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Exhibit 10.1
SHARE EXCHANGE AGREEMENT AND PLAN OF MERGER
THIS SHARE EXCHANGE AGREEMENT AND PLAN OF MERGER is made
as of the 27th day of August, 2008
AMONG:
CORNERWORLD CORPORATION, a corporation formed pursuant to
the laws of the State of Nevada and having an office for business
at 12222 Merit Drive, Suite 120, Dallas, Texas 75251
("Cornerworld")
AND:
ENVERSA COMPANIES LLC , a limited liability company
formed pursuant to the laws of the State of Texas and having an
office for business at 12222 Merit Drive, Suite 120, Dallas, Texas
75251 ("Leadstream Acquisition Sub")
AND:
LEADSTREAM, LLC , a limited liability company formed
pursuant to the laws of the State of Texas and having an office for
business located at 12404 Park Central Drive, Suite 400, Dallas,
Texas 75251 ("Leadstream")
AND:
the holders of the membership interests of Leadstream, LLC, each
of whom are set forth on the signature page of this Agreement (the
"Leadstream Members").
WHEREAS:
A. The
Leadstream Members own such membership interests of Leadstream as
set forth on Exhibit "A" annexed hereto, collectively being 100% of
the presently issued and outstanding Leadstream equity;
B.
Cornerworld is a
reporting company whose common stock is quoted on the
Over-the-Counter Bulletin Board;
C. The
Board of Directors of Cornerworld deems it to be advisable and in
the best interests of Cornerworld and its shareholders to acquire
Leadstream in the manner contemplated by this Agreement;
D. The
sole member of Leadstream Acquisition Sub deems it advisable and in
the best interests of Leadstream Acquisition Sub to merge with
Leadstream in the manner contemplated by this Agreement; and
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E.
The managing member
of Leadstream deems it advisable and in the best interests of
Leadstream and its members to merge with and into Leadstream
Acquisition Sub in the manner contemplated by this
Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
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1.1
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In this Agreement the following terms will have
the following meanings:
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(a)
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" Acquisition " means the merger, at the
Effective Time, of Leadstream with and into Leadstream Acquisition
Sub, with Leadstream Acquisition Sub as the surviving limited
liability company;
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(b)
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" Acquisition Consideration " means the
Acquisition Notes and the Acquisition Shares;
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(c)
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" Acquisition Notes " means the notes in
an aggregate principal amount of $1,500,000 issued on the Closing
Date by Cornerworld to the Leadstream Members pursuant to the terms
of this Agreement;
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(d)
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" Acquisition Shares " means the 3,600,000
Cornerworld Common Shares to be issued pursuant to the terms of
this Agreement;
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(e)
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" Agreement " means this Share Exchange
Agreement and Plan of Merger among Cornerworld, Leadstream
Acquisition Sub, Leadstream and the Leadstream Members;
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(f)
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" Certificate of Merger " means the
certificate of merger respecting the Acquisition, which contains
the information required by the TBOC and the TMCLA;
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(g)
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" Closing " means the completion, on the
Closing Date, of the transactions contemplated by this Agreement in
accordance with Article 7 hereof;
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(h)
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" Closing Date " means the date of this
Agreement;
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(i)
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" Code " means the Internal Revenue Code
of 1986, as amended;
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(j)
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" Cornerworld Accounts Receivable " means
all accounts receivable and other debts owing to Cornerworld, on a
consolidated basis, as of June 30, 2008;
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(k)
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" Cornerworld Assets " means the
undertaking and all the property and assets of the Cornerworld
Business of every kind and description wheresoever situated,
including, without limitation, Cornerworld Equipment, Cornerworld
Inventory, Cornerworld Material Contracts, Cornerworld Accounts
Receivable, Cornerworld Cash, Cornerworld Intangible Assets and
Cornerworld Goodwill, and all credit cards, charge cards and
banking cards issued to Cornerworld;
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(l)
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" Cornerworld Audited Financial Statements
" means, collectively, the audited consolidated financial
statements of Cornerworld for the fiscal year ended April 30, 2008,
together with the unqualified auditors’ report thereon, true
copies of which are attached as Schedule "A" hereto;
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(m)
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" Cornerworld Business " means all aspects
of any business conducted by Cornerworld and its
subsidiaries;
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(n)
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" Cornerworld Cash " means all cash on
hand or on deposit to the credit of Cornerworld and its
subsidiaries;
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(o)
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" Cornerworld Common Shares " means the
shares of common stock, $0.001 par value, of
Cornerworld;
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(p)
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" Cornerworld Equipment " means all
machinery, equipment, furniture, and furnishings used in the
Cornerworld Business;
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(q)
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" Cornerworld Financial Statements "
means, collectively, the Cornerworld Audited Financial Statements
and the Cornerworld Recent Financial Statements;
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(r)
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" Cornerworld Goodwill " means the
goodwill of the Cornerworld Business including the right to all
corporate, operating and trade names associated with the
Cornerworld Business, or any variations of such names as part of or
in connection with the Cornerworld Business, all books and records
and other information relating to the Cornerworld Business, all
necessary licenses and authorizations and any other rights used in
connection with the Cornerworld Business;
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(s)
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" Cornerworld Intangible Assets " means
all of the intangible assets of Cornerworld and its subsidiaries,
including, without limitation, Cornerworld Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of Cornerworld and its subsidiaries;
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(t)
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" Cornerworld Inventory " means all
inventory and supplies of the Cornerworld Business;
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(u)
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" Cornerworld Legal Fees " means the legal
fees incurred by Cornerworld in connection with the transactions
contemplated by this Agreement; provided , however ,
that the maximum amount of such fees shall be $30,000;
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(v)
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" Cornerworld Material Contracts " means
the burden and benefit of, and the right, title and interest of
Cornerworld and its subsidiaries in, to and under, all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which Cornerworld or its subsidiaries are entitled
whereunder Cornerworld or its subsidiaries are obligated to pay or
entitled to receive the sum of $10,000 or more, including, without
limitation, any pension plans, profit sharing plans, bonus plans,
loan agreements, security agreements, indemnities and guarantees,
any agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others, which cannot be terminated without liability
on not more than one month’s notice;
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(w)
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" Cornerworld Parties " means Cornerworld
and Leadstream Acquisition Sub;
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(x)
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" Cornerworld Recent Financial Statements
" means the unaudited consolidated financial statements of
Cornerworld for the two (2) months ending June 30, 2008, true
copies of which are attached as Schedule "A" hereto;
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(y)
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" EBITDA " means earnings before interest,
taxes, depreciation and amortization and excludes extraordinary
expenses which are not incurred in the normal course of
Leadstream’s business and are not part of normal historical
operations of Leadstream. By way of example, and not by way of
limitation, the Transaction Legal Fees and similar fees and
expenses associated with this transaction or any similar
transaction involving Leadstream or Cornerworld shall be excluded
from the expenses used to calculate EBITDA;
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(z)
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" Leadstream Accounts Receivable " means
all accounts receivable and other debts owing to Leadstream, as of
June 30, 2008;
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(aa)
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" Leadstream Annual Financial Statements "
means the unaudited financial statements of Leadstream for the year
ending December 31, 2007 and the notes to the financial statements,
true copies of which are attached as Schedule "B"
hereto;
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(bb)
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" Leadstream Assets " means the
undertaking and all the property and assets of the Leadstream
Business of every kind and description wheresoever situated
including, without limitation, Leadstream Equipment, Leadstream
Inventory, Leadstream Material Contracts, Leadstream Accounts
Receivable, Leadstream Cash, Leadstream Intangible Assets and
Leadstream Goodwill, and all credit cards, charge cards and banking
cards issued to Leadstream;
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(cc)
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" Leadstream Bank Accounts " means all of
the bank accounts, lock boxes and safety deposit boxes of
Leadstream or relating to the Leadstream Business;
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(dd)
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" Leadstream Business " means all aspects
of the business conducted by Leadstream;
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(ee)
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" Leadstream Cash " means all cash on hand
or on deposit to the credit of Leadstream on the Closing
Date;
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(ff)
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" Leadstream Debt to Related Parties "
means the debts owed by Leadstream to the Leadstream Members or to
any family member thereof, or to any affiliate, manager or officer
of Leadstream or the Leadstream Members;
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(gg)
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" Leadstream Equipment " means all
machinery, equipment, furniture, and furnishings used in the
Leadstream Business;
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(hh)
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" Leadstream Financial Statements " means
the Leadstream Annual Financial Statements and the Leadstream
Recent Financial Statements;
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(ii)
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" Leadstream Goodwill " means the goodwill
of the Leadstream Business together with the exclusive right of
Cornerworld to represent itself as carrying on the Leadstream
Business in succession of Leadstream subject to the terms hereof,
and the right to use any words indicating that the Leadstream
Business is so carried on including the right to use the name
"Leadstream" or "Leadstream International" or any variation thereof
as part of the name of or in connection with the Leadstream
Business or any part thereof carried on or to be carried on by
Leadstream, the right to all corporate, operating and trade names
associated with the Leadstream Business, or any variations of such
names as part of or in connection with the Leadstream Business, all
telephone listings and telephone advertising contracts, all lists
of customers, books and records and other information relating to
the Leadstream Business, all necessary licenses and authorizations
and any other rights used in connection with the Leadstream
Business;
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(jj)
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" Leadstream Intangible Assets " means all
of the intangible assets of Leadstream, including, without
limitation, Leadstream Goodwill, all trademarks, logos, copyrights,
designs, and other intellectual and industrial property of
Leadstream and its subsidiaries;
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(kk)
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" Leadstream Inventory " means all
inventory and supplies of the Leadstream Business as of June 30,
2008;
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(ll)
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" Leadstream Material Contracts " means
the burden and benefit of, and the right, title and interest of
Leadstream in, to and under, all trade and non-trade contracts,
engagements or commitments, whether written or oral, to which
Leadstream is entitled in connection with the Leadstream Business
whereunder Leadstream is obligated to pay or entitled to receive
the sum of $10,000 or more, including, without limitation, any
pension plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any agreements
with employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, attorneys or others
which cannot be terminated without liability on not more than one
month’s notice;
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(mm)
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" Leadstream Membership Interests " means
all of the issued and outstanding membership interests of
Leadstream, whether or not certificates have been issued with
respect to such membership interests;
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(nn)
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" Leadstream Parties " means Leadstream
and the Leadstream Members;
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(oo)
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" Leadstream Recent Financial Statements "
means the unaudited financial statements of Leadstream for the six
(6) months ended June 30, 2008, true copies of which are attached
as Schedule "B" hereto;
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(pp)
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" Place of Closing " means the offices of
Sichenzia Ross Friedman Ference LLP, or such other place as
Cornerworld and Leadstream may mutually agree upon;
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(qq)
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" Pledge Agreements " means the Pledge
Agreements of even date herewith between Cornerworld and the
Leadstream Members related to the pledge of all of the equity
interests of the Surviving Company as security for payment of the
Acquisition Notes;
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(rr)
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" Primary Leadstream Member " means
Internet University, Inc.;
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(ss)
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" Registration Rights Agreement " means
that certain Registration Rights Agreement of even date herewith
between Cornerworld and the Leadstream Members.
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(tt)
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" SEC " means the U.S. Securities and
Exchange Commission;
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(uu)
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" Securities Act " means the Securities
Act of 1933, as amended;
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(vv)
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" Surviving Company " means Leadstream
Acquisition Sub, which the Certificate of Merger will designate as
the surviving company in the Acquisition;
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(ww)
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" Tax " means (i) any federal, state,
local, foreign and other tax, charge, fee, duty (including customs
duty), levy or assessment, including any income, gross receipts,
net proceeds, alternative or add-on minimum, corporation, ad
valorem, turnover, real and personal property (tangible and
intangible), sales, use,
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franchise, excise, value added, stamp, leasing,
lease, user, transfer, fuel, excess profits, profits, occupational,
premium, interest equalization, windfall profits, severance,
license, registration, payroll, environmental (including taxes
under Section 59A of the Code), capital stock, capital duty,
disability, estimated, gains, wealth, welfare, employee’s
income withholding, other withholding, unemployment and social
security or other tax of whatever kind (including any fee,
assessment and other charges in the nature of or in lieu of any
tax) that is imposed by any governmental authority, (ii) any
interest, fines, penalties or additions resulting from,
attributable to, or incurred in connection with any items described
in this paragraph or any related contest or dispute and (iii) any
items described in this paragraph that are attributable to another
person or entity but that the applicable person or entity is liable
to pay by law, by contract or otherwise, whether or not
disputed;
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(xx)
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" Tax Return " means any report, return,
declaration, claim for refund or information return or statement
related to Taxes, including any schedule or attachment thereto, and
including any amendment thereof;
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(yy)
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" TBOC " means the Texas Business
Organizations Code;
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(zz)
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" TMCLA " means the Texas Miscellaneous
Corporation Laws Act;
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(aaa)
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" Transaction Legal Fees " means the
Cornerworld Legal Fees and the legal fees incurred by Leadstream in
connection with the transactions contemplated by this Agreement;
and
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(bbb)
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" Treasury Regulation " means the
regulations promulgated under the Code.
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Any other terms defined within the text of this Agreement will
have the meanings so ascribed to them.
Captions and Section Numbers
1.2 The headings and
section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not
intended to interpret, define or limit the scope, extent or intent
of this Agreement or any provision thereof.
Section References and Schedules
1.3 Any reference to a
particular "Article", "Section", "paragraph", "clause" or other
subdivision is to the particular Article, Section, paragraph,
clause or other subdivision of this Agreement and any reference to
a Schedule or Exhibit by letter will mean the appropriate Schedule
or Exhibit attached to this Agreement and by such reference the
appropriate Schedule or Exhibit is incorporated into and made part
of this Agreement. The Schedules and Exhibits to this Agreement are
as follows:
Information concerning Cornerworld
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Schedule "A"
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Cornerworld Financial Statements
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Information concerning Leadstream
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Schedule "B"
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Leadstream Financial Statements
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Exhibits
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Exhibit "A"
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Leadstream Capitalization, Distribution of
Acquisition Shares and Payment of Purchase Price
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Exhibit "B"
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Leadstream Bank Accounts
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Exhibit "C"
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Leadstream Assets
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Exhibit "D"
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Leadstream Material Contracts
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Severability of Clauses
1.4 If
any part of this Agreement is declared or held to be invalid for
any reason, such invalidity will not affect the validity of the
remainder which will continue in full force and effect and be
construed as if this Agreement had been executed without the
invalid portion, and it is hereby declared the intention of the
parties that this Agreement would have been executed without
reference to any portion which may, for any reason, be hereafter
declared or held to be invalid.
ARTICLE 2
THE ACQUISITION
The Acquisition; Certain Effects of the Acquisition
2.1 Subject to the
terms and conditions hereof, on the Closing Date, Cornerworld and
Leadstream will execute or cause to be executed the Certificate of
Merger and Cornerworld will file the Certificate of Merger with the
Secretary of State of the State of Texas.
2.2 The Acquisition
will be effective at the time specified in the Certificate of
Merger or, if the Certificate of Merger does not specify another
time, the time the Certificate of Merger is filed with the
Secretary of State of the State of Texas (the "Effective
Time").
2.3 At and as of the
Effective Time: (a) Leadstream will merge with and into Leadstream
Acquisition Sub in accordance with the applicable provisions of the
TBOC and the TMCLA; (b) Leadstream will cease to exist as a
separate legal entity; (c) Leadstream Acquisition Sub will be the
Surviving Company and, as such, will, all with the effect the TBOC
and the TMCLA provide, (i) acquire all right, title and interest in
and to all real estate and other property of Leadstream and
Leadstream Acquisition Sub, and (ii) be responsible for all
liabilities and obligations of Leadstream and Leadstream
Acquisition Sub; (d) the certificate of formation of Leadstream
Acquisition Sub will be the certificate of formation of the
Surviving Company; and (e) the limited liability company agreement
of Leadstream Acquisition Sub will be the limited liability company
agreement of the Surviving Company.
Effect of the Acquisition on the Membership Interests
2.4 Subject to the
provisions of applicable law related to appraisal rights, as of the
Effective Time, as a result of the Acquisition and without any
action on the part of the holders of the applicable membership
interests, the Leadstream Membership Interests issued and
outstanding immediately prior to the Effective Time will (i)
convert into the right to receive from Cornerworld, on a pro rata
basis, (A) the Acquisition Shares and (B) the Acquisition Notes,
(ii) cease to be outstanding and to exist and (iii) be canceled and
retired. Following the Acquisition, the Surviving Company will
continue to be a wholly-owned subsidiary of Cornerworld. The
Acquisition Shares shall be distributed on the Closing Date in
accordance with Exhibit "A"; the
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Acquisition Shares to be subject to a leakout
provision. It is understood that the Acquisition Shares will be
restricted securities, as defined under the U.S. securities laws.
Accordingly, such shares may be sold only in accordance with Rule
144 or other applicable exemptions. In addition, the Leadstream
Members will agree that during the two-year period following the
Closing, they will not sell Acquisition Shares in the aggregate in
excess of 1% of Cornerworld’s outstanding shares (i.e. each
Leadstream Member will be entitled to sell up to its pro rata
portion of such aggregate 1%). Additionally, the Acquisition Shares
shall be subject to potential restrictions imposed by an investment
banker in connection with an offering of securities. In the event a
placement agent advises Cornerworld that to assure the success of
an offering a temporary suspension for the sales of the Acquisition
Shares is advised then the Leadstream Members will agree not to
sell such shares during such period which can be up to six months
after the offering.
Options
2.5 Following the
Closing Date, Cornerworld shall grant to the existing employees of
Leadstream options to purchase 400,000 Cornerworld Common Shares in
accordance with the Cornerworld existing incentive stock plan at
the discretion of the Cornerworld Board.
Adherence with Applicable Securities Laws
2.6 The Leadstream
Members agree that they are acquiring the Acquisition Shares for
investment purposes and will not offer, sell or otherwise transfer,
pledge or hypothecate any of the Acquisition Shares issued to them
(other than pursuant to an effective registration statement under
the Securities Act), directly or indirectly, unless:
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(a)
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the sale is to Cornerworld;
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(b)
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the sale is made pursuant to the exemption from
registration under the Securities Act, provided by Rule 144
thereunder; or
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(c)
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the Acquisition Shares are sold in a transaction
that does not require registration under the Securities Act or any
applicable United States state laws and regulations governing the
offer and sale of securities, and the vendor has furnished to
Cornerworld an opinion of counsel to that effect or such other
written opinion as may be reasonably required by
Cornerworld.
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The Leadstream Members acknowledge that the certificates
representing the Acquisition Shares shall bear the following
legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF
SUCH SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID
SHARES.
THE RESTIRICITON SHALL BE IN ACCORDANCE WITH THE SHARE EXCHANGE
AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 27, 2008 AND THE
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 27, 2008.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
CORNERWORLD AND LEADSTREAM ACQUISITION SUB
Representations and Warranties
3.1 Cornerworld
and Leadstream Acquisition Sub hereby represent and warrant in all
material respects to Leadstream and the Leadstream Members, with
the intent that Leadstream and the Leadstream Members will rely
thereon in entering into this Agreement and in approving and
completing the transactions contemplated hereby, that:
Cornerworld - Corporate Status and Capacity
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(i)
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Cornerworld is a corporation duly incorporated
and validly subsisting under the laws of the State of Nevada and in
good standing with the office of the Secretary of State for the
State of Nevada, and
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(ii)
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Each of Cornerworld’s subsidiaries is duly
organized and validly subsisting under the laws of its State of
organization and in good standing with the office of the Secretary
of State of such State;
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(b)
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Carrying on Business .
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(i)
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The nature of the Cornerworld Business does not
require Cornerworld to register or be qualified to carry on
business in any jurisdiction other than Texas. Cornerworld conducts
the business described in its filings with the SEC and does not
conduct any other business, and
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(ii)
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Leadstream Acquisition Sub was formed for the
purpose of entering into this Agreement and engaging in the
Acquisition. Leadstream Acquisition Sub has not engaged in any
other business;
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(c)
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Capacity . Cornerworld has the
corporate power, capacity and authority to own the Cornerworld
Assets and to enter into this Agreement and complete the
transactions contemplated hereby; Leadstream Acquisition Sub has
the limited liability company power, capacity and authority to own
its assets and to enter into this Agreement and complete the
transactions contemplated hereby;
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(d)
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Reporting Status; Listing . Cornerworld
is required to file current reports with the SEC pursuant to
section 15(d) of the Securities Exchange Act of 1934. Cornerworld
filed a registration statement under the Securities Act. The
Cornerworld Common Shares are quoted on the Over-the-Counter
Bulletin Board, and all reports required to be filed by Cornerworld
with the SEC or FINRA have been filed;
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Cornerworld - Capitalization
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(i)
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The authorized capital of Cornerworld consists of
250,000,000 Cornerworld Common Shares, $0.001 par value, and
10,000,000 shares of preferred stock, $0.001 par value, of which
43,368,317 Cornerworld Common Shares, and no shares of preferred
stock, are issued and outstanding as of the date hereof,
and
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(ii)
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The authorized capital of each of
Cornerworld’s subsidiaries and the ownership thereof is as
set forth in the attached Schedule 3.1(e)(ii);
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(f)
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No Option, Warrant or Other Right . No
other person, firm or corporation has any agreement, option,
warrant, preemptive right or any other right capable of becoming an
agreement, option, warrant or right for the acquisition of
Cornerworld Common Shares or equity in any of Cornerworld’s
subsidiaries, or for the purchase, subscription or issuance of any
of the unissued shares in the capital of Cornerworld or any of
Cornerworld’s subsidiaries;
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Cornerworld - Records and Financial Statements
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(g)
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Charter Documents . The charter
documents of Cornerworld and its subsidiaries have not been altered
since the incorporation or formation of each, respectively, except
as filed in the record books of Cornerworld or its subsidiaries, as
the case may be;
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(h)
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Corporate Minute Books . The company
minute books of Cornerworld and its subsidiaries are complete and
each of the minutes contained therein accurately reflect the
actions that were taken at a duly called and held meeting or by
consent without a meeting. All actions by Cornerworld and its
subsidiaries which required director (or other governing person) or
shareholder (or other owner) approval are reflected on the
corporate minute books of Cornerworld and its subsidiaries.
Cornerworld and its subsidiaries are not in violation or breach of,
or in default with respect to, any term of their respective
certificates of incorporation (or other charter documents) or
by-laws (or other regulating documents);
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(i)
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Cornerworld Financial Statements . The
Cornerworld Financial Statements present fairly, in all material
respects, the assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Cornerworld, on a consolidated basis,
as of the respective dates thereof, and the sales and earnings of
the Cornerworld Business during the periods covered thereby, in all
material respects, and have been prepared in substantial accordance
with generally accepted accounting principles consistently
applied;
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(j)
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Cornerworld Accounts Payable and
Liabilities . There are no material liabilities, contingent
or otherwise, of Cornerworld or its subsidiaries which are not
reflected in the Cornerworld Financial Statements except those
incurred in the ordinary course of business since the date of the
said Cornerworld Financial Statements, and neither Cornerworld nor
its subsidiaries have guaranteed or agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts
payable and liabilities of Cornerworld as of April 30, 2008 are
described in Schedule "A" hereto, and Cornerworld agrees to update
Schedule "A" prior to the Closing to include all accounts payable
and liabilities as of the Closing Date;
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(k)
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Cornerworld Accounts Receivable . All
the Cornerworld Accounts Receivable result from bona fide business
transactions and services actually rendered without, to the
knowledge and belief of Cornerworld, any claim by the obligor for
set-off or counterclaim;
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(l)
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No Debt to Related Parties . Except as
set forth on the disclosure schedule, neither Cornerworld nor any
of its subsidiaries is, or as of the Closing will be, indebted to
any affiliate, director or officer of Cornerworld, except for
accounts payable on
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10
account of bona fide business transactions of
Cornerworld incurred in the normal course of the Cornerworld
Business, including employment agreements, none of which are more
than 30 days in arrears;
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(m)
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No Related Party Debt to Cornerworld .
No director or officer or affiliate of Cornerworld is now indebted
to or under any financial obligation to Cornerworld or any
subsidiary on any account whatsoever, except for advances on
account of travel and other expenses not exceeding $1,000 in
total;
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(n)
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No Dividends . No dividends or other
distributions on any shares in the capital of Cornerworld have been
made, declared or authorized since the date of Cornerworld Recent
Financial Statements;
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(o)
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No Payments . No payments of any kind
have been made or authorized since the date of the Cornerworld
Recent Financial Statements to or on behalf of officers, directors,
shareholders or employees of Cornerworld or its subsidiaries or
under any management agreements with Cornerworld or its
subsidiaries, except payments made in the ordinary course of
business and at the regular rates of salary or other remuneration
payable to them;
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(p)
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No Pension Plans . There are no
pension, profit sharing, group insurance or similar plans or other
deferred compensation plans affecting Cornerworld;
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(q)
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No Adverse Events . Since the date of
the Cornerworld Recent Financial Statements:
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(i)
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there has not been any material adverse change in
the consolidated financial position or condition of Cornerworld,
its subsidiaries, its liabilities or the Cornerworld Assets or any
damage, loss or other change in circumstances materially affecting
Cornerworld, the Cornerworld Business or the Cornerworld Assets or
Cornerworld’s right to carry on the Cornerworld Business,
other than changes in the ordinary course of business,
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(ii)
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there has not been any damage, destruction, loss
or other event (whether or not covered by insurance) materially and
adversely affecting Cornerworld, its subsidiaries, the Cornerworld
Business or the Cornerworld Assets,
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(iii)
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there has not been any material increase in the
compensation payable or to become payable by Cornerworld to any of
Cornerworld’s officers, employees or agents or any bonus,
payment or arrangement made to or with any of them,
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(iv)
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the Cornerworld Business has been and continues
to be carried on in the ordinary course,
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(v)
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Cornerworld has not waived or surrendered any
right of material value,
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(vi)
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neither Cornerworld nor its subsidiaries have
discharged or satisfied or paid any lien or encumbrance or
obligation or liability other than current liabilities in the
ordinary course of business, and
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(vii)
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no capital expenditures in excess of $15,000
individually or $30,000 in total have been authorized or
made;
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11
Cornerworld - Income Tax
Matters
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(r)
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Tax Returns . All Tax Returns of
Cornerworld and its subsidiaries required by law to be filed have
been timely filed and are true, complete and correct, and all taxes
payable in accordance with any such Tax Returns or in accordance
with any notice of assessment or reassessment issued by any taxing
authority have been paid;
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(i)
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Adequate provisions have been made in accordance
with generally accepted accounting principles consistently applied
for Taxes payable for which Tax Returns are not yet required to be
filed and there are no agreements, waivers, or other
arrangements
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