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12/8/2006
EGDI - MCM Agreement.DOC
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 rule
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