Document:

Exhibit 10.2

    
      Exhibit
        10.2

      
 

       

      AGREEMENT
        AND PLAN OF MERGER

       

      by
        and among

       

      US
        DRY CLEANING CORPORATION,

       

      USDCC
        MERGER SUB, INC.

       

      AND

       

      STEAM
        PRESS HOLDINGS, INC.

       

      

      Dated
        as of August 8, 2005

      

       

      

      

      AGREEMENT
        AND PLAN OF MERGER

       

      THIS
        AGREEMENT AND PLAN OF MERGER (this “Agreement”),
        dated
        as of August 8, 2005, is made and entered into by and among US DRY CLEANING
        CORPORATION, a Delaware corporation (“USDCC”), USDCC MERGER SUB, INC., a Hawaii
        corporation and direct, wholly-owned subsidiary of USDCC (“Merger
        Sub”),
        and
        STEAM PRESS HOLDINGS, INC., a Hawaii corporation (“SPHI”).
        

       

      

       

      RECITALS:

       

      WHEREAS,
        the respective boards of directors of USDCC, Merger Sub and SPHI deem it
        advisable and in the best interests of their respective stockholders that
        Merger
        Sub merge with and into SPHI (the “Merger”)
        upon
        the terms and subject to the conditions set forth herein; and 

       

      WHEREAS
        the respective boards of directors of USDCC, Merger Sub and SPHI have approved
        the Merger; and

       

      WHEREAS,
        as an inducement to enter into this Agreement and to consummate the Merger
        the
        parties hereto are willing to make certain representations and warranties
        as set
        forth herein;

       

      NOW,
        THEREFORE, in consideration of the premises and the representations, warranties
        and agreements contained herein, the parties hereto agree as
        follows:

       

      

       

      1.1  The
        Merger

       

      Upon
        the
        terms and subject to the conditions hereof, at the Effective Time (as defined
        in
Section
        1.2),
        Merger
        Sub shall merge with and into SPHI and the separate corporate existence of
        Merger Sub shall thereupon cease, and SPHI shall be the surviving corporation
        in
        the Merger (as such, the “Surviving
        Corporation”).
        The
        Merger shall have the effects set forth in this Agreement.

       

      1.2  Effective
        Time of the Merger

       

      The
        Merger shall become effective upon the filing with the Secretary of State
        of the
        State of Hawaii of an agreement of merger (the “Agreement
        of Merger”)
        in
        accordance with the requirements of Hawaii law (the “Effective
        Time”).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

       

      THE
        SURVIVING CORPORATION

       

      1.3  Articles
        of Incorporation

       

      The
        articles of incorporation of SPHI in effect immediately prior to the Effective
        Time shall be the articles of incorporation of the Surviving Corporation
        at and
        after the Effective Time, and thereafter may be amended in accordance with
        the
        terms thereof and Hawaii law. 

       

      1.4  Bylaws

       

      The
        bylaws of SPHI in effect immediately prior to the Effective Time shall be
        the
        bylaws of the Surviving Corporation at and after the Effective Time, and
        thereafter may be amended in accordance with their terms and as provided
        by the
        articles of incorporation of the Surviving Corporation.

       

      1.5  Directors
        and Officers

       

      At
        and
        after the Effective Time, the directors and officers of the Surviving
        Corporation shall be the directors and officers of SPHI immediately prior
        to the
        Effective Time, until their respective successors have been duly elected
        or
        appointed and qualified or until their earlier death, resignation or removal
        in
        accordance with the articles of incorporation and bylaws of the Surviving
        Corporation.

       

      ARTICLE
        2  

       

      

       

      CONVERSION
        OF SHARES

       

      2.1  Conversion
        of Capital Stock

       

      As
        of the
        Effective Time, by virtue of the Merger and without any action on the part
        of
        the holders of any capital stock or other securities described
        below:

       

      (a)  Each
        share of the common stock,[ no par value per share,] of SPHI (“SPHI
        Common Stock”)
        issued
        and outstanding immediately prior to the Effective Time shall be converted
        into
        and exchanged for the right to receive 240 shares of fully paid and
        nonassessable shares of USDCC voting Preferred Stock, par value $.0001 per
        share
        and liquidation preference of $2.40 per share, convertible into one share
        of
        USDCC Common Stock, par value $.0001 per share. The SPHI Common Stock, when
        so
        converted and exchanged, shall no longer be outstanding and shall automatically
        be canceled and retired, and the holder of a certificate (“SPHI
        Stock Certificate”)
        that,
        immediately prior to the Effective Time, represented outstanding shares of
        SPHI
        Common Stock shall cease to have any rights with respect thereto, except
        the
        right to receive, upon the surrender of such SPHI Stock Certificate, the
        shares
        of USDCC Preferred Stock (the “Merger
        Shares”)
        to
        which such holder is entitled pursuant to this Section
        3.1(a).
        Until
        surrendered as contemplated by Section
        3.2(a),
        each
        SPHI Stock Certificate shall be deemed at any time after the Effective Time
        to
        represent only the right to receive upon such surrender the Merger Shares
        as
        provided herein. The number of shares of USDCC Preferred

       

      (b)  Stock
        to
        be so issued for each share of SPHI Common Stock is referred to herein as
        the
“Exchange
        Ratio.”

       

      (c)  Each
        share of the common stock, no par value, of Merger Sub (the “Merger
        Sub Common Stock”)
        issued
        and outstanding immediately prior to the Effective Time shall automatically
        be
        converted into the same number of shares of common stock of the Surviving
        Corporation, and shall, immediately after the Merger, be the only shares
        of
        capital stock of the Surviving Corporation issued and outstanding.

       

      (d)  Each
        share of each class and series of USDCC Common Stock issued and outstanding
        immediately prior to the Effective Time shall remain outstanding and shall
        not
        be affected by the Merger.

       

      (e)  The
        Merger Shares issued upon the surrender of the SPHI Stock Certificates in
        accordance with the terms hereof shall be deemed to have been issued in full
        satisfaction of all rights pertaining to such SPHI Stock Certificates and
        the
        SPHI Common Stock formerly represented thereby; and from and after the Effective
        Time there shall be no further registration of transfers effected on the
        stock
        transfer books of the Surviving Corporation of shares of the SPHI Common
        Stock
        which were outstanding immediately prior to the Effective Time. If, after
        the
        Effective Time, SPHI Stock Certificates are presented to the Surviving
        Corporation for any reason, they shall be canceled and exchanged as provided
        in
        this Article
        III.

       

      2.2  Surrender
        and Payment

       

      (a)  At
        the
        Closing, USDCC shall issue and deliver to each holder of a SPHI Stock
        Certificate, the Merger Shares to which such holder is entitled, in exchange
        for
        the holder’s surrender for cancellation of such SPHI Stock
        Certificate.

       

      (b)  If
        any
        Merger Shares are to be issued to a Person (as hereinafter defined) other
        than
        the registered holder of the SPHI Stock Certificates surrendered in exchange
        therefore, it shall be a condition to such issuance that the SPHI Stock
        Certificates so surrendered shall be properly endorsed or otherwise be in
        proper
        form for transfer to USDCC. 

       

      (c)  For
        purposes of this Agreement, “Person”
means
        an individual, a corporation, a limited-liability company, a partnership,
        an
        association, a trust or any other entity or organization, including a
        governmental or political subdivision or any agency or instrumentality
        thereof.

       

      (d)  If
        any
        SPHI Stock Certificate shall have been lost, stolen or destroyed, upon the
        making of an affidavit of that fact by the Person claiming such SPHI Stock
        Certificate to be lost, stolen or destroyed, USDCC will issue in exchange
        for
        such lost, stolen or destroyed SPHI Stock Certificate the Merger Shares
        deliverable in respect thereof pursuant to this Agreement. USDCC, in its
        discretion, may require as a condition to such issuance that such Person
        also
        agree to indemnify, defend and hold harmless USDCC and the Surviving Corporation
        from and against any Liability (as hereinafter defined) to any Person with
        respect to such lost, stolen or destroyed SPHI Stock Certificate. “Liabilities”
for
        purposes of this Agreement means any and all direct or indirect liabilities,
        indebtedness, obligations, commitments, claims, deficiencies,
        expenses,

       

      (e)  deferred
        income, guaranties or endorsements of any type, whether known, unknown, accrued,
        absolute, contingent, matured or unmatured.

       

      2.3  No
        Fractional Shares

       

      No
        fractional share of USDCC Preferred Stock shall be issued in the
        Merger.

       

      2.4  Closing

       

      (a)  The
        closing of the transactions contemplated by this Agreement (the “Closing”)
        shall
        take place at the offices of SPHI, 1930 Auiki Street Honolulu Hawaii on the
        first business day following the date as of which all of the conditions set
        forth in Article
        X
        hereof
        shall have been satisfied or waived, or at such other date and time as USDCC
        and
        SPHI shall otherwise agree in writing (either such date, the “Closing
        Date”).

       

      (b)  At
        the
        Closing, (i) USDCC and Merger Sub shall deliver the various certificates,
        instruments, and documents referred to in subparagraph
        (c),
        below,
        (ii) SPHI shall deliver the various certificates, instruments, and documents
        referred to in subparagraph
        (d),
        below,
        (iii) SPHI and Merger Sub shall execute and file the Agreement of Merger
        with
        the Secretary of State of the State of Hawaii, and (v) the parties hereto
        shall
        undertake any other actions provided for in this Section
        3.4
        in
        accordance with the terms of this Agreement.

       

      (c)  At
        the
        Closing, USDCC or Merger Sub, as applicable, shall deliver the
        following:

       

      (i)  USDCC
        shall issue and deliver the Merger Shares as provided in Section
         3.2(a);
        and

       

      (ii)  USDCC
        and
        Merger Sub shall furnish SPHI with:

       

      (A)  a
        certificate executed by the Secretary or an Assistant Secretary of each of
        USDCC
        and Merger Sub certifying as of the date of the Closing Date (1) a true and
        complete copy of the certificate of incorporation or articles of incorporation,
        as the case may be, of USDCC and Merger Sub certified as of a recent date
        by the
        Secretary of the State of the state of its incorporation or organization,
        and a
        true and complete copy of the respective bylaws of USDCC and Merger Sub,
        as
        certified by the Secretary or an Assistant Secretary of USDCC and Merger
        Sub, as
        applicable, and (2) a true and complete copy of the resolutions of the
        respective boards of directors of USDCC and Merger Sub authorizing the
        execution, delivery, and performance of this Agreement by USDCC and Merger
        Sub
        and the consummation of the transactions contemplated hereby;

       

      (B)  a
        certificate of the Secretary of State of the State of Delaware or other state
        of
        incorporation or organization, as applicable, certifying the good standing
        of
        USDCC and Merger Sub, dated within 10 days of the Closing Date; and

       

      (C)  the
        other
        documents and instruments to be delivered by USDCC or Merger Sub on or before
        the Closing as called for herein.

       

      (D)  At
        the
        Closing, SPHI shall furnish USDCC and Merger Sub with:

       

      (iii)  a
        certificate executed by the Secretary or an Assistant Secretary of SPHI
        certifying as of the date of the Closing Date (1) a true and complete copy
        of
        the articles of incorporation of SPHI, Enivel and each other Subsidiary as
        defined in Section 4.1(c)(ii), certified as of a recent date by the Secretary
        of
        State of the State of Hawaii, and a true and complete copy of the bylaws
        of each
        such entity, certified by the Secretary or an Assistant Secretary of SPHI,
        and
        (2) a true and complete copy of the resolutions of the board of directors
        of
        SPHI authorizing the execution, delivery, and performance of this Agreement
        and
        the consummation of the transactions contemplated hereby;

       

      (iv)  a
        certificate of the Secretary of State of the State of Hawaii certifying the
        good
        standing of SPHI, Enivel and such Subsidiaries in such state, dated within
        10
        days of the Closing Date; and

       

      (v)  such
        other documents and instruments to be delivered by SPHI on or before the
        Closing
        Date as called for herein.

       

      (d)  At
        the
        Closing, SPHI shall deliver to USDCC the resignation and release agreements
        provided for in Section
        8.8.

       

      

       

      ARTICLE
        3  

       

      

       

      REPRESENTATIONS
        AND WARRANTIES OF SPHI

       

      

        SPHI
          represents and warrants to USDCC and Merger Sub that the statements contained
          in
          this Article 4 are true and correct, except as disclosed in the disclosure
          letter delivered by SPHI to USDCC as of the date hereof (the “SPHI Disclosure
          Letter”):

      

       

      3.1  Organization
        and Qualification

       

      (a)  SPHI
        and
        each of its Subsidiaries (as defined in subparagraph
        (c),
        below)
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of it state of incorporation, is duly qualified to do business as a
        foreign
        corporation and is in good standing in each jurisdiction in which the character
        of its properties or the nature of its business makes such qualification
        necessary, except in jurisdictions, if any, where the failure to be so qualified
        would not result in a SPHI Material Adverse Effect (as defined in subparagraph
        (c),
        below). SPHI and each of its Subsidiaries has all requisite corporate or
        other
        power and authority to own, use or lease its properties and to carry on its
        business as it is now being conducted. SPHI and each of its Subsidiaries
        has
        made available to USDCC a complete and correct copy of its articles of
        incorporation and bylaws, each as amended to date, and such articles of
        incorporation and bylaws as so delivered are in full force and effect. Neither
        SPHI nor any of its Subsidiaries is in default in any respect in the
        performance, observation or fulfillment of any provision of its articles
        of
        incorporation or bylaws.

       

      (b)  Schedule
        4.1(b)
        of the
        SPHI Disclosure Letter sets forth a true and complete description of all
        Subsidiaries of SPHI. Except for such Subsidiaries, SPHI has no Subsidiaries
        and
        does not own or hold any investment or other interest in any
        Person.

       

      (c)  For
        purposes of this Agreement, (i) an “SPHI
        Material Adverse Effect”
shall
        mean any event, circumstance, condition, development or occurrence causing,
        resulting in or having (or with the passage of time likely to cause, result
        in,
        or have) a material adverse effect on the financial condition, business,
        assets,
        properties, prospects or results of operations of SPHI; and its Subsidiaries,
        taken as a whole, and (ii) ”Subsidiary”
shall
        mean, with respect to any party, any corporation or other organization, whether
        incorporated or unincorporated, of which (x) at least a majority of the
        securities or other interests having by their terms voting power to elect
        a
        majority of the board of directors or others performing similar functions
        with
        respect to such corporation or other organization is directly or indirectly
        beneficially owned or controlled by such party or by any one or more of its
        subsidiaries, or by such party and one or more of its subsidiaries, or (y)
        such
        party or any Subsidiary of such party is a general partner of a partnership
        or a
        manager of a limited liability company.

       

      3.2  Capitalization

       

      The
        authorized capital stock of SPHI consists of 5,000 shares of SPHI Common
        Stock,
        of which 5,000 shares will be issued and outstanding immediately prior to
        the
        Effective Time.
        As
        of the
        Closing, there will be no outstanding subscriptions, options, rights, warrants,
        convertible securities, stock appreciation rights, phantom equity or other
        agreements or commitments obligating SPHI to issue, transfer, sell, redeem,
        repurchase or otherwise sell, issue or acquire any shares of SPHI Common
        Stock.

       

      3.3  Authority

      

        SPHI
          has
          full corporate power and authority to execute and deliver this Agreement
          and to
          consummate the transactions contemplated hereby. The execution, delivery
          and
          performance of this Agreement and the consummation of the transactions
          contemplated hereby have been duly and validly authorized by SPHI’s board of
          directors and shareholders, and no other corporate proceedings on the part
          of
          SPHI are necessary to authorize this Agreement or to consummate the transactions
          contemplated hereby. This Agreement has been duly and validly executed
          and
          delivered by SPHI and, assuming the due authorization, execution and delivery
          hereof and thereof by the other parties hereto, constitutes the legal,
          valid and
          binding obligation of SPHI enforceable against SPHI in accordance with
          its
          terms, except as such enforceability may be subject to the effects of
          bankruptcy, insolvency, reorganization, moratorium and other laws relating
          to or
          affecting the rights of creditors and of general principles of equity (the
          “Enforceability Exception”).

      

       

      3.4  Consents
        and Approvals; No Violation

       

      The
        execution and delivery of this Agreement, the consummation of the transactions
        contemplated hereby and the performance by SPHI of its obligations hereunder
        will not:

       

      (a)  conflict
        with any provision of SPHI’s articles of incorporation or bylaws;

       

      (b)  require
        any consent, waiver, approval, order, authorization or permit of, or
        registration, filing with or notification to, (i) any governmental or regulatory
        authority or agency (a “Governmental
        Authority”),
        except for applicable requirements of the Securities Act of 1933, as amended
        (the “Securities
        Act”),
        state
        securities or blue sky laws, and approvals that are ministerial in nature
        and
        are customarily obtained from Governmental Authorities after the Effective
        Time
        in connection with transactions of SPHI of the same nature as are contemplated
        hereby (“Customary
        Post-Closing Consents”)
        or
        (ii) any third party other than a Governmental Authority, other than such
        non-Governmental Authority third party consents, waivers, approvals, orders,
        authorizations and permits that would not (x) result in a SPHI Material Adverse
        Effect, (y) materially impair the ability of SPHI to perform its obligations
        under this Agreement or (z) prevent the consummation of any of the transactions
        contemplated by this Agreement;

       

      (c)  result
        in
        any violation of or the breach of or constitute a default (with notice or
        lapse
        of time or both) under, or give rise to any right of termination, cancellation
        or acceleration or guaranteed payments or a loss of a material benefit under,
        any of the terms, conditions or provisions of any note, lease, mortgage,
        license, agreement or other instrument or obligation to which SPHI or any
        of its
        Subsidiaries is a party or by which SPHI or any of its Subsidiaries or any
        of
        their respective properties or assets may be bound, except for such violations,
        breaches, defaults, or rights of termination, cancellation or acceleration,
        or
        losses as to which requisite waivers or consents have been obtained or which,
        individually or in the aggregate, would not (i) result in a SPHI Material
        Adverse Effect, (ii) materially impair the ability of SPHI or any of its
        Subsidiaries to perform its obligations under this Agreement or (iii) prevent
        the consummation of any of the transactions contemplated by this
        Agreement;

       

      (d)  violate
        the provisions of any order, writ, injunction, judgment, decree, statute,
        rule
        or regulation applicable to SPHI or any of its Subsidiaries;

       

      (e)  result
        in
        the creation of any lien, mortgage, pledge, security interest, encumbrance,
        claim or change of any kind (“Lien,”
if
        singular, or “Liens,”
if
        plural) upon any shares of capital stock or material assets of SPHI or any
        of
        its Subsidiaries under any agreement or instrument to which SPHI or any of
        its
        Subsidiaries is a party or by which SPHI or any of its Subsidiaries or any
        of
        their materials assets is bound; or

       

      (f)  result
        in
        any holder of any securities of SPHI being entitled to appraisal, dissenters’ or
        similar rights.

       

      3.5  Required
        Stockholder Vote or Consent

      

        The
          only
          vote of the holders of any class or series of capital stock of SPHI that
          will be
          necessary to consummate the Merger and the other transactions contemplated
          by
          this Agreement is the approval of this Agreement by the shareholders of
          SPHI,
          which has been duly obtained.

      

       

      3.6  Financial
        Statements

       

      The
        financial statements of SPHI previously provided to USDCC are true and correct
        in all material respects.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Absence
        of Certain Changes

       

      Except
        as
        contemplated by this Agreement, (a) SPHI has conducted its business in all
        material respects in the ordinary course, (b) there has not been any change
        or
        development, or combination of changes or developments that, individually
        or in
        the aggregate, would have a SPHI Material Adverse Effect and (c) there has
        not
        been any amendment of any term of any outstanding security of SPHI.

       

      3.7  Taxes

       

      Except
        for matters that would not have a SPHI Material Adverse Effect, SPHI has
        filed
        all material tax returns required by applicable law to be filed by it and
        has
        paid or accrued all taxes shown as due thereon. SPHI has no knowledge of
        a
        material tax deficiency which has been asserted or threatened against
        SPHI.

       

      3.8  Litigation

       

      Except
        for matters that would not have a SPHI Material Adverse Effect, there is
        no
        suit, claim, action, proceeding or investigation pending or, to SPHI’s
        knowledge, threatened against or directly affecting SPHI or any of the directors
        or officers of SPHI in their capacity as such. Neither SPHI nor, to its
        knowledge, any officer, director or employee of SPHI, has been permanently
        or
        temporarily enjoined by any order, judgment or decree of any court or any
        other
        Governmental Authority from engaging in or continuing any conduct or practice
        in
        connection with the business, assets or properties of SPHI, nor, to the
        knowledge of SPHI, is SPHI or any officer, director or employee of SPHI under
        investigation by any Governmental Authority. There is not in existence any
        order, judgment or decree of any court or other tribunal or other agency
        enjoining or requiring SPHI to take any action of any kind with respect to
        its
        business, assets or properties.

       

      3.9  Compliance
        with Applicable Laws

       

      SPHI
        holds all material approvals, licenses, permits, registrations and similar
        type
        authorizations necessary for the lawful conduct of its business, as now
        conducted, and, to SPHI’s knowledge, such business is not being, and SPHI has
        not received any notice from any Governmental Authority or person that any
        such
        business has been or is being, conducted in violation of any law, ordinance
        or
        regulation, including without limitation any law, ordinance or regulation
        relating to occupational health and safety, except for possible violations
        which
        either individually or in the aggregate have not resulted and would not result
        in a SPHI Material Adverse Effect.

       

      3.10  Insurance

       

      SPHI
        currently has in place all policies of insurance which are reasonably required
        in connection with the operation of the business of SPHI as currently conducted
        in accordance with applicable laws and all agreements relating to
        SPHI.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Permits

       

      Immediately
        prior to the Effective Time, SPHI will hold all of the permits, licenses,
        certificates, consents, approvals, entitlements, plans, surveys, relocation
        plans, environmental impact reports and other authorizations of Governmental
        Authorities (“Permits”)
        required or necessary to own, operate, use and maintain its properties and
        conduct its operations as presently conducted, except for such Permits, the
        lack
        of which, individually or in the aggregate, would not have an SPHI Material
        Adverse Effect.

       

      3.11  Brokers

       

      Except
        for the finder’s fees payable to Blackpoint Capital Advisory, LLC, and The
        Watley Group, no investment banker is entitled to any brokerage, finder’s fee or
        other fee or commission payable by SPHI or USDCC in connection with the
        transactions contemplated by this Agreement based upon arrangements made
        by or
        on behalf of SPHI.

       

      ARTICLE
        4  

       

      

       

      REPRESENTATIONS
        AND WARRANTIES OF USDCC

       

      USDCC
        represents and warrants to SPHI as follows, except as disclosed in a disclosure
        letter delivered by USDCC to SPHI as of the date hereof (the “USDCC
        Disclosure Letter”):

       

      4.1  Organization
        and Qualification

       

      (a)  USDCC
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware, is duly qualified to do business as a foreign
        corporation and is in good standing in each jurisdiction in which the character
        of USDCC’s properties or the nature of its business makes such qualification
        necessary. USDCC has made available to SPHI a complete and correct copy of
        its
        certificate of incorporation and bylaws, each as amended to date, and USDCC’s
        certificate of incorporation and bylaws as so delivered are in full force
        and
        effect. USDCC is not in default in any respect in the performance, observation
        or fulfillment of any provision of its certificate of incorporation or
        bylaws.

       

      (b)  Merger
        Sub is a corporation duly organized, validly existing and in good standing
        under
        the laws of the State of Hawaii. USDCC has made available to SPHI a complete
        and
        correct copy of its articles of incorporation and bylaws, each as amended
        to
        date, and Merger Sub’s articles of incorporation and bylaws as so delivered are
        in full force and effect. Merger Sub is not in default in any respect in
        the
        performance, observation or fulfillment of any provision of its articles
        of
        incorporation or bylaws.

       

      (c)  Merger
        Sub is a direct, wholly-owned Subsidiary of USDCC, was formed solely for
        the
        purpose of engaging in the transactions contemplated by this Agreement and
        has
        not engaged in any business activities or conducted any operations of any
        kind,
        entered into any agreement or arrangement with any Person or entity, or
        incurred, directly or indirectly, any Liabilities, in each case, except in
        connection with its incorporation, the negotiation of this Agreement, the
        Merger
        and the transactions contemplated hereby.

       

      (d)  Capitalization

       

      The
        authorized capital stock of USDCC consists of 40,000,000 shares of authorized
        common stock, $0.0001 par value per share (the “USDCC
        Common Stock”),
        and
        20,000,000 shares of Preferred Stock, par value $0.0001 per share (“USDCC
        Preferred Stock”).
        As of
        the date of this Agreement, USDCC has issued and outstanding 3,675,000 shares
        of
        USDCC Common Stock and is in the process of offering up to 35 units, each
        unit
        consisting of a $100,000 face amount senior subordinated convertible note
        (convertible into USDCC Common Stock at $1 per share) and 50,000 shares of
        USDCC
        Common Stock. If all of the Units are sold there would be a total of 8,925,000
        share outstanding on a fully diluted basis. The authorized capital stock
        of
        Merger Sub consists of 1,000 shares of Merger Sub Common Stock, all of which
        shares are outstanding and owned, of record and beneficially, by USDCC. There
        are no other outstanding subscriptions, options, rights, warrants, convertible
        securities or other agreements or commitments obligating USDCC or Merger
        Sub to
        issue, transfer, sell, redeem, repurchase or otherwise sell, issue or acquire
        any shares of Merger Sub Common Stock. All outstanding shares of USDCC Common
        Stock are validly issued, fully paid and non-assessable, and free of preemptive
        rights.

       

      4.2  Authority

       

      (a)  Each
        of
        USDCC and Merger Sub has full corporate power and authority to execute and
        deliver this Agreement and to consummate the transactions contemplated hereby.
        The execution, delivery and performance of this Agreement and the consummation
        of the transactions contemplated hereby have been duly and validly authorized
        by
        the respective board of directors of USDCC and Merger Sub, and no other
        corporate proceedings on the part of USDCC and Merger Sub are necessary to
        authorize this Agreement or to consummate the transactions contemplated hereby.
        This Agreement has been duly and validly executed and delivered by USDCC
        and
        Merger Sub, and, assuming the due authorization, execution and delivery hereof
        by the other parties hereto, constitutes the legal, valid, and binding
        obligations of USDCC and Merger Sub enforceable against USDCC or Merger Sub,
        as
        applicable, in accordance with its terms, except for the Enforceability
        Exception.

       

      (b)  The
        Merger Shares have been duly and validly authorized for issuance pursuant
        to the
        Merger and, when issued at the Closing, will be validly issued, fully paid
        and
        non-assessable and free of any preemptive right. 

       

      4.3  Consents
        and Approvals; No Violation

       

      The
        execution and delivery of this Agreement, the consummation of the transactions
        contemplated hereby and the performance by each of USDCC and Merger Sub of
        their
        respective obligations hereunder will not:

       

      (a)  conflict
        with any provision of the respective certificate or articles of incorporation
        or
        bylaws of USDCC or Merger Sub;

       

      (b)  require
        any consent, waiver, approval, order, authorization or permit of, or
        registration, filing with or notification to, (i) any Governmental Authority,
        except for applicable requirements of the Securities Act, the Exchange Act,
        state securities or blue sky laws and

       

      (c)  Customary
        Post-Closing Consents or (ii) any third party other than a Governmental
        Authority, other than such non-Governmental Authority third party consents,
        waivers, approvals, orders, authorizations and permits that would not (x)
        materially impair the ability of USDCC or any of its Subsidiaries to perform
        its
        obligations under this Agreement or (y) prevent the consummation of any of
        the
        transactions contemplated by this Agreement;

       

      (d)  result
        in
        any violation of or the breach of or constitute a default (with notice or
        lapse
        of time or both) under, or give rise to any right of termination, cancellation
        or acceleration or guaranteed payments or a loss of a material benefit under,
        any of the terms, conditions or provisions of any note, lease, mortgage,
        license, agreement or other instrument or obligation to which USDCC or any
        of
        its Subsidiaries is a party or by which USDCC or any of its Subsidiaries
        or any
        of their respective properties or assets may be bound, except for such
        violations, breaches, defaults, or rights of termination, cancellation or
        acceleration, or losses as to which requisite waivers or consents have been
        obtained or which, individually or in the aggregate, would not (i) materially
        impair the ability of USDCC or any of its Subsidiaries to perform its
        obligations under this Agreement or (ii) prevent the consummation of any
        of the
        transactions contemplated by this Agreement;

       

      (e)  violate
        the provisions of any order, writ, injunction, judgment, decree, statute,
        rule
        or regulation applicable to USDCC or any of its Subsidiaries;

       

      (f)  result
        in
        the creation of any Lien upon any properties or assets or on any shares of
        capital stock of USDCC or its Subsidiaries under any agreement or instrument
        to
        which USDCC or any of its Subsidiaries is a party or by which USDCC or any
        of
        its Subsidiaries or any of their properties or assets is bound; or

       

      (g)  result
        in
        any holder of any securities of USDCC or any of its Subsidiaries being entitled
        to appraisal, dissenters’ or similar rights.

       

      

       

      

       

      4.4  Litigation

       

      There
        is
        no material suit, claim, action, proceeding or investigation pending or,
        to its
        knowledge, threatened against or directly affecting USDCC, or any of the
        directors or officers of USDCC in their capacity as such. Neither USDCC nor
        any
        officer, director or employee of USDCC has been permanently or temporarily
        enjoined by any order, judgment or decree of any court or any other Governmental
        Authority from engaging in or continuing any conduct or practice in connection
        with the business, assets or properties of USDCC, nor, to its knowledge,
        is
        USDCC or any officer, director or employee of USDCC or under investigation
        by
        any Governmental Authority. There is not in existence any order, judgment
        or
        decree of any court or other tribunal or other agency enjoining or requiring
        USDCC to take any action of any kind with respect to its business, assets
        or
        properties.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Employee
        Benefit Plans

       

      Neither
        USDCC nor any trade or business, whether or not incorporated, which together
        with USDCC would be deemed a “single employee” within the meaning of Section
        414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended, or Section
        4001(b)(1) of ERISA has, or on or before the Closing will have, sponsored,
        maintained or contributed to any employee benefits, plan or arrangement
        (including, but not limited to, any plan described in Section 3(3) of ERISA)
        written six years prior to the Effective Time.

       

      4.5  Compliance
        with Applicable Laws

       

      USDCC
        holds all Permits, if any, necessary for the lawful conduct of its businesses,
        as now conducted, and such businesses are not being, and USDCC has not received
        any notice from any Governmental Authority or Person that any such business
        has
        been or is being, conducted in violation of any law, ordinance or regulation,
        including without limitation any law, ordinance or regulation relating to
        occupational health and safety

       

      4.6  Insurance

       

      USDCC
        and
        its Subsidiaries currently have in place the policies of insurance described
        in
Schedule
        5.13
        of the
        USDCC Disclosure Letter. 

       

      4.7  Employees

       

      Schedule
        5.14
        of the
        USDCC Disclosure letter sets forth a true and complete list of all directors,
        officers, and other employees of USDCC.

       

      4.8  Contracts

       

      As
        of the
        Closing Date, USDCC will not be party to any material contract, lease,
        indenture, agreement, arrangement or understanding other than this Agreement
        and
        the other agreements provided for or contemplated hereby.

       

      4.9  Required
        Stockholder Vote or Consent

       

      No
        vote
        or consent of the holders of any class or series of USDCC Stock is or will
        be
        necessary to consummate the Merger and the other transactions contemplated
        by
        this Agreement.

       

      4.10  Brokers

       

      Except
        for the finder’s fees payable to Blackpoint Capital Advisory, LLC, and The
        Watley Group, no broker, finder or investment banker is entitled to any
        brokerage, finder’s fee or other fee or commission payable by USDCC or any of
        its Subsidiaries or the Surviving Corporation in connection with the
        transactions contemplated by this Agreement based upon arrangements made
        by or
        on behalf of USDCC or any of its Subsidiaries.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Issuance
        of the Securities

       

      Upon
        the
        Effective Time, the USDCC Preferred Stock issued or issuable pursuant to
        the
        Merger will be duly authorized and validly issued, fully paid and
        non-assessable, free and clear of all Liens other than restrictions on transfer
        provided for or referred to in this Agreement. Upon the Effective Time, USDCC
        shall have duly reserved out of the authorized but unissued shares of USDCC
        Common Stock such number of shares of USDCC Common Stock as are issuable
        upon
        conversion and exercise, in full, of the USDCC Preferred Stock.

       

      ARTICLE
        5  

       

      

       

      OMITTED

       

      

       

      .

       

      ARTICLE
        6  

       

      

       

      CONDUCT
        OF BUSINESS PENDING THE MERGER

       

      6.1  Conduct
        of Business by the USDCC and SPHI Pending the Merger

       

      From
        the
        date hereof until the Effective Time, unless USDCC and SPHI shall otherwise
        agree in writing, and expect as otherwise contemplated by this Agreement,
        USDCC
        and SPHI and their respective Subsidiaries shall conduct their business in
        the
        ordinary course consistent with past practice. Except as otherwise provided
        in
        this Agreement, and without limiting the generality of the foregoing, from
        the
        date hereof until the Effective Time, without the written consent of USDCC
        and
        SPHI, which consent shall not be unreasonably withheld:

       

      (a)  Neither
        USDCC nor SPHI will adopt or propose any change to their respective certificate
        or articles of incorporation or bylaws (other than an amendment to the articles
        of incorporation of USDCC to authorize the Merger Shares);

       

      (b)  Neither
        USDCC nor SPHI will (i) declare, set aside or pay any dividend or other
        distribution with respect to any shares of capital stock of the respective
        USDCC
        and SPHI, or (ii) repurchase, redeem or otherwise acquire any outstanding
        shares
        of capital stock or other securities of, or other ownership interests in,
        USDCC
        or SPHI, as the case may be;

       

      (c)  Neither
        USDCC nor SPHI will, nor permit any of its Subsidiaries to, merge or consolidate
        with any other person or acquire assets of any other person except in the
        ordinary course of business or pursuant to transactions among wholly-owned
        subsidiaries of USDCC or SPHI, as the case may be; 

       

      (d)  Neither
        USDCC nor SPHI will, nor permit any of its Subsidiaries to, sell, lease,
        license
        or otherwise surrender, relinquish or dispose of any material assets or
        properties except in the ordinary course of business;

       

      (e)  Except
        pursuant to the “debt exchange” agreements referred to below, neither USDCC nor
        SPHI will (i) issue any securities (whether through the issuance or granting
        of
        options, warrants, rights or otherwise, (ii) enter into any amendment of
        any
        term of any outstanding security of such company or of any of its Subsidiaries,
        (iii) incur any indebtedness, except trade debt in the ordinary course of
        business and debt pursuant to existing or previously disclosed contemplated
        credit facilities or arrangements, (iv) increase in any material respect
        compensation, bonus or other benefits payable to, or modify or amend any
        employment agreements or severance agreements with, any executive officer,
        or
        (v) enter into any settlement or consent with respect to any pending litigation,
        other than settlements in the ordinary course of business or on terms which
        are
        not otherwise materially adverse to such company and its Subsidiaries taken
        as a
        whole;

       

      (f)  USDCC
        and
        SPHI will not change any method of accounting or accounting practice by USDCC
        and SPHI or any of their Subsidiaries, except for any such change required
        by
        GAAP;

       

      (g)  Neither
        USDCC nor SPHI will, nor permit any of its Subsidiaries to, (i) take, or
        agree
        or commit to take, any action that would make any representation and warranty
        of
        the respective company hereunder inaccurate in any material respect at, or
        as of
        any time prior to, the Effective Time or (ii) omit, or agree or commit to
        omit,
        to take any action necessary or appropriate to prevent any such representation
        or warranty from being inaccurate in any material respect at any such time;
        and

       

      (h)  Neither
        USDCC nor SPHI will, nor permit any of its Subsidiaries to, agree or commit
        to
        do any of the foregoing.

       

      ARTICLE
        7  

       

      

       

      ADDITIONAL
        AGREEMENTS

       

      7.1  Expenses

       

      The
        parties shall bear their own expenses.

       

      7.2  Cooperation

       

      Subject
        to compliance with applicable law, from the date hereof until the Effective
        Time, each of the parties hereto shall confer on a regular and frequent basis
        with one or more representatives of the other parties to report operational
        matters of materiality and the general status of ongoing operations and shall
        promptly provide the other parties or their counsel with copies of all filings
        made by such party with any Governmental Authority in connection with this
        Agreement and the transactions contemplated hereby.

       

      7.3  Publicity

       

      Neither
        the parties hereto nor any of their respective affiliates shall issue or
        cause
        the publication of any press release or other announcement with respect to
        the
        Merger, this Agreement or the other transactions contemplated hereby without
        the
        prior consultation of the

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      other
        parties, except as may be required by law, and will use reasonable efforts
        to
        provide copies of such release or other announcement to the other parties
        hereto, and give due consideration to such comments as such other parties
        may
        have, prior to such release.

       

      7.4  Additional
        Actions

       

      Subject
        to the terms and conditions of this Agreement, each of the parties hereto
        agrees
        to use all reasonable efforts to take, or cause to be taken, all action and
        to
        do, or cause to be done, all things necessary, proper or advisable under
        applicable laws and regulations, or to remove any injunctions or other
        impediments or delays, to consummate and make effective the Merger and the
        other
        transactions contemplated by this Agreement.

       

      7.5  Filings

       

      Each
        party hereto shall make all filings required to be made by such party in
        connection herewith or desirable to achieve the purposes contemplated hereby,
        and shall cooperate as needed with respect to any such filing by any other
        party
        hereto.

       

      7.6  Consents

       

      Each
        party hereto shall use all reasonable efforts to obtain all consents necessary
        or advisable in connection with such party’s obligations hereunder.

       

      7.7  Notice
        of Certain Events

       

      Each
        party to this Agreement shall promptly as reasonably practicable notify the
        other parties hereto of:

       

      (a)  any
        notice or other communication from any Person alleging that the consent of
        such
        Person (or other Person) is or may be required in connection with the
        transactions contemplated by this Agreement;

       

      (b)  any
        notice or other communication from any Governmental Authority in connection
        with
        the transactions contemplated by this Agreement; or

       

      (c)  any
        actions, suits, claims, investigations or proceedings commenced or, to the
        best
        of such party’s knowledge, threatened against, relating to or involving or
        otherwise affecting such party or any of such party’s Subsidiaries which, if
        pending on the date of this Agreement, would have rendered untrue any
        representation contained in Article
        IV,
        V
        or
VI,
        or
        which relate to the consummation of the transactions contemplated by this
        Agreement.

       

      7.8  Resignations
        and Releases; Appointment of Directors and Officers

       

      (a)  Prior
        to
        the Closing Date, SPHI shall obtain from each of its directors, officers
        and
        employees a written resignation and release agreement, by which each such
        Person
        agrees to resign from SPHI effective as of the Closing Date and to release
        SPHI
        and its affiliates from any and all Liabilities.

       

      (b)  At
        or
        before the Closing Date, SPHI shall cause to be appointed as all of the
        directors and officers of SPHI, effective as of the effectiveness of the
        resignations referred to in subparagraph
        (a),
        above,
        the nominees of USDCC for appointment as such directors and
        officers.

       

      

       

      ARTICLE
        8  

       

      

       

      CONDITIONS
        TO CONSUMMATION OF THE MERGER

       

      8.1  Conditions
        to the Obligation of Each Party

       

      The
        respective obligations of each party to effect the Merger shall be subject
        to
        the fulfillment at or prior to the Effective Time of the following
        conditions:

       

      (a)  no
        action, suit or proceeding instituted by any Governmental Authority shall
        be
        pending and no statute, rule or regulation and no injunction, order, decree
        or
        judgment of any court or Governmental Authority of competent jurisdiction
        shall
        be in effect, in each case which would prohibit, restrain, enjoin or restrict
        the consummation of the Mergers; and

       

      (b)  USDCC
        and
        SPHI shall have obtained such permits, authorizations, consents, or approvals
        required to consummate the transactions contemplated hereby.

       

      8.2  Conditions
        to the Obligations of USDCC and Merger Sub

       

      The
        obligations of USDCC and Merger Sub to effect the Merger are subject to the
        satisfaction at or prior to the Effective Time of the following
        conditions:

       

      (a)  SPHI
        shall have performed in all material respects its obligations under this
        Agreement required to be performed by it at or prior to the Effective Time,
        and
        the representations and warranties of SPHI contained in this Agreement, to
        the
        extent qualified with respect to materiality shall be true and correct in
        all
        respects, and to the extent not so qualified shall be true and correct in
        all
        material respects, in each case, as of the date of this Agreement and at
        and as
        of the Effective Time as if made at and as of such time, and USDCC shall
        have
        received a certificate of the Chief Executive Officer of SPHI as to the
        satisfaction of this condition;

       

      (b)  all
        proceedings to be taken by SPHI in connection with the transactions contemplated
        by this Agreement and all documents, instruments and certificates to be
        delivered by SPHI in connection with the transactions contemplated by this
        Agreement shall be reasonably satisfactory in form and substance to USDCC;
        

       

      (c)  the
“debt
        exchange” agreements in the forms attached hereto shall have been executed;
        and

       

      (d)  SPHI
        shall have received and delivered to USDCC the resignations and release
        agreements from each of its directors, officers and other employees, and
        the
        nominees of SPHI

       

      (e)  shall
        have been duly appointed as all of the directors and officers of USDCC, all
        as
        contemplated in Section
        8.8.

       

      8.3  Conditions
        to the Obligations of SPHI

       

      The
        obligation of SPHI to effect the Merger is subject to the satisfaction at
        or
        prior to the Effective Time of the following conditions: 

       

      (a)  USDCC
        shall have performed in all material respects its obligations under this
        Agreement required to be performed by it at or prior to the Effective Time
        and
        the representations and warranties of USDCC contained in this Agreement,
        to the
        extent qualified with respect to materiality shall be true and correct in
        all
        respects, and to the extent not so qualified shall be true and correct in
        all
        material respects, in each case as of the date of this Agreement and at and
        as
        of the Effective Time as if made at and as of such time, and SPHI shall have
        received a certificate of the Chief Executive Officer of USDCC as to the
        satisfaction of this condition; and

       

      (b)  all
        proceedings to be taken by USDCC and Merger Sub, as the case may be, in
        connection with the transactions contemplated by this Agreement and all
        documents, instruments and certificates to be delivered by USDCC and Merger
        Sub,
        as the case may be, in connection with the transactions contemplated by this
        Agreement shall be reasonably satisfactory in form and substance to
        SPHI.

       

      ARTICLE
        9  

       

      

       

      SURVIVAL
        

       

      9.1  Survival
        of Representations and Warranties

       

      The
        representations and warranties of the parties contained in this Agreement
        shall
        survive the Effective Time.

       

      ARTICLE
        10  

       

      

       

      TERMINATION,
        AMENDMENT AND WAIVER

       

      10.1  Termination

       

      This
        Agreement may be terminated at any time prior to the Effective
        Time:

       

      (a)  by
        the
        mutual written consent of USDCC and SPHI;

       

      (b)  by
        either
        USDCC or SPHI if the Effective Time shall not have occurred on or before
        August
        31, 2005 (the “Termination
        Date”);
        provided, that the party seeking to terminate this Agreement pursuant to
        this
subparagraph
        (b)
        shall
        not have breached in any material respect its obligations under this Agreement
        in any manner that shall have proximately contributed to the failure to
        consummate the Mergers on or before the Termination Date;

       

      (c)  by
        USDCC
        or SPHI if there has been a material breach by one of the other parties of
        any
        representation, warranty, covenant or agreement set forth in this Agreement
        which breach (if susceptible to cure) has not been cured in all material
        respects within 20 business days following receipt by each party of notice
        of
        such breach; or

       

      (d)  by
        USDCC
        or SPHI if there shall be any applicable law, rule or regulation that makes
        consummation of the Merger illegal or if any judgment, injunction, order
        or
        decree of a court or other Governmental Authority of competent jurisdiction
        shall restrain or prohibit the consummation of the Merger, and such judgment,
        injunction, order or decree shall become final and nonappealable.

       

      10.2  Effect
        of Termination

       

      In
        the
        event of termination of the Agreement and the abandonment of the Merger pursuant
        to this Article
        XII,
        all
        obligations of the parties shall terminate, except the obligations of the
        parties pursuant to this Section
        12.2
        and
        except for the provisions of Sections
        8.1
        and
8.3;
        provided, however, that nothing herein shall relieve any party from liability
        for any breach of this Agreement.

       

      ARTICLE
        11  

       

      

       

      MISCELLANEOUS

       

      11.1  Notices

       

      All
        notices or communications hereunder shall be in writing (including facsimile
        or
        similar writing) addressed as follows:

       

      
        	
                To
                  USDCC or Merger Sub:

                 

              	
                35-325
                  Date Palm Drive ste. 211

                Cathedral
                  City, CA. 92234

              
	 	
                1930
                  Auiki Street

                Honolulu,
                  HI. 96819

              
	
                To
                  SPHI:

              	 
	 	 

      

      Any
        such
        notice or communication shall be deemed given (i) when made, if made by hand
        delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
        business day after being deposited with a next-day courier, postage prepaid,
        or
        (iii) three business days after being sent certified or registered mail,
        return
        receipt requested, postage prepaid, in each case addressed as above (or to
        such
        other address as such party may designate in writing from time to
        time).

       

      11.2  Separability

       

      If
        any
        provision of this Agreement shall be declared to be invalid or unenforceable,
        in
        whole or in part, such invalidity or unenforceability shall not affect the
        remaining provisions hereof which shall remain in full force and
        effect.

       

      11.3  Assignment

       

      This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective heirs, legal representatives, successors, and assigns;
        provided, however, that neither this Agreement nor any rights hereunder shall
        be
        assignable or otherwise subject to hypothecation and any assignment in violation
        hereof shall be null and void.

       

      11.4  Interpretation

       

      The
        headings contained in this Agreement are for reference purposes only and
        shall
        not affect in any way the meaning or interpretation of this
        Agreement.

       

      11.5  Counterparts

       

      This
        Agreement may be executed in one or more counterparts, all of which shall
        be
        considered one and the same Agreement, and shall become effective when one
        or
        more such counterparts have been signed by each of the parties and delivered
        to
        each party.

       

      11.6  Entire
        Agreement

       

      This
        Agreement represents the entire agreement of the parties with respect to
        the
        subject matter hereof and shall supersede any and all previous contracts,
        arrangements or understandings between the parties hereto with respect to
        the
        subject matter hereof.

       

      11.7  Governing
        Law

       

      This
        Agreement shall be construed, interpreted, and governed in accordance with
        the
        laws of Hawaii, without reference to rules relating to conflicts of
        law.

       

      11.8  Attorneys’
        Fees

       

      If
        any
        action at law or equity, including an action for declaratory relief, is brought
        to enforce or interpret any provision of this Agreement, the prevailing party
        shall be entitled to recover reasonable attorneys’ fees and expenses from the
        other party, which fees and expenses shall be in addition to any other relief,
        which may be awarded.

       

      11.9  No
        Third Party Beneficiaries

       

      No
        Person
        or entity other than the parties hereto is an intended beneficiary of this
        Agreement or any portion hereof.

       

      11.10  Amendments
        and Supplements

      

        Prior
          to
          the Effective Time, this Agreement may be amended or supplemented in writing
          by
          USDCC and SPHI with respect to any of the terms contained in this Agreement,
          except as otherwise provided by law.

      

       

      11.11  Extensions,
        Waivers, Etc.

       

      At
        any
        time prior to the Effective Time, either party may:

       

      (a)  extend
        the time for the performance of any of the obligations or acts of the other
        party;

       

      (b)  waive
        any
        inaccuracies in the representations and warranties of the other party contained
        herein or in any document delivered pursuant hereto; or

       

      (c)  waive
        compliance with any of the agreements or conditions of the other party contained
        herein.

       

      Notwithstanding
        the foregoing, no failure or delay by any party hereto in exercising any
        right
        hereunder shall operate as a waiver thereof nor shall any single or partial
        exercise thereof preclude any other or further exercise thereof or the exercise
        of any other right hereunder. Any agreement on the part of a party hereto
        to any
        such extension or waiver shall be valid only if set forth in an instrument
        in
        writing signed on behalf of such party.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
        of the
        day and year first above written.

       

      
        	 	
                US
                  Dry Cleaning Corporation

                 

                By:
                  /s/
                  Mike
                  Drace

                Name:
                  Mike Drace

                Title:
                  CEO

                 

                /s/
                  Robert Y. Lee

                Robert
                  Y. Lee

                Chairman

              
	 	
                USDCC
                  MERGER SUB, INC.

                 

                By:
                  /s/
                  Michael Drace

                Name:
                  Michael Drace

                Title:
                  CEO

              
	 	
                STEAM
                  PRESS HOLDINGS, INC..

                 

                By: /s/
                  Michael Drace

                Name:
                  Michael Drace

                Title:
                  PresidentExhibit 10.3 CVR

    

      Exhibit
        10.3

       

       

      AGREEMENT
        AND PLAN OF MERGER

       

      by
        and among

       

      US
        DRY CLEANING CORPORATION

       

      USDCC
        MERGER SUB, INC.

       

      and

       

      Coachella
        Valley Retail, LLC.

       

      

      Dated
        as of August 8, 2005

       

      

      AGREEMENT
        AND PLAN OF MERGER

       

      THIS
        AGREEMENT AND PLAN OF MERGER (this “Agreement”),
        dated
        as of August 8, 2005, is made and entered into by and among US DRY CLEANING
        CORPORATION (“USDCC”), a Delaware corporation (“USDCC”), USDCC MERGER SUB
        INC.(“MERGER SUB”), a California corporation and direct, wholly-owned subsidiary
        of USDCC , and Coachella Valley Retail, LLC, a California Limited Liability
        Company (“CVR”). 

      

       

      RECITALS:

       

      WHEREAS,
        the respective boards of directors of USDCC, Merger Sub and CVR deem it
        advisable and in the best interests of their respective stockholders that
        Merger
        Sub merge with and into CVR (the “Merger”)
        upon
        the terms and subject to the conditions set forth herein; and 

       

      WHEREAS
        the respective boards of directors of USDCC, Merger Sub and CVR have approved
        the Merger; and

       

      WHEREAS,
        as in inducement to enter into this Agreement and to consummate the Merger
        the
        parties hereto are willing to make certain representations and warranties
        as set
        forth herein;

       

      WHEREAS,
        as a further inducement to CVR and the CVR members to enter into this Agreement
        and to consummate the Merger,

       

      NOW,
        THEREFORE, in consideration of the premises and the representations, warranties
        and agreements contained herein, the parties hereto agree as
        follows:

       

      

       

      The
        Merger

       

      Upon
        the
        terms and subject to the conditions hereof, at the Effective Time (as defined
        in
Section 1.1),
        CVR
        shall merge with and into Merger Sub and the separate existence of CVR shall
        thereupon cease, and Merger Sub shall be the surviving corporation in the
        Merger
        (as such, the “Surviving
        Corporation”).
        The
        Merger shall have the effects set forth in this Agreement.

       

      1.1 Effective
        Time of the Merger

       

      The
        Merger shall become effective upon execution of this Merger agreement.
        Immediately after the effective date the company will file with the respective
        Secretary of State of the State of California the agreement of merger (the
        “Agreement
        of Merger”).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        2

       

      THE
        SURVIVING CORPORATION

       

      2.1 Articles
        of Incorporation 

       

      The
        articles of incorporation of Merger Sub in effect immediately prior to the
        Effective Time shall be the articles of incorporation of the Surviving
        Corporation at and after the Effective Time, and thereafter may be amended
        in
        accordance with the terms thereof.

       

       

      2.2 Bylaws

       

      The
        bylaws of Merger Sub in effect immediately prior to the Effective Time shall
        be
        the bylaws of the Surviving Corporation at and after the Effective Time,
        and
        thereafter may be amended in accordance with their terms and as provided
        by the
        articles of incorporation of the Surviving Corporation.

       

      2.3 Directors
        and Officers 

       

      The
        directors and officers (Managing Members) of CVR immediately prior to the
        Effective Time shall resign. At and after the Effective Time, the directors
        and
        officers of the Merger Sub shall be the only directors and officers of the
        Surviving Corporation until their respective successors have been duly elected
        or appointed and qualified or until their earlier death, resignation, or
        removal
        in accordance with the articles of incorporation and bylaws of the Surviving
        Corporation.

       

      ARTICLE
        3

       

      

       

      CONVERSION
        OF SHARES

       

      3.1 Conversion
        of Capital Stock

       

      As
        of the
        Effective Time, by virtue of the Merger and without any action on the part
        of
        the holders of any capital stock/membership interest or other securities
        described below:

       

      (a) The
        members of CVR (“CVR Membership Interest”) immediately prior to the Effective
        Time shall be converted into and exchanged for the right to receive 2,490,000
        shares of fully paid and nonassessable Common Stock of USDCC, par value of
        $.0001. The CVR Membership Interest shall automatically be canceled and retired,
        and the membership interest in CVR immediately prior to the Effective Time
        shall
        cease to have any rights with respect thereto, except the right to receive
        the
        2,490,000 shares of USDCC common stock on a pro-rata basis consistent with
        their
        percentage of membership interest in CVR. Exhibit 1 is a complete membership
        interest listing of all the members of CVR, and the corresponding number
        of

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      USDCC
        shares of Common Stock each CVR member will be entitled to receive upon the
        consummation of the merger. 

       

      (b) Each
        share of the common stock, no par value, of Merger Sub (the “Merger
        Sub Common Stock”)
        issued
        and outstanding immediately prior to the Effective Time shall automatically
        be
        converted into the same number of shares of common stock of the Surviving
        Corporation, and shall, immediately after the Merger, be the only shares
        of
        capital stock of the Surviving Corporation issued and outstanding.

       

      (c) Each
        share of each class and series of USDCC Common Stock issued and outstanding
        immediately prior to the Effective Time shall remain outstanding and shall
        not
        be affected by the Merger.

       

      (d) The
        Merger Shares issued by Merger Sub upon the Merger with CVR in accordance
        with
        the terms hereof shall be deemed to have been issued in full satisfaction
        of all
        rights pertaining to such CVR Membership Interest.

       

      3.2 Surrender
        and Payment

       

      (a) At
        the
        Closing, in exchange for all outstanding membership interest (100%) the CVR
        members shall receive a total of 2,490, 000 shares of USDCC Common stock
        to be
        distributed in amounts according to Exhibit 1.. 

       

      (b) For
        purposes of this Agreement, “Person”
means
        an individual, a corporation, a limited-liability company, a partnership,
        an
        association, a trust or any other entity or organization, including a
        governmental or political subdivision or any agency or instrumentality
        thereof.

       

      .

       

      3.3 No
        Fractional Shares

       

      No
        fractional share of USDCC Common Stock shall be issued in the
        Merger.

       

      3.4 Closing

       

      (a) The
        closing of the transactions contemplated by this Agreement (the “Closing”)
        shall
        take place at the offices of CVR, 35-325 Date Palm Drive ste.211 Cathedral
        City,
        CA. following the date hereof as of which all of the conditions set forth
        in
Article X
        hereof
        shall have been satisfied or waived, or at such other date and time as
        USDCC/Merger Sub and CVR shall otherwise agree in writing (either such date,
        the
“Closing
        Date”).

       

      (b) Following
        the Closing (as soon as practical), (i) Merger Sub and CVR shall deliver
        the various certificates, instruments, and documents referred to in subparagraph (c),
        below,
        (ii)CVR shall deliver the various certificates, instruments, and documents
        referred to in subparagraph (d),
        below,
        (iii) 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Merger
        Sub and CVR shall execute and file the Agreement of Merger with the Secretary
        of
        State of the State of Hawaii, and (v) the parties hereto shall undertake
        any other actions provided for in this Section 3.4
        in
        accordance with the terms of this Agreement.

       

      (c) Following
        the Closing (and as soon as practical), USDCC or Merger Sub, as applicable,
        shall deliver the following:

       

      (i) USDCC
        shall issue and deliver the Merger Shares as provided in Section  3.2(a);
        and

       

      (ii) USDCC
        and
        Merger Sub shall furnish CVR with:

       

      (A) a
        certificate executed by the Secretary or an Assistant Secretary of each of
        USDCC
        and Merger Sub certifying as of the date of the Closing Date (1) a true and
        complete copy of the certificate of incorporation or articles of incorporation,
        as the case may be, of USDCC and Merger Sub certified as of a recent date
        by the
        Secretary of the State of the state of its incorporation or organization,
        and a
        true and complete copy of the respective bylaws of USDCC and Merger Sub,
        as
        certified by the Secretary or an Assistant Secretary of USDCC and Merger
        Sub, as
        applicable, and (2) a true and complete copy of the resolutions of the
        respective boards of directors of USDCC and Merger Sub authorizing the
        execution, delivery, and performance of this Agreement by USDCC and Merger
        Sub
        and the consummation of the transactions contemplated hereby;

       

      (B) a
        certificate of the Secretary of State of the State of Delaware or other state
        of
        incorporation or organization, as applicable, certifying the good standing
        of
        USDCC, Merger Sub, dated within 10 days of the Closing Date; and

       

      (C) the
        other
        documents and instruments to be delivered by USDCC or Merger Sub on or before
        the Closing as called for herein.

       

      (d) Following
        the Closing (as soon as practical), CVR shall furnish USDCC and Merger Sub
        with:

       

      (i) a
        certificate executed by the Secretary or an Assistant Secretary of CVR
        certifying as of the date of the Closing Date (1) a true and complete copy
        of the Operating Agreement as defined in Section 4.1(c)(ii), certified as
        of a
        recent date by the Secretary of State of the State of California., and a
        true
        and complete copy of the Articles of Organization certified by the Secretary
        or
        an Assistant Secretary of CVR, and (2) a true and complete copy of the
        resolutions of the board of directors of CVR authorizing the execution,
        delivery, and performance of this Agreement and the consummation of the
        transactions contemplated hereby;

       

      (ii) a
        certificate of the Secretary of State of the State of California certifying
        the
        good standing of CVR; and

       

      (iii) such
        other documents and instruments to be delivered by CVR as called for
        herein.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e) At
        the
        Closing, CVR shall deliver to USDCC the resignation and release agreements
        provided for in Section 8.8.

       

      

       

      ARTICLE
        4

       

      

       

      REPRESENTATIONS
        AND WARRANTIES OF SPHI

       

      CVR
        represents and warrants to USDCC that the statements contained in this
Article IV
        are true
        and correct, except as disclosed in the disclosure letter delivered by CVR
        to
        USDCC as of the date hereof (the “CVR
        Disclosure Letter”):

       

      4.1 Organization
        and Qualification

       

      (a) CVR
        is a
        Limited Liability Company duly organized, validly existing and in good standing
        under the laws of the State of California, is duly qualified to do business
        as a
        foreign corporation and is in good standing in each jurisdiction in which
        the
        character of CVR’s properties or the nature of its business makes such
        qualification necessary, except in jurisdictions, if any, where the failure
        to
        be so qualified would not result in a CVR Material Adverse Effect (as defined
        in
subparagraph (c),
        below). CVR has all requisite corporate or other power and authority to own,
        use
        or lease its properties and to carry on its business as it is now being
        conducted. CVR has made available to USDCC a complete and correct copy of
        its
        articles of organization and operating agreement. CVR is not in default in
        any
        material respect in the performance, observation or fulfillment of any provision
        of its articles of organization, or its operating agreement.

       

      (b) CVR
        does
        not have any subsidiaries.

       

      4.2 Capitalization

       

      As
        of the
        Closing, there will be no outstanding subscriptions, options, rights, warrants,
        convertible securities, stock appreciation rights, phantom equity or other
        agreements or commitments obligating CVR to issue, transfer, sell, redeem,
        repurchase or otherwise sell, issue or acquire any membership interests of
        CVR.

       

      4.3 Authority

       

      CVR
        has
        full corporate power and authority to execute and deliver this Agreement
        and to
        consummate the transactions contemplated hereby. The execution, delivery
        and
        performance of this Agreement and the consummation of the transaction
        contemplated hereby have been duly and validly authorized by CVRs board of
        directors and the CVRs managing members. This Agreement has been duly and
        validly executed and delivered by CVR and, assuming the due authorization,
        execution and delivery hereof and thereof by the other parties hereto,
        constitutes the legal, valid and binding obligation of CVR enforceable against
        CVR in accordance with its terms, except as such enforceability may be subject
        to the effects of bankruptcy, insolvency, reorganization, moratorium and
        other
        laws relating to or affecting the rights of creditors and of general principles
        of equity (the “Enforceability
        Exception”).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.4 Consents
        and Approvals; No Violation

       

      The
        execution and delivery of this Agreement, the consummation of the transactions
        contemplated hereby and the performance by CVR of its obligations hereunder
        will
        not:

       

      (a) conflict
        with any provision of CVR’s articles of organization or operating
        agreement;

       

      (b) result
        in
        any violation of or the breach of or constitute a default (with notice or
        lapse
        of time or both) under, or give rise to any right of termination, cancellation
        or acceleration or guaranteed payments or a loss of a material benefit under,
        any of the terms, conditions or provisions of any note, lease, mortgage,
        license, agreement or other instrument or obligation to which CVR is a party
        or
        by which CVR or any of its properties or assets may be bound. 

       

      4.5 Required
        Consent

       

      The
        only
        approval that will be necessary to consummate the Merger and the other
        transactions contemplated by this Agreement is the approval of this Agreement
        by
        the CVR Members, which has been duly obtained as evidenced by their execution
        of
        this Agreement.

       

      4.6 Financial
        Statements

       

      USDCC
        has
        inspected the financial statements of CVR and is satisfied with the information
        contained within.

       

      4.7 Absence
        of Certain Changes

       

      Except
        as
        contemplated by this Agreement, (a) CVR has conducted its business in all
        material respects in the ordinary course of business. 

       

      CVR
        has
        filed all material tax returns or extensions required by applicable law to
        be
        filed by it and has paid or accrued all taxes shown as due thereon. CVR has
        no
        knowledge of a material tax deficiency which has been asserted or threatened
        against CVR.

       

      4.8 Litigation

       

      Except
        for matters that would not have a CVR Material Adverse Effect, there is no
        material suit, claim, action, proceeding or investigation pending or, to
        CVR’s
        knowledge, threatened against or directly affecting CVR or any of the directors
        or officers of CVR in their capacity as such. Neither CVR nor, to its knowledge,
        any officer, director or employee of CVR, has been permanently or temporarily
        enjoined by any order, judgment or decree of any court or any other Governmental
        Authority from engaging in or continuing any conduct or practice in connection
        with the business, assets or properties of CVR, nor, to the knowledge of
        CVR, is
        CVR or any officer, director or employee of CVR under investigation by any
        Governmental Authority. There is not in existence any order, judgment or
        decree
        of any court or other tribunal or other agency enjoining or requiring CVR
        to
        take any action of any kind with respect to its business, assets or
        properties.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.9 Compliance
        with Applicable Laws

       

      CVR
        holds
        all material approvals, licenses, permits, registrations and similar type
        authorizations necessary for the lawful conduct of its business, as now
        conducted, and, to CVR’s knowledge, such business is not being, and CVR has not
        received any notice from any Governmental Authority or person that any such
        business has been or is being, conducted in violation of any law, ordinance
        or
        regulation, including without limitation any law, ordinance or regulation
        relating to occupational health and safety, except for possible violations
        which
        either individually or in the aggregate have not resulted and would not result
        in a CVR Material Adverse Effect.

       

      4.10 Insurance

       

      CVR
        currently has in place all policies of insurance which are reasonably required
        in connection with the operation of the business of CVR as currently conducted
        in accordance with applicable laws and all agreements relating to
        CVR.

       

      4.11 Permits

       

      Immediately
        prior to the Effective Time, CVR will hold all of the permits, licenses,
        certificates, consents, approvals, entitlements, plans, surveys, relocation
        plans, environmental impact reports and other authorizations of Governmental
        Authorities (“Permits”)
        required or necessary to own, operate, use and maintain its properties and
        conduct its operations as presently conducted, except for such Permits, the
        lack
        of which, individually or in the aggregate, would not have a CVR Material
        Adverse Effect.

       

      4.12 Brokers

       

      There
        are
        no fees owed as a result of this transaction/merger.

       

      ARTICLE
        5

       

      

       

      REPRESENTATIONS
        AND WARRANTIES OF USDCC

       

      USDCC
        represents and warrants to CVR as follows, except as disclosed in a disclosure
        letter delivered by USDCC to CVR as of the date hereof (the “USDCC
        Disclosure Letter”):

       

      5.1 Organization
        and Qualification

       

      (a) USDCC
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware, is duly qualified to do business as a foreign
        corporation and is in good standing in each jurisdiction in which the character
        of USDCC’s properties or the nature of its business makes such qualification
        necessary. USDCC has made available to the Company a complete and correct
        copy
        of its certificate of incorporation and bylaws, each as amended to date,
        and
        USDCC’s certificate of incorporation and bylaws as so delivered are in full
        force and effect. USDCC is not in default in any respect in the performance,
        observation or fulfillment of any provision of its certificate of incorporation
        or bylaws.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b) Merger
        Sub is a corporation duly organized, validly existing and in good standing
        under
        the laws of the State of California. USDCC has made available to the Company
        a
        complete and correct copy of its articles of incorporation and bylaws, each
        as
        amended to date, and Merger Sub’s articles of incorporation and bylaws as so
        delivered are in full force and effect. Merger Sub is not in default in any
        respect in the performance, observation or fulfillment of any provision of
        its
        articles of incorporation or bylaws.

       

      (c) Merger
        Sub is a direct, wholly-owned Subsidiary of USDCC, was formed solely for
        the
        purpose of engaging in the transactions contemplated by this Agreement and
        has
        not engaged in any business activities or conducted any operations of any
        kind,
        entered into any agreement or arrangement with any Person or entity, or
        incurred, directly or indirectly, any Liabilities, in each case, except in
        connection with its incorporation, the negotiation of this Agreement, the
        Merger
        and the transactions contemplated hereby.

       

      5.2 Capitalization

       

      The
        authorized capital stock of USDCC consists of 40,000,000 shares of authorized
        common stock, $0.0001 par value per share (the “USDCC
        Common Stock”),
        and
        20,000,000 shares of Preferred Stock, par value of $0.0001 per share
        (“USDCC
        Preferred Stock”).
        As of
        the date of this Agreement, USDCC has issued and outstanding 3,675,000 shares
        of
        USDCC Common Stock and is in the process of offering 35 units, each unit
        consisting of a $100,000 face amount senior subordinated convertible note
        (convertible into USDCC Common Stock at $1 per share and 50,000 shares of
        USDCC
        Common Stock). If all of the Units are sold there would be a total of 8,925,000
        shares outstanding on a fully diluted basis. The authorized capital stock
        of
        Merger Sub consists of 5,000 shares of Merger Sub Common Stock, all of which
        shares are outstanding and owned, of record and beneficially, by USDCC. There
        are no other outstanding subscriptions, options, rights, warrants, convertible
        securities or other agreements or commitments obligating USDCC or Merger
        Sub to
        issue, transfer, sell, redeem, repurchase or otherwise sell, issue or acquire
        any shares of Merger Sub Common Stock. All outstanding shares of USDCC Common
        Stock are validly issued, fully paid and non-assessable, and free of preemptive
        rights.

       

      5.3 Authority

       

      (a) Each
        of
        USDCC and Merger Sub has full corporate power and authority to execute and
        deliver this Agreement and to consummate the transactions contemplated hereby.
        The execution, delivery and performance of this Agreement and the consummation
        of the transactions contemplated hereby have been duly and validly authorized
        by
        the respective board of directors of USDCC and Merger Sub, and no other
        corporate proceedings on the part of USDCC and Merger Sub are necessary to
        authorize this Agreement or to consummate the transactions contemplated hereby.
        This Agreement has been duly and validly executed and delivered by USDCC
        and
        Merger Sub, and, assuming the due authorization, execution and delivery hereof
        by the other parties hereto, constitutes the legal, valid, and binding
        obligations of USDCC and Merger Sub enforceable against USDCC or Merger Sub,
        as
        applicable, in accordance with its terms, except for the Enforceability
        Exception.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b) The
        Merger Shares have been duly and validly authorized for issuance pursuant
        to the
        Merger and, when issued at the Closing, will be validly issued, fully paid
        and
        non-assessable and free of any preemptive right. The Merger Stock Rights
        have
        been duly authorized for issuance pursuant to the Merger, and when issued
        at the
        Closing will be validly issued and free of any preemptive right.

       

      5.4 Consents
        and Approvals; No Violation

       

      The
        execution and delivery of this Agreement, the consummation of the transactions
        contemplated hereby and the performance by each of USDCC and Merger Sub of
        their
        respective obligations hereunder will not:

       

      (a) conflict
        with any provision of the respective certificate or articles of incorporation
        or
        bylaws of USDCC or Merger Sub;

       

      (b) require
        any consent, waiver, approval, order, authorization or permit of, or
        registration, filing with or notification to, (i) any Governmental
        Authority, except for applicable requirements of the Securities Act, the
        Exchange Act, state securities or blue sky laws and Customary Post-Closing
        Consents or (ii) any third party other than a Governmental Authority, other
        than such non-Governmental Authority third party consents, waivers, approvals,
        orders, authorizations and permits that would not (x) materially impair the
        ability of USDCC or any of its Subsidiaries to perform its obligations under
        this Agreement or (y) prevent the consummation of any of the transactions
        contemplated by this Agreement;

       

      (c) result
        in
        any violation of or the breach of or constitute a default (with notice or
        lapse
        of time or both) under, or give rise to any right of termination, cancellation
        or acceleration or guaranteed payments or a loss of a material benefit under,
        any of the terms, conditions or provisions of any note, lease, mortgage,
        license, agreement or other instrument or obligation to which USDCC or any
        of
        its Subsidiaries is a party or by which USDCC or any of its Subsidiaries
        or any
        of their respective properties or assets may be bound, except for such
        violations, breaches, defaults, or rights of termination, cancellation or
        acceleration, or losses as to which requisite waivers or consents have been
        obtained or which, individually or in the aggregate, would not
        (i) materially impair the ability of USDCC or any of its Subsidiaries to
        perform its obligations under this Agreement or (ii) prevent the
        consummation of any of the transactions contemplated by this
        Agreement;

       

      (d) violate
        the provisions of any order, writ, injunction, judgment, decree, statute,
        rule
        or regulation applicable to USDCC or any of its Subsidiaries;

       

      (e) result
        in
        the creation of any Lien upon any properties or assets or on any shares of
        capital stock of USDCC or its Subsidiaries under any agreement or instrument
        to
        which USDCC or any of its Subsidiaries is a party or by which USDCC or any
        of
        its Subsidiaries or any of their properties or assets is bound; or

       

      (f) result
        in
        any holder of any securities of USDCC or any of its Subsidiaries being entitled
        to appraisal, dissenters’ or similar rights.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      5.5 Litigation

       

      There
        is
        no material suit, claim, action, proceeding or investigation pending or,
        to its
        knowledge, threatened against or directly affecting USDCC, or any of the
        directors or officers of USDCC in their capacity as such. Neither USDCC nor
        any
        officer, director or employee of USDCC has been permanently or temporarily
        enjoined by any order, judgment or decree of any court or any other Governmental
        Authority from engaging in or continuing any conduct or practice in connection
        with the business, assets or properties of USDCC, nor, to its knowledge,
        is
        USDCC or any officer, director or employee of USDCC or under investigation
        by
        any Governmental Authority. There is not in existence any order, judgment
        or
        decree of any court or other tribunal or other agency enjoining or requiring
        USDCC to take any action of any kind with respect to its business, assets
        or
        properties.

       

      5.6 Employee
        Benefit Plans

       

      Neither
        USDCC nor any trade or business, whether or not incorporated, which together
        with USDCC would be deemed a “single employee” within the meaning of
        Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA
        has, or on or before the Closing will have, sponsored, maintained or contributed
        to any employee benefits, plan or arrangement (including, but not limited
        to,
        any plan described in Section 3(3) of ERISA) written six years prior to the
        Effective Time.

       

      5.7 Compliance
        with Applicable Laws

       

      USDCC
        holds all Permits, if any, necessary for the lawful conduct of its businesses,
        as now conducted, and such businesses are not being, and USDCC has not received
        any notice from any Governmental Authority or Person that any such business
        has
        been or is being, conducted in violation of any law, ordinance or regulation,
        including without limitation any law, ordinance or regulation relating to
        occupational health and safety

       

      5.8 Insurance

       

      USDCC
        and
        its Subsidiaries currently have in place the policies of insurance described
        in
Schedule
        5.13
        of the
        USDCC Disclosure Letter. 

       

      5.9 Employees

       

      Schedule
        5.14
        of the
        USDCC Disclosure letter sets forth a true and complete list of all directors,
        and officers of USDCC.

       

      5.10 Permits

       

      Immediately
        prior to the Effective Time and except for Customary Post-Closing Consents,
        USDCC and its subsidiaries will hold all of the Permits required or necessary
        to
        own, operate, use and maintain their respective properties and conduct their
        respective operations as presently conducted.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.11 required
        Stockholder Vote or Consent

       

      No
        vote
        or consent of the holders of any class or series of USDCC Stock is or will
        be
        necessary to consummate the Merger and the other transactions contemplated
        by
        this Agreement.

       

      5.12 Brokers

       

      No
        broker, finder or investment banker is entitled to any brokerage, finder’s fee
        or other fee or commission payable by USDCC or any of its Subsidiaries or
        the
        Surviving corporations in connection with the transactions contemplated by
        this
        Agreement based upon arrangements made by or on behalf of USDCC or any of
        its
        Subsidiaries.

       

      5.13 Issuance
        of the Securities

       

      Upon
        the
        Effective Time, the USDCC Common Stock issued or issuable pursuant to the
        Merger
        will be duly authorized and validly issued, fully paid and nonassessable,
        free
        and clear of all Liens other than restrictions on transfer provided for or
        referred to in this Agreement. Upon the Effective Time, USDCC shall have
        duly
        reserved out of the authorized but unissued shares of USDCC Common Stock
        such
        number of shares of USDCC Common Stock as are issuable upon conversion and
        exercise, in full, of the CVR merger stock.

       

      ARTICLE
        6

       

      

       

      [REPRESENTATIONS
        AND WARRANTIES OF SPHI SHAREHOLDERS

       

      The
        CVR
        Managing Members, severally and not jointly, each represents and warrant,
        to
        USDCC as follows:

       

      6.1 Power
        and Authority Relative to this Transaction

       

      Such
        CVR
        managing member has full power and authority and has taken all action necessary
        to permit it to execute and deliver and to carry out the terms of this Agreement
        and all other documents or instruments required hereby. This Agreement
        constitutes the legal, valid and binding obligation of CVR, enforceable in
        accordance with its terms, except for the Enforceability Exception.

       

      6.2 Accredited
        Investor

       

      Such
        CVR
        managing member is an “accredited investor” as that term is defined in
        Rule 501 of Regulation D promulgated under the Securities
        Act.

       

      6.3 Investment
        Representations

       

      (a) Such
        CVR
        Member will acquire
        the
        USDCC Common Stock issuable pursuant to the Merger for such member’s own account
        for the purpose of investment, and not with a view to distribution or resale
        thereof in violation of the Securities Act and the rules and regulations
        promulgated thereunder. Such CVR member understands that none of the USDCC
        Common Stock has been registered under the Securities Act or any other
        applicable securities laws, and,

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      therefore,
        cannot be resold unless they are subsequently registered under the Securities
        Act and other applicable securities laws, or unless an exemption from such
        registration is available. Such CVR Member agrees not to resell or otherwise
        dispose of all or any part of the USDCC Common Stock, except as permitted
        by
        law, including, without limitation, any regulations under the Securities
        Act and
        other applicable securities laws. 

       

      (b) Such
        CVR
        Member understands and agrees that all certificates evidencing any of the
        USDCC
        Common Stock, whether upon initial issuance or upon any transfer thereof,
        shall
        bear a legend, prominently stamped or printed thereon, reading substantially
        as
        follows:

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS. THESE SECURITIES HAVE
        BEEN
        ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. SUCH
        SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED,
        PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
        COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER
        APPLICABLE SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN OPINION
        OF
        COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
        IS NOT
        REQUIRED OR THE TRANSFEREE IS AN AFFILIATE OF THE HOLDER.”

       

      6.4 Access
        to Information

       

      During
        the course of the transactions contemplated by this Agreement and prior to
        the
        purchase of any USDCC Common Stock, such CVR Member has had the opportunity
        to
        ask questions of and receive answers from representatives of USDCC concerning
        the terms and conditions of the offering of the USDCC Common Stock, and to
        obtain additional information, documents, records and books relative to USDCC
        and an investment in USDCC.

       

      6.5 Knowledge
        and Experience

       

      Such
        CVR
        Member has sufficient knowledge and experience in business and financial
        matters
        so as to enable such CVR Member to analyze and evaluate the merits and risks
        of
        the investment contemplated hereby and is capable of protecting its interest
        in
        connection with this transaction. Such CVR Member is able to bear the economic
        risk of such investment, including a complete loss of the
        investment.]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        7

       

      

       

      CONDUCT
        OF BUSINESS PENDING THE MERGER

       

      7.1 Conduct
        of Business by the USDCC and CVR Pending the Merger

       

      From
        the
        date hereof until the Effective Time, unless USDCC and CVR shall otherwise
        agree
        in writing, and expect as otherwise contemplated by this Agreement, USDCC
        and
        CVR and their respective Subsidiaries shall conduct their business in the
        ordinary course consistent with past practice. Except as otherwise provided
        in
        this Agreement, and without limiting the generality of the foregoing, from
        the
        date hereof until the Effective Time, without the written consent of USDCC
        and
        CVR, which consent shall not be unreasonably withheld:

       

      (a) Neither
        USDCC nor CVR will adopt or propose any change to their respective certificate
        or articles of incorporation or bylaws;

       

      (b) Neither
        USDCC nor CVR will (i) declare, set aside or pay any dividend or other
        distribution with respect to any shares of capital stock of the respective
        USDCC
        and CVR, or (ii) repurchase, redeem or otherwise acquire any outstanding
        shares of capital stock or other securities of, or other ownership interests
        in,
        USDCC or CVR, as the case may be;

       

      (c) Neither
        USDCC nor CVR will, nor permit any of its Subsidiaries to, merge or consolidate
        with any other person or acquire assets of any other person except in the
        ordinary course of business or pursuant to transactions among wholly-owned
        subsidiaries of USDCC or CVR, as the case may be; 

       

      (d) Neither
        USDCC nor CVR will, nor permit any of its Subsidiaries to, sell, lease, license
        or otherwise surrender, relinquish or dispose of any material assets or
        properties except in the ordinary course of business;

       

      (e) USDCC
        and
        CVR will not change any method of accounting or accounting practice by USDCC
        and
        CVR or any of their Subsidiaries, except for any such change required by
        GAAP;

       

      (f) Neither
        USDCC nor CVR will, nor permit any of its Subsidiaries to, (i) take, or
        agree or commit to take, any action that would make any representation and
        warranty of the respective company hereunder inaccurate in any material respect
        at, or as of any time prior to, the Effective Time or (ii) omit, or agree
        or commit to omit, to take any action necessary or appropriate to prevent
        any
        such representation or warranty from being inaccurate in any material respect
        at
        any such time; and

       

      (g) Neither
        USDCC nor CVR will, nor permit any of its Subsidiaries to, agree or commit
        to do
        any of the foregoing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        8

       

      

       

      ADDITIONAL
        AGREEMENTS

       

      8.1 Expenses

       

      The
        parties shall bear their own expenses.

       

      8.2 Cooperation

       

      Subject
        to compliance with applicable law, from the date hereof until the Effective
        Time, each of the parties hereto shall confer on a regular and frequent basis
        with one or more representatives of the other parties to report operational
        matters of materiality and the general status of ongoing operations and shall
        promptly provide the other parties or their counsel with copies of all filings
        made by such party with any Governmental Authority in connection with this
        Agreement and the transactions contemplated hereby.

       

      8.3 Publicity

       

      Neither
        the parties hereto nor any of their respective affiliates shall issue or
        cause
        the publication of any press release or other announcement with respect to
        the
        Merger, this Agreement or the other transactions contemplated hereby without
        the
        prior consultation of the other parties, except as may be required by law,
        and
        will use reasonable efforts to provide copies of such release or other
        announcement to the other parties hereto, and give due consideration to such
        comments as such other parties may have, prior to such release.

       

      8.4 Additional
        Actions

       

      Subject
        to the terms and conditions of this Agreement, each of the parties hereto
        agrees
        to use all reasonable efforts to take, or cause to be taken, all action and
        to
        do, or cause to be done, all things necessary, proper or advisable under
        applicable laws and regulations, or to remove any injunctions or other
        impediments or delays, to consummate and make effective the Merger and the
        other
        transactions contemplated by this Agreement.

       

      8.5 Filings

       

      Each
        party hereto shall make all filings required to be made by such party in
        connection herewith or desirable to achieve the purposes contemplated hereby,
        and shall cooperate as needed with respect to any such filing by any other
        party
        hereto.

       

      8.6 Consents

       

      Each
        party hereto shall use all reasonable efforts to obtain all consents necessary
        or advisable in connection with such party’s obligations hereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8.7 Notice
        of
        Certain Events

       

      Each
        party to this Agreement shall promptly as reasonably practicable notify the
        other parties hereto of:

       

      (a) any
        notice or other communication from any Person alleging that the consent of
        such
        Person (or other Person) is or may be required in connection with the
        transactions contemplated by this Agreement;

       

      (b) any
        notice or other communication from any Governmental Authority in connection
        with
        the transactions contemplated by this Agreement; or

       

      (c) any
        actions, suits, claims, investigations or proceedings commenced or, to the
        best
        of such party’s knowledge, threatened against, relating to or involving or
        otherwise affecting such party or any of such party’s Subsidiaries which, if
        pending on the date of this Agreement, would have rendered untrue any
        representation contained in Article IV,
        V
        or
VI,
        or
        which relate to the consummation of the transactions contemplated by this
        Agreement.

       

      8.8 Resignations
        and Releases; Appointment of Directors and Officers

       

      (a) Prior
        to
        the Closing Date, CVR shall obtain from each of its directors, and officers
        a
        written resignation and release agreement, by which each such Person agrees
        to
        resign from CVR effective as of the Closing Date and to release CVR and its
        affiliates from any and all Liabilities.

       

      .

       

      

       

      ARTICLE
        9

       

      

       

      CONDITIONS
        TO CONSUMMATION OF THE MERGER

       

      9.1 Conditions
        to the Obligation of Each Party

       

      The
        respective obligations of each party to effect the Merger shall be subject
        to
        the fulfillment at or prior to the Effective Time of the following
        conditions:

       

      (a) no
        action, suit or proceeding instituted by any Governmental Authority shall
        be
        pending and no statute, rule or regulation and no injunction, order, decree
        or
        judgment of any court or Governmental Authority of competent jurisdiction
        shall
        be in effect, in each case which would prohibit, restrain, enjoin or restrict
        the consummation of the Mergers;

       

      (b) USDCC
        and
        CVR shall have obtained such permits, authorizations, consents, or approvals
        required to consummate the transactions contemplated hereby; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      9.2 Conditions
        to the Obligations of USDCC and Merger Sub

       

      The
        obligations of USDCC and Merger Sub to effect the Merger are subject to the
        satisfaction at or prior to the Effective Time of the following
        conditions:

       

      (a) CVR
        shall
        have performed in all material respects its obligations under this Agreement
        required to be performed by it at or prior to the Effective Time, and the
        representations and warranties of CVR contained in this Agreement, to the
        extent
        qualified with respect to materiality shall be true and correct in all respects,
        and to the extent not so qualified shall be true and correct in all material
        respects, in each case, as of the date of this Agreement and at and as of
        the
        Effective Time as if made at and as of such time, and USDCC shall have received
        a certificate of the President and Managing Member of CVR as to the satisfaction
        of this condition;

       

      (b) all
        proceedings to be taken by CVR in connection with the transactions contemplated
        by this Agreement and all documents, instruments and certificates to be
        delivered by CVR in connection with the transactions contemplated by this
        Agreement shall be reasonably satisfactory in form and substance to USDCC;
        

       

      (c) CVR
        shall
        have received and delivered to USDCC the resignations and release agreements
        from each of its directors, and officers. 

       

      9.3 Conditions
        to the Obligations of CVR

       

      The
        obligation of CVR to effect the Merger is subject to the satisfaction at
        or
        prior to the Effective Time of the following conditions: 

       

      (a) USDCC
        shall have performed in all material respects its obligations under this
        Agreement required to be performed by it at or prior to the Effective Time
        and
        the representations and warranties of USDCC contained in this Agreement,
        to the
        extent qualified with respect to materiality shall be true and correct in
        all
        respects, and to the extent not so qualified shall be true and correct in
        all
        material respects, in each case as of the date of this Agreement and at and
        as
        of the Effective Time as if made at and as of such time, and CVR shall have
        received a certificate of the Chief Executive Officer of USDCC as to the
        satisfaction of this condition;

       

      (b) all
        proceedings to be taken by USDCC and Merger Sub, as the case may be, in
        connection with the transactions contemplated by this Agreement and all
        documents, instruments and certificates to be delivered by USDCC and Merger
        Sub,
        as the case may be, in connection with the transactions contemplated by this
        Agreement shall be reasonably satisfactory in form and substance to CVR;
        and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        10

       

      

       

      SURVIVAL
        AND INDEMNIFICATION

       

      10.1 Survival
        of Representations and Warranties

       

      The
        representations and warranties of the parties contained in this Agreement
        shall
        not survive the Effective Time.

       

      ARTICLE
        11

       

      

       

      TERMINATION,
        AMENDMENT AND WAIVER

       

      11.1 Termination

       

      This
        Agreement may be terminated at any time prior to the Effective
        Time:

       

      (a) by
        the
        mutual written consent of USDCC and CVR;

       

      (b) by
        either
        USDCC or CVR if the Effective Time shall not have occurred on or before August
        31, 2005 (the “Termination
        Date”);
        provided, that the party seeking to terminate this Agreement pursuant to
        this
subparagraph
        (b)
        shall
        not have breached in any material respect its obligations under this Agreement
        in any manner that shall have proximately contributed to the failure to
        consummate the Mergers on or before the Termination Date;

       

      (c) by
        USDCC
        or CVR if there has been a material breach by one of the other parties of
        any
        representation, warranty, covenant or agreement set forth in this Agreement
        which breach (if susceptible to cure) has not been cured in all material
        respects within 20 business days following receipt by each party of notice
        of
        such breach; or

       

      (d) by
        USDCC
        or CVR if there shall be any applicable law, rule or regulation that makes
        consummation of the Merger illegal or if any judgment, injunction, order
        or
        decree of a court or other Governmental Authority of competent jurisdiction
        shall restrain or prohibit the consummation of the Merger, and such judgment,
        injunction, order or decree shall become final and nonappealable.

       

      11.2 Effect
        of Termination

       

      In
        the
        event of termination of the Agreement and the abandonment of the Merger pursuant
        to this Article XII,
        all
        obligations of the parties shall terminate, except the obligations of the
        parties pursuant to this Section 12.2
        and
        except for the provisions of Sections 8.1
        and
8.3;
        provided, however, that nothing herein shall relieve any party from liability
        for any breach of this Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        12

       

      

       

      MISCELLANEOUS

       

      12.1 Notices

       

      All
        notices or communications hereunder shall be in writing (including facsimile
        or
        similar writing) addressed as follows:

       

      
        	
                To
                  CVR:

                 

              	
                35-325
                  Date Palm Drive ste. 211

                Cathedral
                  City, CA. 92234

              
	
                To
                  USDCC:

              	
                1930
                  Auiki Street

                Honolulu,
                  HI. 96819

              
	 	 
	 	 

      

      Any
        such
        notice or communication shall be deemed given (i) when made, if made by
        hand delivery, and upon confirmation of receipt, if made by facsimile,
        (ii) one business day after being deposited with a next-day courier,
        postage prepaid, or (iii) three business days after being sent certified or
        registered mail, return receipt requested, postage prepaid, in each case
        addressed as above (or to such other address as such party may designate
        in
        writing from time to time).

       

      12.2 Separability

       

      If
        any
        provision of this Agreement shall be declared to be invalid or unenforceable,
        in
        whole or in part, such invalidity or unenforceability shall not affect the
        remaining provisions hereof which shall remain in full force and
        effect.

       

      12.3 Assignment

       

      This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective heirs, legal representatives, successors, and assigns;
        provided, however, that neither this Agreement nor any rights hereunder shall
        be
        assignable or otherwise subject to hypothecation and any assignment in violation
        hereof shall be null and void.

       

      12.4 Interpretation

       

      The
        headings contained in this Agreement are for reference purposes only and
        shall
        not affect in any way the meaning or interpretation of this
        Agreement.

       

      12.5 Counterparts

       

      This
        Agreement may be executed in one or more counterparts, all of which shall
        be
        considered one and the same Agreement, and shall become effective when one
        or
        more such counterparts have been signed by each of the parties and delivered
        to
        each party.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      12.6 Entire
        Agreement

       

      This
        Agreement represents the entire agreement of the parties with respect to
        the
        subject matter hereof and shall supersede any and all previous contracts,
        arrangements or understandings between the parties hereto with respect to
        the
        subject matter hereof.

       

      12.7 Governing
        Law

       

      This
        Agreement shall be construed, interpreted, and governed in accordance with
        the
        laws of California, without reference to rules relating to conflicts of
        law.

       

      12.8 Attorneys’
        Fees

       

      If
        any
        action at law or equity, including an action for declaratory relief, is brought
        to enforce or interpret any provision of this Agreement, the prevailing party
        shall be entitled to recover reasonable attorneys’ fees and expenses from the
        other party, which fees and expenses shall be in addition to any other relief,
        which may be awarded.

       

      12.9 No
        Third Party Beneficiaries

       

      Except
        as
        provided in Section 11.2,
        no
        person or entity other than the parties hereto is an intended beneficiary
        of
        this Agreement or any portion hereof.

       

      12.10 Amendments
        and Supplements

       

      Prior
        to
        the Effective Time, this Agreement may be amended or supplemented in writing
        by
        USDCC and CVR with respect to any of the terms contained in this Agreement,
        except as otherwise provided by law.

       

      12.11 Extensions,
        Waivers, Etc.

       

      At
        any
        time prior to the Effective Time, either party may:

       

      (a) extend
        the time for the performance of any of the obligations or acts of the other
        party;

       

      (b) waive
        any
        inaccuracies in the representations and warranties of the other party contained
        herein or in any document delivered pursuant hereto; or

       

      (c) waive
        compliance with any of the agreements or conditions of the other party contained
        herein.

       

      Notwithstanding
        the foregoing, no failure or delay by any party hereto in exercising any
        right
        hereunder shall operate as a waiver thereof nor shall any single or partial
        exercise thereof preclude any other or further exercise thereof or the exercise
        of any other right hereunder. Any agreement on the part of a party hereto
        to any
        such extension or waiver shall be valid only if set forth in an instrument
        in
        writing signed on behalf of such party.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
        of the
        day and year first above written.

       

      
        	 	
                US
                  Dry Cleaning Corporation

                 

                By:
                  /s/ Michael Drace

                Name:
                  Michael Drace

                Title:
                  CEO

              
	 	
                USDCC
                  MERGER SUB, INC.

                 

                By:
                  /s/ Robert Y. Lee

                Name:
                  Robert Y. Lee

                Title:
                  CEO

              
	 	
                Coachella
                  Valley Retail, LLC.

                By:
                  /s/ Brian Walker

                Name:
                  Brian Walker

                Title:
                  President

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