AGREEMENT
AND PLAN OF CORPORATE
SEPARATION
AND REORGANIZATION (Exhibit A1)
This
Agreement and Plan of Corporate Separation and Reorganization
("Agreement") is made as of January 29, 2009 by and between
Semotus, Inc., a California corporation (“Semotus”),
Flint Telecom Group, Inc., a Nevada corporation
(“Flint”), and the undersigned shareholder (the
“Shareholder”).
STATEMENT
OF PURPOSE
Flint
Telecom, Inc. merged with Semotus Solutions, Inc. in October 2008
and continued to operate the historic businesses of each entity
under the name Flint Telecom Group, Inc. Flint Telecom,
Inc. had operated since 2005 to provide telecom services to the
global telecom and media industry (the “Flint
Division”) while Semotus Solutions, Inc. had operated since
1993 to provide software for connecting people to critical business
systems, information and processes (the “Solutions
Division”). For the business reasons described
below, the parties have agreed that Flint will transfer the assets
described herein constituting the Solutions Division to Semotus, a
newly organized California corporation, in exchange for the
original issue of one thousand five hundred (1,500)
shares of common stock of Semotus, which shall constitute all of
the outstanding common stock of Semotus. Flint intends
to immediately thereafter transfer the one thousand five hundred
(1,500) shares of common stock of Semotus to be acquired by Flint
in the manner described above to the Shareholder, in exchange for
the number of common Flint shares owned by Shareholder specified on
Exhibit “B” (the “Flint Shares”) in a
transaction qualifying as a tax-free reorganization under
sections 355 and 368(a)(1)(D) of the Internal Revenue Code of
1986, as amended (“Code”).
PLAN
OF REORGANIZATION
The
parties hereby adopt this plan of reorganization which is intended
to effect a tax-free reorganization under sections 361(a) and
368(a)(1)(D) of the Code. Pursuant to the terms and
provisions of the Agreement hereinafter set forth, the
reorganization will consist of:
1. The
transfer by Flint of the part of its assets (subject to certain
liabilities) which constitute the Solutions Division to Semotus in
exchange solely for all the outstanding voting stock of Semotus;
and
2. The
distribution (“Distribution”) by Flint of all of the
Semotus stock to the Shareholder, in exchange for the Flint
Shares.
AGREEMENT
The
parties hereby agree as follows:
1.
Transfer of Solutions Division to Semotus . Flint
agrees to take or
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Agreement
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Separation
and Reorganization
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cause
to be taken the following action at or prior to the Closing Date as
defined herein:
(a) Shareholder
will cause Semotus to be organized as a California corporation,
having articles of incorporation, bylaws and organizational
minutes. The corporate name of Semotus shall be Semotus,
Inc. The initial issued capitalization of Semotus shall
consist solely of one thousand five hundred (1,500) shares of
common stock. The initial director of Semotus shall be
Anthony LaPine.
(b) Flint
shall transfer all of the assets and properties, subject to all the
liabilities, debts, obligations and contracts, of the Solutions
Division to Semotus in exchange for one thousand five hundred
(1,500) shares of its common stock. The transfer and
assignment of assets shall be by bulk or individual assignments in
form and substance satisfactory to Flint.
(c) More
specifically, the assets transferred to Semotus shall include the
real and personal property, accounts receivable, intangibles,
prepaid expenses and deposits as are attributable to the Solutions
Division, as shown on Exhibit “A.”
(d) Semotus
shall assume all the liabilities and obligations of Flint that are
attributable to or properly allocable to the Solutions
Division.
(e) Semotus
hereby assumes any and all liabilities of the Solutions Division
including any unasserted, unknown, or contingent liabilities
attributable or arising out of the operation of the Solutions
Division.
(g) On
or before the Closing Date, Flint and Semotus shall ratify and
approve this plan of reorganization by a resolution of their Boards
of Directors and consents of their shareholders.
2.
Transfer of Semotus Stock to The Shareholder
. Flint and Shareholder agree to take the following
action at or prior to the Closing Date as defined
herein:
(a) Following
the transfer of the Solutions Division to Semotus in exchange for
one thousand five hundred (1,500) shares of common stock of
Semotus, Flint agrees to transfer the one thousand five hundred
(1,500) shares of common stock of Semotus to the Shareholder in
exchange for the Flint Shares.
(b) Following
the transfer of the Solutions Division to Semotus in exchange for
one thousand five hundred (1,500) shares of common stock of
Semotus, the Shareholder agrees to transfer the Flint Shares to
Flint in exchange for Flint’s one thousand five hundred
(1,500) shares of common stock of Semotus.
3.
Services Agreement . Flint shall make available
to Semotus the services of the employees of the Solutions Division
pursuant to a cost allocation as may be agreed upon between the
parties.
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Agreement
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and Reorganization
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4.
No Representations or Warranties as to Solutions Division
. Flint makes no representations or warranties as to its
operations or the operations of the Solutions
Division. Flint further disclaims all warranties,
express or implied, with respect to the assets transferred to
Semotus and Semotus will receive all assets from Flint “AS
IS”.
5.
Employee Benefits/ Options . In the event that any Flint
employees (“Transferred Employees”) become employed by
Semotus, Semotus shall provide similar benefits for such
employees.
6.
Employees . Semotus will be solely responsible for
performing under any existing contracts of employment between
Transferred Employees and Flint and meeting all other obligations
of Flint to such employees. Semotus agrees to indemnify
Flint for any claims, losses, expenses and liabilities, including
attorneys’ fees, to Flint arising out of the rights and
claims of Transferred Employees so assigned to Semotus.
7.
Creditor Consents . Within thirty (30) days after
the Closing Date, Semotus will obtain consents from creditors to
the transfer of assets subject to deeds of trust, liens and
security interests from Flint to Semotus.
8.
Indemnity and Hold Harmless . Semotus shall indemnify and
hold Flint harmless from any and all claims, actions, losses,
expenses, liabilities and obligations, including attorneys’
fees, assumed by Semotus or incurred by Semotus on or after the
Closing Date. Flint shall indemnify and hold Semotus harmless from
any and all claims, actions, losses, expenses, liabilities and
obligations, including attorneys’ fees, retained by Flint or
incurred by Flint on or after the Closing Date.
9.
Risk of Loss . Until the Closing Date, Flint
shall bear all risk of loss, injury, damage or destruction of the
business and the assets of the Solutions Division.
10.
Buy-Sell Agreement . After the execution of this
Agreement, the Shareholder shall negotiate in good faith for the
conclusion of a buy sell agreement.
11.
Stock Splits, etc . If, from time to time during
the term of this Agreement there is any stock dividend or
liquidating dividend of cash and/or property, stock split or other
change in the character or amount of any of the outstanding
securities of Semotus, or there is any consolidation, merger or
sale of all, or substantially all, of the assets of Semotus; then,
in such event, any and all new, substituted or additional
securities or other property to which Shareholder is entitled by
reason of his ownership of Semotus shares shall be immediately
subject to this Agreement and be included in the word
“Semotus shares” for all purposes with the same
force and effect as the Semotus shares presently subject to this
Agreement.
12.
Legends . All certificates representing any of
the Semotus shares subject to the provisions of this Agreement
shall have endorsed thereon legends substantially in the following
form:
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Agreement
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and Reorganization
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“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”). THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.”
Any
legend that may be required by the California Commissioner of
Corporations or by applicable blue sky laws of any
state.
13.
Representations and Warranties of The Shareholder
. Shareholder represents and warrants as
follows:
(a) On
the Closing Date, Semotus will be a corporation duly organized and
existing and in good standing under the laws of the State of
California, with no liabilities except as contemplated by this
Agreement and the transactions related hereto.
(b) On
the Closing Date, the authorized capital of Semotus shall consist
of one thousand five hundred (1,500) shares of common stock, of
which one thousand five hundred (1,500) shares will be issued and
outstanding.
14.
Further Representations and Warranties of The Shareholder .
The undersigned Shareholder represents and warrants as
follows:
(a)
Owner of Flint shares . As of the date hereof and
as of immediately before the Closing, the Shareholder owns
beneficially and of record the number of shares of Flint common
stock set forth next to his signature to this Agreement.
(b)
No Plan of Disposition . The undersigned
Shareholder has no plan or intention to dispose of any of his
shares of Semotus acquired pursuant to this Agreement, or to cause
Semotus to redeem any of its stock issued pursuant to this
Agreement.
(c)
Investment Intent; Capacity to Protect Interests . The
Shareholder is acquiring the shares of Semotus solely for his own
account for investment and not with a view to or for sale in
connection with any distribution of the shares or any portion
thereof and not with any present intention of selling, offering to
sell or otherwise disposing of or distributing the shares or
any portion thereof in any transaction other than a transaction
exempt from registration under the Securities Act of 1933, as
amended (the “Act”). The Shareholder also
represents that the entire legal and beneficial interest of the
shares received in the Distribution will be held by the
Shareholder, for the Shareholder’s account only, and neither
in whole or in part for any other person. The
Shareholder either has a pre-existing business or personal
relationship with Flint and Semotus or any of their officers,
directors or controlling persons or by reason of
Shareholder’s business or financial experience or the
business or financial experience of Shareholder’s
professional advisors who are unaffiliated with
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Agreement
and Plan of Corporate
Separation
and Reorganization
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