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Execution
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PACKETPORT.COM, INC.
PACKETPORT ACQUISITIONS, INC.
WYNDSTORM CORPORATION
Dated as of
October 31, 2007
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger
(this " Agreement ") is made and entered into as of
October 31, 2007, by and among Packetport.com, a Nevada corporation
(" Parent "); Packetport Acquisitions, Inc., a Delaware corporation
and a wholly-owned subsidiary of Parent (" Merger Sub
") and Wyndstorm
Corporation, a Delaware corporation (the " Company
").
RECITALS
WHEREAS, the respective Boards of
Directors of Parent, Merger Sub and the Company have determined
that the merger of Merger Sub with and into the Company, in the
manner contemplated herein (the " Merger
"), is desirable and in
the best interests of their respective stockholders and, by
resolutions duly adopted, have approved and adopted this Agreement;
and
WHEREAS, the parties desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions
to the Merger.
NOW, THEREFORE, in consideration of
these premises and their promises hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1
The Merger.
Upon the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the Delaware General Corporation Law (the "
DGCL
"), Merger Sub shall be
merged with and into the Company at the Effective Time (as defined
below). As a result of the Merger, the separate corporate existence
of Merger Sub shall cease and the Company shall continue its
existence under the laws of the State of Delaware as a wholly-owned
subsidiary of Parent. The Company, in its capacity as the
corporation surviving the Merger, is hereinafter sometimes referred
to as the " Surviving Corporation ."
1.2
Effective
Time. As
promptly as practicable on the Closing Date (as defined below), the
parties shall cause the Merger to be consummated by filing with the
Secretary of State of the State of Delaware (the "
Delaware Secretary
of State ") a certificate of merger (the " Certificate of
Merger ")
in such form as is required by and executed in accordance with the
DGCL. The Merger shall become effective (the " Effective Time
") when the Certificate
of Merger has been filed with the Delaware Secretary of State or at
such later time as shall be agreed upon by Parent and the Company
and specified in the Certificate of Merger. Prior to the filing
referred to in this Section 1.2, a Closing Date (the "
Closing
Date ")
shall be held at the offices of Bingham McCutchen, 2020 K Street,
NW., Washington, D.C. 20007, or such other place as the parties may
agree upon, as soon as practicable (but in any event within ten
(10) business days) following the date upon which all conditions
set forth in Article VI that are capable of being satisfied prior
to the Closing Date have been satisfied or waived, or at such other
date as Parent and the Company may agree; provided that the
conditions set forth in Article VI have been satisfied or waived at
or prior to such date. The date on which the Closing Date takes
place is referred to herein as the " Closing Date
." For all purposes, the
Closing Date shall be effective as of 11:59 p.m. on the Closing
Date.
1.3
Effects of the
Merger. At
and after the Effective Time, the separate existence of Merger Sub
will cease, and the Company, as the Surviving Corporation and
successor, shall succeed to all of the rights and property of
Merger Sub and the Company, and shall be subject to all the debts
and liabilities of Merger Sub and the Company except as otherwise
expressly provided in reference to this Agreement.
1.4
Certificate of
Incorporation and Bylaws. The Certificate of Incorporation of
the Surviving Corporation shall be amended in its entirety to
contain the provisions set forth in the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the
Effective Time (the " Merger Sub Certificate "), and (b) the Bylaws of Merger
Sub, as in effect immediately prior to the Effective Time (the
" Merger Sub
Bylaws "), shall be the Bylaws of the Surviving Corporation; in each
case, until amended in accordance with the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
2.1
Merger Consideration; Conversion
of Capital Stock.
At the Effective Time,
by virtue of the Merger and without any action on the part of
Parent, Merger Sub or the Company or their respective stockholders,
each share of the Company's common stock (" Company Common
Stock ")
issued and outstanding immediately prior to the Effective Time
shall be converted into, and shall represent the right to receive
such number of shares of Parent Common Stock (as defined in Section
3.6)(such aggregate number of shares, the " Merger
Consideration ") equaling 86% of the issued and outstanding shares of
Parent Common Stock, computed on a fully diluted basis, taking into
account any outstanding warrants, options or other rights with
regard to Parent Common Stock. The Merger Consideration shall be
allocated and distributed as set forth on Schedule 1.
2.2
Conversion of Merger
Sub Stock. Each share of capital stock of Merger Sub outstanding at the
Effective Time shall be converted into and become one validly
issued, fully paid and non-assessable share of common stock of the
Surviving Corporation.
2.3
Exchange of
Certificates.
(a)
Exchange Procedures
.
(i)
Promptly after the Closing Date,
the Surviving Corporation shall send to all the Company
stockholders (the " Stockholders ") a notice informing such
Stockholders of the consummation of the Merger, instructing such
Stockholders to deliver duly endorsed stock certificates to the
Surviving Corporation within the twenty (20) day period following
the date of such notice (the " Delivery Period
"). In exchange for such
delivery of the stock certificates, such Stockholder shall receive,
as soon as practicable after the end of the Delivery Period, stock
certificates in Parent.
(ii)
If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such person of
a bond in such reasonable amount as Parent may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, Parent will deliver in exchange for such lost, stolen
or destroyed Certificate, the Merger Consideration, payable at
Closing Date, with respect to the shares of the Company Capital
Stock that were represented by such Certificate, as provided in
this Article II.
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(b)
No Further
Ownership Rights in the Company Common Stock. All Merger
Consideration issued and/or paid and any cash payments in lieu of
fractional shares upon surrender of Certificates (or affidavits) in
accordance with the terms hereof shall be deemed to have been
issued and/or paid in full satisfaction of all rights pertaining to
such shares of the Company Common Stock represented thereby, and,
as of the Closing Date, the stock transfer books of the Company
shall be closed and there shall be no further registration of
transfers on the stock transfer books of the Company of shares of
the Company Common Stock outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall
be cancelled and exchanged as provided in this Section 2.4.
(c)
Restrictive Legend. Each certificate evidencing shares of
Parent Common Stock issued pursuant to this Agreement shall bear
the following legend in conspicuous type:
THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION
WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
In order to induce the
Company to enter into this Agreement, Parent and Merger Sub,
jointly and severally, hereby represent and warrant to the Company
that the statements contained in this Article III are true, correct
and complete, except as otherwise expressly set forth in this
Article III as of the date hereof and as of the Closing Date unless
another date is expressly stated below or except as otherwise set
forth in the Parent Disclosure Schedule attached to this
Agreement.
3.1
Organization and
Standing.
(a)
Each
of Parent, Merger Sub and each other subsidiary of Parent is or
prior to Closing Date shall be a corporation duly organized,
validly existing and, where applicable, in good standing under the
laws of its state of incorporation with corporate power and
authority to own, lease, use and operate its properties and to
conduct its business as and where now owned, leased, used, operated
and conducted.
(b)
Each
of Parent, Merger Sub and each other subsidiary of Parent is or
prior to Closing Date shall be duly qualified to do business and in
good standing in each jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or
operates, requires it to so qualify, except where failure to be so
qualified would not have a Material Adverse Effect. Parent is not
in default in the performance, observance or fulfillment of any
provision of the Articles of Incorporation of the Parent, as
amended (the " Parent Articles "), or the bylaws of
the Parent, as amended, as in effect on the date hereof (the "
Parent Bylaws "), and Merger Sub and each other
subsidiary of Parent is not in default in the performance,
observance or fulfillment of any provisions of its Certificate of
Incorporation or Bylaws.
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3.2
Corporate Power and Authority. Each of Parent and Merger Sub
has all requisite corporate power and authority to enter into and
deliver this Agreement to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by Parent and Merger Sub has
been duly authorized by all necessary corporate action on the part
of each of Parent and Merger Sub, other than as provided in Section
3.8. This Agreement has been duly executed and delivered by each of
Parent and Merger Sub and shall constitute the legal, valid and
binding obligation of each of Parent and Merger Sub enforceable
against each of them in accordance with its terms, except to the
extent that such enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally or by
general equitable principles.
3.3
Conflicts; Consents and Approvals. Neither the execution and
delivery of this Agreement by Parent and Merger Sub nor the
consummation of the transactions contemplated hereby will:
(a)
conflict with, or result in a breach of any provision of, the
Parent Articles or the Parent Bylaws, the Merger Sub Certificate or
the Merger Sub Bylaws or the governing documents of any other
subsidiary of Parent;
(b)
materially violate, or conflict with, or result in a material
breach of any provision of, or constitute a material default (or an
event that, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, or entitle any party
(with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a material default under, or
result in the creation of any material Encumbrance (as defined
below) upon any of the properties or assets of Parent or any of its
subsidiaries under, any of the terms, conditions or provisions of
any material note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other
instrument or obligation to which Parent or any of its subsidiaries
is a party (for purposes of this Agreement, "
Encumbrance " means any charge, claim, mortgage,
servitude, easement, right of way, equitable interest, lease or
other possessory interest, conditional sale or other title
retention arrangement, lien, pledge, security interest, preference,
priority, right of first refusal or similar restriction);
(c)
materially violate any (i) order, writ, injunction, decree,
statute, ruling, assessment, or arbitration or award of any
governmental authority or (ii) applicable laws relating to Parent
or any of its subsidiaries or their respective properties or
assets; or
(d)
require any action or consent or approval of, or review by, or
registration or filing by Parent or any of its affiliates with, any
third party or any governmental authority, other than (i)
registrations or other actions required under federal and state
securities laws or the rules and regulations of the national
securities exchange or national securities quotation system on
which the Parent Common Stock is then listed, and (ii) the filing
of the Certificate of Merger with the Delaware Secretary of
State.
3.4
Actions. There are no Actions pending or, to the knowledge
of Parent, threatened against Parent or Merger Sub, including any
Action which questions the validity of this Agreement or the Merger
or any action taken or to be taken pursuant hereto or pursuant to
the Merger, or relating to its method of doing business or its
relationship with past or existing users or purchasers of any goods
or services, and there is no outstanding order, writ, injunction or
decree of any governmental authority against Parent or Merger Sub.
With regard to the SEC Investigations (as defined and disclosed in
the Parent Disclosure Schedule), Parent has no liability to the SEC
and the directors and management have no liability to the SEC in
excess of $275,000 in the aggregate. For purposes of this
Agreement, " Action " means any action, arbitration,
audit, examination, suit, proceeding, hearing or litigation,
whether formal or informal, and whether public or private,
commenced, brought, conducted or heard by or before any court or
governmental authority.
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3.5
Financial Ability.
At the Effective Time,
Parent will have a sufficient number of shares of Parent Common
Stock authorized to pay the Merger Consideration.
3.6
Capitalization of
Parent.
(a)
The
authorized capital stock of Parent consists of 149,000,000 common
shares (the " Parent
Common Stock "). At the date of this Agreement, (i) 22,107,520 shares of
Parent Common Stock are issued and outstanding, (ii) 3,750,000
shares of Parent Common Stock are reserved for issuance upon the
exercise or conversion of options, warrants or convertible
securities granted or issuable by Parent, including pursuant to
Parent's stock option and stock purchase plans. Each outstanding
share of Parent Common Stock is duly authorized and validly issued,
fully paid and nonassessable and has not been issued in violation
of any preemptive or similar rights. The issuance and sale of all
of the shares of Parent Common Stock described in this Section 3.6
have been in compliance in all material respects with applicable
federal and state securities laws.
(b)
As of
the date hereof, other than as set forth in clause (a) above, there
are no outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights
of any type relating to the issuance, sale, repurchase or transfer
by Parent of any securities of Parent, nor are there outstanding
any securities which are convertible into or exchangeable for any
shares of Parent Common Stock, and Parent has no obligation of any
kind to issue any additional securities or to pay for or repurchase
any securities of Parent or any predecessor.
(c)
The
shares of Parent Common Stock to be issued at the Effective Time
have been duly authorized and will, at the Effective Time, be fully
paid and nonassessable and issued in reliance on exceptions from
the registration and qualification requirements of federal and
state securities laws.
(d)
The
transactions contemplated by this Agreement, including without
limitation, the issuance of Parent Common Stock and the ownership
of the Parent Common Stock by the Stockholders, will not create any
obligation by Parent to sell or otherwise issue any shares of
Parent Common Stock or any other securities, or otherwise cause the
application of, any control share acquisition, shareholder approval
requirement (other than the Parent Stockholder Approval), poison
pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Parent Articles or the
laws of the state of its incorporation or other applicable law.
(e)
Prior
to Closing Date, Parent Common Stock shall have been reverse split
1:20 so as to provide this transaction with between 8,000,000 and
12,000,000 shares of Parent Common Stock for consideration.
3.7
Brokerage and Finders'
Fees. Neither
Parent nor any stockholder, director, officer or employee thereof
has incurred or will incur on behalf of Parent or any of its
affiliates, any brokerage, finders' or similar fee in connection
with the transactions contemplated by this Agreement, other than to
Source Capital Group, 276 Post Road West, Westport, CT
06880.
3.8
Board Recommendation;
Required Vote. The Board of Directors of Parent, at a meeting duly called and
held, has by the requisite vote of those directors present and
constituting a quorum of the directors then in office (a)
determined that this Agreement and the transactions contemplated
hereby, including the Merger, are fair to and in the best interests
of Parent and its stockholders, and (b) has recommended that the
stockholders of Parent vote for approval of the issuance of Parent
Common Stock.
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The
affirmative vote of a majority of the total votes cast by the
holders of Parent Common Stock, in favor of the issuance of Parent
Common Stock, if any, is the only vote of the Parent stockholders
necessary to approve the issuance of the consummation of the Merger
and the authorization, issuance and payment of the Merger
Consideration.
3.9
Parent SEC Documents. (a) Parent has timely filed with the
U.S. Securities and Exchange Commission (the "
Commission ") all forms, reports, schedules,
statements and other documents (including exhibits and other
information incorporated therein) required to be filed by it since
July 1, 2004 under the Securities Act of 1933, as amended (the "
Securities Act "), or the Securities Exchange Act of
1934, as amended (the " Exchange Act ") (such
documents, as supplemented and amended since the time of filing,
collectively, the " Parent SEC Documents "). No
subsidiary of Parent is required to file any form, report,
registration statement, prospectus or other document with the
Commission.
(b)
The
Parent SEC Documents, including any financial statements or
schedules included in the Parent SEC Documents, at the time filed
(and, in the case of registration statements and proxy statements,
on the dates of effectiveness and the dates of mailing,
respectively and, in the case of any Parent SEC Document amended or
superseded by a filing prior to the date of this Agreement, then on
the date of such amending or superseding filing): (i) did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) complied in all
material respects with the applicable requirements of the Exchange
Act and the Securities Act, as the case may be.
(c)
The
financial statements of Parent (including the related notes)
included in the Parent SEC Documents at the time filed (and, in the
case of registration statements and proxy statements, on the dates
of effectiveness and the dates of mailing, respectively, and, in
the case of any Parent SEC Document amended or superseded by a
filing prior to the date of this Agreement, then on the date of
such amending or superseding filing) complied in all material
respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect
thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q or Form 10-QSB of the
Commission), and fairly present (subject, in the case of unaudited
statements, to normal, recurring audit adjustments not material in
amount) in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and
cash flows for the periods then ended.
3.10
Specific
Matters
Parent represents and warrants that, as of the Closing Date,
there is no liability to the Company or Parent regarding any of the
following matters:
(a)
any matter relating
to any creditor or successor in interest who trades under the name
of Themis or similar related name;
(b)
any matter relating
to any creditor or successor in interest who trades under the name
of NewChip or similar related name;
(c)
any matter relating
to any creditor or successor in interest who trades under the name
of GKLZ or similar related name;
(d)
any matter relating
to any creditor or successor in interest who trades under the name
of Portellis or similar related name; or
(e)
any matter relating
to any creditor or successor in interest who trades under the name
of Transcom or similar related name.
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3.11
Undisclosed Liabilities . As of the Closing Date, neither
Parent nor Merger Sub has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) other
than (a) accrued liabilities disclosed on Parent's consolidated
financial statements, or in the notes thereto, not to exceed
$80,000 with respect to Ronald A. Durando and $150,000 with respect
to any other parties, each incurred prior to January 31, 2007, (b)
additional liabilities not to exceed $50,000 incurred from January
31, 2007 through the Closing Date, each as set forth in the Parent
Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce
Parent to enter into this Agreement, the Company hereby represents
and warrants to Parent and Merger Sub that the statements contained
in this Agreement are true, correct and complete, except as
otherwise expressly set forth herein, as of the date hereof and as
of the Closing Date unless another date is expressly stated below
or as otherwise set forth in the Company Disclosure Schedule
attached to this Agreement.
4.1
Organization and
Standing.
(a)
Upon
execution of this Agreement, the Company shall be a corporation
duly organized and validly existing under the laws of the State of
Delaware with
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