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, customs duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority and (ii) “Tax Return” shall mean any report, return, documents declaration or other information or filing required to be supplied to any taxing authority or jurisdiction with respect to Taxes.

 

 

14


 

Section 2.14. Title to Property . ALCANTARA has good and defensible title to all of its properties and assets, free and clear of all liens, charges and encumbrances except liens for taxes not yet due and payable and such liens or other imperfections of title, if any, as do not materially detract from the value of or interfere with the present use of the property affected thereby or which, individually or in the aggregate, would not have a Material Adverse Effect on ALCANTARA; and, to ALCANTARA’s knowledge, all leases pursuant to which ALCANTARA leases from others real or personal property are in good standing, valid and effective in accordance with their respective terms, and there is not, to the knowledge of ALCANTARA, under any of such leases, any existing material default or event of default (or event which with the giving of notice or lapse of time, or both, would constitute a default and in respect of which ALCANTARA has not taken adequate steps to prevent such a default from occurring) except where the lack of such good standing, validity and effectiveness, or the existence of such default or event, would not have a Material Adverse Effect on ALCANTARA.

 

Section 2.15. Intellectual Property .

 

 

(a)

ALCANTARA owns, or possesses adequate licenses or other valid rights to use, all existing United States and foreign patents, trademarks, trade names, service marks, copyrights, trade secrets and applications therefore that are material to its business as currently conducted (the “ALCANTARA Intellectual Property Rights”).

 

 

(b)

The validity of the ALCANTARA Intellectual Property Rights and the title thereto of ALCANTARA is not being questioned in any litigation to which ALCANTARA is a party.

 

 

(c)

Except as set forth in Section 2.15(c) of the ALCANTARA Disclosure Schedule, the conduct of the business of ALCANTARA as now conducted does not, to ALCANTARA’s knowledge, infringe any valid patents, trademarks, trade names, service marks or copyrights of others. The consummation of the transactions completed hereby will not result in the loss or impairment of any ALCANTARA Intellectual Property Rights.

 

 

(d)

ALCANTARA has taken steps it believes appropriate to protect and maintain its trade secrets as such, except in cases where ALCANTARA has elected to rely on patent or copyright protection in lieu of trade secret protection.

 

Section 2.16. Insurance . ALCANTARA currently does not maintain general liability and other business insurance.

 

Section 2.17. Vote Required . The affirmative vote of the holders of at least a majority of the outstanding SUB CO Shares and at least a majority of the outstanding ALCANTARA Shares are the only vote of the holders of any class or series of SUB CO’s capital stock and ALCANTARA necessary to approve and adopt this Agreement and the Merger.

 

 

15


 

Section 2.18. Tax Treatment . Neither ALCANTARA or SUB CO nor, to the knowledge of ALCANTARA or SUB CO, any of their affiliates have taken or agreed to take action that would prevent the Merger from constituting a reorganization qualifying under the provisions of Section 368(a) of the Code.

 

Section 2.19. Affiliates . Except for the directors and executive officers of ALCANTARA, each of whom is listed in Section 2.19 of the ALCANTARA Disclosure Schedule, there are no persons who, to the knowledge of ALCANTARA, may be deemed to be affiliates of ALCANTARA under Rule 1-02(b) of Regulation S-X of the SEC (the “ALCANTARA Affiliates”).

 

Section 2.20. Certain Business Practices . None of ALCANTARA or SUB CO or any directors, officers, agents or employees of ALCANTARA or SUB CO has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or (iii) made any other unlawful payment.

 

Section 2.21. Insider Interests . Except as set forth in Section 2.21 of the ALCANTARA Disclosure Schedule, no officer or director of ALCANTARA has any interest in any material property, real or personal, tangible or intangible, including without limitation, any computer software or ALCANTARA Intellectual Property Rights, used in or pertaining to the business of ALCANTARA, except for the ordinary rights of a stockholder or employee stock option-holder.

 

Section 2.22. Opinion of Financial Adviser . No financial adviser has been engaged to assist ALCANTARA in reference to this transaction, nor are there any fees or commissions obligated to any third party.

 

Section 2.23. Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or


 
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