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AGREEMENT AND PLAN OF
REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
dated as of December 8, 2006 (this "Agreement") among ELGRANDE
INTERNATIONAL, INC., a Nevada corporation ("EGDI") and MCM
INTEGRATED TECHNOLOGIES, LTD., a British Columbia corporation (the
"Company"), and the sole stockholder of the Company, Murat Erbatur
(the "Stockholder").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to
the conditions of this Agreement, the Stockholder will exchange 100
shares of common stock of the Company, constituting 100% of the
issued and outstanding shares of the Company's common stock, for
consideration as follows (the “Exchange”):
1.
at the Effective Time (as defined below
in Section 1.02), EGDI will assume servicing the Company’s
accounts payable and working capital requirements,
2.
Within 9 months of the Effective Time (or
such later time as may be agreed in writing by each of the parties
hereto), EGDI will assume the accounts payable loan guarantees
currently provided by the Stockholder and in the amount as per the
November 30, 2006 audited balance sheet of the Company.
3.
EGDI will issue the Stockholder
10,000,000 shares of EGDI’s common stock, par value $0.001
per share restricted under Rule 144 and a promissory note payable
to the Stockholder in the amount of $Cdn 150,000 due 4 months
following the Effective Time (or such later time as may be agreed
in writing by each of the parties hereto).
As security for the indebtedness
represented by the Note delivered by EGDI at the Closing under this
Agreement, upon the delivery of the Note to the Stockholder,
Stockholder shall deposit the stock certificate for the 100
shares of the Company and EGDI will deposit the stock
certificate for 10,000,000 shares. with a Trustee to be agreed upon
by the parties, to be held in Trust by the Trustee until (i) full
payment of the principal amount of the Note and (ii) full payment
to Stockholder of the principal amount of Seller's loan to the
Company. In the event that EGDI fails to meet the dates specified
in items 2 and 3 above (or such other dates as may be agreed in
writing by each of the parties hereto), the shares of the Company
will revert to the Stockholder, the shares of EGDI will revert to
EGDI and all payments due under this Agreement will become
null.
As a result of the Exchange EGDI will
thus acquire 100% of the issued and outstanding securities of the
Company, making EGDI the sole stockholder of the
Company.
WHEREAS, for federal income tax purposes,
the Exchange is intended to qualify as a reorganization under the
provisions of section 368(a)(1)(B) of the United States Internal
Revenue Code of 1986, as amended (the "Code"); and.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, EGDI, the Company and
Stockholder hereby agree as follows:
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ARTICLE I: THE
EXCHANGE .
SECTION 1.01. The Exchange
. Upon the terms and subject to the
conditions set forth in Article VII, at the Effective Time (as
defined below in Section 1.02), as a result of the Exchange, EGDI
will become the sole shareholder of the Company.
SECTION 1.02. Effective Time;
Closing . As promptly as
practicable and in no event later than the fifth business day
following the satisfaction or, if permissible, waiver of the
conditions set forth in Article VII (or such other date as may be
agreed in writing by each of the parties hereto), the parties
hereto shall cause the Exchange to be consummated by Stockholder
delivering to the Trustee, or its representatives, the certificates
representing 100% of the outstanding Company Securities (as defined
below in Section 2.01 (c)), duly endorsed (or with duly executed
stock powers) so as to make EGDI the sole owner thereof free and
clear of all claims and encumbrances except as specifically assumed
by EGDI. The term "Effective Time" means the date and time of the
Closing (or such later time as may be agreed in writing by each of
the parties hereto) to be held at the offices of EGDI, Vancouver,
British Columbia, Canada (or such other place as the parties may
agree).
SECTION 1.03. Effect of the
Exchange . At the Effective
Time, the effect of the Exchange shall be that EGDI will become the
100% controlling shareholder of the Company.
ARTICLE II: DELIVERY OF
SECURITIES; EXCHANGE OF CERTIFICATES.
SECTION 2.01. Delivery of
Securities. At the
Effective Time, by virtue of the Exchange: 10,000,000 shares of
common stock, at $0.001 par value , of EGDI (the "EGDI Common
Stock") shall be issued in exchange for 100% of all outstanding
shares of capital stock of the Company (the “Shares” or
"Company Securities") issued and outstanding immediately prior to
the Effective Time. Each share of Company Securities shall be
converted, subject to Section 2.02(e), into the right to receive a
ratable portion of 10,000 shares (the "Exchange Ratio") of EGDI
Common Stock; provided, however, that, if between the date of this
Agreement and the Effective Time the outstanding shares of EGDI
Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination
or exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to the extent appropriate to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination
or exchange of shares (all such shares of EGDI Common Stock being
herein referred to as the "EGDI Securities" or the "Exchange
Consideration"); and each Share held in the treasury of the Company
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto.
SECTION 2.02. Exchange of
Certificates.
(a)
At the Closing, the Stockholder shall
deliver to EGDI all certificates representing Company Securities
(the "Certificates") delivered to it (together with any stock
transfer tax stamps required by reason of the payment of the
Exchange Consideration to a person other than the registered holder
of the Certificate surrendered), together with such other customary
documents as may reasonably be required by EGDI, in exchange for
the Exchange Consideration. The certificate representing the
Exchange Consideration shall be issued to the
Stockholder.
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(b)
All shares of EGDI Common Stock issued
upon conversion of the Company Securities in accordance with the
terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Company
Securities.
SECTION 2.03. Stock Transfer
Books . At the Effective Time,
the stock transfer books of the Company shall be closed and there
shall be no further registration of transfers of Shares thereafter
on the records of the Company.
From and after the Effective Time, the
holders of Certificates representing Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided in this
Agreement or by Law.
ARTICLE III: REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
Except as set forth in this Agreement and
disclosed in Exhibit A, the Company and the Stockholder hereby
jointly and severally represent and warrant to EGDI
that:
SECTION 3.01. Organization and
Qualification; Subsidiaries .
The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the Province of British
Columbia and has all requisite corporate power to own, lease and
operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized,
existing or in good standing or to have such corporate power, have
not had, and could not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect (as defined
below). The Company has no subsidiaries. The Company is duly
qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good
standing that have not had, and could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse
Effect. The term "Company Material Adverse Effect" means any change
in or effect on the business of the Company that is materially
adverse to the financial condition or results of operations of the
Company, except for any such changes or effects resulting from or
arising in connection with (i) this Agreement or the transactions
contemplated by this Agreement or the announcement hereof, (ii) any
changes in economic, regulatory or political conditions or (iii)
any issue or condition otherwise known to EGDI prior to the date of
this Agreement.
SECTION 3.02. Certificate of
Incorporation and By-Laws. The
Company has heretofore made available to EGDI a complete and
correct copy of the Certificate of Incorporation and the By-Laws of
the Company. Such Certificate of Incorporation and By-Laws are in
full force and effect. The Company is not in violation of any of
the provisions of its Certificate of Incorporation or
By-Laws.
SECTION 3.03.
Capitalization. Except as
indicated on Exhibit A, (i) all Company Securities will be issued
and outstanding and will be validly issued, fully paid and
non-assessable and (ii) there are no outstanding options or
warrants to purchase Company Securities no shares are reserved for
future issuance pursuant to any such options or warrants. All
shares of Company
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Securities subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable. There
are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of Company
Securities. There are no material outstanding contractual
obligations of the Company to provide funds to, or make any
investment (in the form of a loan, capital contribution or
otherwise) in, any other person.
SECTION 3.04. Authority Relative to
This Agreement. The Company
has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and
to consummate the Exchange and the other transactions contemplated
by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the Exchange and
the other transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Exchange
and the other transactions contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by EGDI, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.
SECTION 3.05. No Conflict; Required
Filings and Consents.
(a)
Except as described on Exhibit A, the
execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or
By-laws of the Company, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.05(b) have
been obtained and all filings and obligations described in Section
3.05(b) have been made, to the best knowledge of the Company after
inquiry, conflict with or violate any foreign or domestic law,
statute, ordinance, rule, regulation, order, judgment or decree
("Law") applicable to the Company or by which any property or asset
of the Company is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect
to clause (iii), for any such conflicts, violations, breaches,
defaults or other occurrences that have not had, and could not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and that could not reasonably be
expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b)
Except as described on Exhibit A, the
execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any domestic or foreign
governmental or regulatory authority ("Governmental Entity"),
except (i) for applicable requirements, if any, of provincial
securities or "blue sky" laws ("Blue Sky Laws"), provincial
takeover laws, the filing and recordation of appropriate Exchange
documents as required under the laws of its jurisdiction of
organization and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make
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such filings or notifications, has not
had, and could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, and could not
reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this
Agreement.
SECTION 3.06. Absence of Certain
Changes or Events. Since the
date of its organization, except as contemplated by or as disclosed
in this Agreement, the Company has conducted its business only in
the ordinary course and in a manner consistent with past practice
and, since such date, there has not been (a) any material change by
the Company in its accounting methods, principles or practices, (b)
any declaration, setting aside or payment of any dividend or
distribution in respect of the Common Stock or any redemption,
purchase or other acquisition of any of the Company's securities or
(c) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting
of stock options, stock appreciation rights, performance awards or
restricted stock awards), stock purchase or other employee benefit
plan, or any other increase in the compensation payable or to
become payable to any executive officers of the Company, except in
the ordinary course of business.
SECTION 3.07. Absence of
Litigation. Except as set
forth on Exhibit A, as of the date of this Agreement, there is no
litigation, suit, claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the
Company, or any property or asset of the Company, before any court,
arbitrator or governmental entity, domestic or foreign, which (i)
has had, or could reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the Company or (ii)
seeks to delay or prevent the consummation of any other material
transaction contemplated by this Agreement.
As of the date of this Agreement, neither
the Company nor any property or asset of the Company is subject to
any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any governmental entity, or
any order, writ, judgment, injunction, decree, determination or
award of any governmental entity or arbitrator having, individually
or in the aggregate, a material adverse effect on the
Company.
SECTION 3.08.
Contracts.
(a)
The Company has furnished to EGDI the
following written contracts and agreements of the Company (such
contracts and agreements being "Material Contracts"): (i)
each contract and agreement for the purchase or lease of personal
property with any supplier or for the furnishing of services to the
Company that in each case involves annual payment in excess of
US$5,000; (ii) all broker, exclusive dealing or exclusivity,
distributor, dealer, manufacturer's representative, franchise,
agency, sales promotion and market research agreements involving
annual payments in excess of US$5,000, to which the Company is a
party or any other material contract that compensates any person
other than employees based on any sales by the Company; (iii)
all leases and subleases of real property; (iv) all contracts
and agreements relating to indebtedness for borrowed money other
than trade indebtedness of the Company; (v) all contracts and
agreements involving annual payments in excess of $1,000 with any
Governmental Entity to which
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the Company is a party; and (vi)
any other material agreement of the Company which is terminable
upon or prohibits a change of ownership or control of the
Company.
(b)
Each Material Contract: (i) is valid and
binding on the Company and, to the knowledge of the Company, on the
other parties thereto, and is in full force and effect, and (ii)
upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without material
penalty or other material adverse consequence. The Company is not
in material breach of, or material default under, any Material
Contract and, to the knowledge of the Company, no other party to
any Material Contract is in material breach thereof or material
default thereunder.
SECTION 3.9. Taxes.
Except as for such matters that could not
reasonably be expected to have a Company Material Adverse
Effect,
(a)
the Company has timely filed or will
timely file all returns and reports required to be filed by it with
any taxing authority with respect to Taxes for any period ending on
or before the Effective Time, taking into account any extension of
time to file granted to or obtained on behalf of the
Company,
(b)
all Taxes shown to be payable on such
returns or reports that are due prior to the Effective Time have
been paid or will be paid,
(c)
as of the date of this Agreement, no
deficiency for any material amount of Tax has been asserted or
assessed by a taxing authority against the Company, and
(d)
the Company has provided adequate
reserves in its financial statements for any Taxes that have not
been paid in accordance with generally accepted accounting
principles, whether or not shown as being due on any
returns.
As used in this Agreement, "Taxes" shall mean any and all taxes,
fees, levies, duties, tariffs, imposts and other charges of any
kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or
other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value added or gains taxes; license, registration
and documentation fees; and customers' duties, tariffs and similar
charges.
SECTION 3.10. Brokers.
No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Exchange or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of
the Company.
SECTION 3.11. Financial
Statements. The financial
statements of the Company from October 2002 through September 2005
and the audited financial statements for October 2005 through
September, 2006 (to be attached hereto as Exhibit C when the
audited statements are available), have been prepared in accordance
with Canadian generally accepted accounting principles consistently
applied. Since the date of the last of the Financial Statements
there have been no expenditures or purchases except in the ordinary
course of business; and there have been no claims made against the
Company, its principals or its assets.
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SECTION 3.12. Business.
The Company is a reseller of computer
hardware, software, custom IT solutions and designs, supplies,
installs home automation solutions (the “Business”) and
has title free and clear of all liens, charges and liabilities to
all assets used in the Business and has no liabilities other than
those stated in the Financial Statements and those incurred in the
ordinary course of business since the date of the last of the
Financial Statements.
ARTICLE IV: REPRESENTATIONS AND
WARRANTIES OF EGDI
Except as set forth in this Agreement and
disclosed in Exhibit B, EGDI hereby represents and warrants to the
Company that:
SECTION 4.01. Organization and
Qualification; Subsidiaries. EGDI is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada
and has all corporate requisite power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or
in good standing or to have such corporate power, authority and
governmental approvals have not had, and could not reasonably be
expected to have, individually or in the aggregate, a EGDI Material
Adverse Effect (as defined below). EGDI is duly qualified or
licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good
standing that have not had, and could not reasonably be expected to
have, individually or in the aggregate, a EGDI Material Adverse
Effect. The term "EGDI Material Adverse Effect" means any change in
or effect on the business of EGDI that is materially adverse to the
financial condition or results of operations of EGDI, except for
any such changes or effects resulting from or in connection with
(i) this Agreement or the transactions contemplated by this
Agreement or the announcement hereof, (ii) any changes in economic,
regulatory or political conditions or (iii) any issue or condition
otherwise known to the Company prior to the date of this
Agreement.
SECTION 4.02. Certificate of
Incorporation and By-Laws. EGDI has heretofore made available to the Company a
complete and correct copy of the Certificate of Incorporation and
the By-Laws of EGDI.
Such Certificate of Incorporation and
By-Laws are in full force and effect.
EGDI is not violation of any of the
provisions of its Certificate of Incorporation or
By-Laws.
SECTION 4.03.
Capitalization . The
authorized capital stock of EGDI consists of (a) 500,000,000 shares
of EGDI Common Stock, at par value $0.001, and (b) no shares of
preferred stock. All shares of EGDI Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
non-assessable.
The shares of EGDI Common Stock to be
issued pursuant to the Exchange in accordance with Section 2.01 (i)
will be duly authorized, validly issued, fully paid and
non-assessable and not
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subject to preemptive rights created by
statute, the EGDI' Certificate of Incorporation or By-Laws or any
agreement to which the EGDI is a party or is bound and (ii) will,
when issued, be exempt from registration under the Securities Act
of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act") and the Securities
Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act") and
exem
