Exhibit 10.1
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;
2
“
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
3
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;
4
“ 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
5
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;
6
“ 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 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
7
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 (ii) all of the issued
and outstanding shares of the Company’s Series B Preferred
Stock, par value $0.001 per share, (the “ Company Series B
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 .” The terms
of the respective series of the Parent Preferred Stock shall have
substantially the same terms as the series of Company preferred
stock that are being converted except for the conversion rate which
shall be based on the Exchange Ratio.
8
(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
warrant, an “ Eligible Warrant ”), shall be
assumed by Parent (thereafter, 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.
9
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, five-year 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, which such New Parent Warrants
shall expire five (5) years from the date of issuance. 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
10
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
11
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
12
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
13
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
|
