AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
OF
CLOUDTECH SENSORS, INC., A DELAWARE CORPORATION
INTO
ADVANCED PRODUCTS GROUP, INC. A DELAWARE CORPORATION
As Surviving Corporation
Dated as of May 31, 2007
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF
MERGER is made and entered into as of May 31, 2007 (the
“ Agreement ”) by and among Advanced Products
Group, Inc., a Delaware corporation (“ APG ” or
the “ Company ”) and 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 stockholders for
Cloudtech to acquire APG upon the terms and subject to the
conditions set forth herein;
WHEREAS , the original
Agreement and Plan of Merger, dated February 27, 2007 (the
“ Original Agreement ”), was incorrect when
executed, including APG’s capitalization in the Original
Agreement;
WHEREAS , the Constituent
Companies have decided to amend the Original Agreement to reflect
the mutually agreed upon business arrangement providing for the
Company stockholders to own 15% of the common stock of the
Surviving Corporation (as defined in Section 1.1 ) and
Cloudtech stockholders’ common stock and Cloudtech reserved
common stock to comprise 85% of the common stock of the Surviving
Corporation immediately following the Merger;
WHEREAS , as of May 31,
2007, prior to the Merger (as defined in Section 1.1 ),
APG had 4,840,141 shares of common stock outstanding;
WHEREAS , pursuant to the
Merger the Surviving Corporation (i) issued Cloudtech
stockholders 25,650,000 shares of common stock in the Surviving
Corporation, and (ii) reserved 1,777,466 shares of Cloudtech
common stock for issuance to consultants in return for services to
Cloudtech or the Surviving Corporation (the “
Reserved Stock Pool ”) of which 460,000 have been
allocated for issuance for pre-merger services;
WHEREAS , certain Surviving
Corporation stockholders have agreed to purchase 1,465,650
additional shares of common stock of the Surviving Corporation
following the Merger
in a
private placement and may sell some of their existing shares of
common stock of the Surviving Corporation to fund such
purchases;
WHEREAS , the Board of
Directors of the Company (the “ Board ”) has
unanimously (i) determined that the Merger is advisable and
fair to, and in the best interests of, the Company and its
stockholders, (ii) approved the Original Agreement and this
Agreement and the other transactions contemplated by this Agreement
(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 , in January, 2007,
the holders of at least a majority of the outstanding shares of
common stock of the Company voted to adopt and approve the Original
Agreement and prior to execution of this Agreement, voted to 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 25,650,000 shares were issued and outstanding
(adjusted pre-closing stock split);
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; and
WHEREAS , the stockholders of
Cloudtech have unanimously voted to adopt and approve this
Agreement.
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 ”) and
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 to be the close of business on May 31, 2007, being the
“ Effective Time ”) as soon as practicable on or
after the Closing Date (as herein defined). The closing of the
Merger (the
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“
Closing ”) shall take place at the offices of Sayid
and Associates LLP, 408 West 57th 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 .
(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, as amended of APG (the
“ Certificate of Incorporation ”) as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, subject to
Section 5.6 , 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 5.6 , 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:
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(a) Conversion of Shares
. The manner of converting of the securities of the Constituent
Corporations into shares of the Surviving Corporation is set forth
as follows, effective at the Effective Time without any action on
the part of the holder thereof:
(i) Each share of common stock of APG
shall automatically become and be converted into one common stock
share of the Surviving Corporation (the “ Merger
Consideration ”), and
(ii) Each share of common stock of
Cloudtech shall automatically become and be converted into one
common stock share of the Surviving Corporation.
(b) Effect of Certain
Bahaman Shares . The Constituent Companies acknowledge and
agree that:
(i) There is a dispute as to the
validity of certain issuances of APG common stock to certain
Bahaman entities (the “ Bahaman APG Shares ”)
and that those Bahaman APG Shares are included in the current total
of APG pre-merger issued shares;
(ii) If the Surviving Corporation is
successful in cancelling any of the Bahaman APG Shares, (those
cancelled Bahaman APG Shares shall be know as the “
Cancelled Bahaman APG Shares ”), then the Surviving
Corporation, as part of the Merger Consideration and to reflect
mutually agreed upon business arrangement providing for the APG
stockholders to own 15% of the common stock of the Surviving
Corporation at the Effective Time of the Merger, agrees to issue on
a pro rata basis new shares of the Surviving Corporation in an
amount equal to the amount of Cancelled Bahaman APG Shares to the
APG stockholders immediately prior to the Merger, or to their
respective successors or assigns.
(c) Exchange of
Certificates . After the Effective Time, any holder of a
certificate or certificates which theretofore represented shares of
Cloudtech or the Company 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 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.
(d) 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.
1.7 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
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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 1.8 ,
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 Cloudtech, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
1.8 Surrender of Certificates
.
(a) Certificate Exchange
Procedures . Promptly after the Effective Time, the Company
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.
(b) 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
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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.
(c) 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 thereof 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.
1.9 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 .
1.10 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.
1.11 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 thereof) 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, comb nation, recapitalization or other like
change.
1.12 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,
6
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 forty million
(40,000,000) shares of $0.001 par value common stock of which four
million eight hundred forty thousand one hundred forty one
4,840,141 shares are issued and outstanding and one million
(1,000,000) shares of preferred stock of which no shares are issued
and outstanding. There are no valid agreements providing for any
anti-dilution protection with respect to outstanding shares or
shares promised to be issued after the Closing.
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. 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. 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 Company’s stockholders 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 ”), and the
Company Stockholder approval has been duly and validly obtained.
This Agreement has been duly and validly executed and
7
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 Company’s rights 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 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.
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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) Except for the filing of its
10QSB on June 28, 2001, Current Report on Form 8-K filed on
March 13, 2007, Preliminary Information Statement on
Schedule 14-C filed on March 14, 2007, and a Definitive
Information Statement on Schedule 14-C filed on May 11,
2007, APG has not filed or furnished any other 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
Statements ”) 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
.
(a) 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 (i) Liabilities incurred since the
financial statements 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
9
Requirement, (ii) Liabilities not prohibited under
Section 4.1 , hereof or (iii) Liabilities incurred
in connection with this Transaction.
(b) Schedule A sets
forth a list of all Liabilities of the Company as of the close of
business on May 31, 2007.
(c) Schedule B sets
forth all contracts and agreements that are not terminable within
30 days notice with no penalty and all contracts or agreements
(whether or not terminable) for which the Company is reasonably
expected to be obligated to pay in excess of $10,000 in the year
following the Closing (“Material Contracts”).
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, 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.
2.11 Restrictions on Business
Activities . There is no Contract (noncompete or otherwise),
commitment, judgment, injunction, order or decree binding upon APG
in which APG is a party which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any
business practice of APG or any, any acquisition of property by APG
or the conduct of business by APG.
2.12 Title to Property . Since
completing the financial statements referred to in herein above,
APG has abandoned its business and has no material property or
assets.
2.13 Taxes .
(a) Definition of Taxes
. For the purposes of this Agreement, “ Tax ” or
“ Taxes ”, means (i) any and all federal,
state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based
upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed
with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated, consolidated, combined
or unitary group for any period; and (iii) any liability for
the payment of any amounts of the type described in clause
(i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any
obligations under any
10
agreements or arrangements with any other person with respect to
such amounts and including any liability for taxes of a predecessor
entity.
(b) Tax Returns and
Audits .
(i) The Company has timely filed all
federal, state, local and foreign returns, forms, estimates,
information statements and reports (“ Returns ”)
relating to Taxes required to be filed by the Company. The Company
has paid all Taxes shown to be due on such Returns. All Returns
were complete and accurate in all material respects and have been
prepared in all material respects in compliance with all applicable
Legal Requirements.
(ii) The Company is not delinquent in
the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against the Company,
nor has the Company executed any unexpired waiver of any statute of
limitations on or extension of any the period for the assessment or
collection of any Tax. The Company has not filed, nor is it subject
to, any consent agreements pursuant to section 3419(f) of the
Internal Revenue Code.
(iii) No audit, or pending audit of,
or other examination of any Return of the Company by any Tax
authority is presently in progress, nor has the Company been
notified in writing of any request for such an audit or other
examination.
(iv) No unresolved adjustment
relating to any Returns filed or required to be filed by the
Company has been proposed in writing, formally or informally, by
any Tax authority to the Company or any of its subsidiaries or any
representative thereof.
2.14 Board Approval . The full
Board, by resolutions duly adopted (and not thereafter modified or
rescinded) as of the date of this Agreement, has unanimously
(a) approved this Agreement and the Merger and determined that
this Agreement and the Merger are advisable and fair to, and in the
best interests of, the Company and its stockholders,
(b) approved, subject to stockholder approval of this
Agreement, the Transactions, and (c) directed that adoption of
this Agreement be submitted to the stockholders for consideration
and recommended that the stockholders adopt this Agreement.
2.15 State Takeover Statutes .
The Board has approved the Merger and this Agreement and taken all
actions sufficient to render inapplicable to the Merger, the
execution, delivery and performance of this Agreement and the
Transactions, the provisions of Section 203 of Delaware Law
applicable to a “business combination” (as defined in
such Section 203). No other state takeover statute or similar
statute or regulation or anti-takeover provision in the Company
Charter Documents applies to, purports to apply or at the Effective
Time will be applicable to the Merger, this Agreement and the
Company Voting Agreements or the Transactions and the transactions
contemplated by the Company Voting Agreements.
2.16 Interested Party
Transactions . No event has occurred and no relationship exists
that would be required to be reported by APG pursuant to
Item 404 of Regulation S-K since its last reported
filing.
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2.17 Full Disclosure . No
representation or warranty by the Company in this Agreement and
other written material provided by the Company or its
Representatives prior to the date hereof, contains any untrue
statement of a material fact or omits or will omit to state a
material fact required to be stated herein or therein or necessary
to make any statement herein or therein not materially
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CLOUDTECH
Cloudtech hereby represents and
warrants to APG, as follows (such representations and warranties
Cloudtech to be as of the date that Cloudtech executes and delivers
the Agreement to APG):
3.1 Corporate Organization .
Cloudtech is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the
requisite corporate 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 power, authority and governmental approvals would not
prevent or materially delay consummation of the Transactions, or
otherwise prevent Cloudtech from performing their respective
material obligations under this Agreement.
3.2 Authority Relative to this
Agreement . Cloudtech has all necessary corporate power and
authority to execute and deliver this Agreement, and to perform its
obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Cloudtech and the
consummation by Cloudtech of the Transactions have been duly and
validly authorized by all necessary corporate action on the part of
Cloudtech no other corporate proceedings on the part of Cloudtech
are necessary to authorize this Agreement, or to consummate the
Transactions (other than, with respect to the Merger, the filing of
the Certificate of Merger as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by
Cloudtech and, assuming the due authorization, execution and
delivery by APG, constitutes a legal and binding obligation of
Cloudtech, enforceable against Cloudtech in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors’ rights and general
principles of equity.
3.3 No Conflict; Required Filings
and Consents .
(a) The execution and delivery
of this Agreement by Cloudtech does not, and the performance of
this Agreement by Cloudtech will not, (i) conflict with or
violate Cloudtech’s certificate of incorporation or bylaws,
each as amended to date, (ii) subject to compliance with the
requirements set forth in Section 3.3(b) hereof,
conflict with or violate any Legal Requirements applicable to
Cloudtech or by which its properties are bound or affected, or
(iii) conflict with or violate, 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 impair Cloudtech’s
rights under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a Encumbrance on any of the properties or assets of
Cloudtech pursuant to any Contract to which it is a party or by
which Cloudtech or its properties are bound or
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affected, except to the extent such conflict, violation, breach,
default, impairment or other effect could not in the case of
clauses (ii) or (iii) individually or in the aggregate,
prevent or materially delay consummation of the Transactions or
otherwise prevent Cloudtech from performing their respective
material obligations under this Agreement.
(b) The execution and delivery
of this Agreement by Cloudtech does not, and the performance of
this Agreement by Cloudtech shall not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except(i) 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, could not, individually or in the
aggregate, prevent or materially delay consummation of the
Transactions or otherwise prevent Cloudtech from performing their
respective material obligations under this Agreement.
3.4 Sufficient Funds . The
Surviving Corporation will at the Effective Time provide Edward J.
da Parma (“Mr. da Parma”) with a Promissory Note the
terms of which shall be included herewith by reference whereby the
Surviving Corporation agrees to pay Mr. da Parma for the
outstanding APG liabilities in the sum of three hundred thousand
dollars ($300,000.00) promptly following raising at least one
million three hundred thousand dollars ($1,300,000.00) in a private
placement equity offering from third party sources in net sales of
equity after payment of transaction fees.
3.5 No Prior Operations .
Cloudtech has not engaged in any business activities or conducted
any operations other than in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by
Company . During the period from the date of the Original
Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, the
Company (i) carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted and in compliance with all applicable material Legal
Requirements, (ii) pay its Liabilities and Taxes when due
(subject to good faith disputes over such Liabilities or Taxes),
(iii) pay or perform other material obligations when due
(subject to good faith disputes over such payments or performance),
(iv) use its reasonable efforts to assure that each of its
material Contracts entered into after the date of this Agreement
will not require the procurement of any consent, waiver or novation
or provide for any material change in the obligations of any party
in connection with, or terminate as a result of the consummation
of, the Merger, (v) notify and give Cloudtech the opportunity
to participate in the defense or settlement of any litigation to
which the Company may become a party, and (vi) use its
commercially reasonable efforts consistent with past practices and
policies to (A) preserve intact its present business
organization, (B) keep available the services of its present
Employees, and (C) preserve its relationships with customers,
suppliers, distributors, consultants, licensors, licensees and
others with which it has business dealings.
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In addition, without the prior
written consent of Cloudtech, during the period from the date of
this Agreement and continuing until the earlier of the
termination
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