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
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2
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2
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Articles of Incorporation; Bylaws
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2
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Board of Directors and Officers
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2
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4
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5
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Taking of Necessary Action; Further Action
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6
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Representations and Warranties of
ALCANTARA
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Organization and Qualification
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Capitalization of ALCANTARA
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Authority Relative to this Agreement;
Recommendation.
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8
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SEC Reports; Financial Statements
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Consents and Approvals; No Violations
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No Undisclosed Liabilities; Absence of
Changes
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Compliance with Applicable Law
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Employee Benefit Plans; Labor Matters
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Environmental Laws and Regulations
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Certain Business Practices
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Opinion of Financial Adviser
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Representations and Warranties of
LORETO.
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Organization and Qualification
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Authority Relative to this Agreement;
Recommendation
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SEC Reports; Financial Statements
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Consents and Approvals; No Violations
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No Undisclosed Liabilities; Absence of
Changes
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Compliance with Applicable Law
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Employee Benefit Plans; Labor Matters
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Environmental Laws and Regulations
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Certain Business Practices
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25
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Opinion of Financial Adviser
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Conduct of Business of ALCANTARA
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Conduct of Business of LORETO
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Other Potential Acquirers
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Additional Agreements; Reasonable Efforts.
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Employee Benefits; Stock Option and Employee
Purchase Plans
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Notification of Certain Matters
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35
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Conditions to Consummation of the
Merger
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35
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Conditions to Each Party’s Obligations
to Effect the Merger
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Conditions to the Obligations of ALCANTARA and
SUB CO
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Conditions to the Obligations of LORETO
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Termination; Amendment; Waiver
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Non-survival of Representations and
Warranties
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Entire Agreement; Assignment
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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”).
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 .
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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.
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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.
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Section 1.7.
Conversion of Shares .
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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.
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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:
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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.
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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.
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Section 1.8.
Exchange of Certificates .
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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 .
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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.
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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.
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Section 2.2.
Capitalization of ALCANTARA .
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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.
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The ALCANTARA Shares constitute the only class
of equity securities of ALCANTARA registered under the Exchange
Act.
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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.
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Section 2.3.
Authority Relative to this Agreement; Recommendation .
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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.
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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.
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Section 2.4. SEC
Reports; Financial Statements .
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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.
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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.
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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.
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.
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 .
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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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(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.
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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.
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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.
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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.
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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.
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Section 2.12.
Environmental Laws and Regulations .
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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.
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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.
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Section 2.13. Tax
Matters .
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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.
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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.
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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 .
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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”).
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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.
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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.
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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.
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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.
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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