AGREEMENT AND PLAN OF
REORGANIZATION
This Agreement and Plan of
Reorganization (the “Agreement”), dated as of the 27th
day of March 2009, by and between Sustut Exploration, Inc., Inc., a
Delaware corporation (“Sustut”), and Optex Systems,
Inc., a Delaware corporation (“Optex”), and Sileas
Corporation (“Sileas”), Alpha Capital Anstalt
(“Alpha”), and Arland Holdings, Ltd.
(“Arland”) (collectively, “Shareholders”)
with reference to the following:
A. Sustut is a publicly
held Delaware corporation. Sustut has authorized capital
stock of 200,000,000 shares of Common Stock, $.001 par value per
share (“Sustut Common Stock”) and 1,027 shares of
Series A Preferred Stock (“Sustut Series A Preferred
Stock”). Of such shares, 44,999,991 shares of
Sustut Common Stock are issued and outstanding, of which 25,000,000
will be cancelled at closing, leaving 19,999,991 outstanding, and
no shares of Sustut Series A Preferred Stock are issued and
outstanding.
B. Optex is a privately
held corporation organized under the laws of Delaware. Optex
has authorized capital stock of 300,000,000 shares of Common Stock,
$.001 par value per share (“Optex Common Stock”) and
1,027 shares of Series A Preferred Stock (“Optex Series A
Preferred Stock). Of such shares, 85,000,000shares of Optex
Common Stock are issued and outstanding, and 1,027 shares of Optex
Series A Preferred Stock are issued and outstanding.
C. The respective Boards
of Directors of Sustut and Optex have deemed it advisable and in
the best interests of Sustut and Optex and their respective
shareholders that, contingent upon approval by shareholders holding
100% of the outstanding stock of Optex, all currently outstanding
shares of Optex be acquired by Sustut, pursuant to the terms and
conditions set forth in this Agreement.
D. Certain investors in
the private placement of Optex have separately agreed to a share
exchange which shall occur on a one-for-one basis for shares of
Sustut Common Stock in exchange for their shares of
Optex.
E. Sustut, Shareholders
and Optex propose to enter into this Agreement which provides,
among other things, that (i) the outstanding 85,000,000 shares of
Optex Common Stock be exchanged by Sustut
for 113,333,282 shares of Sustut Common Stock, (ii) the
outstanding 1,027 shares of Optex Series A Preferred Stock be
exchanged by Sustut for 1,027 shares of Sustut Series A Preferred
Stock and such additional items as more fully described in the
Agreement and (iii) the 8,131,667 shares of Optex purchased in the
private placement will be exchanged by Sustut for 8,131,667 shares
of Sustut Common Stock, as acknowledged by Sustut.
NOW, THEREFORE, the parties hereto
agree as follows:
ARTICLE 1
THE EXCHANGE
1.01 At the Effective Time (as defined in
Section 2.01), subject to the terms and conditions herein,
the 85,000,000 shares of Optex Common
Stock issued and outstanding immediately prior to the
Effective Time shall be acquired by Sustut in exchange for
113,333,282 fully paid and
nonassessable shares of Sustut Common Stock and 1,027 shares of Optex Series A Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall be acquired by Sustut in exchange for 1,027 shares of Sustut
Series A Preferred Stock (the exchange of all shares of Optex
Common Stock for Sustut Common Stock shall constitute the
“Exchange”). The Sustut Common Stock shall be
issued to the Shareholders and/or their nominees in the amounts set
forth on a list provided by Optex to Sustut.
1.02 As of the Effective Time, each outstanding
stock certificate that immediately prior to the Effective Time
represents shares of Optex Common Stock shall be deemed for all
purposes to evidence ownership and to represent the number of
shares of Sustut Common Stock for which such shares of Optex Common
Stock have been exchanged pursuant to Section 1.01. The
record holder of each outstanding certificate representing shares
of Optex Common Stock shall, after the Effective Time, be entitled
to vote the Sustut Common Stock for which such shares of Optex
Common Stock have been exchanged on any matters on which the
holders of the Sustut Common Stock are entitled to vote.
After the Effective Time, the holders of certificates
evidencing outstanding shares of Optex Common Stock immediately
prior to the Effective Time shall deliver such certificates of
Optex Common Stock, duly endorsed so as to make Sustut the sole
holder thereof, free and clear of all claims, and encumbrances and
Sustut shall deliver a transmittal letter to the transfer agent of
Sustut directing the issuance of the Sustut Common Stock to the
shareholders of Optex and/or their nominees. Any shares of
Sustut Common Stock issued pursuant to this Agreement will not be
transferable except (a) pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the
“Act”), or (b) upon receipt by Sustut of a written
opinion of counsel for the holder reasonably satisfactory to Sustut
to the effect that the proposed transfer is exempt from the
registration requirements of the Act, and relevant state securities
laws. Restrictive legends shall be placed on all certificates
representing Sustut Common Stock issued pursuant to this Agreement,
and the shares of Sustut Common Stock into which they may be
converted, as set forth in Section 11.02.
In the event any certificate for
Optex Common Stock has been lost, stolen or destroyed, Sustut shall
issue and pay in exchange for such lost, stolen or destroyed
certificate, promptly following its receipt of an affidavit of that
fact by the holder thereof, such shares of Sustut Common Stock as
may be required pursuant to this Agreement.
1.03 Following the Effective Time,
there will be a total of 141,464,940 shares of Sustut Common Stock
issued and outstanding and 1,027 shares of Sustut Series A
Preferred Stock outstanding.
1.04 Following the Effective Time,
Optex will be a wholly-owned subsidiary of Sustut.
ARTICLE 2
THE CLOSING
2.01 Subject to the terms and
conditions herein, the consummation of the transactions
contemplated by this Agreement (the “Closing”) shall
take place on or before March 30, 2009 (the “Closing
Date”) or at such other place or date and time as may be
agreed to in writing by the parties hereto at the earliest
practicable time after satisfaction or waiver of the conditions
hereof (the “Effective Time” or “Effective
Date”).
2.02 The following conditions are a
part of this Agreement and must be completed on or as of the
Closing Date, or such other date specified by the
parties:
(a) At the Closing, the Board of
Directors of Sustut shall appoint the following individuals as
members of the Board of Directors: Stanley Hirschman, Merrick
Okamoto and Ronald Richards.
(b) Immediately
following the appointment of the individuals listed in
Section 2.02(a) above to the Board of Directors, the Board of
Directors of Sustut shall consist of the three directors set forth
in (a).
(c) Immediately prior to Closing,
all of the current officers of Sustut shall resign as officers of
Sustut. After the Closing Date, the newly constituted Board
of Directors of Sustut consisting of the individuals appointed
pursuant to Section 2.2(a) shall appoint such
officers as it deems is necessary and in the best interests of
Sustut.
(d) Prior to Closing, Sustut shall
have obtained board and shareholder approval to the extent
necessary to (i) consummate the share exchange contemplated by
this Agreement, (ii) create an option pool of 6,000,000 shares
of Common Stock, and (iii) complete, following Closing, in a
manner which is reasonably acceptable to Optex, the sale, spin-off
or other disposition of its pre-Closing operations, including all
assets and liabilities.
(e) Optex shall have delivered to
Sustut its financial statements for the period from October 1, 2007
– September 30, 2008, which shall have been audited in
substantial compliance with generally accepted accounting
principles in the U.S. (“U.S. GAAP”), and which shall
be capable of being audited in accordance with U.S.
GAAP.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF SUSTUT
Sustut hereby represents and
warrants to Optex as follows:
3.01 Organization, Standing and
Power . Sustut is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification necessary.
3.02 Capital Structure .
As of the date of execution of this Agreement, the authorized
capital stock of Sustut is as described in the recitals hereto. The
Exchange Shares to be issued pursuant to this Agreement shall be,
when issued pursuant to the terms of the resolution of the Board of
Directors of Sustut approving such issuance, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
Except as otherwise specified herein, as of the date of
execution of this Agreement, there are no other options, warrants,
calls, agreements or other rights to purchase or otherwise acquire
from Sustut at any time, or upon the happening of any stated event,
any shares of the capital stock of Sustut whether or not presently
issued or outstanding.
3.03 Certificate of
Incorporation, Bylaws, and Minute Books . The copies of
the Articles of Incorporation and of the Bylaws of Sustut which
have been delivered to Optex are true, correct and complete copies
thereof. The minute book of Sustut, which has been made
available for inspection, contains accurate minutes of all meetings
and accurate consents in lieu of meetings of the Board of Directors
(and any committee thereof) and of the shareholders of Sustut since
the date of incorporation and accurately reflects all transactions
referred to in such minutes and consents in lieu of
meetings.
3.04 Authority .
Sustut has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Sustut. No other
corporate or shareholder proceedings on the part of Sustut are
necessary to authorize the Exchange, or the other transactions
contemplated hereby.
3.05 Conflict with Other
Agreements; Approvals . The execution and delivery of
this Agreement does not, and the consummation of the transactions
contemplated hereby will not result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the creation
of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a
“violation”) pursuant to any provision of the Articles
of Incorporation or Bylaws or any organizational document of Sustut
or, result in any violation of any loan or credit agreement, note,
mortgage, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Sustut which violation would have a
material adverse effect on Sustut taken as a whole. No
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign (a “Governmental Entity”) is
required by or with respect to Sustut in connection with the
execution and delivery of this Agreement by Sustut or the
consummation by Sustut of the transactions contemplated
hereby.
3.06 Books and Records .
Sustut has made and will make available for inspection by
Optex upon reasonable request all the books of Sustut relating to
the business of Sustut. Such books of Sustut have been maintained
in the ordinary course of business. All documents furnished
or caused to be furnished to Optex by Sustut are true and correct
copies, and there are no amendments or modifications thereto except
as set forth in such documents.
3.07 Compliance with Laws .
Sustut is and has been in compliance in all material respects with
all laws, regulations, rules, orders, judgments, decrees and other
requirements and policies imposed by any Governmental Entity
applicable to it, its properties or the operation of its
businesses.
3.08 SEC Filings . As of the
date hereof, Sustut is current in its filing
obligations.
3.09 Financial Statements .
Copies of Sustut’s audited financial statements for the
fiscal year ended December 31, 2008 have been delivered to
Optex.
3.10 Banks . Sustut
will deliver to Optex a true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the
name of each bank in which Sustut has an account or safe deposit
box, and (2) the names and addresses of all
signatories.
3.11 Litigation .
There is no suit, action or proceeding pending, or, to the
knowledge of Sustut, threatened against or affecting Sustut which
is reasonably likely to have a material adverse effect on Sustut,
nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Sustut
having, or which, insofar as reasonably can be foreseen, in the
future could have, any such effect.
3.12 Employees
. Sustut has no employees or consultant contracts and is
not in the process of acquiring any employees or consultant
contracts.
3.13 Liens, Leases and
Contracts . Sustut has no liens, encumbrances, easements,
security interests or similar interests in or on any of its assets.
Sustut has no leases (whether of real or personal property)
contracts, promissory notes, mortgages, licenses, franchises, or
other written agreement to which Sustut is a party which involves
or can reasonably be expected to involve aggregate future payments
or receipts by Sustut (whether by the terms of such lease,
contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or
indemnity against the failure to pay same) except any of said
instruments which terminate or are cancelable without
penalty.
3.14 Absence of Undisclosed
Liabilities . Sustut has no liabilities of any nature, whether
fixed, absolute, contingent or accrued. As of the Effective Time,
Sustut shall have no assets or liabilities other than accounts
payable.
3.15 Absence of Changes
. Since January 1, 2009 there has not been any material
adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of Sustut.
3.16 Tax Matters . All taxes and other
assessments and levies which Sustut is required by law to withhold
or to collect have been duly withheld and collected, and have been
paid over to the proper government authorities or are held by
Sustut in separate bank accounts for such payment or are
represented by depository receipts, and all such withholdings and
collections and all other payments due in connection therewith
(including, without limitation, employment taxes, both the
employee’s and employer’s share) have been paid over to
the government or placed in a separate and segregated bank account
for such purpose. There are no known deficiencies in income
taxes for any periods and all returns, declarations, reports,
estimates and statements required have been filed. There are
no liens or taxes upon any assets of Sustut, except taxes not yet
due. Further, the representations and warranties as to
absence of undisclosed liabilities contained in Section 3.14
includes any and all tax liabilities of whatsoever kind or nature
(including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes)
due or to become due, incurred in respect
of or measured by Sustut income or business prior to the Effective
Date. Copies of Sustut’s tax returns for years ending
December 31, 2006, 2007 and 2008 have been delivered to
Optex.
3.17 Brokers and Finders .
Sustut shall be solely responsible for payment to any broker
or finder retained by Sustut for any brokerage fees, commissions or
finders’ fees in connection with the transactions
contemplated herein.
3.18 Subsidiaries .
Sustut does not have any subsidiary, or own an ownership
interest in any other corporation.
3.19 Valid Issuance of
Securities . The Sustut Common Stock, when issued, sold
and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly
issued, fully paid and non assessable, and will be free of
restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities
laws.
3.20 Directors, Officers and
Controlling Shareholders . No director, officer or
controlling shareholder of Sustut has been subject to a criminal
proceeding, bankruptcy, Securities and Exchange Commission or NASD
censure in the last five years nor is any such individual under
investigation for any of the above.
3.21 Accuracy of Information
. No representation or warranty by Sustut contained in this
Agreement and no statement contained in any certificate or other
instrument delivered or to be delivered to Optex pursuant hereto or
in connection with the transactions contemplated hereby (including
without limitation all Schedules and exhibits hereto) contains or
will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
3.22 Full Disclosure .
The representations and warranties of Sustut contained in
this Agreement (and in any schedule, exhibit, certificate or other
instrument to be delivered under this Agreement) are true and
correct in all material respects, and such representations and
warranties do not omit any material fact necessary to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading. There is no fact of
which Sustut has knowledge that has not been disclosed to Optex
pursuant to this Agreement, including the schedules hereto, all
taken together as a whole, which has had or could reasonably be
expected to have a material adverse effect on Sustut or Optex or
materially adversely affect the ability of Sustut to consummate in
a timely manner the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF OPTEX
Optex hereby represents and
warrants to Sustut as follows:
4.01 Organization, Standing and Power .
Optex is a corporation duly organized, validly existing and
in good standing under the laws of Singapore, has all requisite
power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified
and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary.
4.02 Capital Structure .
The capitalization of Optex is as stated in the recitals
hereto.. All outstanding shares of Optex stock are validly
issued, fully paid and nonassessable and not subject to preemptive
rights or other restrictions on transfer. All of the issued
and outstanding shares of Optex were issued in compliance with all
applicable securities laws. Except as otherwise specified
herein, there are no options, warrants, calls, agreements or other
rights to purchase or otherwise acquire from Optex at any time, or
upon the happening of any stated event, any shares of the capital
stock of Optex.
4.03 Authority . Optex
has all requisite power to enter into this Agreement and, subject
to approval of the proposed transaction by the holders of 100% of
its issued and outstanding shares which are entitled to vote to
approve the proposed transaction, has the requisite power and
authority to consummate the transactions contemplated hereby.
Except as specified herein, no other corporate or shareholder
proceedings on the part of Optex are necessary to authorize the
Exchange and the other transactions contemplated hereby.
4.04 Conflict with Agreements;
Approvals . The execution and delive
