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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
UPGRADE INTERNATIONAL CORPORATION
AND
SECOND CMA INC.
APRIL 2, 2000
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AGREEMENT AND PLAN OF MERGER
Agreement entered as of April 2, 2000 by and between Upgrade
International Corporation, a Florida corporation (the "Buyer"), and Second Cma,
Inc., a Colorado corporation (the "Target"). The Buyer and the Target are
referred to collectively herein as the "Parties."
This Agreement contemplates a merger of the Target with and into the
Buyer. The Target Stockholders will receive 45,000 restricted shares of Buyer
stock and cash in the aggregate amount of $300,000 in exchange for their capital
stock in the Target. The Parties expect that the Merger will further certain of
their business objectives. Now, therefore, in consideration of the premises and
the mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor has the meaning set forth in Rule 501 of the
regulations promulgated under the Securities Act
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Articles of Merger" has the meaning set forth in Section 2(c) below.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Date" has the meaning set forth in Section 2(b) below.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Exchange Agent" has the meaning set forth in Section 2(e) below.
"Merger" has the meaning set forth in Section 2(a) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(f)
below.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Public Reports" has the meaning set forth in Section 3(e) below.
"Requisite Target Stockholder Approval" means the unanimous written
consent of the holders of Target Shares in favor of this Agreement and the
Merger.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2(a) below.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock of the Target.
"Target Stockholder" means any Person who or which holds any Target
Shares.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Target will merge with and into the Buyer (the "Merger") at the
Effective Time. The Buyer shall be the corporation surviving the Merger (the
"Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx Xxxxxx
Xxxxxxx, PLLC, in Seattle, Washington, commencing at 9:00 a.m. local time on the
first business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date")
(c) Actions at the Closing. At the Closing, (i) the Target will deliver
to the Buyer the various certificates, instruments, and documents referred to in
Section 6(a) below, (ii) the Buyer will deliver to the Target the various
certificates, instruments, and documents referred to in Section 6(b) below,
(iii) the Buyer and the Target will file with the Secretary of State of the
States of Florida and Colorado Articles of Merger (the "Articles of Merger"),
and (iv) the Buyer will deliver to the Exchange Agent in the manner provided
below in this Section 2 the certificates representing the shares and the sum of
$300,000 to be distributed to the Target Shareholders.
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(d) Effect of Merger.
(i) General. The Merger shall become effective at the time (the
"Effective Time") the Buyer and the Target file the Articles of Merger
with the Secretary of State of the States of Florida and Colorado. The
Merger shall have the effect set forth in the laws of the States of
Florida and Colorado. The Surviving Corporation may, at any time after
the Effective Time, take any action (including executing and delivering
any document) in the name and on behalf of either the Buyer or the
Target in order to carry out and effectuate the transactions
contemplated by this Agreement.
(ii) Articles of Incorporation. The Articles of Incorporation of
the Buyer in effect at and as of the Effective Time will remain the
Articles of Incorporation of the Surviving Corporation without any
modification or amendment in the Merger.
(iii) Bylaws. The Bylaws of the Buyer in effect at and as of the
Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger.
(iv) Directors and Officers. The directors and officers of the
Buyer in office at and as of the Effective Time will remain the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office).
(v) Cancellation of Target Shares. At and as of the Effective
Time, each Target Share shall be canceled.
(vi) Buyer Shares. Each Buyer Share issued and outstanding at and
as of the Effective Time will remain issued and outstanding.
(e) Procedure for Payment.
(i) Immediately after the Effective Time, the Buyer will furnish
to Xxxxxxxx Xxxxxx & Xxxxxxx, counsel for Target, as Exchange Agent, the
sum of $300,000 and instruct its transfer agent to issue a certificate
for 45,000 shares of restricted stock of Buyer in the names provided to
Buyer prior to closing.
(ii) The Exchange Agent shall deduct all of its charges and
expenses of the from the proceeds before distributing to the Target
Shareholders.
3. Representations and Warranties of the Target. The Target and each of
its shareholders represent and warrant to the Buyer that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3)
(a) Organization, Qualification, and Corporate Power. Each of the Target
and its Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Target and its Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where
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such qualification is required Each of the Target and its Subsidiaries has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
(b) Capitalization. The entire authorized capital stock of the Target
consists of 10,000,000 shares of Preferred Stock and 100,000,000 shares of
Common Stock, of which 12,000,000 Target Shares are issued and outstanding. All
of the issued and outstanding Target Shares have been duly authorized and are
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Target to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Target.
(c) Authorization of Transaction. The Target has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
the Target cannot consummate the Merger unless and until it receives the
Requisite Target Stockholder Approval. This Agreement constitutes the valid and
legally binding obligation of the Target, enforceable in accordance with its
terms and conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Target and its Subsidiaries is
subject or any provision of the charter or bylaws of any of the Target and its
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
any of the Target and its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets) Other than in connection with the provisions of
Colorado law, none of the Target and its Subsidiaries needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement
(e) Filings with the SEC. The Target has made all filings with the SEC
that it has been required to make under the Securities Act and the Securities
Exchange Act (collectively the "Public Reports") and has received from the SEC a
letter to the effect that the SEC will have no further comment on Target's Form
10SB. Each of the Public Reports has complied with the Securities Act and the
Securities Exchange Act in all material respects. None of the Public Reports, as
of their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Target has delivered to the Buyer a correct and complete copy of
each Public Report (together with all exhibits and schedules thereto and as
amended to date).
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(f) Financial Statements. The Target has filed an Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999 ("Most Recent Fiscal Year
End"). The financial statements included in or incorporated by reference into
these Public Reports (including the related notes and schedules) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, and present fairly the financial condition of the
Target and its Subsidiaries as of the indicated dates and the results of
operations of the Target and its Subsidiaries for the indicated periods;
provided, however, that the interim statements are subject to normal year-end
adjustments.
(g) Events Subsequent to Most Recent Fiscal Quarter End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Target and its Subsidiaries taken as a whole.
(h) Undisclosed Liabilities. None of the Target and its Subsidiaries has
any liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
taxes, except for (i) liabilities set forth on the face of the balance sheet
dated as of the Most Recent Fiscal Year End (rather than in any notes thereto)
and (ii) liabilities which have arisen after the Most Recent Fiscal Year End in
the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
(i) Brokers' Fees. None of the Target and its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(j) Affiliate and Accredited Investor Status All shareholders of Target
are Affiliates of Target and are Accredited Investors.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Target that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4).
(a) Organization. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. The Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions.
(c) Noncontravention. To the Knowledge of any director or officer of the
Buyer, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government,
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governmental agency, or court to which the Buyer is subject or any provision of
the charter or bylaws of the Buyer or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its
assets is subject except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to give notice
would not have a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement. To the Knowledge of
any director or officer of the Buyer, and other than in connection with the
provisions of Florida law, the Buyer does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. The Buyer does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which any of the Target and
its Subsidiaries could become liable or obligated.
5. Covenants.
The Parties agree as follows with respect to the period from and after
the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 6 below).
(b) Notices and Consents. The Target will give any notices (and will
cause each of its Subsidiaries to give any notices) to third parties, and will
use its best efforts to obtain any third party consents, that the Buyer
reasonably may request in connection with the matters referred to in Section
3(d) above.
(c) Regulatory Matters and Approvals.(i) Each of the Parties will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 3(d)
and Section 4(d) above.
(ii) Colorado Law. The Target will obtain the unanimous written
consent of its stockholders for the adoption of this Agreement and the
approval of the Merger in accordance with Colorado Law.
6. Conditions to Obligation to Close.
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(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have been approved by the
unanimous written consent of the shareholders of Target;
(ii) Target and its Subsidiaries shall have procured all of the
third party consents specified in Section 5(b) above;
(iii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iv) the Target shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(v) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(C) affect adversely the right of the Surviving Corporation to own the
former assets, to operate the former businesses, and to control the
former Subsidiaries of the Target, or (D) affect adversely the right of
any of the former Subsidiaries of the Target to own its assets and to
operate its businesses (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(vi) the Target shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in Section
6(a)(i)-(v) is satisfied in all respects;
(vii) the Buyer shall have received from counsel to the Target an
opinion in form and substance satisfactory addressed to the Buyer, and
dated as of the Closing Date; and
(viii) all actions to be taken by the Target in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of the Target
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
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(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in form
and substance to the Target;
(iv) Buyer shall have delivered to Target its audited financial
statements for the fiscal year ended December 31, 1999.
The Target may waive any condition specified in this Section 6(b) if it executes
a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Target at any time prior to the Effective Time (A) in the
event the Target has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer
has notified the Target of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before April 30, 2000, by
reason of the failure of any condition precedent under Section 6(a)
hereof (unless the failure results primarily from the Buyer breaching
any representation, warranty, or covenant contained in this Agreement);
(iii) the Target may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Effective Time (A) in the
event the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Target
has notified the Buyer of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before April 30, 2000, by
reason of the failure of any condition precedent under Section 6(b)
hereof (unless the failure results primarily from the Target breaching
any representation, warranty, or covenant contained in this Agreement);
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach).
8. Miscellaneous.
(a) Survival.
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None of the representations, warranties, and covenants of the Parties
(other than the provisions in Section 2 above concerning issuance of the Buyer
Shares) will survive the Effective Time.
(b) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient at the last
address give to the other party.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the last address give to the other party
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
(h) Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their respective boards of directors; provided, however, that
any amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the laws of the State of Florida. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by both of the Parties. No waiver by any Party of any default,
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misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(k) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
[as of] the date first above written.
BUYER:
By:
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Title:
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TARGET:
By:
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Title:
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