AGREEMENT AND PLAN OF MERGER
AGREEMENT AND
PLAN OF MERGER (the “Agreement”), dated as
of May 6, 2008, by and among Kelyniam Global, Inc., a Nevada
corporation (“Parent”) and M2-Systems, LLC a
corporation organized under the laws of the State of
Connecticut (“Seller”)
WHEREAS , the
board of directors of Parent and directors and officers of
Seller have approved the acquisition of Seller by Parent on
the terms and conditions set forth in this
Agreement;
WHEREAS , pursuant
to this Agreement, and subject to the terms and conditions set
forth herein, Kelyniam Global, Inc. has agreed to commence a
cash offer (the “ Offer
”) to purchase all of Seller fixed assets and
outstanding debt (“ Seller
Assets and Debt
”), for a total cash offer price of $406,080.00 (“
Offer
Price ”);
WHEREAS , the
Offer Price constitutes the repayment of debt financing in the
amount of $166,080 and payment of lease-to-own balance of
$240,000 in order to acquire all Seller’s assets free
and clear (“ Repayment
”);
WHEREAS ,
following consummation of the Offer, upon the terms and
conditions set forth herein, M2-Systems, LLC will be merged
with and into Kelyniam Global, Inc. as a wholly owned
subsidiary of the Parent corporation, (“ Merger
” and, with the Offer, the “ Transaction
”), whereby Parent will have the right to receive free
and clear title ownership to Seller Assets, whereby placing
title into either M2-Systems, LLC as a wholly owned subsidiary
of Kelyiam Global, Inc. or directly into Kelyiam Global, Inc.
whichever proves to be in the best interest of Parent and
Seller;
WHEREAS , the
Seller shall continue to conduct ordinary course of business
from the date of this Agreement and after the completion of
this Agreement and subsequent Transactions with reasonable
efforts from Parent to provide management, operating and
technical assistance to the operator of M2-Systems,
LLC;
WHEREAS , the
Seller directors and officers have unanimously
(i) determined and declared that this Agreement, the
Offer and the Merger are advisable and in the best interests
of Seller, (ii) approved the Offer and the Merger in
accordance with the General Corporation Law of the State of
Connecticut, (“ CTGCL
”) and (iii) adopted this Agreement, and
(iv) recommended that the Seller accept the Offer, extend
full ownership of all Seller Assets and Debt into the Offer
for the purpose of Repayment and free and clear title of
ownership by Parent, and if required by applicable Law, adopt
and approve this Agreement;
WHEREAS , as an
inducement and condition to Parent entering into this
Agreement, certain directors and executive officers of Seller
are entering into support agreements (collectively, the
“ Support
Agreements ”) with Parent and with the execution
of this Agreement, whereby, among other things, such directors
and officers have agreed, upon the terms and subject to the
conditions set forth therein, to extend full ownership of
Seller Assets and Debt whether held directly by Seller or its
directors and officers on behalf of Seller in the Offer and to
support the actions necessary to consummate the Merger;
and
WHEREAS , the
parties desire to make certain representations, warranties and
agreements in connection with the Transaction and to prescribe
certain conditions to the Transaction.
NOW,
THEREFORE , in consideration of the foregoing and the
mutual covenants, representations, warranties and agreements
contained herein, and intending to be legally bound hereby,
the parties agree as follows:
ARTICLE I – THE OFFER
(a)
Provided that this Agreement shall not have been terminated by
a mutual agreement by the Parent board and the Seller
directors and officers, as promptly as is reasonably
practicable (but in no event later than May 30, 2008) after
the date of this Agreement, Parent shall commence an offer to
purchase all Seller Assets and Debt at the Offer Price and
shall use its reasonable best efforts to consummate the Offer,
subject to the terms and conditions hereof and
thereof. Subject to the terms and conditions of
this Agreement, Parent shall purchase from Seller, (after
giving effect to any required withholding Tax), all Seller
Assets and Debt validly presented pursuant to the Offer and
not withdrawn (the time and date of acceptance for payment,
the “ Acceptance
Date ”).
(b)
Parent reserves the right to modify, in whole or in part, the
terms of the Offer, with written consent of the
Seller. The Offer shall remain open until 12:00
midnight, Little Rock, Arkansas time, on the date that is
twenty (20) Business Days after the commencement of the
Offer (the “ Expiration
Date ”), unless Parent shall have extended the
period of time for which the Offer is open pursuant to, and in
accordance with, the succeeding sentence or as may be required
by applicable Laws, in which event the term “
Expiration
Date ” shall mean the latest time and date as the
Offer, as so extended, may expire; provided
, however ,
that Parent may provide a subsequent offering period for an
additional 30 calendar days (and one or more extensions
thereof) after the Expiration Date, in accordance with
applicable Laws. Nothing contained in this
paragraph shall affect any termination rights of the parties
in Article VIII.
(c)
On the date of commencement of the Offer, Parent shall make
all other filings or recordings required by the Securities and
Exchange Commission (“ SEC
”) with respect to the Offer which shall contain the
offer to purchase and related letter of transmittal and
summary advertisement and other ancillary documents and
instruments required thereby pursuant to which the Offer will
be made and cause the Offer Documents to be disseminated to
Seller directors and officers giving reasonable opportunity to
review and comment on the Offer Documents prior to their
filing with the SEC, and Parent agree to provide Seller with
any comments or other communications, whether written or oral,
that may be received from the SEC or its staff with respect to
the Offer Documents promptly after receipt thereof and prior
to responding thereto, and a reasonable opportunity
to provide comments on that response (to which reasonable and
good faith consideration shall be given). If at any
time prior to the Effective Time, any information relating to
the Offer, the Merger, Seller, Parent, or any of their
respective Affiliates, should be discovered by Seller or
Parent which should be set forth in an amendment or supplement
to the Offer Documents, so that the Offer Documents shall not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
the party which discovers such information shall promptly
notify the other party, and an appropriate amendment or
supplement describing such information shall be filed with the
SEC and disseminated to the Seller directors and officers, as
and to the extent required by applicable Law.
(d) Parent
shall provide or cause to be provided to Seller on a timely
basis the funds necessary to pay for Seller Assets and Debt
that Parent becomes obligated to purchase pursuant to the
Offer and shall cause Parent to fulfill its obligations under
this Agreement.
(a)
Seller directors and officers hereby represent, that the
Seller directors and officers, at a meeting duly called and
held at which a quorum was present throughout, has unanimously
(i) determined that the Transaction, and each of the
Offer and the Merger, is advisable and in the best interests
of Seller, (ii) approved the Offer, the Merger and this
Agreement in accordance with the CTGCL, (iii) recommended
acceptance of the Offer extend full ownership of all Seller
Assets and Debt into the Offer for the purpose of Repayment
and free and clear title of ownership of tangible assets by
Parent, and if required by applicable Law, adopt and approve
this Agreement;
(b) In
connection with the Offer, Seller will promptly furnish Parent
with managerial meeting minutes as of January 1, 2008,
financial and Tax reports, active contracts or agreements for
normal course of business and a computer list containing the
names and addresses and contractual details for the companies,
Persons or Person with a revenue generating contractual
relationship with Seller as of the most recent practicable
date, and shall furnish Parent with such additional available
information and such other assistance as Parent or its agents
may reasonably request. Subject to the requirements of
applicable Laws, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Parent, and their
Representatives, shall keep such information confidential and
use the information contained in any such listings and files
only in connection with the Offer and the Merger and, should
the Offer terminate or if this Agreement shall be terminated,
will promptly deliver to Seller all copies of such information
then in their possession.
ARTICLE II – THE MERGER
2.1
The
Merger . Upon the terms and subject to the
satisfaction or waiver of the conditions set forth in this
Agreement, and in accordance with the CTGCL, at the Effective Time,
Seller shall merge with and into Parent as a wholly owned
Subsidiary of Parent upon acquisition of Seller Assets and
Debt.
2.2
Closing;
Effective Time . Subject to the terms and
conditions of this Agreement, the closing of the Merger (the
“ Closing
”) will take place at the offices of Kelyniam Global, Inc.,
1100 North University Avenue, Suite 135, Little Rock, Arkansas,
unless another place is agreed to in writing by the parties hereto,
at 10:00 a.m., local time, on a date (the “ Closing Date
”) specified by the parties, which shall be no later than two
(2) Business Days after the satisfaction or waiver (subject to
applicable Law) of the latest to occur of the conditions set forth
here within, unless this Agreement has been theretofore terminated
pursuant to its terms or unless extended by mutual agreement of the
parties. As soon as practicable after the satisfaction or waiver of
the conditions set forth, the Merger shall become effective upon
the filing with the Secretary of State of the State of Connecticut
a certificate of merger or other appropriate document (the “
Certificate of
Merger ”), and the parties shall make all other
filings or recordings required by the CTGCL and the
SEC. The term (“ Effective Time
”) shall be the date and time when the Merger becomes
effective.
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2.3
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Effects of the Merger .
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(a)
At and after the Effective Time, the Merger shall have the
effects set forth in this Agreement and in the appropriate
provisions of the CTGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, the
wholly owned subsidiary of Parent shall maintain the name
M2-Systems, LLC and as such continue ordinary course of
business; manage all licenses, leases, legally enforceable
rights to use, all material service names, domain names, and
logos used in the respective business, continue to provide SEP
to certain officers of Seller, maintain contractual agreements
with independent contractors, and uphold positions and duties
of officers and all other Seller Personnel necessary to carry
on business as is currently being conducted.
(b)
Seller will conduct business within its ordinary course;
however Seller will not enter into any capital commitment
relating to the business or incur or assume any liability in
connection with the business, other than in the normal and
usual course of business, without prior written consent of the
Parent, such consent not to be unreasonably withheld or
delayed. Seller will not vary any of their vendor
contracts or agreements and will continue to observe and
perform all of its obligations and duties under these
contracts or agreements unless written notification is
provided to Parent regarding such variances.
(c)
Parent shall use reasonable efforts to provide management,
operating and technical assistance to the Seller’s
operator during the interim period of this
Agreement.
2.4
Certificate
of Incorporation and Bylaws . At the Effective Time, the
Certificate of Incorporation, as amended, of Seller, as in effect
immediately prior to the Effective Time, shall be amended in order
to reflect the provisions outlined in this agreement in accordance
with the applicable laws of the State of
Connecticut. From and after the Effective Time, the
Bylaws, as amended, of Seller, as in effect immediately prior to
the Effective Time, shall be amended and restated to be identical
to the Bylaws of Parent as in effect immediately prior to the
Effective Time, and as so amended shall be the Bylaws of the wholly
owned Subsidiary Corporation, until thereafter amended as provided
therein and in accordance with applicable Law.
2.5
Directors
and Officers . Subject to compliance with applicable Laws,
from and after the Effective Time, the directors and officers of
Seller shall continue to hold office until their successors shall
have been duly elected, appointed or qualified or until their
earlier death, resignation or removal in accordance with the Seller
Corporate Charter and the Seller Bylaws.
ARTICLE III – REPRESENTATIONS AND WARRANTIES OF
PARENT
Parent
hereby represent and warrant to Seller as
follows:
3.1
Corporate
Organization .
(a) Parent
is a Nevada corporation duly organized, validly existing and
in corporate good standing under the laws
of Nevada.
(b) Parent
has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate all
of its properties and assets and to carry on its business as
it is now being conducted. Parent is duly licensed or
qualified to do business and is in corporate good standing in
each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties
and assets owned, leased or operated by it makes such
licensing or qualification necessary, except where the failure
to be so licensed or qualified and in corporate good standing
would not, either individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect. The
certificate of incorporation and bylaws of Parent, copies of
which have previously been made available to Seller, are true,
correct and complete copies of such documents as currently in
effect.
3.2
Authority
. Parent has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby and perform its obligations hereunder. The
adoption, execution, delivery and performance of this Agreement and
the approval of the consummation of the transactions contemplated
hereby have been recommended by, and are duly and validly
authorized by all necessary action of Parent. No other corporate
proceedings on the part of Parent are necessary to authorize the
adoption, execution, delivery and performance of this Agreement or
to consummate each of the Offer, the Merger and the other
Transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent, and (assuming due
authorization, execution and delivery by Seller), constitutes the
valid and binding obligations of Parent, enforceable against Parent
in accordance with its terms.
3.3
Consents
and Approvals . None of the execution, delivery or
performance of this Agreement by Parent, the consummation by Parent
of the transactions contemplated hereby, including the Offer and
the Merger, or compliance by Parent with any of the provisions
hereof will (i) conflict with or result in any breach of any
provision of the organizational documents of Parent,
(ii) require Parent to make any filing with, give any notice
to, or obtain any permit, authorization, consent, or approval of,
any Governmental Authority, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to
which Parent, as the case may be, is a party or by which it or any
of their respective properties or assets may be bound, or
(iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent or any of their respective
properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such filings, notices, permits,
authorizations, consents, approvals, violations, breaches or
defaults that would not, individually or in the aggregate,
(A) prevent or materially delay consummation of the Offer or
the Merger, (B) otherwise prevent or materially delay
performance by Parent of the respective material obligations under
this Agreement, or (C) have a Parent Material Adverse
Effect.
3.4
Broker’s
Fees . Parent nor any of the respective officers, directors,
employees or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in
connection with any of the transactions contemplated by this
Agreement except for fees and commissions incurred in connection
with the engagement of legal, accounting or other professional
services payable in connection with the Merger, all of which will
be paid by Parent.
3.5
Legal
Proceedings . There is no claim, suit, action, proceeding or
investigation of any nature pending or, to the knowledge of Parent,
threatened, against Parent, challenging the validity or propriety
of the transactions contemplated by this Agreement, which, if
adversely determined, would, either individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
3.6
Available
Funds . Parent has, and at
each of the Acceptance Date and the date of the Effective Time will
have, sufficient cash, available lines of credit or other sources
of immediately available funds to enable it to pay the aggregate
Offer Price and the aggregate Merger Consideration in full as well
as to make all other required payments payable in connection with
the transactions contemplated hereby.
3.7
No
Other Representations or Warranties . Except for the
representations and warranties contained herewithin, none
of Parent, or any other Person on behalf of Parent makes
any express or implied representation or warranty with respect to
Parent or with respect to any other information provided to Seller
in connection with the transactions contemplated hereby. None of
Parent or any other Person on behalf of Parent shall be held liable
for damage, liability or loss resulting from the distribution to
Seller, or Seller’s use of, any such information, including
any information, documents, projections, forecasts or other
material made available to Seller in expectation of the
transactions contemplated by this Agreement, unless any such
information is expressly included in a representation or warranty
contained herewithin.
ARTICLE IV – REPRESENTATIONS AND WARRANTIES OF
SELLER
Seller
hereby represents and warrants to Parent as
follows:
4.1
Corporate
Organization .
(a)
Seller is a corporation duly organized, validly existing and
in corporate good standing under the laws of the State of
Connecticut.
(b) Seller
has all requisite corporate power and authority to own, lease
or operate all of its properties and assets and to carry on
its business as it is now being conducted. Seller is duly
licensed or qualified to do business and is in corporate good
standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes
such licensing or qualification necessary, except where the
failure to be so licensed or qualified and in corporate good
standing has not and would not reasonably be expected to have,
a Seller Material Adverse Effect. The Certificate of
Incorporation and the Bylaws or equivalent organizational
documents of Seller, copies of which have previously been made
available to Parent, are true, correct, and complete copies of
such documents as currently in effect.
4.2
Capitalization
. Since its origination, Seller hereby represents that
it does not have a share structure established nor has it ever
authorized, issued, or registered any shares.
4.3
Assets
and Debt . Seller has fixed assets in the form of
Automobiles valued at approximately $51,000 and Equipment valued at
approximately $340,000. All Seller Assets are wholly
owned by Seller and/or its directors and officers and having been
duly authorized, validly obtained, fully paid or financed, and are
assessed at approximate values. Seller Debt is in the
amount of $406,080 resulting from debt incurred in the acquisition
of assets, office build-out for business expansion through
financing in the amount of $166,080 and equipment used in
Seller’s daily operations currently owned by one of the
officers of the Seller with an outstanding lease-to-own balance in
the amount of $240,000;
4.4
Authority
. Seller has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby and perform its obligations hereunder,
including the Offer and the Merger, subject to obtaining the
approval of the Seller directors and officers to adopt and approve
this Agreement. The adoption, execution, delivery and performance
of this Agreement and the approval of the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller and no other
corporate proceedings on the part of Seller are necessary to
authorize the adoption, execution, delivery and performance of this
Agreement or to consummate each of the Offer and the Merger and the
other transactions contemplated hereby, except for the adoption and
approval of this Agreement by the Seller directors and officers and
the filing of the Certificate of Merger with the State of
Connecticut. The Seller directors and officers have unanimously
(i) determined and declared that this Agreement, the Offer and
the Merger are advisable and in the best interests of Seller,
(ii) approved the Offer and the Merger in accordance with the
CTGCL, and (iii) adopted this Agreement, and
(iv) recommended that the Seller accept the Offer, extend full
ownership of all Seller Assets and Debt into the Offer for the
purpose of Repayment and free and clear title of ownership by
Parent, and if required by applicable Law, adopt and approve this
Agreement. This Agreement has been duly and validly
executed and delivered by Seller and (assuming due authorization,
execution and delivery by Parent) constitutes the valid and binding
obligations of Seller, enforceable against Seller in accordance
with its terms.
4.5
No
Violation; Required Filings and Consents . Assuming the
adoption and approval of this Agreement by the Seller directors and
officers and except for filings, permits, authorizations, consents
and approvals, and for the termination or expiration, as
applicable, none of the execution, delivery or performance of this
Agreement by Seller, the consummation by Seller of the transactions
contemplated hereby, including the Offer and the Merger, or
compliance by Seller with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of
the organizational documents of Seller, (ii) require Seller to
make any filing with, give any notice to, or obtain any permit,
authorization, consent or approval of, any Governmental Authority,
(iii) (A) require Seller to give any notice to, or obtain any
consent from, any Person under, or (B) result in a violation
or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
modification, cancellation or acceleration) under, any of the
terms, conditions or provisions of any material note, bond,
mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Seller is a party or by which it
or any of its properties or assets may be bound, or
(iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Seller or any of its properties or
assets, excluding from the foregoing clauses (ii), (iii) and
(iv) such filings, notices, permits, authorizations, consents,
approvals, violations, breaches, defaults or rights of termination,
cancellation or acceleration that, would not, individually or in
the aggregate, (A) prevent or materially delay consummation of
the Offer and the Merger, (B) otherwise prevent or materially
delay performance by Seller of its material obligations under this
Agreement, or (C) reasonably be expected to have a Seller
Material Adverse Effect.
4.6
Financial
Statements . Seller financial statements (including, in each
case, any notes thereto) (the “ Seller Financial
Statements ”) made available by the Seller to the
Parent, (i) has been prepared from and in accordance with and
accurately reflects the books and records of Seller in all material
respects, (ii) has been prepared in accordance with United
States generally accepted accounting principles (“
GAAP ”)
applied (except as may be indicated in the notes thereto) on a
consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto), and (iii) each presents
fairly in all material respects the financial position, results of
operations and cash flows of Seller.
4.7
Broker’s
Fees . Neither Seller nor any of its officers, directors,
employees, or agents has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in
connection with any of the transactions contemplated by this
Agreement (including the Offer and the Merger), except for fees and
commissions incurred in connection with the engagement of legal,
accounting or other professional services payable in connection
with the transactions contemplated hereby, all of which will be
paid by Seller.
4.8
Absence
of Certain Changes or Events . Since April 30, 2008,
(a) Seller has conducted its respective business in all
material respects in the ordinary course consistent with their past
practice, (b) other than as a result of the transactions
contemplated by this Agreement, there has not been: (i) any
adverse change in the financial condition, backlog, operations or
business of Seller that would reasonably be expected to have a
Seller Material Adverse Effect; (ii) any damage, destruction,
or loss to the business or properties of Seller (whether or not
covered by insurance) that would reasonably be expected to have a
Seller Material Adverse Effect; (iii) any labor dispute (other
than routine grievances); (iv) any increase in compensation,
bonus, deferred compensation, or other consideration of any
employee or director other than in the ordinary course of business
consistent with past practice, (v) transfer, sell, lease,
sublease or license or otherwise dispose of any material assets or
properties of Seller other than in the ordinary course of business
consistent with past practice, (vi) write down or write up the
value of any receivable or revalue any assets of Seller other than
in the ordinary course of business consist with past practice, or
(vii) settle, pay or discharge any litigation, investigation,
or arbitration, other than the settlement, payment, discharge or
satisfaction in the ordinary course of business consistent with
past practice, and (c) there has not been any change,
circumstance or event which has had, or would reasonably be
expected to have, individually or in the aggregate, a Seller
Material Adverse Effect.
4.9
Legal
Proceedings . There is (a) no suit, claim, action,
arbitration, investigation of a Governmental Authority, alternative
dispute resolution action or any other judicial, administrative or
arbitral proceeding pending or, to the knowledge of Seller,
threatened against Seller or, to the knowledge of Seller, any
executive officer or director of Seller (in their capacity as
such), and (b) to the knowledge of Seller, any executive
officer or director of Seller (in their capacity as such), is
subject to any outstanding order, writ, judgment, injunction or
decree of any Governmental Authority, which, in the case of
(a) or (b), (i) would, individually or in the
aggr
