AGREEMENT AND PLAN OF MERGER

 

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

Xedar Corporation, a Colorado corporation

 

and

 

PDS Acquisition Corp., a Colorado corporation

 

and

 

Premier Data Services, Inc., a Delaware corporation

 

 

 

 

December 31, 2006

 

 

 

TABLE OF CONTENTS

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER is made and entered into effective as of December 31, 2006, by and among Xedar Corporation, a Colorado corporation ("Parent"), PDS Acquisition Corp., a Colorado corporation ("Acquisition Corp."), which is a wholly-owned subsidiary of Parent, and Premier Data Services, Inc., a Delaware corporation (the "Company").

 

RECITALS

 

WHEREAS, the Board of Directors of each of Acquisition Corp., Parent and the Company have each determined that it is fair and in the best interests of their respective corporations and shareholders for Acquisition Corp. to be merged with and into the Company (the "Merger"), with the Company being the Surviving Corporation (as defined below in Section 1.1), upon the terms and subject to the conditions set forth herein;

 

WHEREAS, the Board of Directors of Acquisition Corp. and the Board of Directors of the Company have approved the Merger in accordance with the General Corporation Law of the State of Delaware (the "DGCL"), the Colorado Business Corporation Act ("CBCA"), and upon the terms and subject to the conditions set forth herein, in the Certificate of Merger (the "Certificate of Merger"), attached as Exhibit A hereto, and in the Statement of Merger ("Statement of Merger"), attached as Exhibit B hereto, and the Board of Directors of Parent has also approved the Merger, this Agreement, the Certificate of Merger, and the Statement of Merger.

 

WHEREAS, the requisite shareholders of Acquisition Corp. and the Company have approved, by written consent and to the extent required by the DGCL and the CBCA, this Agreement, the Certificate of Merger, the Statement of Merger, and the transactions contemplated hereby and thereby, including without limitation, the Merger;

 

WHEREAS, immediately prior to the Closing (as such term is defined herein), the Company will sell $1,330,000 worth of shares of its common stock, $0.001 par value per share, in a private offering (the "Private Offering") to accredited investors, pursuant to the terms of a Share Purchase Agreement, dated December 29, 2006, as it may be further supplemented (the "Purchase Agreement"), for the purpose of financing the ongoing business and operations of the Surviving Corporation following the Merger; and

 

WHEREAS, pursuant to agreements with Jack Baum and Sagebrook Technologies (the "Conversion Agreements"), immediately following the Merger, the Company will convert one half of the outstanding balance of those certain promissory notes, in the original principal amount of $321,839, payable to Jack Baum, and in the original principal amount of $378,161, payable to Sagebrook Technology Partners, L.P., an entity controlled by Jack Baum (collectively the "Notes"), into 409,090 shares of Parent Common Stock (as defined below), with the remaining unpaid balance of such notes convertible into 409,089 shares of Parent Common Stock pursuant to the terms of the Conversion Agreements and as more fully described in Schedule 1.7 hereof.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

 

1. The Merger.

 

1.1 Merger . Subject to the terms and conditions of this Agreement, the Certificate of Merger, and the Statement of Merger, Acquisition Corp. shall be merged with and into the Company in accordance with Section 252 of the DGCL and Section 7-111-107 of the CBCA. At the Effective Time (as hereinafter defined), the separate legal existence of Acquisition Corp. shall cease, and the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of Delaware under the name: Premier Data Services, Inc.

 

1.2 Effective Time . The Merger shall become effective on December 31, 2006, and upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, in accordance with Section 252 of the DGCL, and the Statement of Merger with the Secretary of State of the State of Colorado, in accordance with Section

 

 

7-111-104.5. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the "Effective Time."

 

1.3 Certificate of Incorporation, Bylaws, Directors and Officers .

 

 

 

1.4 Assets and Liabilities . At the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties of each of Acquisition Corp. and the Company (collectively, the "Constituent Corporations"); and all the rights, privileges, powers and franchises of each of the Constituent Corporations, and all property, real, personal and mixed, and all debts due to any of the constituent corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of the Constituent Corporations, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectively the property of the Surviving Corporation as they were of the several and respective Constituent Corporations, and the title to any real estate vested by deed or otherwise in either of the such Constituent Corporations shall not revert or be in any way impaired by the Merger; but all rights of creditors and all liens upon any property of any of the Constituent Corporations shall be preserved unimpaired, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

 

1.5 Manner and Basis of Converting Shares .

 

 

 

 

 

 

 

1.6 Surrender and Exchange of Certificates . Promptly after the Effective Time and upon (i) surrender of a certificate or certificates representing shares of Company Stock that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form reasonably acceptable to counsel for the Parent stating that such Stockholder has lost its certificate or certificates or that such have been destroyed and (ii) delivery of a Letter of Transmittal (as described in Section 4 hereof), Parent shall issue to each record holder of the Company Stock surrendering such certificate or certificates and Letter of Transmittal, a certificate or certificates registered in the name of such Stockholder representing the number of shares of Parent Common Stock that such Stockholder shall be entitled to receive as set forth in Sections 1.5(a)(ii) and 1.5(a)(iii) hereof. Until the certificate, certificates or affidavit is or are surrendered together with the Letter of Transmittal as contemplated by this Section 1.6 and Section 4 hereof, each certificate or affidavit that immediately prior to the Effective Time represented any outstanding shares of Company Stock shall be deemed at and after the Effective Time to represent only the right to receive upon surrender as aforesaid the Parent Common Stock specified in Schedule 1.5 hereof for the holder thereof or to perfect any rights of appraisal which such holder may have pursuant to the applicable provisions of the DGCL.

 

1.7 Options; Warrants; Other Rights . Except as set forth in Schedule 1.7 , all options, warrants, and other rights of any kind to purchase Company Stock outstanding as of the Effective Date will be exercised or terminated prior to or effective upon the Effective Time, and neither Parent nor Acquisition Corp., except as set forth in Schedule 1.7 , shall assume or have any obligation with respect to such options or rights.

 

1.8 Parent Common Stock . Parent agrees that it will cause the Parent Common Stock into which the Company Common Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) and 1.5(a)(iii) to be available for such purpose. Parent further covenants that immediately prior to the Effective Time there will be no more than 2,500,000 shares of Parent Common Stock (plus that number of shares necessary to adjust for any averaging up resulting from the reverse split of Parent described in the Definitive Proxy of Parent, filed December 4, 2006) issued and outstanding, and that no other common or preferred stock or equity securities or any options, warrants, rights or other agreements or instruments convertible, exchangeable or exercisable into common or preferred stock or other equity securities shall be issued or outstanding.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to Parent and Acquisition Corp. as follows:

 

2.1 Organization, Standing, Subsidiaries, Etc .

 

 

 

 

 

2.2 Qualification . The Company is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of the Company taken as a whole (the "Condition of the Company").

 

2.3 Capitalization of the Company . The authorized capital stock of the Company consists of 30,000,000 shares of Company Common Stock, 10,000,000 shares of preferred stock, 5,000,000 of which have been designated Company Preferred Stock. The Company has no authority to issue any other capital stock. There are 13,776,262 shares of Company Common Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable. There are 3,162,941 shares of Company Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable. Except as disclosed in Schedule 1.7 , the Company has no outstanding warrants, stock options, rights or commitments to issue Company Common Stock, Company Preferred Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock, Company Preferred Stock or other Equity Securities of the Company.

 

2.4 Company Stockholders . Schedule 2.4 hereto contains a true and complete list of the names of the record owners of all of the outstanding shares of Company Stock and other Equity Securities of the Company, together with the number of securities held. To the knowledge of the Company, except as described in Schedule 2.4 , there is no voting trust, agreement or arrangement among any of the beneficial holders of Company Common Stock affecting the exercise of the voting rights of Company Stock.

 

2.5 Corporate Acts and Proceedings . The execution, delivery and performance of this Agreement, the Certificate of Merger and the Statement of Merger (together, the "Merger Documents") have been duly authorized by the Board of Directors of the Company and, to the extent required by the DGCL, have been approved by the requisite vote of the Stockholders, and all of the corporate acts and other proceedings required for the due and valid authorization, execution, delivery and performance of the Merger Documents and the consummation of the Merger have been validly and appropriately taken, except for the filing of the Certificate of Merger and the Statement of Merger, which shall be filed upon or promptly after the Closing.

 

2.6 Compliance with Laws and Instruments . To the knowledge of the Company, the business, products and operations of the Company have been and are being conducted in compliance in all material respects with all applicable laws, rules and regulations, except for such violations thereof for which the penalties, in the aggregate, would not have a material adverse effect on the Condition of the Company. The execution, delivery and performance by the Company of the Merger Documents and the consummation by the Company of the transactions contemplated by this Agreement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except such as shall have been obtained prior to the Closing, (b) will not cause the Company to violate or contravene in any material respect (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Certificate of Incorporation or Bylaws of the Company, (c) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, except as would not have a material adverse effect on the Condition of the Company, and (d) will not result in the creation or imposition of any material Lien upon any property or asset of the Company.

 

2.7 Binding Obligations . The Merger Documents constitute the legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their respective terms, except as such

enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.

 

 

          2.8 Broker's and Finder's Fees . No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company, Parent, Acquisition Corp. or any Stockholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, except as set forth in Schedule 2.8 hereof.

 

2.9 Financial Statements . Attached hereto as Schedule 2.9 are the Company's audited Consolidated Balance Sheet, Consolidated Statement of operations, Consolidated Statement of Changes in Shareholders' Equity and Consolidated Statement of Cash Flows as of and for the year ended December 31, 2005, and the Company's unaudited Consolidated Balance Sheet (the "Balance Sheet") as of September 30, 2006 (the "Balance Sheet Date") and related Statement of Operations, Consolidated Statement of Changes in Shareholders' Equity and Consolidated Statement of Cash Flows as of and for the nine months ended September 30, 2006. Such financial statements (i) are in accordance with the books and records of the Company, (ii) present fairly in all material respects the financial condition of the Company at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified and (iii) have been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a basis consistent with prior accounting periods.

 

2.10 Absence of Undisclosed Liabilities . The Company has no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in Schedule 2.10 and/or Schedule 2.11 hereto, (b) to the extent set forth on or reserved against in the Balance Sheet, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since the Balance Sheet Date, none of which (individually or in the aggregate) has had or will have a material adverse effect on the Condition of the Company and (d) by the specific terms of any written agreement, document or arrangement identified in the Schedules.

 

2.11 Changes . Since the Balance Sheet Date, except as disclosed in Schedule 2.11 hereto, the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Merger and related transactions and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) materially and

adversely affecting the Condition of the Company, or (g) entered into any transaction other than in the usual and ordinary course of business.

 

2.12 Title to Property and Encumbrances . Except as disclosed in Schedule 2.12 hereto, the Company has good, valid and indefeasible marketable title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force and effect and which are not in default) free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as do not, individually or in the aggregate, materially detract from the value of the property or assets or materially impair the use made thereof by the Company in its business. Without limiting the generality of the foregoing, the Company has good and indefeasible title to all of its properties and assets reflected in the Balance Sheet, except for property disposed of in the usual and ordinary course of business since the Balance Sheet Date and for property held under valid and subsisting leases which are in full force and effect and which are not in default.

 

2.13 Litigation . Except as set forth on Schedule 2.13 , there is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the best knowledge of the Company, threatened against or affecting the Company or its properties, assets or business, and after reasonable investigation, the Company is not aware of any incident, transaction, occurrence or circumstance that might reasonably be expected to result in or form the basis for any such action, suit, arbitration or other proceeding. The Company is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

 

 

          2.14 Patents, Trademarks, Etc . Schedule 2.14 sets forth a list of all United States and foreign patents, trademarks, trade names, copyrights, and applications therefor used by the Company exclusively in and material to the conduct of its business (the "Patent and Trademark Rights"). Except as disclosed in Schedule 2.14 , (a) the Company owns or possesses adequate licenses or other valid rights to use all Patent and Trademark Rights; and (b) to the Company's knowledge, the conduct of its business as now being conducted does not conflict with any valid patents, trademarks, trade names or copyrights of others in any way which has a material adverse effect on the business or financial condition of the Company or its business.

 

3. Representations and Warranties of Parent and Acquisition Corp. Parent and Acquisition Corp. jointly and severally represent and warrant to the Company, as follows:

 

3.1 Organization and Standing . Parent is a corporation duly organized and existing in good standing under the laws of the State of Colorado. Acquisition Corp. is a corporation duly organized and existing in good standing under the laws of the State of Colorado. Parent and Acquisition Corp. have heretofore delivered to the Company complete and correct copies of their respective Articles of Incorporation and Bylaws as now in effect. Parent and Acquisition Corp. have full corporate power and authority to carry on their respective businesses as they are now being conducted and as now proposed to be conducted and to own or lease their respective properties and assets. Except as disclosed in Schedule 3.1 hereto, neither Parent nor Acquisition Corp. has any subsidiaries (except Parent as the sole stockholder of Acquisition Corp.) or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business. Parent owns all of the issued and outstanding capital stock of Acquisition Corp. free and clear of all Liens, and Acquisition Corp. has no outstanding options, warrants or rights to purchase capital stock or other equity securities of Acquisition Corp., other than the capital stock owned by Parent. Unless the context otherwise requires, all references in this Section 3 to the "Parent" shall be treated as being a reference to the Parent and Acquisition Corp. taken together as one enterprise.

 

3.2 Corporate Authority . Each of Parent and/or Acquisition Corp. (as the case may be) has full corporate power and authority to enter into the Merger Documents and the other agreements to be made pursuant to the Merger Documents, and to carry out the transactions contemplated hereby and thereby. All corporate acts and proceedings required for the authorization, execution, delivery and performance of the Merger Documents and such other agreements and documents by Parent and/or Acquisition Corp. (as the case may be) have been duly and validly taken or will have been so taken prior to the Closing. Each of the Merger Documents constitutes a legal, valid and binding obligation of Parent and/or Acquisition Corp. (as the case may be), each enforceable against them in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and by general principles of equity.

 

3.3 Broker's and Finder's Fees . Except for the firms engaged by the Company described in Section 2.8, no person, firm, corporation or other entity is entitled by reason of any act or omission of Parent or Acquisition Corp. to any broker's or finder's fees, commission or other similar compensation with respect to the execution and delivery of this Agreement or the Certificate of Merger, or with respect to the consummation of the transactions contemplated

hereby or thereby. Parent and Acquisition Corp. jointly and severally indemnify and hold Company harmless from and against any and all loss, claim or liability arising out of any such claim from any other Person who claims he, she or it introduced Parent or Acquisition Corp. to, or assisted them with, the transactions contemplated by or described herein.

 

3.4 Capitalization of Parent . The authorized capital stock of Parent consists of (a) 50,000,000 shares of common stock, no par value per share (the "Parent Common Stock"), of which not more than 2,500,000 shares (plus that number of shares necessary to adjust for any averaging up resulting from the reverse split of Parent described in the Definitive Proxy of Parent, filed December 4, 2006) will be, prior to the Effective Time, issued and outstanding. Parent has no outstanding options, rights or commitments to issue shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp., and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp. There is no voting trust, agreement or arrangement among any of the beneficial holders of Parent Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Parent Common Stock. All outstanding shares of the capital stock of Parent are validly issued and outstanding, fully paid and nonassessable, and none of such shares have been issued in violation of the preemptive rights of any person.

 

 

          3.5 Acquisition Corp . Acquisition Corp. is a wholly-owned subsidiary of Parent that was formed specifically for the purpose of the Merger and that has not conducted any business or acquired any property, and will not conduct any business or acquire any property prior to the Closing Date, except in preparation for and otherwise in connection with the transactions contemplated by this Agreement, the Certificate of Merger and the other agreements to be made pursuant to or in connection with this Agreement and the Certificate of Merger.

 

3.6 Validity of Shares . The 15,530,911 shares of Parent Common Stock to be issued at the Closing pursuant to this Agreement, when issued and delivered in accordance with the terms hereof, the Certificate of Merger, and the Statement of Merger shall be duly and validly issued, fully paid and nonassessable. Based in part on the representations and warranties of the Stockholders as contemplated by Section 4 hereof and assuming the accuracy thereof, the issuance of the Parent Common Stock upon the Merger pursuant to this Agreement will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.

 

3.7 SEC Reporting and Compliance .

 

 

 

 

 

 

 

3.8 Financial Statements . The balance sheets, and statements of operations, statements of changes in shareholders' equity and statements of cash flows contained in the Parent SEC Documents (the "Parent Financial Statements") (i) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Parent, and (iii) present fairly in all material respects the financial condition of the Parent at the dates therein specified and the results of its operations and changes in financial position for the periods

 

 

therein specified. The financial statements included in the Annual Report on Form 10-KSB for the fiscal years ended December 31, 2004 and December 31, 2005, are audited by, and include the related report of Schumacher & Associates, Parent's independent certified public accountants. The financial information included in the Quarterly Report on Form 10-QSB for the quarter ended September, 30, 2006, is unaudited, but reflects all adjustments (including normally recurring accounts) that Parent considers necessary for a fair presentation of such information and have been prepared in accordance with generally accepted accounting principles, consistently applied.

 

3.9 Governmental Consents . All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent or Acquisition Corp. required in connection with the consummation of the Merger shall have been obtained prior to, and be effective as of, the Closing.

 

3.10 Compliance with Laws and Instruments . The execution, delivery and performance by Parent and/or Acquisition Corp. of this Agreement, the Certificate of Merger and the other agreements to be made by Parent or Acquisition Corp. pursuant to or in connection with this Agreement or the Certificate of Merger and the consummation by Parent and/or Acquisition Corp. of the transactions contemplated by the Merger Documents will not cause Parent and/or Acquisition Corp. to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (v) any provision of their respective articles or certificate of incorporation or Bylaws as amended and in effect on and as of the Closing Date and will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or contract to which Parent or Acquisition Corp. is a party or by which Parent and/or Acquisition Corp. or any of their respective properties is bound.

 

3.11 No General Solicitation . In issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone acting on its behalf has offered to sell the Parent Common Stock by any form of general solicitation or advertising.

 

3.12 Binding Obligations . The Merger Documents constitute the legal, valid and binding obligations of the Parent and Acquisition Corp., and are enforceable against the Parent and Acquisition Corp., in accordance with their respective terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of cre