|
AGREEMENT AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this “
Agreement ”)
is made and entered into as of September 4, 2007, by and among
CaminoSoft Corp., a California corporation (“
Parent ”),
CC Merger Corp., a Nevada corporation and a wholly-owned subsidiary
of Parent (“
Merger Sub ”),
and Shea Development Corp., a Nevada corporation (the
“
Company ”).
Parent, Merger Sub and the Company are collectively referred to
herein as the “
Parties ,”
and each is a “
Party ”.
Capitalized terms used and not otherwise defined herein have the
meanings set forth in Article 1.
RECITALS
WHEREAS,
the respective Boards of Directors of Parent, Merger Sub and
the Company have deemed it advisable and in the best interests
of their respective corporations and shareholders that Parent,
Merger Sub and the Company enter into a business combination
transaction;
WHEREAS,
in furtherance thereof, the respective Boards of Directors of
Parent, Merger Sub and the Company each have approved and
declared advisable this Agreement and the merger of Merger Sub
with and into the Company (the “
Merger ”),
upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the provisions of the Nevada
Revised Statutes (the “
NRS ”);
WHEREAS,
the respective Boards of Directors of Parent and the Company
have determined to recommend to their respective shareholders
the approval and adoption of this Agreement and the Merger;
and
WHEREAS,
in connection with the Merger, the parties desire to make
certain representations, warranties, covenants and agreements
and also to prescribe various conditions to the Merger, upon
the terms and subject to the conditions contained
herein.
NOW,
THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other
good and valuable consideration, intending to be legally bound
hereby the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1
Certain Definitions .
The following terms shall, when used in this Agreement, have the
following meanings:
“
Affiliate ”
means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling or holding with power to vote ten
percent (10%) or more of the outstanding voting securities of such
other Person (other than passive or institutional investors); (ii)
any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held
with power to vote, by such other Person; (iii) any Person directly
or indirectly controlling, controlled by or under common control
with such other Person; and (iv) any officer, director or partner
of such other Person. “Control” for the
foregoing
purposes
shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities or voting interests, by contract or
otherwise;
“
Agreement ”
shall have the meaning set forth in the Recitals of this
Agreement;
“
Business Day ”
means any
day other than Saturday, Sunday or a day on which banking
institutions in Los Angeles, California, are required or authorized
to be closed;
“
Alternative Acquisition ”
shall have the meaning set forth in Section 5.12 of this
Agreement;
“
Capital Increase ”
shall have the meaning set forth in Section 5.4 of this
Agreement;
“
Certificates ”
shall have the meaning set forth in Section 2.9 of this
Agreement;
“
Change of Control ,”
with respect to any Person, means (i) a liquidation or dissolution
of such Person; (ii) a merger or consolidation of such Person with
or into another corporation or entity in which such Person is not
the surviving corporation or other business entity (other than a
merger with a wholly owned subsidiary); (iii) a merger or
consolidation of such Person (or a triangular merger involving a
subsidiary of the Company) where such Person is the surviving
corporation but with respect to which the shareholders of such
Person immediately prior to the merger or consolidation hold less
than 50% of the outstanding Common Stock of such Person immediately
following the merger or consolidation; or (iv) an underwritten
initial public offering by such Person of its common
stock;
“
Closing ”
shall have the meaning set forth in Section 2.2 of this
Agreement;
“
Closing Date ”
shall have the meaning set forth in Section 2.2 of this
Agreement;
“
Collateral Documents ”
means the Confidential Disclosure Schedules to this
Agreement;
“
Company ”
shall have the meaning set forth in the preamble of this
Agreement;
“
Company Common Stock ”
shall have the meaning ascribed to it in Section 2.7 of this
Agreement;
“
Company Option Plan ”
shall have the meaning ascribed to it in Section 2.7 of this
Agreement;
“
Company Preferred Stock ”
shall mean, collectively, the Company Series A Preferred Stock and
Company Series B Preferred Stock;
“
Company Series A Preferred Stock ”
shall mean the 3,800,000 shares of the Company’s Series A
Preferred Stock issued and outstanding;
“
Company Series B Preferred Stock ”
shall mean the 4,600,000 shares of the Company’s Series B
Preferred Stock issued and outstanding;
“
Company Financial Statement Date ”
shall
have the meaning set forth in Section 3.8 of this
Agreement;
“
Continuing Employees ”
shall have the meaning set forth in Section 5.2 of this
Agreement;
“
Contracts ”
shall have the meaning set forth in Section 3.16 of this
Agreement;
“
Dissenting Shares ”
shall have the meaning set forth in Section 2.15 of this
Agreement;
“
Effective Time ”
shall have the meaning set forth in Section 2.3 of this
Agreement;
“
Effective Date ”
shall have the meaning set forth in Section 2.3 of this
Agreement;
“
Eligible Warrant ”
shall have the meaning set forth in Section 2.7(b) of this
Agreement;
“
Eligible Warrant Agreements ”
shall have the meaning set forth in Section 2.9 of this
Agreement;
“
Encumbrance ”
means any material mortgage, pledge, lien, encumbrance, charge,
security interest, security agreement, conditional sale or other
title retention agreement, limitation, option, assessment,
restrictive agreement, restriction, adverse interest, restriction
on transfer or exception to or material defect in title or other
ownership interest (including but not limited to restrictive
covenants, leases and licenses);
“
Equity Equivalents ”
shall have the meaning set forth in Section 3.3(b) of this
Agreement;
“
ERISA ”
shall mean the Employee Retirement Income Security Act of 1974, as
amended;
“
Exchange Act ”
means the Securities Exchange Act of 1934, as amended;
“
Exchange Ratio ”
shall have the meaning set forth in Section 2.7(c) of this
Agreement;
“
GAAP ”
means U.S. generally accepted accounting principles consistently
applied, as in effect from time to time;
“
Indemnified Party ”
shall have the meaning set forth in Section 7.3 of this
Agreement;
“
Indemnifying Party ”
shall have the meaning set forth in Section 7.3 of this
Agreement;
“
Intellectual Property ”
means all trademarks and trademark rights, trade names and trade
name rights, service marks and service mark rights, service names
and service name rights, patents and patent rights, utility models
and utility model rights, copyrights, mask work rights, brand
names, trade dress, product designs, product packaging, business
and product names, logos, slogans, rights of publicity, trade
secrets, inventions (whether patentable or not), invention
disclosures, improvements, processes, formulae, industrial models,
processes, designs, specifications, technology, methodologies,
computer software (including all source code and
object
code), firmware, development tools, flow charts, annotations,
all Web addresses, sites and domain names, all data bases and
data collections and all rights therein, any other
confidential and proprietary right or information, whether or
not subject to statutory registration, and all related
technical information, the information set forth in
manufacturing, engineering and technical drawings, know-how
and all pending applications for and registrations of patents,
utility models, trademarks, service marks and copyrights, and
the right to sue for past infringement, if any, in connection
with any of the foregoing;
“
Joint Proxy-Registration Statement ”
shall have the meaning set forth in Section 5.4 of this
Agreement;
“
Key Employees ”
shall have the meaning set forth in Section 5.1 of this
Agreement;
“
Key Employee Agreements ”
shall have the meaning set forth in Section 5.1 of this
Agreement;
“
Legal Requirements ”
means any statute, ordinance, law, rule, regulation, code,
injunction, judgment, order, decree, ruling, or other requirement
enacted, adopted or applied by any Regulatory Authority, including
judicial decisions applying common law or interpreting any other
Legal Requirement;
“
Losses ”
shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments,
diminutions in value and other losses, however suffered or
characterized, all interest thereon, all costs and expenses of
investigating any claim, lawsuit or arbitration and any appeal
there from, all actual attorneys’, accountants’
investment bankers’ and expert witness’ fees incurred
in connection therewith, whether or not such claim, lawsuit or
arbitration is ultimately defeated and, subject to Section 7.4, all
amounts paid incident to any compromise or settlement of any such
claim, lawsuit or arbitration;
“
Material Adverse Effect ”
means a material adverse effect on (i) the assets, liabilities,
properties or business of the Parties, (ii) the validity, binding
effect or enforceability of this Agreement or the Collateral
Documents or (iii) the ability of any Party to perform its
obligations under this Agreement and the Collateral
Documents;
provided ,
however ,
that none of the following shall constitute a Material Adverse
Effect on the Company: (i) the filing, initiation and subsequent
prosecution, by or on behalf of shareholders of any Party, of
litigation that challenges or otherwise seeks damages with respect
to the Merger, this Agreement and/or transactions contemplated
thereby or hereby, (ii) occurrences due to a disruption of a
Party’s business as a result of the announcement of the
execution of this Agreement or changes caused by the taking of
action required by this Agreement, (iii) general economic
conditions, or (iv) any changes generally affecting the industries
in which a Party operates;
“
Merger ”
shall have the meaning set forth in the Recitals of this
Agreement;
“
Merger Consideration ”
shall have the meaning set forth in Section 2.7 (b) of this
Agreement;
“
Merger Options ”
shall have the meaning set forth in Section 2.7 (b) of this
Agreement;
“
Merger Sub ”
shall have the meaning set forth in the preamble to this
Agreement;
“
New Parent Warrants ”
shall have the meaning set forth in Section 2.8 of this
Agreement;
“
NRS ”
shall have the meaning set forth in the preamble of this
Agreement;
“
Order ”
means any writ, judgment, decree, ruling, injunction or similar
order of any Regulatory Authority (in each such case whether
preliminary or final);
“
Parent ”
shall have the meaning set forth in the preamble to this
Agreement;
“
Parent Common Stock ”
means the shares of common stock of Parent, no par value per
share;
“
Parent Financial Statements ”
shall
have the meaning set forth in Section 4.8 of this
Agreement;
“
Parent Financial Statement Date ”
shall have the meaning set forth in Section 4.8 of this
Agreement;
“
Parent Preferred Stock ”
shall have the meaning set forth in Section 2.7(b) of this
Agreement;
“
Parent Series A Preferred Stock ”
shall have the meaning set forth in Section 2.7(b) of this
Agreement;
“
Parent Series B Preferred Stock ”
shall have the meaning set forth in Section 2.7(b) of this
Agreement;
“
Parent Warrants ”
shall have the meaning set forth in Section 2.7(e) of this
Agreement;
“
Participating Company Shares ”
means all issued and outstanding shares of Company Common Stock and
Company Preferred Stock immediately prior to the Effective
Time
plus all
shares of Company Common Stock deemed to be issued upon exercise of
all Company options granted under the Company Option Plan and
Eligible Warrants;
“
Party ”
or “
Parties ”
shall have the meaning set forth in the preamble to this
Agreement;
“
Permit ”
means any license, franchise, certificate, declaration, waiver,
exemption, variance, permit, consent, approval, registration,
authorization, qualification or similar right granted by a
Regulatory Authority;
“
Person ”
means any
natural person, individual, firm, corporation, including a
non-profit corporation, partnership, trust, unincorporated
organization, association, limited liability company, labor union,
Regulatory Authority or other entity;
“
Regulatory Authority ”
means: any (i) federal, state, local, municipal or foreign
government; (ii) governmental or quasi-governmental authority of
any nature (including without
limitation
any governmental agency, branch, department, official,
instrumentality or entity and any court or other tribunal;
(iii) multi-national organization or body; or (iv) body
exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulation or taxing
authority or power of any nature;
“
Representatives ”
shall have the meaning set forth in Section 5.12 of this
Agreement;
“
Reverse Split ”
shall have the meaning set forth in Section 2.5 of this
Agreement;
“
SEC ”
means the United States Securities and Exchange
Commission;
“
Securities Act ”
means the Securities Act of 1933, as amended;
“
SEC Reports ”
with respect to each of Parent and the Company, means such
Party’s Annual Report on Form 10-KSB and all interim reports
filed with the SEC under the Exchange Act after the date of the
Form 10-KSB filing.
“
Securities Filings ”
means the filings with the SEC of a Party.
“
Subsidiary ”
of a specified Person means (a) any Person if securities having
ordinary voting power (at the time in question and without regard
to the happening of any contingency) to elect a majority of the
directors, trustees, managers or other governing body of such
Person are held or controlled by the specified Person or a
Subsidiary of the specified Person; (b) any Person in which the
specified Person and its subsidiaries collectively hold a fifty
percent (50%) or greater equity interest; (c) any partnership or
similar organization in which the specified Person or subsidiary of
the specified Person is a general partner; or (d) any Person the
management of which is directly or indirectly controlled by the
specified Person and its Subsidiaries through the exercise of
voting power, by contract or otherwise;
“
Surviving Corporation ”
shall have the meaning set forth in Section 2.1 of this
Agreement;
“
Taxes ”
means any U.S. or non U.S. federal, state, provincial, local or
foreign (i) income, corporation gross income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
intangible property, recording, occupancy, sales, use, transfer,
registration, value added minimum, ad valorem or excise tax,
estimated or other tax of any kind whatsoever, including any
interest, additions to tax, penalties, fees, deficiencies,
assessments, additions or other charges of any nature with respect
thereto, whether disputed or not; and (ii) any liability for the
payment of any amount of the type described in (i)
above;
“
Tax Returns ”
means all federal, state, local, provincial and foreign tax
returns, declarations, reports, claims, schedules and forms for
refund or credit or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including
any amendment thereof;
“
Terminated Employees ”
shall have the meaning set forth in Section 5.3 of this Agreement;
and
“
Transmittal Letter ”
shall have the meaning set forth in Section 2.9.
ARTICLE 2
THE MERGER
2.1
Merger .
Upon the terms and conditions set forth in this Agreement, and in
accordance with the provisions of the NRS, at the Effective Time
(as defined below), Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease
and the Company will continue as the surviving corporation
following the Merger, succeeding to all of the property, rights,
privileges, powers and franchises of Merger Sub, and shall become a
wholly-owned Subsidiary of Parent. The Company, as the surviving
corporation after the Merger, is sometimes referred to herein as
the “
Surviving Corporation .”
2.2
Closing .
Subject to the terms and conditions of this Agreement, the closing
of the Merger (the “
Closing ”)
will take place at the offices of Troy & Gould located at 1801
Century Park East, 16
th Floor,
Los Angeles, California 90067, or at such other place as Parent and
the Company mutually agree, at 10:00 a.m. local time on the later
to occur of (a) November 15, 2007, or (b) the second Business Day
after the day on which the last of the closing conditions set forth
in Article 6 below has been satisfied or waived, or such other date
as Parent and the Company mutually agree upon in writing (the
“
Closing Date ”).
2.3
Effective Time .
Upon the terms of and subject to the conditions of this Agreement,
as soon as practicable on the Closing Date: (a) the parties hereto
will cause the Merger to be consummated by filing with the
Secretary of State of the State of Nevada a certificate of merger
and any required related documents, in such form or forms as are
required by, and executed in accordance with, applicable law (the
date and time of such filing being the “
Effective Time ”
and the date upon which the Effective Time occurs, being the
“
Effective Date ”);
and (b) Parent will deliver the Merger Consideration to the
shareholders of the Company and the holders of the Company
Preferred Stock in accordance with Section 2.7 hereof; and (c)
Parent, Merger Sub and the Company will cross-deliver the
certificates and other documents and instruments to be
cross-delivered pursuant to Article 6 below.
2.4
Effect of the Merger .
At the Effective Time, in accordance with the NRS, the separate
existence of Merger Sub will cease and the Surviving Corporation
shall succeed, without further action, to all the property, assets,
rights, privileges, powers and franchises of every kind of the
nature and description of Merger Sub and the Company. All debts,
liabilities and duties of Merger Sub and the Company will become
the debts, liabilities and duties of the Surviving Corporation. As
of the Effective Time, the Surviving Corporation will be a wholly
owned subsidiary of the Parent.
2.5
Effect of Merger on Common Stock of the Parent
.
Subject to a reverse split to be determined by the Parties after
the date hereof (the “
Reverse Split ”)
to occur prior to Closing, each share of Common Stock of Parent
issued and outstanding immediately prior to the Effective Time,
including, without limitation, Parent Common Stock, shall remain
issued and outstanding
from
and after the Effective Time. Notwithstanding anything herein
to the contrary, the number of shares of Parent Common Stock
to be held by the shareholders of Parent immediately prior to
the Closing shall equal 4.99% of the fully diluted capital
stock of the Parent as of the Closing after giving effect to
the shares of Parent Common Stock (i) to be issued to the
holders of Company Common Stock pursuant to
Section 2.7(a); (ii) issuable upon conversion of the
Parent Preferred Stock to be issued pursuant to
Section 2.7(b); (iii) issuable upon exercise of the
Merger Options to be issued pursuant to Section 2.7(c)
and the Parent Warrants to be issued pursuant to
Section 2.7(e); and (iv) without duplication, the
capital stock (including any shares of common stock issuable
upon conversion on exercise of any derivative securities)
issuable or deemed to be issued (if not in fact issued) in
connection with an equity financing or financings to be
undertaken by Parent or the Company pursuant to which Parent
or the Company shall raise at least $6,000,000 in gross
proceeds at a per share price of not less than $0.50 per share
(on a pre-Reverse Split basis).
2.6
Effect of Merger on Common Stock of Merger Sub
.
At the Effective Time, each share of common stock, par value $.001
per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without
any action on the part of the holders thereof, be converted into
and become one validly issued, fully paid and non-assessable share
of common stock, par value $.001 per share, of the Surviving
Corporation.
2.7
Effect of Merger on Capital Stock of Company
.
(a)
Company Common Stock .
At the Effective Time, all issued and outstanding shares of the
Company’s common stock (the “
Company Common Stock ”)
shall, by virtue of the Merger and without any action on the part
of the holders thereof ,
be converted into the right to receive a such number of shares of
Parent Common Stock equal to 95.01% of Parent Common Stock
outstanding immediately prior to Closing (after giving effect to
the Reverse Split) less the shares of Parent Common Stock issuable
upon Conversion of the Parent Preferred Stock and the exercise of
the Parent Warrants and the Merger Options .
(b)
Company Series A Preferred Stock and Series B Preferred
Stock .
At the Effective Time, (i) all of the issued and outstanding shares
of the Company’s Series A Preferred Stock, par value $0.001
per share, (the “
Company Series A Preferred Stock ”)
shall by virtue of the Merger and without any action on the part of
the holders thereof, be converted into the right to receive a pro
rata share of 3,800,000 shares of Parent’s Series A Preferred
Stock (the “
Parent Series A Preferred Stock ”);
and (iii) all of the issued and outstanding shares of the
Company’s Series B Preferred Stock, par value $0.001 per
share, (the “
Company Series A Preferred Stock ”)
shall by virtue of the Merger and without any action on the part of
the holders thereof, be converted into the right to receive a pro
rata share of 4,600,000 shares of Parent’s Series B Preferred
Stock (the “
Parent Series B Preferred Stock ”,
together with Parent Series A Preferred Stock, the “
Parent Preferred Stock ”),
as set forth in Schedule 2.7 hereto, subject to the terms and
conditions of this Agreement. The shares of Parent Common Stock and
Parent Preferred Stock issuable pursuant to Sections 2.7(a) and
this Section 2.7(b) are collectively referred to herein as the
“
Merger Consideration .”
(c)
Outstanding Company Options .
At the Effective Time, each outstanding option to purchase Company
Common Stock granted under the Company’s 2007 Stock
Option
and
Performance Awards Plan (the “
Company Option Plan ”),
which has not previously expired or been exercised in full, whether
or not vested or exercisable on the Closing Date, shall be assumed
by Parent. Pursuant to such assumption, holders of such assumed
Options shall be entitled to receive in respect of each share of
Company Common Stock subject to such assumed Options, after the
Effective Time, options (“
Merger Options ”)
to purchase that number of shares of Parent Common stock obtained
by multiplying (x) the number of shares of Company Common Stock
issuable under such assumed option by (y) the Exchange Ratio
(defined below), at an exercise price equal to the exercise price
of such assumed option divided by the Exchange Ratio and otherwise
on the same terms and conditions as those contained in such assumed
option. For the avoidance of doubt, and notwithstanding anything to
the contrary contained herein, under no circumstances shall any
such assumed options accelerate with respect to the vesting thereof
by virtue of, in anticipation of or otherwise in connection with
the Merger or the transactions contemplated by this Agreement. For
purposes of this Agreement, “
Exchange Ratio ”
shall mean the ratio obtained by dividing (x) the number of shares
equal to the Merger Consideration by (y) the sum of the number
shares of the Company Common Stock and the Company Preferred Stock
issued and outstanding immediately prior to the Effective Time and
the number of shares of Company Common Stock issuable upon exercise
of all such Merger Options and Parent Warrants.
(d)
Company Option Plan .
At the Effective Time, Parent shall assume the Company Option Plan
pursuant to which 9,500,000 shares of Company Common Stock are
reserved for issuance.
(e)
Outstanding Company Warrants .
At the Effective Time, each outstanding warrant to purchase Company
Common Stock, which has not previously expired or been exercised in
full (each such option, an “
Eligible Warrant ”),
shall be assumed by Parent (the “
Parent Warrants ”).
(f)
As
a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of
Company Common Stock, all shares of Company Series A Preferred
Stock, and all shares of Company Series B Preferred Stock
shall be cancelled and retired and shall cease to be
outstanding. Each holder of shares of the Company Common
Stock, Company Series A Preferred Stock, and Company Series B
Preferred Stock shall thereafter cease to have any rights with
respect to such shares, except that the issued and outstanding
shares of Company Common Stock, Company Series A Preferred
Stock and Company Series B Preferred Stock immediately prior
to the Effective Time, and the respective holders thereof,
shall have the right to receive the Merger Consideration in
accordance with this Section 2.7 upon the surrender of the
certificate or certificates representing such
shares.
(g)
Each
share of Company Common Stock held in the Company’s
treasury at the Effective Time, if any, shall, by virtue of
the Merger and without any action on the part of the Company,
cease to be outstanding and shall be cancelled and retired
without payment of any Merger Consideration or any other
consideration therefor.
2.8
Effect of Merger on Existing Common Stock of Parent
.
At the Effective Time, holders of Parent Common Stock shall be
entitled to receive in respect of each share of Parent Common
Stock, warrants (the “
New Parent Warrants ”)
to purchase 0.333 shares of Parent
Common
Stock following the consummation of the Merger and other
transactions contemplated herein at an exercise price of 110%
per share of the most recent private placement of the Company
from the date hereof and ending six months from the Closing
Date. At and after the Effective Time, Parent will deliver to
each holder of a Parent Common Stock a certificate, evidencing
the New Parent Warrants. Pursuant to Article 5 hereof, such
New Parent Warrants and the shares of Parent Common Stock
issuable pursuant to the exercise thereof shall be registered
with the SEC under the Joint Proxy-Registration Statement to
be filed with the SEC following the execution of this
Agreement in respect of the Merger, this Agreement and the
transactions contemplated hereby.
2.9
Delivery of Certificates and Eligible Warrant Agreements
.
At and after the Effective Time, Parent will make available, and
each holder of an issued and outstanding share of Company Common
Stock and Company Preferred Stock, and each holder of an Eligible
Warrant, will be entitled to receive, (i) upon surrender to Parent
or its representatives of any certificates evidencing Company
Common Stock and Company Preferred Stock (the “
Certificates ”)
for cancellation and a letter of transmittal or assignment separate
from certificate in customary form (which will be in such form and
have such other provisions as Parent will reasonably specify) (the
“
Transmittal Letter ”);
or (ii) upon delivery to Parent or its representatives of
agreements evidencing the Eligible Warrants (the “
Eligible Warrant Agreements ”)
and/or other certificates or instruments evidencing the Eligible
Warrants, if any, the pro-rata share of the Merger Consideration,
Merger Options and Merger Warrants, as applicable, into which such
Company Common Stock or Eligible Warrant have been converted into
pursuant to the Merger, and upon such surrender of each Certificate
and/or the agreements or certificates representing the Eligible
Warrants, and delivery by Parent of the aggregate Merger
Consideration in exchange therefor, the Participating Company
Shares will forthwith be cancelled. Until surrendered or delivered
as contemplated by this Section 2.9, each Certificate, Eligible
Warrant Agreement or certificates representing the Eligible
Warrants, as applicable, will be deemed at any time after the
Effective Time for all purposes to evidence only the right to
receive upon such surrender the corresponding pro rata portion of
the Merger Consideration and Merger Warrants, as
applicable.
2.10
Stock Transfer Books .
From and after the Effective Time, the stock transfer books of the
Company will be closed, and there will be no further registration
or transfers of Company Common Stock and Company Preferred Stock
thereafter on the records of the Company.
2.11
No Further Ownership Rights .
The Merger Consideration and Merger Warrants delivered upon the
surrender for exchange of the Certificates, or the delivery of the
agreements or certificates representing Eligible Warrants, in
accordance with the terms hereof will be deemed to have been issued
in full satisfaction of all rights pertaining to such Participating
Company Shares, and there will be no further registration of
transfers of such shares which were outstanding immediately prior
to the Effective Time on the records of the Surviving Corporation.
If, after the Effective Time, Certificates, or agreements or
certificates representing the Eligible Warrants, are presented to
the Surviving Corporation, they will be cancelled, assumed and/or
adjusted, as applicable, pursuant to Section 2.7
hereof.
2.12
Lost, Stolen or Destroyed Certificates .
In the event any Certificates are lost, stolen or destroyed, Parent
will issue in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the
holder thereof and the other deliveries required above, the
applicable Merger Consideration; provided, however, that the
Surviving Corporation may, in its sole discretion and as a
condition precedent to the issuance thereof, require the owner of
such lost, stolen or destroyed Certificates to deliver an indemnity
or bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against it with respect to the
Certificates alleged to have been lost, stolen or
destroyed.
2.13
Charter Documents; Directors and Officers .
Unless otherwise agreed by the Company and Parent prior to the
Closing, at and as of the Effective Time, without any further
action on the part of Parent, Merger Sub or the Company: (i) the
Articles of Incorporation and the Bylaws of the Company as in
effect immediately prior to the Effective Time will be the Articles
of Incorporation and Bylaws of the Surviving Corporation at and
after the Effective Time until thereafter amended as provided by
applicable law and such Articles of Incorporation and Bylaws, as
applicable; (ii) the directors of the Company immediately prior to
the Effective Time will be the initial directors of the Surviving
Corporation from and after the Effective Time, until their
successors are elected and qualified or until their resignation or
removal; (iii) the officers of the Company immediately prior to the
Effective Time shall serve in their respective offices of the
Surviving Corporation from and after the Effective Time, until
their successors are elected or appointed and qualified or until
their resignation or removal.
2.14
Taking of Necessary Action; Further Action .
Each of Parent, Merger Sub and the Company will take all such
reasonable lawful action as may be necessary or appropriate in
order to effect the Merger in accordance with this Agreement as
promptly as practicable. If, at any time after the Effective Time,
any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all the property, rights,
privileges, power and franchises of the Company and Merger Sub, the
officers and directors of the Company and Merger Sub immediately
prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take,
all such lawful and necessary action
2.15
Company Dissenting Shares .
Shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by
persons who are entitled to and have properly exercised, and not
withdrawn or waived, appraisal rights with respect thereto in
accordance with the NRS (the “
Dissenting Shares ”),
will not be converted into the right to receive the Merger
Consideration, and holders of such shares of Company Common Stock
will be entitled, in lieu thereof, to receive payment of the
appraised value of such shares of Company Common Stock in
accordance with the provisions of the NRS unless and until such
holders fail to perfect or effectively withdraw or lose their
rights to appraisal and payment under the NRS. If, after the
Effective Time, any such holder fails to perfect or effectively
withdraws or loses such right, such shares of Company Common Stock
will thereupon be treated as if they had been converted at the
Effective Time into the right to receive the Merger Consideration,
without any interest thereon. The Company will give Parent prompt
notice of any demands received by the Company for appraisal of
shares of Company Common Stock. Prior to the Effective Time, the
Company will not, except with the prior written consent of Parent
make any payment with respect to, or settle or offer to settle, any
such demands.
2.16
Parent Dissenting Shares .
Shares of Parent Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by
persons who are entitled to and who have properly exercised, and
not withdrawn or waived, appraisal rights with respect thereto in
accordance with the California General Corporation Law
(“
CGCL ”)
(the “
Dissenting Shares ”),
will be entitled to receive payment of the appraised value of such
shares of Parent Common Stock in accordance with the provisions of
the CGCL unless and until such holders fail to perfect or
effectively withdraw or lose their rights to appraisal and payment
under the CGCL. The Parent will give Company prompt notice of any
demands received by the Parent for appraisal of shares of Parent
Common Stock. Prior to the Effective Time, the Parent will not,
except with the prior written consent of Company make any payment
with respect to, or settle or offer to settle, any such
demands.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
The
Company hereby represents and warrants to Parent that (subject
to such exceptions as are disclosed in the corresponding
Schedules with respect to specific sections of this Article 3)
the statements contained in this Article 3 are correct and
complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of
this Agreement throughout this Article 3, except in the case
of representations and warranties stated to be made as of the
date of this Agreement or as of another date and except for
changes contemplated or permitted by this
Agreement):
3.1
Organization, Standing and Qualification .
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. The
Company has all requisite corporate power and authority to own,
lease and use its assets as they are currently owned, leased and
used and to conduct its business as it is currently conducted. The
Company is duly qualified or licensed to do business in and is in
good standing in each jurisdiction in which the character of the
properties owned, leased or used by it or the nature of the
activities conducted by it make such qualification necessary,
except any such jurisdiction where the failure to be so qualified
or licensed would not have a Material Adverse Effect on the Company
or a Material Adverse Effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the
ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents. (b) The
Company’s wholly-owned subsidiaries Information Intellect,
Inc., Riptide Software, Inc. and Bravera, Inc. are corporations
duly organized, validly existing and in good standing under the
laws of the State of Georgia, State of Florida and State of Florida
respectively. Each has all requisite corporate power and authority
to own, lease and use its assets as they are currently owned,
leased and used and to conduct its business as it is currently
conducted. Each subsidiary is duly qualified or licensed to do
business in and is in good standing in each jurisdiction in which
the character of its properties owned, leased or used by it or the
nature of the activities conducted by it make such qualification
necessary, except any such jurisdiction where the failure to be so
qualified or licensed would not have a Material Adverse Effect on
the Company and its subsidiaries as a whole.
3.2
Due Authorization .
The Company has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and
delivery by the Company of this Agreement and the consummation by
the Company of the transactions contemplated hereby, and the
performance by the Company of its obligations hereunder, have been
duly and validly authorized by all necessary action by the Board of
Directors of the Company, and no other action on the part of the
Board of Directors of the Company is required to authorize the
execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to the
enforcement of creditors’ rights generally and by general
principles of equity.
3.3
Capitalization .
(a)
The
authorized common stock and other ownership interests of the
Company consist of 800,000,000 shares of Common Stock, par
value $0.001 per share and 60,000,000 shares of Preferred
Stock, par value $0.001 per share, of which 10,000,000 shares
have been designated as Series A Preferred Stock and
20,000,000 shares have been designated as Series B Preferred
Stock. There are 63,446,676 shares of Common Stock, 3,800,000
shares of Series A Preferred Stock and 4,600,000 shares of
Series B Preferred Stock issued and outstanding as of the date
hereof. All of the issued and outstanding shares of the
Company Common Stock, Company Series A Preferred Stock and
Company Series B Preferred Stock have been duly authorized and
are validly issued and outstanding, fully paid and
nonassessable and have been issued in compliance with
applicable securities laws and other applicable Legal
Requirements or transfer restrictions under applicable
securities laws.
(b)
Schedule 3.3(b) hereto
lists all outstanding or authorized options, warrants, purchase
rights, preemptive rights or other contracts or commitments that
could require the Company to issue, sell, or otherwise cause to
become outstanding any of its common stock or other ownership
interests (collectively “
Equity Equivalents ”),
including, without limitation, all Eligible Warrants. Except as
disclosed in
Schedule 3.3(b) hereto,
there are no other Equity Equivalents, commitments or agreements of
any character (whether created by statute, the Articles of
Incorporation or Bylaws of the Company, or any agreement or
otherwise) to which the Company is a party or by which it is bound,
obligating the Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of common stock of the Company or obligating
the Company to grant, extend, accelerate the vesting of, change the
price or otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement.
3.4
No Conflicts .
Except as set forth on
Schedule 3.4 hereto,
the execution, delivery and performance by the Company of this
Agreement and the Collateral Documents to which it is a party, and
the consummation of the transactions contemplated hereby and
thereby in accordance with the terms and conditions hereof and
thereof, do not and will not conflict with, constitute a violation
or breach of, constitute a default or give rise to any right of
termination or
acceleration
of any right or obligation of the Company under, or result in
the creation or imposition of any Encumbrance upon the
Company, its business, assets, properties or the Company
Common Stock by reason of the terms of (i) the Articles of
Incorporation, Bylaws or other charter or organizational
document of the Company or any Subsidiary of the Company, (ii)
any material contract, agreement, lease, indenture or other
instrument to which the Company is a party or by or to which
the Company, or its assets may be bound or subject and a
violation of which would result in a Material Adverse Effect
on the Company, (iii) any order, judgment, injunction, award
or decree of any arbitrator or Regulatory Authority or any
statute, law, rule or regulation applicable to the Company or
(iv) any Permit of the Company, which in the case of (ii),
(iii) or (iv) above would have a Material Adverse Effect on
the Company or a material adverse effect on the validity,
binding effect or enforceability of this Agreement or the
Collateral Documents or the ability of the Company to perform
its obligations under this Agreement or any of the Collateral
Documents.
3.5
Consents and Approvals .
Except as set forth on
Schedule 3.5 hereto,
no consent, approval, authorization or order of, registration or
filing with, or notice to, any Regulatory Authority or any other
Person is necessary to be obtained, made or given by the Company in
connection with the execution, delivery and performance by the
Company of this Agreement or any Collateral Document or for the
consummation by the Company of the transactions contemplated hereby
or thereby, except to the extent the failure to obtain any such
consent, approval, authorization or order or to make any such
registration or filing would not have a Material Adverse Effect on
the Company or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company to perform its obligations
under this Agreement or any of the Collateral
Documents.
3.6
Intellectual Property .
Except as set forth on
Schedule 3.6 hereto,
the Company and each of the Company’s subsidiaries own, or is
licensed or otherwise possesses legally enforceable rights to use,
all Intellectual Property that is used or currently proposed to be
used in the business of the Company as currently conducted or as
presently proposed by the Company to be conducted in the immediate
future.
3.7
Compliance with Legal Requirements .
The Company has operated its business in compliance with all Legal
Requirements applicable to the Company except to the extent the
failure to operate in compliance with all material Legal
Requirements would not have a Material Adverse Effect on the
Company on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents.
3.8
Financial Statements .
The Company has provided
Parent with copies of the unaudited Consolidated Balance Sheets of
the Company as of June 30, 2007 (the “
Company Financial Statement Date ”),
and the unaudited Consolidated Statements of Operations for the
period then ended and the audited Consolidated Balance Sheet of the
Company as of December 31, 2006 and the audited Consolidated
Statement of Operations for the period then ended (collectively,
the “
Company Financial Statements ”).
The Company Financial Statements have been
prepared in accordance with GAAP applied on a basis consistent
throughout all periods presented, present fairly in all material
respects the financial condition of the Company and its results of
operations as of the date and for the periods indicated
therein.
The accounting and
other
financial records of the Company have been maintained in
accordance with good business practices.
3.9
Litigation .
Except as set forth on
Schedule 3.9 hereto,
there are no outstanding judgments or orders against or otherwise
affecting or related to the Company, its business, assets or
properties, and there is no action, arbitration, audit, hearing,
suit, complaint, proceeding or investigation, judicial,
administrative or otherwise, that is pending or, to the
Company’s knowledge, threatened that, if adversely
determined, would have a Material Adverse Effect on the Company or
a Material Adverse Effect on the validity, binding effect or
enforceability of this Agreement or the Collateral
Documents.
3.10
Taxes .
Except as set forth on
Schedule 3.10 hereto,
the Company has duly and timely filed in proper form all Tax
Returns for all Taxes required to be filed with the appropriate
Regulatory Authority, and has paid all taxes required to be paid in
respect thereof except where such failure would not have a Material
Adverse Effect on the Company.
3.11
Books and Records .
The books and records of the Company accurately and fairly
represent the Company’s business and its results of
operations in all material respects.
3.12
Brokers or Finders .
Except as set forth on
Schedule 3.12 hereto,
all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company or its
Affiliates in connection with the transactions contemplated by this
Agreement, and neither the Company, or Affiliates has incurred any
obligation to pay any brokerage or finder’s fee or other
commission in connection with the transaction contemplated by this
Agreement.
3.13
Disclosure .
No representation or warranty of the Company in this Agreement or
in the Collateral Documents and no statement in any certificate
furnished or to be furnished by the Company pursuant to this
Agreement contained, contains or will contain on the date such
agreement or certificate was or is delivered, or on the Closing
Date, any untrue statement of a material fact, or omitted, omits or
will omit on such date to state any material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading.
3.14
No Undisclosed Liabilities .
Except as set forth in
Schedule 3.14 hereto,
the Company has no obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) other than (i) those
set forth or reserved against in the Company Financial Statements
or if subsequent to the date of the Company Financial Statements,
as otherwise disclosed in filings made with the SEC, (ii) those
incurred in connection with this Agreement or the transactions
contemplated hereby, (iii) those incurred in the ordinary course of
business consistent with the Company’s past
practice.
3.15
Absence of Certain Changes .
Except as set forth on
Schedule 3.15 hereto,
since the Financial Statement Date or otherwise disclosed in
filings made with the SEC, the Company has not: (a) suffered any
material adverse change in its financial condition, assets,
liabilities or business; (b) contracted for or paid any capital
expenditures; (c) except as otherwise disclosed in SEC filings,
incurred any indebtedness or borrowed money, issued or sold any
debt or equity
securities,
declared any dividends or discharged or incurred any
liabilities or obligations except in the ordinary course of
business as heretofore conducted; (d) except as otherwise
disclosed in SEC filings mortgaged, pledged or subjected to
any lien, lease, security interest or other charge or
encumbrance any of its properties or assets; (e) except as
otherwise disclosed in SEC filings paid any material amount on
any indebtedness prior to the due date, forgiven or cancelled
any material amount on any indebtedness prior to the due date,
forgiven or cancelled any material debts or claims or released
or waived any material rights or claims; (f) suffered any
damage or destruction to or loss of any assets (whether or not
covered by insurance); (g) except as otherwise disclosed in
SEC filings acquired or disposed of any assets or incurred any
liabilities or obligations; (h) except as otherwise disclosed
in SEC filings made any payments to its Affiliates or
associates or loaned any money to any person or entity; (i)
except as otherwise disclosed in SEC filings acquired or
disposed of any interest in any corporation, partnership,
limited liability company, joint venture or other entity; (j)
except as otherwise disclosed in SEC filings entered into any
employment, compensation, consulting or collective bargaining
agreement or any other agreement of any kind or nature with
any person or group, or modified or amended in any respect the
terms of any such existing agreement; (k) except as otherwise
disclosed in SEC filings entered into any other commitment or
transaction or experienced any other event that relates to or
affect in any way this Agreement or to the transactions
contemplated hereby, or that has affected, or may adversely
affect the Company’s business, operations, assets,
liabilities or financial condition; or (1) except as otherwise
disclosed in SEC filings amended its Articles of Incorporation
or By-laws, except as otherwise contemplated
herein.
3.16
Contracts .
Schedule 3.16(a) hereto
sets forth a true and complete list of all contracts, agreements,
leases, commitments or other understandings or arrangements,
written or oral, express or implied, to which the Company is a
party or by which it or any of its property is bound or affected
requiring payments to or from, or incurring of liabilities by, the
Company in excess of $250,000 (the “
Contracts ”).
Except as set forth on
Schedule 3.16(b) hereto,
the Company has complied with and performed, in all material
respects, all of its obligations required to be performed under and
is not in default with respect to any of the Contracts, as of the
date hereof, nor has any event occurred which has not been cured
which, with or without the giving of notice, lapse of time, or
both, would constitute a default in any respect thereunder. To the
best knowledge of the Company, no other party has failed to comply
with or perform, in all material respects, any of its obligations
required to be performed under or is in material default with
respect to any such Contracts, as of the date hereof, nor has any
event occurred which, with or without the giving of notice, lapse
of time or both, would constitute a material default in any respect
by such party thereunder. Except as set forth on
Schedule 3.16(c) hereto,
the Company knows of and has no reason to believe that there are
any facts or circumstances which would make a material default by
any party to any contract or obligation likely to occur subsequent
to the date hereof.
3.17
Permits and Licenses .
The Company has all certificates of occupancy, rights, permits,
certificates, licenses, franchises, approvals and other
authorizations as are reasonably necessary to conduct its business
and to own, lease, use, operate and occupy its assets, at the
places and in the manner now conducted and operated, except those
the absence of which would not materially adversely affect its
business. The Company has not received any written or oral notice
or claim pertaining to the failure to obtain any material permit,
certificate, license,
approval
or other authorization required by any federal, state or local
agency or other regulatory body, the failure of which to
obtain would materially and adversely affect its
business.
3.18
Restrictions on Business Activities .
Except as set forth in
Schedule 3.18 hereto,
there is no agreement or Order binding upon the Company, or any of
its assets or properties which has had or could reasonably be
expected to have the effect of prohibiting or impairing any current
business practice of the Company (or future business practice of
the Surviving Corporation), any acquisition of property by the
Company or the conduct of business by the Company as currently
conducted or as proposed to be conducted by the Company other than
in the ordinary course of business or which would not reasonably be
expected to give rise to a Material Adverse Effect.
3.19
Title to Property .
The Company has good and marketable title to all of its properties,
interests in properties and assets, real and personal, reflected in
the Company Financial Statements or ac
|
