AMENDMENT
NO. 1
TO
PLAN
AND AGREEMENT OF MERGER
This
constitutes Amendment No. 1 to that certain Plan and Agreement of
Merger (the “Plan of Merger”), dated January 9, 2009,
by and among Diamond I, Inc., a Delaware corporation
(“Parent”), UB Acquisition Corp., a Nevada corporation
wholly owned by Parent (“Acquiror”), and ubroadcast,
Inc., a Nevada corporation (“Target”).
For
good and adequate consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereby agree, as
follows:
A. Section
1.6(b) of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
(b)Each
share of Target Common Stock which is outstanding immediately prior
to the Effective Time, other than those shares of Target Common
Stock cancelled as set forth in subsection (a) hereof, shall be
converted into the right to receive shares of the $.001 par value
per share common stock of Parent (the “Parent Common
Stock”), as follows:
at
the Effective Time, each share of Target Common Stock shall be
exchanged for 168.299 shares of Parent Common Stock, for a total of
2,560,000,000 shares of Parent Common Stock (these shares of Parent
Common Stock are referred to as the “Closing Shares”).
The Closing Shares are referred to as the “Merger
Consideration”.
B. Section
1.8 of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
1.8.
Closing . The closing (the “Closing”) of the
transactions contemplated by this Agreement shall take place (a) at
the offices of Target at 3:00 p.m., local time, on the earlier of
(i) January 23, 2009, or (ii) the third business day immediately
following the date on which the last of the conditions set forth in
Article VI is fulfilled or waived, (b) at such other time and place
and on such other date as Parent and Target shall agree or (c) by
exchange of duly executed documents via facsimile and/or e-mail
(the “Closing Date”).
C. Section
2.4 of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
Section
2.4. Board of Directors of Parent . Upon the Closing, three
of the directors of Parent, Waddell D. Loflin, Gregory A. Bonner
and Ira R. Witkin, shall resign and, in their place, John
Castiglione, Jason Sunstein and one other person designated by
Messrs. Castiglione and Sunstein shall be elected, to serve until
the earlier of their removal or resignation.
D. Section
3.3 of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
Section
3.3. Capitalization . The authorized capital stock of Parent
consists of 4,000,000,000 shares of Parent Common Stock, $.001 par
value per share, and 50,000,000 shares of preferred stock, $.001
par value per share. As of the date hereof, 691,016,707 shares of
Parent Common Stock and no shares of Parent’s preferred stock
are issued and outstanding, all of which are validly issued, fully
paid and non-assessable. No shares of Parent Common Stock or
preferred stock are held in the treasury of Parent or by
subsidiaries of Parent. 100,000 shares of Parent Common Stock are
reserved for future issuance under Parent’s Second Amended
2004 Stock Ownership Plan and 15,000,000 shares of Parent Common
Stock are reserved for issuance under certain warrants, all as
described in the Parent Disclosure Schedule. Each of the
outstanding shares of capital stock of each of Parent’s
corporate subsidiaries is duly authorized, validly issued, fully
paid and non-assessable and such shares owned by Parent are owned
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on Parent’s voting rights, charges or
other encumbrances of any nature whatsoever.
E. Section
3.16 of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
Section
3.16. Brokers; Finders . The parties acknowledge that
Heriberto Cruz acted as a finder in connection with the
transactions contemplated by this Agreement. Parent shall be solely
responsible for the payment of any and all finder’s fee
payable to Heriberto Cruz, upon the consummation of the
transactions contemplated herein. To that end, the parties
acknowledge that Parent has entered into a finder’s fee
agreement with Heriberto Cruz, in the form of Annex E attached
hereto. The parties further acknowledge that no other broker,
finder or investment banker is, or will be, entitled to any
brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement.
F. Section
3.16 of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
Section
4.3. Capitalization . The authorized capital stock of Target
consists of 75,000,000 shares of Target Common Stock, $.001 par
value per share, and no shares of preferred stock. As of the date
hereof, 15,211,018 shares of Target Common Stock are issued and
outstanding, all of which are validly issued, fully paid and
non-assessable; no shares of preferred stock are issued and
outstanding; and no shares of Target Common Stock are held in the
treasury of Target or by any subsidiary of Target. Except as set
forth in the Target Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock
of Target or obligating Target to issue or sell any shares of
capital stock of, or other equity interests in, Target. All shares
of Target Common Stock subject to issuance shall be duly
authorized, validly issued, fully paid and non-assessable. There
are no outstanding contractual obligations of Target to repurchase,
redeem or otherwise acquire any shares of Target Common
Stock.
G. Section
6.3(d) of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
(d)Reverse
Split. Parent shall have completed a recapitalization to effectuate
a 32-to-1 reverse split of its outstanding common stock.
H. Section
6.3(f) of the Plan of Merger is hereby deleted in its entirety and
replaced with the following:
(f)Accrued
Salary. Parent shall have paid all accrued and unpaid salary of
Parent’s president, David Loflin, by issuing 160,000,000
shares of Parent’s common stock, which shares shall become,
after the reverse split described in subparagraph (d) above,
5,000,000 shares of Parent’s common stock.
In
all other aspects, the Plan of Merger is ratified and
affirmed.
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By:/s/
JOHN L. CASTIGLIONE
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PLAN
AND AGREEMENT OF MERGER
PLAN
AND AGREEMENT OF MERGER, dated as of January 9, 2009 (the
“Agreement”), among Diamond I, Inc., a Delaware
corporation (“Parent”), UB Acquisition Corp., a Nevada
corporation wholly owned by Parent (“Acquiror”), and
ubroadcast, Inc., a Nevada corporation (“Target”)
(Aquiror and Target being hereinafter collectively referred to as
the “Constituent Corporations”).
WHEREAS,
the Boards of Directors of Parent, Acquiror and Target have
approved the acquisition of Target by Parent;
WHEREAS,
in furtherance of such acquisition, the Boards of Directors of
Parent, Acquiror and Target have each approved the merger of Target
into Acquiror (the “Merger”), pursuant to an Agreement
of Merger in the form attached hereto as Exhibit “A”
(the “Merger Agreement”), and the transactions
contemplated hereby, in accordance with the applicable provisions
of the statutes of the States of Delaware and Nevada and upon the
terms and subject to the conditions set forth herein;
and
WHEREAS,
for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization with the meaning of Section
368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986,
as amended (the “Code”); and
WHEREAS,
each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions thereto;
and
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Acquiror and Target hereby agree as
follows:
ARTICLE
I
THE
MERGER
Section
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 Merger Agreement, Target shall be merged
with and into Acquiror, the separate corporate existence of Target
shall cease and Acquiror shall continue as the surviving
corporation, in accordance with the applicable provisions of the
Nevada Revised Statutes (the “Nevada Law”). Acquiror,
as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the “Surviving
Corporation”.
Section
1.2. Effective Time . As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI,
and provided that this Agreement has not been terminated or
abandoned pursuant to Article VIII, the Constituent Corporations
shall cause the Merger to be consummated by filing an Articles of
Merger (the “Articles of Merger”) with the office of
the Secretary of State of the State of Nevada, in such form as
required by, and executed in accordance with, the relevant
provisions of the Nevada Law. Subject to, and in accordance with,
the Nevada Law, the Merger will become effective at the date and
time the Articles of Merger are filed with the office of the
Secretary of State of the State of Nevada or such later time or
date as may be specified in the Articles of Merger (the
“Effective Time”). Each of the parties shall use its
best efforts to cause the Merger to be consummated as soon as
practicable following the fulfillment or waiver of the conditions
specified in Article VI hereof.
Section
1.3. Effect of the Merger . At the Effective Time, the
effect of the Merger shall be as provided in the applicable
provisions of the Nevada Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, except
as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Target shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Target shall
become the debts, liabilities and duties of the Surviving
Corporation.
Section
1.4. Articles of Incorporation; Bylaws .
(a) At
the Effective Time, the Articles of Incorporation of Acquiror, as
in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of
Incorporation; provided, however, that the name of Acquiror shall
be changed to “ubroadcast, inc.”, as soon as is
practicable following the Effective Time.
(b) The
Bylaws of Acquiror, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such
Bylaws.
Section
1.5. Directors and Officers . The board of directors of
Acquiror immediately upon the Effective Time shall be David Loflin
and Waddell D. Loflin, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation,
and the officers of Target immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or
appointed and qualified.
Section
1.6. Conversion of Securities . At the Effective Time, by
virtue of the Merger and without any action on the part of
Acquiror, the following shall occur:
(a) Each
share of common stock of Target (the “Target Common
Stock”) held in the treasury of Target and each such share of
Target Common Stock owned by Acquiror, Parent or any direct or
indirect wholly-owned subsidiary of Parent or of Target immediately
prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof and no payment shall be made with
respect thereto.
(b) Each
share of Target Common Stock which is outstanding immediately prior
to the Effective Time, other than those shares of Target Common
Stock cancelled as set forth in subsection (a) hereof, shall be
converted into the right to receive shares of the $.001 par value
per share common stock of Parent (the “Parent Common
Stock”), as follows:
at
the Effective Time, each share of Target Common Stock shall be
exchanged for 5.6231 shares of Parent Common Stock, for a total of
80,000,000 shares of Parent Common Stock (these shares of Parent
Common Stock are referred to as the “Closing Shares”).
The Closing Shares are referred to as the “Merger
Consideration”.
(c) Anti-Dilution
Adjustments. The number of shares included in the Merger
Consideration (the "Merger Shares") shall be subject to adjustment
as follows:
(i) In
case the Parent shall (i) pay a dividend or make a distribution on
its Parent Common Stock in shares of its capital stock or other
securities, (ii) subdivide its outstanding shares of Parent Common
Stock into a greater number of shares, (iii) combine its
outstanding Parent Common Stock into a smaller number of shares or
(iv) issue, by reclassification of its Parent Common Stock, shares
of its capital stock or other securities of the Parent (including
any such reclassification in connection with a consolidation or
merger in which Parent is the continuing corporation), the number
of Merger Shares issuable to the Shareholders immediately prior
thereto shall be adjusted so that the Shareholders shall be
entitled to receive the kind and number of Merger Shares, shares of
Parent’s capital stock and other securities of Parent which
such holder would have owned or would have been entitled to receive
immediately after the happening of any of the events described
above, had the Merger Shares been issued to the Shareholders
immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this
subsection (a) shall become effective immediately after the
effective date of such event.
(ii) In
case Parent shall issue rights, options, warrants or convertible
securities to holders of its Parent Common Stock, without any
charge to such holders, containing the right to subscribe for or
purchase Parent Common Stock, the number of Merger Shares
thereafter issuable to the Shareholders shall be determined by
multiplying the number of Merger Shares theretofore issuable to the
Shareholders by a fraction, of which the numerator shall be the
number of shares of Parent Common Stock outstanding immediately
prior to the issuance of such rights, options, warrants or
convertible securities plus the number of additional shares of
Parent Common Stock offered for subscription or purchase, and of
which the denominator shall be the number of shares of Parent
Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities. Such
adjustment shall be made whenever such rights, options, warrants or
convertible securities are issued, and shall become effective
immediately upon issuance of such rights, options, warrants or
convertible securities.
(iii) In
case Parent shall distribute to holders of its Parent Common Stock
evidences of its indebtedness or assets (excluding cash dividends
or distributions out of current earnings made in the ordinary
course of business consistent with past practices), then in each
case the number of Merger Shares that have not yet been issued to
the Shareholders shall be determined by multiplying the number of
Merger Shares that have not yet been issued to the Shareholders by
a fraction, of which the numerator shall be the then Market Price
(as defined below) on the date of such distribution, and of which
the denominator shall be such Market Price on such date minus the
then fair value (determined as provided in subsection (d) below) of
the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Parent Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution.
(iv) To
the extent not covered by subsections (b) or (c) hereof:
(A) In
case Parent shall sell or issue Parent Common Stock or rights,
options, warrants or convertible securities containing the right to
subscribe for, purchase or exchange into shares of Parent Common
Stock at a price per share (determined, in the case of such rights,
options, warrants or convertible securities, by dividing (i) the
total amount received or receivable by Parent in consideration of
the sale or issuance of such rights, options, warrants or
convertible securities, plus the total consideration payable to
Parent upon exercise, conversion or exchange thereof, by (ii) the
total number of shares covered by such rights, options, warrants or
convertible securities) lower than $0.08 per share, then the number
of unissued Merger Shares shall thereafter be equal to the sum of
the number of unissued Merger Shares immediately prior to such sale
or issuance plus the number of shares of Parent Common Stock and
rights, options, warrants or convertible securities containing the
right to subscribe for, purchase or exchange into shares of Parent
Common Stock sold or issued in such issuance.
(B) In
case Parent shall sell or issue Parent Common Stock or rights,
options, warrants or convertible securities containing the right to
subscribe for, purchase or exchange into Parent Common Stock for a
consideration consisting, in whole or in part, of property other
than cash or its equivalent, then, in determining the "price per
share" of Parent Common Stock and the "consideration received by
Parent" for purposes of the first sentence of this subsection (d),
the Board of Directors shall determine the fair value of said
property, and such determination, if based upon the Board of
Directors, good faith business judgment, shall be binding upon the
Shareholders. In determining the "price per share" of Parent Common
Stock, any underwriting discounts or commissions paid to brokers,
dealers or other selling agents shall not be deducted from the
price received by Parent for sales of securities registered under
the Securities Act of 1933 or issued in a private
placement.
(v) For
the purpose of this Section 1.6, the term "Parent Common Stock"
shall mean (i) the class of stock designated as the Parent Common
Stock of parent at the date of this Agreement or (ii) any other
class of stock resulting from successive changes or
reclassifications of such Parent Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result
of an adjustment made pursuant to this Section 1.6, a Shareholder
shall become entitled to receive any securities of Parent other
than Parent Common Stock, (i) if the Shareholder’s right to
acquire is on any other basis than that available to all holders of
Parent Common Stock, Parent shall obtain an opinion of a reputable
investment banking firm valuing such other securities and (ii)
thereafter the number of such other securities so purchasable upon
issuance of the Merger Consideration shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Parent Common
Stock contained in this Section 1.6.
(vi) Upon
any adjustment of the number of Merger Shares, then and in each
such case, Parent shall give written notice thereof, by first-class
mail, postage prepaid, addressed to the Shareholders as shown on
the books of Parent, which notice shall state the increase or
decrease, if any, in the number of shares of Parent Common Stock
issuable to the Shareholders as Merger Shares, setting forth in
reasonable detail the method of calculation and the facts upon
which such calculation is based.
(d) The
common stock, par value $.001 per share, of Acquiror issued and
outstanding immediately prior to the Effective Time shall remain
validly issued, fully paid and non-assessable common stock of the
Surviving Corporation.
Section
1.7. Surrender of and Exchange of Target Common Stock
.
(a) As
soon as practicable after the Effective Time, the stock
certificates representing Target Common Stock issued and
outstanding at the Effective Time (or affidavits of lost
certificates in a form reasonably acceptable to Parent) shall be
surrendered for exchange to the Surviving Corporation. Until so
surrendered for exchange, each such stock certificate nominally
representing Target Common Stock shall be deemed for all purposes
(except for payment of dividends thereon or redemption thereof) to
evidence the ownership of the number of shares of Parent Common
Stock which the holder would be entitled to receive upon its
surrender to the Surviving Corporation.
(b) No
redemption with respect to Parent Common Stock shall be made with
respect to any unsurrendered certificates representing shares of
Target Common Stock with respect to which the shares of Parent
Common Stock shall have been issued in the Merger, until such
certificates shall be surrendered as provided herein.
(c) All
rights to receive the Merger Consideration into which shares of
Target Common Stock shall have been converted pursuant to this
Article I shall be deemed to have been paid or issued, as the case
may be, in full satisfaction of all rights pertaining to such
shares of Target Common Stock.
1.8.
Closing . The closing (the “Closing”) of the
transactions contemplated by this Agreement shall take place (a) at
the offices of Target at 3:00 p.m., local time, on the earlier of
(i) January 23, 2009, or (ii) the third business day immediately
following the date on which the last of the conditions set forth in
Article VI is fulfilled or waived, or (b) at such other time and
place and on such other date as Parent and Target shall agree (the
“Closing Date”).
ARTICLE
II
FURTHER
AGREEMENTS
Section
2.1. Access to Information; Confidentiality .
(a) From
the date hereof to the Effective Time, each of Parent, Acquiror and
Target shall, and shall cause their respective subsidiaries,
affiliates, officers, directors, employees, auditors and agents to
afford the officers, employees and agents of one another complete
access at all reasonable times to one another’s officers,
employees, agents, properties, offices, plants and other facilities
and to all books and records, and shall furnish one another with
all financial, operating and other data and information as each,
through its officers, employees or agents, may reasonably request;
provided, however, that no party shall be required to provide
access or furnish information which it is prohibited by law or
contract to provide or furnish.
(b) Each
of Parent, Acquiror and Target shall, and shall cause their
respective affiliates and their respective officers, directors,
employees and agents to hold in strict confidence all data and
information obtained by them from one another or their respective
subsidiaries, affiliates, directors, officers, employees and agents
(unless such information is or becomes readily ascertainable from
public or published information or trade sources or public
disclosure or such information is required by law) and shall insure
that such officers, directors, employees and agents do not disclose
such information to others without the prior written consent of
Parent, Acquiror or Target, as the case may be.
(c) In
the event of the termination of this Agreement, Parent, Acquiror
and Target shall, and shall cause their respective affiliates,
officers, directors, employees and agents to (i) return promptly
every document furnished to them by one another or any of their
respective subsidiaries, affiliates, officers, directors, employees
and agents in connection with the transactions contemplated hereby
and any copies thereof, and (ii) shall cause others to whom such
documents may have been furnished promptly to return such documents
and any copies thereof any of them may have made.
(d)
No investigation
pursuant to this Section II shall affect any representations or
warranties of the parties herein or the conditions to the
obligations of the parties hereto.
Section
2.2. Notification of Certain Matters . Target shall give
prompt notice to Parent, and Parent shall give prompt notice to
Target, of (a) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue
or inaccurate, and (b) any failure of Target, Parent or Acquiror,
as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice
pursuant to this Article II shall not limit or otherwise affect the
remedies available hereunder to the party receiving such
notice.
Section
2.3. Separation of Certain Monies by Parent, Acquiror and
Target . Each of Parent, Acquiror and Target agree that 50% of
any and all net proceeds, up to $800,000, from sales of any of
their respective equity securities received after the Closing shall
be deposited into an escrow account to be established pursuant to
an amendment to the employment agreement of Parent’s current
president, David Loflin, a form of which is attached hereto as
Exhibit 2.3, which amendment shall have been executed at or prior
to the Closing.
Section
2.4. Board of Directors of Parent . Upon the Closing, three
of the directors of Parent, Waddell D. Loflin, Gregory A. Bonner
and Ira R. Witkin, shall resign and, in their place, John
Castiglione, Jason Sunstein and one other person designated by
Messrs. Castiglione and Sunstein shall be elected, to serve until
the earlier of their removal or resignation.
Section
2.5. Further Action . Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable
to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
Section
2.6. Public Announcements . No party shall issue a press
release or otherwise make any public statements with respect to the
Merger, without the prior consent of the other parties; provided,
however, that Parent may, without the prior consent of any party,
issue a press release or otherwise make public statements with
respect to the Merger, should such press release or public
statements be deemed, in good faith, necessary by Parent to assure
its compliance with applicable securities laws.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUIROR
Parent
and Acquiror hereby, jointly and severally, represent and warrant
to Target that, except as set forth in the Disclosure Schedule
delivered by Parent and Acquiror to Target (the “Parent
Disclosure Schedule”) as soon as is practicable after the
mutual execution of this Agreement:
Section
3.1. Organization and Qualification; Subsidiaries . Each of
Parent and Acquiror 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 and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates, approvals and orders to own, operate or lease the
properties that it purports to own, operate or lease and to carry
on its business as it is now being conducted, and is duly qualified
as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such
qualification necessary, except for such failures which, when taken
together with all other such failures, would not have a Material
Adverse Effect. Neither Parent nor Acquiror has received any notice
of proceedings relating to revocation or modification of any such
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals or orders. The term
“Material Adverse Effect”, as used herein, means any
change in or effect on the business of Parent or Acquiror
(including intangible properties), prospects, condition (financial
or otherwise), assets or subsidiaries, taken as a whole. Parent has
four wholly-owned subsidiaries: (a) AirRover Networks, Inc, a
Maryland corporation; (b) Diamond I Technologies, Inc., a Nevada
corporation; (c) Touchdev, Limited, a U.K. corporation; and (d) UB
Acquisition Corp. (Acquiror).
Section
3.2. Certificate/Articles of Incorporation and Bylaws .
Parent shall, as part of the Parent Disclosure Schedule, furnish to
Target a complete and correct copy of the Certificate/Articles of
Incorporation and the Bylaws, each as amended to date, of Parent
and Acquiror. Such Certificate/Articles of Incorporation and Bylaws
are in full force and effect.
Section
3.3. Capitalization . The authorized capital stock of Parent
consists of 700,000,000 shares of Parent Common Stock, $.001 par
value per share, and 50,000,000 shares of preferred stock, $.001
par value per share. As of the date hereof, 688,016,707 shares of
Parent Common Stock and no shares of Parent’s preferred stock
are issued and outstanding, all of which are validly issued, fully
paid and non-assessable. No shares of Parent Common Stock or
preferred stock are held in the treasury of Parent or by
subsidiaries of Parent. 3,100,000 shares of Parent Common Stock are
reserved for future issuance under Parent’s Second Amended
2004 Stock Ownership Plan and 15,000,000 shares of of Parent Common
Stock are reserved for issuance under certain warrants, all as
described in the Parent Disclosure Schedule. Each of the
outstanding shares of capital stock of each of Parent’s
corporate subsidiaries is duly authorized, validly issued, fully
paid and non-assessable and such shares owned by Parent are owned
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on Parent’s voting rights, charges or
other encumbrances of any nature whatsoever.
Section
3.4. Authority Relative to this Agreement . Each of Parent
and Acquiror has all necessary corporate power and authority to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Parent
and Acquiror and the consummation by Parent and Acquiror of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Acquiror other
than filing and recording of appropriate merger documents as
required by the Nevada Law. This Agreement has been duly executed
and delivered by Parent and Acquiror and, assuming the due
authorization, execution and delivery by Target, constitutes a
legal, valid and binding obligation of each such
corporation.
Section
3.5. No Conflict; Required Filings and Consents .
(a) The
execution and delivery of this Agreement by Parent and Acquiror do
not, and the performance of this Agreement by Parent and Acquiror
shall not, (i) conflict with or violate either the Certificate of
Incorporation or Bylaws of Parent or the Articles of Incorporation
or Bylaws of Acquiror, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or
Acquiror or by which either of them or their respective properties
is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
property or assets of Parent or Acquiror pursuant to any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent
or Acquiror is a party or by which Parent or Acquiror or any of
their respective properties is bound or affected, except for any
such breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse
Effect.
(b) The
execution and delivery of this Agreement by Parent and Acquiror
does not, and the performance of this Agreement by Parent and
Acquiror shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except for applicable
requirements of the Securities Act of 1933, as amended (the
“Securities Act”), the Securities Exchange Act of 1934
(the “Exchange Act”) and State securities laws
(“Blue Sky Laws”).
Section
3.6. Compliance . Neither Parent nor Aquiror is in conflict
with, or in default or violation of, (a) its Certificate/Articles
of Incorporation or Bylaws or equivalent organizational documents,
(b) any law, rule, regulation, order, judgment or decree applicable
to Parent or Aquiror or by which its or any of their respective
properties is bound or affected, including, without limitation,
health and safety, environmental, civil rights laws and regulations
and zoning ordinances and building codes, or (c) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise, ease
