AGREEMENT OF MERGER
OF
CLOUDTECH SENSORS, INC., A DELAWARE CORPORATION
INTO
ADVANCED PRODUCTS GROUP, INC., A DELAWARE CORPORATION
As surviving Corporation
Dated as of February ________, 2007
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into
as of February _____________, 2007 (the Agreement ), by and
among Advanced Products Group, Inc., a Delaware corporation (
Company ), Cloudtech Sensors Inc., Delaware corporation (
Cloudtech ), hereinafter collectively, the Constituent
Companies .
;
RECITALS:
WHEREAS , the Boards of Directors of the Constituent
Corporations have each determined that it is in the best interests
of their respective stockholder of Cloudtech to acquire the APG
upon the terms and subject to the conditions set forth herein.
WHEREAS , the Board of Directors of the Company (the
Board ) has unanimously (i) determined that the Merger (as
defined in Section 1.1 ) is advisable and fair to, and in
the best interests of, the Company and its stockholders, (ii)
approved this Agreement and the other transactions contemplated by
this Agreement, including the transactions contemplated by the
Company Voting Agreements (collectively, the Transactions ),
and (iii) determined, subject to the terms of this Agreement, to
recommend that the stockholders of the Company adopt and approve
this Agreement.
WHEREAS, Cloudtech is a corporation duly organized under the
laws of the State of Delaware having been formed on August 22, 2006
, having authorized capitalization of 40 million shares of $0.001
par value common stock of which 2,839,000 shares have been issued;
and
WHEREAS the Board of Directors of Cloudtech has (i)
determined that the Merger is advisable and fair to, and in the
best interest of, Cloudtech and its stockholders, and (ii) approved
this Agreement.
WHEREAS , concurrently with the execution of this Agreement,
as a condition and inducement to enter into this Agreement, certain
stockholders of the Company are entering into Voting Agreements in
substantially the form attached hereto as Exhibit A (the
Company Voting Agreements ).
NOW, THEREFORE , in consideration of the covenants, promises
and representations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
:
ARTICLE I
THE MERGER
1.1 The Merger . At the Effective Time (as defined in
Section 1.2 ) and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of the
Delaware General Corporation Law ( Delaware Law ), Cloudtech
shall be merged with and into the Company (the Merger ), the
separate corporate existence of Cloudtech shall cease and the
Company shall continue as the surviving corporation. The Company,
as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the Surviving Corporation .
1.2 Effective Time; Closing . Upon the terms and subject to
the conditions of this Agreement, the parties hereto shall cause
the Merger to be consummated by filing a certificate of merger (the
Certificate of Merger ) with the Secretary of State of the
State of Delaware in accordance with the relevant provisions of
Delaware Law (the time of such filing, or such later time as may be
agreed in writing by the Constituent Companies and specified in the
Certificate of Merger, being the Effective Time ) as soon as
practicable on or after the Closing Date (as herein defined). The
closing of the Merger (the Closing ) shall take place at the
offices of Sayid and Associates LLP, 408 West 57 th
Street, Suite 8E, New York, New York 10019, at a time and date to
be specified by the parties hereto, which shall be no later than
the second business day after the satisfaction or waiver of the
conditions set forth in Article VI (other than those
conditions, which by their terms, are to be satisfied or waived on
the Closing Date, but subject to the satisfaction or waiver
thereof), or at such other time, date and location as the parties
hereto agree in writing (the Closing Date ).
1.3 Effect of the Merger . At the Effective Time, the effect
of the Merger shall be as provided in this Agreement and the
applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective
Time, all of the assets, properties, rights, privileges, powers and
franchises of the Constituent Companies shall vest in the Surviving
Corporation, and all of the debts, liabilities, obligations,
restrictions and duties of the Constituent Companies, if any, shall
become the debts, liabilities, obligations, restrictions and duties
of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws of Surviving
Corporation .
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(a) Certificate of Incorporation . As of the Effective Time,
by virtue of the Merger and without any action on the part of the
Constituent Companies, the Certificate of Incorporation of the
Surviving Corporation shall be amended and restated to read the
same as the Certificate of Incorporation of Advanced Products
Group, Inc., as in effect immediately prior to the Effective Time,
subject to Section 5.8 , until thereafter amended in
accordance with Delaware Law and such Certificate of Incorporation;
provided, however , that as of the Effective Time the
Certificate of Incorporation shall provide that the name of the
Surviving Corporation is Cloudtech Sensors, Inc.
(b) Bylaws . As of the Effective Time, by virtue of the
Merger and without any action on the part of the Constituent
Companies, the Bylaws of the Surviving Corporation shall be amended
and restated to read the same as the Bylaws of the Company, as in
effect immediately prior to the Effective Time, subject to
Section 5.8 , until thereafter amended in accordance with
Delaware Law, the Certificate of Incorporation of the Surviving
Corporation and such Bylaws.
1.5 Directors and Officers of Surviving Corporation .
(a) Directors . The initial directors of the Surviving
Corporation shall be the directors of Cloudtech as of immediately
prior to the Effective Time, until their respective successors are
duly elected or appointed and qualified.
(b) Officers . The initial officers of the Surviving
Corporation shall be the officers of the Company as of immediately
prior to the Effective Time.
1.6 Effect on Capital Stock . Upon the terms and subject to
the conditions of this Agreement, at the Effective Time, by virtue
of the Merger and without any action on the part of Cloudtech, the
Company or the holders of any of the following securities, the
following shall occur:
1.7 (a) Conversion of Shares . The manner of converting the
securities of the Constituent Corporations into shares of the
Surviving Corporation is set forth as follows:
i) Immediately upon the Effective Time, each share of common stock
of Cloudtech outstanding, without any action on the part of the
holder thereof, shall automatically become and be converted into
common stock of the Surviving Corporation as delineated in Schedule
D attached hereto. Accordingly, the Surviving Corporation
shall issue 3,340,000 common shares, which shall be restricted,
pursuant to Rule 144 of the Securities and Exchange Act of 1933, as
amended.
ii) After the Effective Time, any holder of a certificate or
certificates which theretofore represented shares of Cloudtech is
required to surrender the same to the Transfer Agent of the
Surviving Corporation, to wit: Fidelity Transfer, 1800 South West
Temple, Suite 301, Salt Lake City, Utah 84115 and shall upon
payment of the required fee, thereupon be entitled to receive in
exchange a certificate or certificates representing the number of
shares of common or preferred stock of the Surviving
Corporation into which the Shares represented by such certificate
or certificates shall be converted.
iii) After the Effective Time any holder of a
certificate or certificates theretofore represented shares of
common stock of the Company shall be required to surrender the same
to the Transfer Agent, as set forth in subparagraph ii above, and
shall upon payment of the required fee, be entitled to receive in
exchange for each one (1) share of Common Stock of the Company, a
certificate or certificates representing 0.15 share of the
Surviving Corporation.
(b) Cancellation of Treasury Shares . Any Company Common
Stock held by the Company or owned by any direct or indirect
wholly-owned subsidiary of the Company immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof.
1.8 Dissenting Shares .
(a) Notwithstanding any provision of this Agreement to the
contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by
stockholders who shall have not voted in favor of the Merger and
who shall have demanded properly in writing appraisal for such
Common Stock in accordance with Section 262 of Delaware Law
(collectively, the Dissenting Shares ) shall not be
converted into, or represent the right to receive, the Merger
Consideration payable for each such share of Common Stock. Such
stockholders shall be entitled to receive payment of the appraised
value of such Company Common Stock held by them in accordance with
the provisions of such Section 262, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal
of such Company Common Stock under such Section 262 shall thereupon
be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive
the Per Share Merger Consideration payable for each such share of
Common Stock upon surrender, in the manner provided in Section
1.9 , of the certificate or certificates that formerly
evidenced such Company Common Stock.
(b) The Company shall give Cloudtech (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such
demands, and any other instruments served pursuant to Delaware Law
and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under Delaware Law. The Company shall not, except with the prior
written consent of Cloutdtech, make any payment with respect to any
demands for appraisal or offer to settle or settle any such
demands.
293:
1.9 Surrender of Certificates .
(a) Certificate Exchange Procedures . Promptly after the
Effective Time, Cloudtech shall cause the Transfer Agent to mail to
each holder of record (as of the Effective Time) of a certificate
or certificates (the Certificates ), which immediately prior
to the Effective Time represented the outstanding shares of Company
Common Stock converted into the right to receive the portion of the
Merger Consideration payable for such Common Stock, (i) a letter of
transmittal in customary form and approved by the Company prior to
the Effective Time (which approval shall not be unreasonably
withheld or delayed) (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Transfer Agent
and shall contain such other provisions as the Constituent
Companies shall reasonably agree) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the
portion of the Merger Consideration payable upon surrender of said
Certificates. Upon surrender of Certificates for cancellation to
the Transfer Agent or to such other agent or agents as may be
appointed by the Company, together with such letter of transmittal,
duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates formerly
representing the Company Common Stock shall be entitled to receive
in exchange therefor the portion of the Merger Consideration
payable for such shares of Company Common Stock, and the
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, outstanding Certificates shall be deemed from and
after the Effective Time, for all corporate purposes, to evidence
only the ownership of the respective portion of the Merger
Consideration to which the record holder of such Certificate is
entitled by virtue thereof. Promptly following surrender of any
such Certificates and the duly executed letters of transmittal, the
Transfer Agent shall deliver to the record holders thereof, the
portion of the Merger Consideration to which such holder is
entitled upon surrender of said Certificates, subject to the
restrictions set forth herein.
(c) With respect to Unsurrendered Company Common Stock;
No Liability . Neither the Surviving Corporation nor the
Transfer Agent shall be liable to any former holder of any Company
Common Stock for any portion of the Merger Consideration properly
delivered in respect of such Common Stock to a public official
pursuant to any abandoned property, escheat or other similar
law.
(d) Transfers of Ownership . If the issuance of the portion
of the Merger Consideration to which such holder is entitled is to
be issued to a person other than the person in whose name the
Certificates surrendered in exchange therefor are registered, it
will be a condition of issuance that the Certificates so
surrendered be properly endorsed and otherwise in proper form for
transfer (including, if requested by the Company or the Transfer
Agent, a medallion guarantee), and that the persons requesting such
issuance will have paid to the Company or any agent designated by
it any transfer or other taxes required by reason of the issuance
of a portion of the Merger Consideration to a person other than the
registered holder of the Certificates surrendered, or established
to the satisfaction of the Company or any agent designated by it
that such tax has been paid or is not applicable.
1.10 No Further Ownership Rights in Company
Common Stock . Issuance of the Merger Consideration shall be
deemed to have been paid in full satisfaction of all rights
pertaining to Company Common Stock, and after the Effective Time,
there shall be no further registration of transfers on the records
of the Surviving Corporation of the Company Common Stock which were
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 canceled and exchanged as
provided in this Article I .
1.11 Lost, Stolen or Destroyed Certificates . In the event
that any Certificates shall have been lost, stolen or destroyed,
the Transfer Agent shall pay in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, the portion of the Merger Consideration
with respect thereto; provided, however , that APG or the
Transfer Agent may, in its discretion and as a condition precedent
to the issuance of such portion of the Merger Consideration,
require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such reasonable and customary amount as it may
direct as indemnity against any claim that may be made against APG,
the Surviving Corporation or the Transfer Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.12 Adjustments . In the event of any stock split, reverse
stock split, stock dividend (including any dividend or distribution
of securities convertible into APG Common Stock, whether directly
or indirectly), reorganization, reclassification, combination,
recapitalization or other like change with respect to such Common
Stock occurring after the date of this Agreement and prior to the
Effective Time, all references in this Agreement to specified
numbers of shares of any class or series affected thereby, and all
calculations provided for that are based upon numbers of shares of
any class or series (or trading prices therefor) affected thereby,
shall be equitably adjusted to the extent necessary to provide the
parties the same economic effect as contemplated by this Agreement
prior to such stock split, reverse stock split, stock dividend,
reorganization, reclassification, combination, recapitalization or
other like change.
1.13 Taking of Necessary
Action; Further Action . If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Constituent
Corporations, the officers and directors of the Constituent
Corporations will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF APG
The Company hereby represents and warrants to Cloudtech,
subject only to such exceptions as are specifically disclosed in
writing in the schedules attached hereto (which such exceptions
shall reference the specific section and, if applicable, subsection
number of this Article II to which it applies, and any
information disclosed in any such section or subsection shall be
deemed to be disclosed only for purposes of such section or
subsection, except to the extent it is reasonably apparent that the
disclosure contained in such section or subsection contains enough
information regarding the subject matter of other representations
and warranties contained in this Article II so as to qualify
or otherwise apply to such other representations and warranties),
as follows:
2.1 Organization and Qualification; subsidiaries .
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and
authority to carry on its business as it is now being
conducted.
2.2 Certificate of Incorporation and Bylaws . At the Closing
date the Company shall furnish to Cloudtech (i) a complete and
correct copy of its Certificate of Incorporation and Bylaws as
amended to date (together, the Company Charter Documents).
The Company Charter Documents are in full force and
effect. The Company is not in violation of any of the provisions of
its Charter Documents.
2.3 Capitalization. The authorized capital stock of the
Company consists of 40,000,000 million shares of $0.001 par value
common stock of which approximately three million three hundred
forty thousand (3,340,000) shares are issued and outstanding and
ten million (10,000,000) shares of preferred stock of which no
shares are issued and outstanding.
2.4 Authority Relative to this Agreement . The Company has
all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to
consummate the Transactions, subject, with respect to the Merger,
to the Stockholder Approval (as defined below). The execution and
delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate
the Transactions other than (i) with respect to the Merger, the
filing with the Securities and Exchange Commission (the SEC
) of a proxy statement with respect to, and the receipt of, the
Company Stockholder Approval if and to the extent required by
applicable law, (ii) the filing of the Certificate of Merger as
required by Delaware Law. The affirmative vote of the
holders of a majority of the shares of Company Common Stock issued
and outstanding on the record date set for the meeting of the
stockholders of the Company to adopt this Agreement in accordance
with applicable law is the only vote of the holders of capital
stock of the Company necessary to adopt this Agreement under
applicable Legal Requirements and Company Charter Documents (the
Company Stockholder Approval ). This Agreement has been duly
and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Cloudtech, constitutes
the legal and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating
to creditors rights and general principles of equity.
2.5 No Conflict; Required Filings and Consents .
(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) result in the creation of any material Encumbrance (as
defined below) on any of the material properties or assets of the
Company, (ii) conflict with or violate its Charter Documents, (iii)
subject, (A) with respect to the Merger, to Stockholder Approval
and (B) to compliance with the requirements set forth in Section
2.5(a) , conflict with or violate in any material respect any
Legal Requirements applicable to the Company, or (iv) conflict with
or violate, or result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or materially impair the rights of the Company or
alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any contract to which the Company is a party or by
which it is bound or affected, except to the extent such conflict,
violation, breach, default, impairment or other effect would not in
the case of clauses (iii) or (iv), individually or in the
aggregate: (A) reasonably be expected to have a Material Adverse
Effect on Company; or (B) prevent or materially delay consummation
of the Transactions or otherwise prevent the Company from
performing its obligations under this Agreement. Encumbrance
means, with respect to any asset, mortgage, deed of trust, lien,
pledge, charge, security interest, title retention device,
conditional sale or other security arrangement, collateral
assignment, claim, charge, adverse claim of title, ownership or
right to use, restriction or other encumbrance of any kind in
respect of such asset (including any restriction on (1) the voting
of any security or the transfer of any security or other asset, (2)
the receipt of any income derived from any asset, (3) the use of
any asset, and (4) the possession, exercise or transfer of any
other attribute of ownership of any asset), in each case except for
such restrictions of general application under the Securities Act
and Blue Sky Laws (as defined below).
(b) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by it shall not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any court, administrative agency,
commission, governmental or regulatory authority, domestic or
foreign (a Governmental Entity ), except (i) for applicable
requirements, if any, of the Securities Exchange Act of 1934, as
amended (the Exchange Act ), state securities laws ( Blue
Sky Laws ) and state takeover laws, such filings as may be
required under, and compliance with the other applicable
requirements of the HSR Act or other applicable Antitrust Laws, the
rules and regulations of Nasdaq, and the filing and recordation of
the Certificate of Merger as required by Delaware Law and (ii)
where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, (A) would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company or, following the Effective Time, the Surviving
Corporation, or prevent consummation of the Transactions or (B)
otherwise prevent the Company from performing its obligations under
this Agreement.
2.6 Compliance; Permits .
(a) APG is not in conflict with, or in default or violation of, (i)
any Legal Requirement applicable to the Company or by which its or
any of their respective properties is bound, or (ii) any contract
to which the Company is a party or by which it or any of its
respective properties is bound or affected, except for any
conflicts, defaults or violations that (individually or in the
aggregate) would not cause the Company to lose any material benefit
or incur any material liability.
2.7 SEC Filings; Financial Statements .
(a) Since the filing of its 1QSB in June, 2001, APG has not filed
or furnished any report, schedule, registration statement and
definitive proxy statement as required to be filed or furnished by
the Company with or under the Securities Act (as defined below) or
the Exchange Act (the SEC Reports ). The SEC Reports that
were filed or furnished were timely, (ii) were prepared in
accordance with the requirements of the Securities Act of 1933, as
amended (the Securities Act ) or the Exchange Act, as the
case may be, and (iii) did not at the time they were filed (and if
amended or superseded by a filing prior to the date of this
Agreement then on the date of such filing) 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.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the SEC Reports
(the Financial Statement s) complied as to form in all
material respects with the published rules and regulations of the
SEC with respect thereto in effect at the time of such
filing; was prepared in accordance with United States
generally accepted accounting principles ( GAAP ) applied on
a consistent basis throughout the periods involved (except as may
be indicated in the notes thereto or, in the case of unaudited
statements, may not contain footnotes as permitted by Form 10-QSB)
and fairly presented and fairly present in all material respects
the consolidated financial position of APG at the respective dates
thereof. The Financial Statements comply in all material respects
with the requirements of the American Institute of Certified Public
Accountants' Statement of Position 97-2. APG has not had any
dispute with any of its auditors regarding accounting matters or
policies during any of the period in which it remained current and
filing with the Securities and Exchange Commission. It
has had no financial activity since June 2001.
2.8
No Undisclosed Liabilities . APG has no liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type (whether absolute, accrued, contingent,
direct, indirect, or otherwise) (collectively, Liabilities )
of a nature required to be disclosed on a balance sheet, except
Liabilities incurred since the Interim Balance Sheet Date in the
ordinary course of business consistent with past practices and
which, individually or in the aggregate, are not material in nature
or amount and do not result from any breach of Contract, tort or
violation of any Legal Requirement, (iii) Liabilities not
prohibited under Section 4.1 hereof or (iv) Liabilities
incurred in connection with this Transaction.
2.9 Absence of Certain Changes or Events . There has not
been, occurred or arisen, since the last filing of Company's 10QSB,
June, 2001: (a) any event or condition of any character that, to
the knowledge of the Company, its directors and officers, has had
or is reasonably expected to have a Material Adverse Effect on
Company.
2.10 Absence of Litigation . There are no claims, actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened (each, an Action ) against it, or any of their
respective properties or, to the Company's knowledge, any of the
executive officers or directors of the Company before any
Governmental Entity or otherwise. There is no
investigation or review by any Governmental Entity pending
or, to the knowledge of the Company, threatened against it or to
its knowledge any of its executive officers or directors, nor has
any Governmental Entity indicated to APG an intention to conduct
the same. To the knowledge of the Company, no Governmental Entity
has at any time challenged or questioned the legal right of the APG
to conduct its operations as presently or previously conducted.
2.12 Proxy Statement . Neither the proxy statement to be
sent to the stockholders of the Company in connection with the
Stockholders' Meeting (as hereinafter defined) or the information
statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or
supplemented, being referred to herein as the Proxy
Statement ), shall not, at the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders of
the Company and at the time of the Stockholders' Meeting, contain
any untrue statement of a material fact, or omit to state any
material fact required to be stated therein, or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not false or misleading or necessary to
correct any statement in any earlier communication with respect to
the solicitation of proxies, if any, for the Stockholders' Meeting,
which shall have become false or misleading. Notwithstanding the
foregoing, APG makes no representation or warranty with respect to
any information supplied by Cloudtech or Cloudtech's
representatives in writing for inclusion in the Proxy Statement.
The Proxy Statement shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and
regulations thereunder.
2.13 Restrictions on
