Exhibit 10.1(a)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made this 24th day
of July, 2007 by and among Cyber Vault Technologies, Inc., an Illinois
corporation (the "COMPANY"), the shareholders of the Company listed on APPENDIX
A attached hereto (each a "SELLER" and collectively, "SELLERS"), and Terra Firma
Technologies, Inc., a Delaware corporation (f/k/a Highriver Acquisition Corp., a
Delaware corporation) ("PURCHASER").
WHEREAS, Sellers are the record and beneficial owner of Five Million One
Hundred Twenty-One Thousand Nine Hundred Sixty-Two (5,121,962) shares of common
stock of the Company, no par value, (together, the "SELLER SHARES"), which
constitute One Hundred Percent (100%) of the issued and outstanding shares of
capital stock of the Company;
WHEREAS, the respective Boards of Directors of Purchaser and the Company
have determined that it is advisable and in the best interests of their
respective companies and their shareholders to consummate the business
combination transaction provided for herein in which the Company will, subject
to the terms and conditions set forth herein, merge with and into Purchaser (the
"MERGER"); and
WHEREAS, Purchaser, the Company and the Seller desire to make certain
representations, warranties and covenants in connection with the Merger;
WHEREAS, the parties hereto intend for the Merger to qualify, for federal
income tax purposes, as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Sellers and Purchaser desire to set forth herein their agreement
relative to the matters set forth above in these Recitals.
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Recitals. The recitals contained herein are specifically remade,
restated and fully incorporated into the terms and conditions of this Agreement.
2. The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law ("DGCL") and the Illinois
Business Corporation Act of 1983 ("IBCA"), at the Effective Time (as hereinafter
defined), the Company shall merge with and into Purchaser. Purchaser shall
become the surviving corporation (hereinafter sometimes called the "SURVIVING
CORPORATION") in the Merger, and shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
be "Terra Firma Technologies, Inc.", a Delaware corporation. Upon consummation
of the Merger, the separate corporate existence of the Company shall terminate.
3. Plan of Merger. This Agreement shall constitute an agreement of merger
for purposes of the DGCL and the IBCA.
4. Effective Time. As promptly as practicable, but in no event later than
the third (3rd) business day after all of the conditions set forth in Section 14
shall have been satisfied or, if permissible, waived by the party entitled to
the benefit of the same, the Company and Purchaser shall duly execute and file
certificates/articles of merger (collectively, the "CERTIFICATES OF MERGER")
with the Secretary of State of the State of Delaware (the "DELAWARE SECRETARY")
in accordance with the DGCL and with the Secretary of State of the State of
Illinois (the "ILLINOIS SECRETARY") in accordance with the IBCA. The Merger
shall become effective on the date (the "CLOSING DATE") and at the later of such
time (the "EFFECTIVE TIME") as the Certificates of Merger are filed with the
Delaware Secretary and the Illinois Secretary or at such later date and time as
is specified in such Certificates of Merger, but in no event shall the Closing
Date occur later than July 20, 2007 unless agreed to in writing by the
undersigned. Subject to the terms and conditions of this Agreement, the closing
of the Merger (the "CLOSING") shall be held at the offices of Xxxxxxxx & Xxxxx,
P.C., 000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 or such
other location as the parties may mutually agree upon.
5. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided herein and as set forth in Section 259 of the DGCL and
Section 11.50 of the IBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, (a) all the property, rights,
privileges, powers and franchises of the Company shall vest in the Surviving
Corporation, and (b) all debts, liabilities, obligations, restrictions,
disabilities and duties of Purchaser and the Company shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
6. Conversion of Company Common Stock.
(a) At the Effective Time, the Seller Shares shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be
converted into the right to receive and be exchangeable for 5,121,962
shares of Purchaser's common stock, $0.001 par value in the same
proportions that each Seller owns the Seller Shares (the "MERGER
CONSIDERATION"). Each Seller Share converted into the right to receive
Merger Consideration pursuant to this Section 6 shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each certificate (each a "CERTIFICATE," and collectively, the
"CERTIFICATES") previously representing any such Seller Shares shall
thereafter represent the right to receive Merger Consideration.
(b) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Purchaser shall be changed into a different number of
shares by reason of any reclassification, recapitalization or exchange of
shares or if a stock split, combination, stock dividend, stock rights or
dividend thereon shall be declared with a record date within said period,
the number of Purchaser shares included in the Merger Consideration,
rounded to the nearest whole number.
7. Certificate of Incorporation. Unless otherwise agreed to by the parties
prior to the Effective Time, at and after the Effective Time, the Certificate of
Incorporation of Purchaser shall be the Certificate of Incorporation of the
Surviving Corporation, until thereafter amended as provided by law and such
Certificate of Incorporation.
8. Bylaws. Unless otherwise agreed to by the parties prior to the Effective
Time, at and after the Effective Time, the Bylaws of Purchaser shall be the
Bylaws of the Surviving Corporation, until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
9. Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry
out the purposes of this Agreement, the Company and its proper officers and
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directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
the Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of the Company or otherwise to take any and all
such action.
10. Accounting and Tax Treatment. The parties to this Agreement intend that
the Merger shall be treated as a reorganization under Section 368(a) of the
Code.
11. Exchange of Shares.
(a) At the Effective Time, upon surrender of all the Certificates
representing all issued and outstanding Seller Shares to Purchaser,
Purchaser shall deliver to each Seller such Seller's pro rata portion of
the Merger Consideration.
(b) After the date of this Agreement, there shall be no transfers on
the stock transfer books of the Company of the Seller Shares, which were
issued and outstanding immediately prior to the date hereof.
12. Closing Deliveries.
(a) At Closing, Sellers shall deliver to Purchaser:
(i) a Certificate of Good Standing for the Company issued by the
Illinois Secretary of State not more than 30 days prior to Closing;
(ii) a certified copy of resolutions adopted by the shareholders
and board of directors of the Company authorizing the execution and
delivery of this Agreement and the transactions contemplated hereby;
(iii)assignment of any agreements of the Company relating to the
business of the Company and any consents required for such
assignments;
(iv) certificates representing the Seller Shares, which shall be
duly endorsed in blank, or accompanies by stock powers duly endorsed
in blank, in proper form for transfer;
(v) a shareholder agreement between the Company and all of its
shareholders executed by each Seller in the form attached hereto as
EXHIBIT A;
(vi) a license agreement in substantially the form attached
hereto as EXHIBIT B wherein the Company agrees to license to the
Purchaser the right to use the Intellectual Property (as hereinafter
defined);
(vii) an irrevocable lease-purchase agreement in substantially
the form attached hereto as EXHIBIT C wherein after Purchaser agrees
to lease from Cybervault Properties, LLC and Illinois Information
Management, LLC certain real property and intellectual property;
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(viii) an irrevocable lease-purchase agreement in substantially
the form attached hereto as EXHIBIT D wherein after Purchaser agrees
to lease from the Company the IT Assets (as hereinafter defined);
(ix) all schedules referenced in this Agreement; and
(x) such other documents as may be reasonably necessary to carry
out the transactions contemplated by this Agreement.
(b) At Closing, Purchaser shall deliver to Sellers:
(i) the Merger Consideration;
(ii) a Certificate of Good Standing for Purchaser issued by the
Illinois and Delaware Secretaries of State not more than 30 days prior to
Closing;
(iii) a certified copy of resolutions adopted by the shareholders and
board of directors of Purchaser authorizing the execution and delivery of
this Agreement and the transactions contemplated herein;
(iv) an employment agreement in substantially the form attached hereto
as EXHIBIT E for continued employment with the Purchaser for each member of
the Company's management team so designated by the Company prior to the
Closing; and
(v) such other documents as may be reasonably necessary to carry out
the transactions contemplated by this Agreement.
13. Representations and Warranties.
(a) The Company and Sellers hereby represent and warrant to Purchaser,
respectively, as follows:
(i) Organization. The Company is a corporation duly formed and
validly existing under the laws of the State of Illinois and has the
power and authority to carry on its business as now conducted, to
execute this Agreement and the instruments referred to in this
Agreement that it is executing and delivering, and to carry out the
transactions contemplated hereby and thereby.
(ii) Enforceability. The execution and delivery by the Company of
this Agreement and the instruments referred to in this Agreement have
been duly authorized by the board of directors and Sellers and
constitute legal, valid, binding and enforceable agreements and
instruments of the Company.
(iii) No Violation. Neither the execution, delivery, nor
performance of this Agreement or any instrument executed and delivered
by or on behalf of the Company in connection herewith, nor the
consummation of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or thereof,
contravenes the Articles of Incorporation or By-Laws of the Company or
any provisions of law, statute, rule, regulation or judgment, decree,
franchise, order or permit applicable to the Company, or conflicts or
is inconsistent with or will result in any breach of or to the
Company's Knowledge constitute a default under any contract,
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commitment, agreement, understanding, arrangement or instrument, or
result in the creation of or imposition of (or the obligation to
create or impose) any lien, encumbrance or liability on any of the
property or assets of the Company. "COMPANY'S KNOWLEDGE" shall mean
the actual knowledge of the Sellers after reasonable investigation.
(iv) Compliance with Laws. To the Company's Knowledge, the
Company is in compliance with all applicable laws, statutes,
ordinances, rules, regulations and orders of governmental authorities,
and the Company has not received notice asserting any violation
thereof or non-compliance therewith. To the Company's Knowledge, the
Company holds all the permits, licenses, certificates, registrations,
approvals or authorizations by or of governmental authorities or third
parties necessary or desirable for operation of the Company's
business, all of which are in full force and effect.
(v) Litigation. There is no claim, demand, suit, action,
arbitration or other administrative proceeding or investigation
pending or threatened against the Company, or to which the Company is
otherwise a party, or which may cause a material adverse effect for
the Company, before any court or any governmental department,
commission, board, agency or instrumentality; nor to the Company's
Knowledge is there any basis for any such claim, demand, suit, action,
proceeding or investigation. For purposes of this sub-section,
"material adverse effect" shall mean any liability, cost, or potential
financial exposure of at least $10,000, or any effect, which may have
a tendency to substantially disrupt or affect the ongoing business
operations of the Company or the Purchaser.
(vi) Disclosure. To Company's Knowledge, the representations and
warranties of the Company made in or pursuant to this Agreement do not
omit any material fact necessary in order to make the statements made
herein, in light of the circumstances under which they are made, not
misleading. To the Company's Knowledge, none of the information
contained herein contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained
herein not misleading.
(vii) The Company. The authorized capital stock of the Company
consists of Five Million One Hundred Twenty-One Thousand Nine Hundred
Sixty-Two (5,121,962) shares of common stock, of which only the Shares
are issued and outstanding as of the date of this Agreement and no
shares are held in treasury. The Shares have been duly and validly
authorized and issued and are fully paid and nonassessable. No Shares
are subject to any preferences, qualifications, limitations,
restrictions or special or relative rights under the Company's
articles of incorporation. There are no options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the
Company any shares of capital stock of the Company, whether now or
hereafter authorized or issued.
(viii) Title to the Shares. Sellers own, beneficially and of
record, the number of Shares set forth under Sellers' names on the
signature page to this Agreement, free and clear of all all options,
pledges, security interests, liens, mortgages, charges, claims,
conditional sale agreements, title exceptions or other encumbrances or
restrictions of any kind (collectively, "Encumbrances"), and have good
and marketable title to such Shares and full legal right, power and
authority to transfer such Shares in the manner contemplated by this
Agreement.
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(ix) No Undisclosed Liabilities. To the Company's Knowledge, the
Company has no liabilities, whether accrued, absolute, contingent or
otherwise, existing or arising out of any transaction or state of
facts existing on or prior to the date hereof, except (a) as and to
the extent arising under contracts, commitments, transaction or
circumstances identified in the Exhibits and Schedules provided for
herein, excluding any liabilities for Company breaches thereunder; and
(b) liabilities, not material in the aggregate and incurred in the
Ordinary Course of Business, which, under GAAP, would not be required
to be reflected on a balance sheet prepared as of the date hereof. For
purposes of the preceding subsection (b), any liabilities incurred in
connection with litigation or judicial, administrative or arbitration
proceedings or claims against the Company shall not be deemed to be
incurred in the Ordinary Course of Business. An action taken in the
"ORDINARY COURSE OF BUSINESS" shall mean an action taken in the
ordinary course of business of the Company, as applicable, consistent
with custom and practice (including with respect to quantity and
frequency) and where for such action to be taken, no separate
authorization by the Company's board of directors, as applicable, is
required.
(x) Material Contracts. Schedule 13(a)(x) lists a complete and
correct list of all Material Contracts, which the Company shall
deliver to the Purchaser prior to the Closing. The Company shall make
available to the Purchaser all Material Contracts, and all copies of
such Material Contracts made available to the Purchaser shall be true
and complete. "MATERIAL CONTRACTS" include every contract, commitment
or arrangement, whether written or oral with a value greater than
$5,000 (and the Company shall deliver to the Purchaser written
descriptions of the terms and conditions of all oral Material
Contracts), of a material nature under which the Company is obligated
on the date hereof, including the following:
(A) all consulting arrangements, and contracts for professional,
advisory and other services, including contracts under which the
Company performs services for others;
(B) all leases of real estate and personal property;
(C) all contracts, commitments and agreements for the
acquisition, development or disposition of real or personal property
other than conditional sales contacts and security agreements
whereunder total future payments are, in each instance, less than
$5,000.00;
(D) all contracts relating to the employment, engagement,
compensation or termination of directors, officers, employees,
consultants or agents of the Company, and all pension, retirement,
profit sharing, stock option, stock purchase, stock appreciation,
insurance or similar plans or arrangements for the benefit of any
employees, officers or directors of the Company;
(E) all loans, loan commitments, promissory notes, letters of
credit or other financial accommodations or arrangements or evidences
of indebtedness, including modifications, waivers or amendments
thereof, extended to or for the benefit of the Company;
(F) all loans, loan commitments, promissory notes, letters of
credit or other financial accommodations or arrangements or evidences
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of indebtedness, including modifications, waivers or amendments
thereof, extended to or for the benefit of any single borrower or
related group of borrowers if the aggregate amount of all such loans,
loan commitments, promissory notes, letters of credit or other
financial accommodations or arrangements or evidences of indebtedness
extended to such borrower or related group of borrowers exceeds
$50,000.00;
(G) all union and other labor contracts;
(H) any contract involving total future payments by the Company
of more than $5,000.00 or which requires performance by the Company
beyond the second anniversary of the Closing Date, that by its terms
does not terminate or is not terminable by the Company without penalty
within 30 days after the date of this Agreement;
(I) except for provisions of the Articles of Incorporation and
By-Laws of the Company, all contracts under which the Company as any
obligation, direct, indirect, contingent or otherwise, to assume or
guarantee any liability or to indemnify any person (other than in a
fiduciary capacity);
(J) all joint venture or marketing agreements with any other
person or entity;
(K) all other Material Contracts, made other than in the Ordinary
Course of Business of the Company, to which the Company is a party or
under which the Company is obligated.
(xi) No Defaults. The Company has fulfilled and taken all action
reasonably necessary to date to enable it to fulfill, when due, all of
its material obligations under all Material Contracts to which it is a
party. There are no breaches or defaults by the Company under any
Material Contract that could give rise to a right of termination or
claim for material damages under such Material Contract, and to the
Company's Knowledge no events have occurred that, with the lapse of
time or the election of any other party, will become such a breach or
default by the Company. To the Company's Knowledge, no breach or
default by any other party under any Material Contract has occurred or
is threatened that will or could impair the ability of the Company to
enforce any of its rights under such Material Contract.
(xii) Taxes.
(A) The Company has duly and timely filed all Tax Returns
required to be filed or delivered by the Company in connection with
the Company's business and operations, to the Company's Knowledge all
information included in such Tax Returns is accurate in all material
respects, and all Taxes required to be shown on such Tax Returns as
payable by the Company with respect to the income of the Company have
been paid when due. No application for an extension of time for filing
any Tax Return or consent to any extension of the period of
limitations applicable to the assessment or collection of any Tax is
in effect with respect to the Company. To the Company's Knowledge, the
Company is not delinquent on the payment of any Taxes claimed to be
due from the Company by any taxing authority, and adequate reserves
for Taxes (including any penalties and interest) payable by the
Company have been made on the books of the Company and on the most
recent of the Company's financial statements. The Company has not
received any notice (whether written or, to the Company's knowledge,
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oral) of any proposed audit or proposed deficiency for any Tax due
from the Company with respect to the business and operations of the
Company, as the case may be, and there are no pending audits or claims
with respect thereto.
(B) The Company is not, and within the past five years, has not
been, a party to any contract, agreement or arrangement under which
the Company has agreed to share Tax liability of any person.
(C) "TAXES" shall mean any and all taxes, charges, fees, levies
or other assessments, including net income, gross receipts, excise,
real or personal property, sales, withholding, social security,
occupation, use, service, service use, value added, license, net
worth, payroll, franchise, transfer, recording, gross income,
alternative or add-on minimum, environmental, goods and services,
capital stock, profits, single business, employment, severance, stamp,
unemployment, customs and duties taxes, fees and charges, imposed by
any taxing authority (whether domestic or foreign including any state,
local or foreign government or any subdivision or taxing agency
thereof), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies or other
assessments. "TAX RETURN" shall mean any report, return, document,
declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes.
(xiii) Environmental Conditions. To the Company's Knowledge,
there are no present or past Environmental Conditions in any way
relating to the business of the Company as conducted on its Premises.
"ENVIRONMENTAL CONDITIONS" means the introduction into the soil,
groundwater or environment of the Premises (through leak, spill,
release, discharge, escape, emission, dumping, disposal or otherwise)
of any pollution, including without limitation any contaminant,
irritant or pollutant or hazardous substance (whether or not upon the
Premises and whether or not such pollution constituted at the time
thereof a violation of any environmental law) as a result of which
Company or, after the Closing, Purchaser has or may become liable to
any person or federal, state, or local government or agency or by
reason of which any of the Company's assets may suffer or be subjected
to any lien. .
(xiv) Technology and Intellectual Property.
(A) Schedule 13(a)(xiv) sets forth a complete and correct list of
all (i) registered trademarks, service marks, copyrights and patents;
(ii) applications for registration or grant of any of the foregoing;
(iii) unregistered trademarks, service marks, trade names, logos and
assumed names; and (iv) licenses for any of the foregoing, in each
cased, owned by the Company or used in or necessary to conduct the
Company's business as presently conducted. The items on Schedule
13(a)(xiv), together will all other trademarks, service marks, trade
names, logos, assumed names, patents, copyrights, trade secrets,
computer software, licenses, formulae, customer lists or other
databases, business application designs and inventions currently used
in or necessary to conduct the business of the Company as presently
conducted constitute the "INTELLECTUAL PROPERTY".
(B) Except at set forth on Schedule 13(a)(xiv), the Company has
ownership of, or such other rights by license, lease or other
agreement in and to, the Intellectual Property as is necessary to
permit the Company to use the Intellectual Property in the conduct of
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its business as presently conducted. The Company has not received
notice (whether written or, to the Company's Knowledge, oral) alleging
that the Company has infringed or violated any trademark, trade name,
copyright, patent, trade secret right or other proprietary right of
others, and to the Company's Knowledge, it has not committed any such
violation or infringement. Other than as set forth on Schedule
13(a)(xiv), to the Company's Knowledge, there is no reason to believe
that, upon consummation of the transactions contemplated hereby,
including execution of any and all license agreements between the
Company and the Purchaser, the Company or the Purchaser will be in any
way more restricted in its use of any of the Intellectual Property
than it was on the date hereof under any contract to which the Company
is a party or by which it is bound, or that use of such Intellectual
Property by the Company or the Purchaser will, as a result of such
consummation, violate or infringe the rights of any person, or subject
the Purchaser or the Company to liability of any kind, under any such
contract.
(C) The IT Assets operate and perform in all material respects in
accordance with their documentation and functional specifications and
otherwise as required by the Company in connection with its business,
and except as set forth in Schedule 13(a)(xiv) have not materially
malfunctioned or failed within the past three (3) years. "IT ASSETS"
means the computers, computer software, firmware, servers,
workstations, routers, hubs, switches, data communications lines and
all other information technology equipment, and all associated
documentation, owned or leased by the Company. To the Company's
Knowledge, the IT Assets do not contain any worms, viruses, bugs,
faults or other devices or effects that (i) enable or assist any
person or entity to access without authorization the IT Assets; or
(ii) otherwise significantly adversely affect the functionality of the
IT Assets, except as disclosed in its documentation. To the Company's
Knowledge, no person or entity has gained unauthorized access to the
IT Assets. The Company has implemented reasonable back-up and disaster
recovery technology consistent with industry practices. To the
Company's Knowledge, none of the IT Assets contains any shareware,
open source code, or other software, the use of which requires
disclosure or licensing of any intellectual property.
(xv) Change in Business Relationships. As of the date of this
Agreement, the Company has not received notice (whether written or, to
the Company's Knowledge, oral), whether on account of the transactions
contemplated by this Agreement or otherwise, (i) that any customer,
agent, representative, supplier, vendor or business referral source of
the Company intends to discontinue, diminish or change its
relationship with the Company, the effect of which would be material
to the Company taken as a whole; or (ii) that any officer of the
Company intends to terminate or substantially alter the terms of his
or her employment. There have been no complaints or disputes (in each
case set forth in writing) with any customer, employee, agent,
representative, supplier or vendor of the Company that have not been
resolved which are reasonably likely to be material to the Company
taken as a whole.
(xvi) Financial Condition. The Company is solvent and the Company
reasonably expects that it will operate with actual net cash flow as
of the end of fiscal year 2007 of not less than $452,000 and actual
gross revenue as of the end of fiscal year 2007 of not less than
$25,000.
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(xvii) Accredited Investors. The Sellers are accredited investors
pursuant to the rules promulgated by the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "SECURITIES ACT").
(xviii) Real Property. Attached as Schedule 13(a)(xviii) is an
exhibit of Real Property, which sets for the a complete and correct
description of all real property owned or leased by the Company or in
which the Company has an interest (other than as a mortgagee). No real
property is carried on the Company's books as "other real estate
owned." The Company owns, or has a valid right to use or has a
leasehold interest in, all real property used by it in the conduct of
its business as such business is presently conducted. The Company
shall deliver to Purchaser true, correct, and complete copies of any
leases for premises leased by the Company and listed on Schedule
13(a)(xviii) of the Disclosure Schedule (the "LEASES"). All rent
amounts due under the Leases have been paid and, to Company's
Knowledge, there exists no default under the terms of the Leases.
Except as otherwise set forth in Schedule 13(a)(xviii), the ownership
or leasehold interest of the Company of such real property is not
subject to free of all liens, and is not subject to any encumbrances
except for Permitted Encumbrances. As used in this Agreement,
"PERMITTED ENCUMBRANCES" shall mean (i) Encumbrances arising under
conditional sales contracts and equipment leases with third parties
under which the Company is not delinquent or in default; (ii)
carriers', workers', repairers', materialmen's, warehousemen liens'
and similar Encumbrances incurred in the ordinary course of business;
(iii) Encumbrances for taxes not yet due and payable, or that are
being contested in good faith and for which proper reserves have been
established by the Company; and (iv) zoning and similar restrictions
on the use of real property. All Leases shall permit the assignment to
or assumption by the Purchaser; and, if necessary, Company shall
obtain the written consent of any lessor to the assignment to or
assumption by the Purchaser of any Lease. All material certificates,
licenses and permits required for the lawful use and occupancy of any
real property by the Company, as the case may be, have been obtained
and are in full force and effect.
(xix) Personal Property. Section 13(a)(xix) of the Disclosure
Schedule Attached sets forth a complete and correct description of
each item of tangible personal property owned by the Company or used
by the Company in the conduct of its business that is reflected as a
capital asset worth in excess of $1,000 by the Company on the
Company's financial statements. The Company owns, or has a valid right
to use or a leasehold interest in, all such personal property, all
such property is owned free and clear of any Encumbrances except for
Permitted Encumbrances, and all to the Company's Knowledge such
property is in good working condition, normal wear and tear excepted.
(b) Purchaser hereby represents and warrants to Sellers as follows:
(i) Organization and Good Standing. Purchaser is duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to carry on its business as now
conducted, to execute this Agreement and the instruments referred to in
this Agreement that it is executing and delivering, and to carry out the
transactions contemplated hereby and thereby.
(ii) Authorization. Purchaser has the requisite power and authority to
make, execute and deliver and to perform its obligations under this
Agreement. This Agreement has been duly authorized by all requisite action
on the part of Purchaser. This Agreement is the valid and binding
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obligation of Purchaser, enforceable against Purchaser in accordance with
its terms.
(iii) No Violation. Neither the execution, delivery, nor performance
of this Agreement or any instrument executed and delivered by or on behalf
of Purchaser in connection herewith, not the consummation of the
transactions herein or therein contemplated, nor compliance with the terms
and provisions hereof or thereof, contravenes the provisions of law,
statute, rule, regulations or judgment, decree, franchise, order or permit
applicable to Purchaser, or conflicts or is inconsistent with or will
result in any breach of or constitute a default under any contract,
commitment, agreement, understanding, arrangement or instrument, or result
in the creation of or imposition of (or the obligations to create or
impose) any lien, encumbrance or liability on any of the property or assets
of Purchaser.
(iv) Employment. Each individual currently employed by the Company as
an officer or manager will be offered continued employment with Purchaser
in a role substantially similar to that in which he or she currently serves
with the Company, with responsibilities involving the continued management
and operation of the Company's products and services, and at each
individual employee's current annualized salary as of the date of this
Agreement. Such employment offers shall be made in the form of a written
employment agreement given by the Purchaser. Upon successful closing of
this transaction, each affected employee shall be eligible for a one-time
bonus of preferred stock in Purchaser, with amounts of such bonuses to be
determined at the discretion of the Purchaser.
(v) Securities Laws. Based in part on the representations made by the
Sellers in this Agreement, the issuance of the Purchaser's stock pursuant
to the Merger is exempt from the registration and prospectus delivery
requirements of the Securities Act.
(vi) Disclosure. To Purchaser's Knowledge, the representations and
warranties of the Purchaser made in or pursuant to this Agreement do not
omit any material fact necessary in order to make the statements made
herein, in light of the circumstances under which they are made, not
misleading. To the Purchaser's Knowledge, none of the information contained
herein contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein not misleading.
"PURCHASER'S KNOWLEDGE" shall mean the actual knowledge of Xxxxx Xxxxxxxx
after reasonable investigation.
(c) All representations and warranties made by either party to this
Agreement shall survive the Closing.
14. Agreement and Covenants.
(a) Conduct of Business. During the period commencing on the date hereof
and continuing until the Closing Date, the Company shall conduct the Company's
business in the Ordinary Course of Business consistent with prudent business
practice, as applicable. Without limiting the foregoing, without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld, the Company agrees and covenants that:
(i) no change shall be made in the articles of incorporation or
By-Laws of the Company;
11
(ii) no change shall be made in the capitalization of the Company or
in the number of issued and outstanding Shares;
(iii) no dividends or other distributions shall be declared or paid by
the Company;
(iv) the Company shall use its commercially reasonable efforts to
maintain its present insurance coverage in respect to its properties,
assets, and its business;
(v) no material changes shall be made in the general nature of the
business conducted by the Company;
(vi) no employment, consulting or similar agreements shall be entered
into by the Company that are not terminable by the Company on 30 days' or
fewer notice without penalty or obligation;
(vii) the Company shall file all Tax Returns in a timely manner and
shall make any application for or consent to any extension of time for
filing any Tax Return or any extension of the period of limitations
applicable thereto;
(viii) the Company shall not do or fail to do anything that will cause
a breach by the Company of, or default by the Company under, any Material
Contract; and
(ix) no changes of a material nature shall be made in any of the
Company's accounting procedures, methods, policies or practices or the
manner in which the Company maintain its records.
(b) No Conduct Inconsistent with this Agreement. Sellers and the Company
shall not, directly or indirectly, solicit, encourage or facilitate inquiries or
proposals or enter into any agreement with respect to, or initiate or
participate in any negotiations or discussions with or furnish any information
to any person or entity concerning (i) any disposition or sale of the Shares of
all or a substantial portion of the assets of the Company; or (ii) any merger or
other business combination involving the Company, other than as contemplated by
this Agreement. Sellers and the Company shall immediately notify the Purchaser
orally and in writing if any such proposal (including the materials terms and
conditions thereof) is received by, or any person or entity seeks to obtain such
information or to initiate such discussions with the Company or any Seller,
which notice shall include the identity of the person or entity making such
proposal or inquiry.
(c) Untrue Representations and Warranties. During the term of this
Agreement, if any party becomes aware of any facts, circumstances or of the
occurrence or impending occurrence of any event that would cause one or more of
such party's representations and warranties contained in this Agreement to be or
to become untrue as of the Closing Date, then:
(i) such party shall promptly give detailed written notice thereof to
the other parties; and
(ii) such party shall use reasonable and diligent efforts to change
such facts or events to make such representations and warranties true,
unless the same shall have been waived in writing by the other parties.
12
(d) Non-Competition; Non-Solicitation of Employees.
(i) For a period of three (3) years beginning on the Closing Date,
except with the prior written consent of the Purchaser, each Seller agrees
not to, directly or indirectly, either alone or in conjunction with any
other person, firm, association, company or corporation:
(A) engage in the business of design and development of document
archival products, systems and services that convert paper, emails and
electronic files into permanent, non-modifiable archived records (the
"BUSINESS") and the solicitation of customers for such services as an
owner, principal, agent, employee or in any other capacity at any business
which conducts such Business within the greater-Chicago metropolitan area
(which for purposes of Sections 14(d)(i)(A) and 14(d)(i)(D) includes
McHenry, Cook, Lake and DuPage counties and northwest Indiana), other than
in the performance of his employment responsibilities on behalf of
Purchaser;
(B) solicit or conduct business which involves customer relationship
management with any person, corporation or other entity which is a customer
of the Company, the Purchaser or a potential customer with whom the Company
or the Purchaser has an outstanding oral or written proposal to provide
customer relationship management services, other than in the performance of
his employment responsibilities on behalf of Purchaser;
(C) request, advise or directly or indirectly invite any of the
existing customers, suppliers or service providers of the Company, the
Purchaser or any other affiliate of the Purchaser to withdraw, curtail or
cancel its business with the Company, the Purchaser, or any other affiliate
of the Purchaser other than through mass mailings or general advertisements
not specifically directed at customers of the Company, the Purchaser, or
affiliates of the Purchaser; or
(D) hire, solicit, induce or attempt to solicit or induce any
employee, consultant or agent of the Company or the Purchaser to (1)
terminate his or her employment or association with the Company or the
Purchaser; (2) become employed by or serve in any employment, management,
director, consulting or advisory capacity with a company whose business is
in direct competition with the Business of the Company or the Purchaser; or
(3) in any way participate in starting a new company whose business is in
direct competition with the Business of Company or the Purchaser, and which
is located in the greater-Chicago metropolitan area, as defined in Section
14(d)(i)(A).
(ii) Notwithstanding the foregoing, each Seller shall not be prevented
by this Section 14(d)(ii) from (i) investing or owning shares of stock of
any corporation engaged in any business provided that such shares are
regularly traded on a national securities exchange or any over-the-counter
market; or (ii) retaining any shares of stock in any corporation which such
Seller owned prior to the Closing Date.
(iii) Each Seller has reviewed the provision of this Section 14(d)
with legal counsel and acknowledges that the Purchaser would be irreparably
inured by a violation of this Section 14(d), that the provisions of this
Section 9(e) are reasonable and that the Purchaser could not be adequately
compensated in damages for any such violation, in light of the sensitivity
of the non-public Company's Knowledge that Sellers possess. Each Seller
agrees that the Purchaser, in addition to any other remedies available to
13
it for any breach or threatened breach of this Section 14(d), shall be
entitled to seek a preliminary injunction, temporary restraining order or
other equivalent relief restraining any Seller from any such breach or
threatened breach.
(e) Releases. Effective as of the Closing, each Seller, hereby and
without any further action, releases and forever discharges the Company and
the Purchaser and their respective officers, directors, employees and
agents, from any and all liabilities, claims, obligations, actions, causes
of actions, suits at law or in equity of whatever kind or nature, debts,
dues, sums or money, accounts, bonds, bills, covenants, contracts,
promises, variances, trespasses, judgments, verdicts, extents,
encumbrances, payments, damages, costs, attorneys fees, expenses, and
demands of any kind or nature, which such Seller may have or may have had,
known or unknown, from the beginning of the world, based in whole or in
part upon events occurring prior to the Closing Date and/or circumstances
existing as of the Closing Date, against the Company or the Purchaser and
their respective officers, directors, employees and agents, provided,
however, that the foregoing shall not be deemed to waive, discharge or
release any of the following claims, benefits or rights of any Seller
existing as of the Closing Date: (i) claims arising out of the Purchaser's
obligations under this Agreement; (ii) claims for salary accrued and
unpaid; (iii) unreimbursed business expenses and director's fees incurred
in the Ordinary Course of Business; (iv) any right of a Seller in such
Seller's capacity, either directly or indirectly, as a lender to the
Company; (v) claims arising from the obligations of a Seller as a guarantor
of the Company's or Purchaser's debt or any other obligations; or (vi)
claims arising from the Company's or Purchaser's Tax obligations.
15. Securities Laws. Sellers acknowledge that the shares of Purchaser they
shall receive as Merger Consideration have not been registered under the
Securities Act will be issued to the Sellers in a private placement transaction
effected in reliance on an exemption from the registration requirements of the
Securities Act and in reliance on exemptions from the qualification requirements
of applicable state securities laws. Sellers understand that none of the shares
they receive as Merger Consideration may be sold or otherwise transferred
without either (a) registration under the Securities Act and registration and/or
qualification under applicable state securities laws or (b) an exemption
therefrom.
16. Indemnification.
(a) Indemnification of Purchaser. Subject to the limitations of
Section 13(c) above, Sellers shall jointly and severally hold Purchaser,
and, from and after the Closing, Purchaser and its affiliates, directors,
officers, partners, successors, assigns, and agents (collectively
"PURCHASER INDEMNIFIED PERSONS"), harmless and indemnify each of them from
and against, and Sellers waive any claim for contribution or indemnity
against Purchaser Indemnified Persons with respect to any claims, actions,
administrative proceedings, judgments, compensatory damages, punitive
damages, penalties, fines, costs, liabilities, sums paid in settlement or
compromise of claims, interest or losses, reasonable attorneys' fees,
expert witness fees and expenses, together with all other costs and
expenses of any kind or nature, including any such fees and expenses,
relating to a claim for Indemnification ("INDEMNIFIED LOSSES") incurred or
to be incurred by any of them, to the extent resulting from or arising from
the breach of any agreement, covenant, representation, warranty, or other
obligation of Seller made or incurred under or pursuant to this Agreement;
provided, however, when all aggregate Indemnified Losses Purchaser has
suffered by reason of all breaches or alleged breaches exceed the amount of
the Merger Consideration, Sellers will have no obligation to indemnify
Purchaser from and against any further Indemnified Losses.
14
(b) Indemnification of Sellers. Subject to the limitations of Section
13(c) above, Purchaser shall hold Sellers, their successors, assigns and
agents (collectively "SELLER INDEMNIFIED PERSONS") harmless and indemnify
each of them from and against, and Purchaser waives any claim for
contribution or indemnity against the Seller Indemnified Persons with
respect to any and all Indemnified Losses incurred or to be incurred by any
of them up to the amount of the Merger Consideration, to the extent
resulting from or arising out of the breach of any agreement, covenant,
representation, warranty, or other obligation of Purchaser made or incurred
under this Agreement; provided, however, when all aggregate Indemnified
Losses Sellers have suffered by reason of all breaches or alleged breaches
exceed the amount of the Merger Consideration, Purchaser will have no
obligation to indemnify Sellers from and against any further Indemnified
Losses.
(c) Notice of Claim. In the event that a party seeks indemnification
hereunder such party (the "INDEMNIFIED PARTY") shall give written notice to
the indemnifying Party (the "INDEMNIFYING PARTY") specifying the facts
constituting the basis for such claim and the amount, to the extent known,
of the claim asserted. Subject to the terms hereof, the Indemnifying Party
shall pay the amount of any valid claim not more than thirty days (30)
after the Indemnified Party provides notice to the Indemnifying Party of
such amount.
17. Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given (i) when had delivered; (ii) on the first day after proper and
timely deposit, freight prepaid, with a nationally recognized commercial
next-day delivery service to the recipient; (iii) three (3) days after deposit
in the United States mail, postage prepaid and certified, return receipt
requested; or (iv) when sent by facsimile, provided confirmatory notice is sent
on the same day as such facsimile transmission by first class mail, postage
prepaid, in each case addressed to the party entitled thereto at the address or
facsimile number set forth below, unless such address is modified by notice
under this section:
If to Seller: Cyber Vault Technologies, Inc.
c/o Xxxxxx Xxxxxxxxx
0000 XxXxxxxx Xxxx
Xxxxxxxx 00
Xxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxx X. Xxx
Law Office of Xxxxxx X. Xxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 Fax
If to Purchaser: Terra Firma Technologies, Inc.
c/o Xxxxx Xxxxxxxx
000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 Fax
15
With a copy to: Xxxxxxxx & Xxxxx, P.C.
c/o Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 Fax
18. Entire Agreement; Amendment. This Agreement and the attached Exhibits
and Schedules constitute the entire understanding of the parties and may be
amended only by a writing executed by the parties.
19. Assignment; Binding Effect. No party may assign its rights or delegate
its obligations hereunder without the consent of the other party, except that
Purchaser may assign its rights hereunder to any affiliated entity. Subject to
the foregoing, this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
20. No Third-Party Beneficiaries. Nothing in this Agreement shall confer
any third-party beneficiary rights or other benefits upon any person or entity
that is not a party hereto, and no such third parties may rely on this Agreement
to enforce any obligations against any party hereto.
21. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois.
23. Construction. The Section headings herein are solely for convenience of
reference and shall not in any way affect the interpretation of this Agreement.
When used herein, the masculine shall include the feminine and the neuter and
the singular shall include the plural and vice versa.
24. Incorporation. The recitals set forth above and the Schedules attached
hereto are incorporated herein by this reference and by such reference mad a
part hereof.
25. Termination. If this Agreement is terminated prior to the closing of
the transaction contemplated herein without Purchaser's fault, the Deposit shall
be returned to Purchaser, but if the termination is caused by Purchaser's fault,
then upon notice to Purchaser, the Deposit shall be forfeited to Seller as
liquidated damages.
26. Attorneys' Fees. The prevailing party in any action under this
Agreement shall be entitled to recover its reasonable attorney's fees court
costs and expenses.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the Company, each Seller, and the Purchaser have
affixed their signatures to this Agreement and Plan of Merger as of the date
first written above.
CYBER VAULT TECHNOLOGIES, INC. TERRA FIRMA TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------------- -------------------------
Xxxxxx Xxxxxxxxx Xxxxx Xxxxxxxx
Its: Chief Executive Officer Its: Chief Executive Officer
17
APPENDIX A
SELLERS
Shareholder Number of Shares
----------- ----------------
Xxxxxx Xxxxxxxx 435,350
Miles Xxxxxxx 435,350
Xxxxxxx Xxxxxxxx 415,000
Xxxxxxx Xxxx 448,690
Xxxxxx Xxxx 50,500
Xxxxxxxxx Xxxx 231,000
Xxxx X Xxxxx 331,000
Shameless Commerce, LLC 469,360
Xxxx Xxxxxxxx 10,000
Pelican Associates 571,380
Xxxx X Xxxxxx 221,500
Xxxx X Xxxxxx 321,500
Xxxxxxx Xxxxxx 35,000
Xxxxx Xxxxxx 186,500
Xxxxxxxxx Xxxxxx 321,500
Xxxx Xxxxxxxxx 127,020
Xxxxxx Xxxxxxxx 65,510
Xxxx Xxxxxxxx 74,502
Xxxx X. Xxxxxx 34,000
Xxxxx/Xxxx Xxxxxxx 50,500
Xxxxxx Family Trust dated 12/12/01 65,510
Xxx Xxxxxxxxx 49,140
Xxxx Xxxxxxx - F 2,000
Deja Vu Holdings, LLC 150
Xxxx Xxxx 30,000
Xxxxxxx Xxxxxxx 5,000
Xxxx Xxxx 5,000
Xxxxxxx X X'Xxxxxxxx 130,000
TOTAL 5,121,962
18
