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EXHIBIT 2(a)
AGREEMENT AND PLAN OF MERGER
BETWEEN
TECHNOLOGY GUARDIAN, INC.
AND
U. S. CONNECT 1995, INC.
DATED
SEPTEMBER 15, 1998
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TABLE OF CONTENTS
Section 1. Effective Date...................................................................1
Section 2. Governing Law....................................................................1
Section 3. Articles of Incorporation........................................................2
Section 4. Bylaws...........................................................................2
Section 5. Manner of Converting Shares......................................................2
5.1 Conversion.............................................................2
5.2 Exchange of Certificates...............................................3
5.3 Fractional Shares......................................................3
5.4 Unexchanged Certificates...............................................3
5.5 Legend on USC Certificates Issued in Conversion of
certain TGI Common.....................................................4
Section 6. Board of Directors and Officers..................................................5
Section 7. Effect of the Merger.............................................................5
Section 8. Approval of Shareholders.........................................................5
Section 9. Representations and Warranties of TGI............................................5
9.1 Corporate Organization and Good Standing...............................6
9.2 Capitalization. .......................................................6
9.3 Subsidiaries...........................................................6
9.4 Financial Statements...................................................6
9.5 Absence of Undisclosed Liabilities.....................................6
9.6 Absence of Certain Changes.............................................6
9.7 Litigation, Etc........................................................6
9.8 Contracts..............................................................6
9.9 Title..................................................................7
9.10 Tax Returns............................................................7
9.11 No Violation...........................................................7
9.12 Authorization..........................................................7
9.13 Books and Records......................................................7
9.14 Disclosure.............................................................7
9.15 Broker's or Finder's Fees..............................................7
9.16 Due Diligence..........................................................7
Section 10. Representations and Warranties of USC.......................................... 8
10.1 Corporate Organization and Good Standing...............................8
10.2 Capitalization.........................................................8
10.3 Financial Statements...................................................8
10.4 Absence of Undisclosed Liabilities.....................................8
10.5 Absence of Certain Changes.............................................8
10.6 Litigation.............................................................8
10.7 Contracts..............................................................8
10.8 Title..................................................................9
10.9 Tax Returns............................................................9
10.10 No Violation...........................................................9
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10.11 Authorization..........................................................9
10.12 Books and Records......................................................9
10.13 Disclosure.............................................................9
10.14 Broker's or Finder's Fees..............................................9
Section 11. Conduct of TGI Pending the Effective Date.......................................9
11.1 Certificate of Incorporation and Bylaws................................9
11.2 Capitalization, Etc...................................................10
11.3 Shareholders' Meeting.................................................10
11.4 Conduct of Business...................................................10
Section 12. Conduct of USC Pending the Effective Date......................................10
12.1 Certificate of Incorporation and Bylaws. .............................10
12.2 Capitalization, Etc. .................................................10
12.3 Shareholders' Meeting.................................................10
12.4 Conduct of Business...................................................10
Section 13. Conditions Precedent to Obligation of TGI......................................10
13.1 USC's Representations and Warranties..................................10
13.2 USC's Covenants.......................................................10
13.3 Shareholder Approval..................................................11
13.4 Dissenting Shareholders of USC........................................11
13.5 Opinion of USC's Counsel..............................................11
13.6 Accountant's Letter. .................................................11
13.7 Proxy Information.....................................................11
13.8 Assets. ..............................................................12
Section 14. Conditions Precedent to Obligation of USC......................................12
14.1 TGI's Representations and Warranties..................................12
14.2 TGI's Covenants.......................................................12
14.3 Shareholder Approval..................................................12
14.4 Dissenting Shareholders of TGI........................................12
14.5 Opinion of TGI's Counsel..............................................12
14.6 Accountant's Letter...................................................13
14.7 Proxy Information.....................................................13
14.8 Funding...............................................................13
14.9 Due Diligence.........................................................13
Section 15. Access.........................................................................13
Section 16. Stand-still Agreement..........................................................13
Section 17. Notice of Events...............................................................14
Section 18. Termination....................................................................14
18.1 Circumstances of Termination. ........................................14
18.2 Effect of Termination.................................................14
Section 19. General Provisions..............................................................15
19.1 Further Assurances....................................................15
19.2 Waiver................................................................15
19.3 Entire Agreement......................................................15
19.4 Headings..............................................................15
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19.5 Governing Law.........................................................15
19.6 Assignment............................................................15
19.7 Counterparts..........................................................15
Section 20. Survival of Representations, Warranties and Agreements.........................15
Section 21. Indemnity Agreements of USC and TGI............................................15
Section 22. Fees and Expenses..............................................................16
Section 23. Other Agreements...............................................................16
23.1 Public Disclosure.....................................................16
23.2 Notices...............................................................16
23.3 Binding Effect........................................................17
23.4 Entire Agreement......................................................17
23.5 Schedules and Exhibits................................................17
23.6 Applicable Law and Jurisdiction.......................................17
23.7 No Benefit to Third Parties. .........................................17
23.8 Counterparts. ........................................................17
23.9 Acknowledgments.......................................................18
SCHEDULES
Schedule 3 Amended and Restated Articles of Incorporation
Schedule 5.1(a) USC Common Stock Ownership
Schedule 5.1(c) TGI Options
Schedule 5.2(a) TGI Common Stock Ownership
Schedule 9.5 TGI Absence of Undisclosed Liabilities
Schedule 9.6 TGI Changes in Business as of June 30, 1998
Schedule 9.7 Litigation
Schedule 9.8 Contracts
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of September
__, 1998, between Technology Guardian, Inc., a California corporation ("TGI")
and Technology Guardian, Inc., a Nevada corporation (formerly U.S. Connect,
1995, Inc., a Nevada corporation)("USC"), being sometimes referred to herein as
the "Constituent Corporations".
WHEREAS, the Board of Directors of each Constituent Corporation
deems it advisable for the general welfare of its Constituent Corporation and
its shareholders that the Constituent Corporations merge into a single
corporation pursuant to this Agreement and the applicable laws of the States of
Nevada and California; and
WHEREAS, the Constituent Corporations desire to adopt this
Agreement as a Plan of Reorganization and to consummate the merger in accordance
with the provisions of Section 368(a)(1) of the Internal Revenue Code of 1986,
as amended;
NOW, THEREFORE, the Constituent Corporations agree that TGI shall
be merged with and into USC as the surviving corporation in accordance with the
applicable laws of California and Nevada, that the name of the surviving
corporation shall be Technology Guardian, Inc. (which in its capacity as
surviving corporation is hereinafter called the "Surviving Corporation"), and
that the terms and conditions of the merger and the mode of carrying it into
effect shall be as follows:
Section 1. Effective Date
The merger provided for in this Agreement shall become effective
upon the completion of the following:
(1) Adoption of this Agreement by the shareholders of TGI
pursuant to the laws of the State of California and by the shareholders of USC
pursuant to the laws of the State of Nevada;
(2) Execution and filing of the Certificate of Merger as required
by the laws of the States of California and Nevada; and
(3) Execution and filing of the Articles of Merger with the
Secretary of State in accordance with the laws of the State of Nevada.
The Constituent Corporations shall agree upon the date (the
"Effective Date") on which the Certificate of Merger and the Articles of Merger
shall be filed, but such filings shall take place with reasonable promptness
after the approval of this Agreement by the shareholders of the Constituent
Corporations and the fulfillment or waiver of the terms and conditions in
Sections 13 and 14 hereof.
Section 2. Governing Law
The Surviving Corporation shall be governed by the laws of the
State of Nevada.
Section 3. Articles of Incorporation
The Articles of Incorporation of USC, as amended and restated, a
copy of which is attached as Schedule 3, shall be the Articles of Incorporation
of the Surviving Corporation from and after the Effective Date, subject to the
right of the Surviving Corporation to amend its Articles of Incorporation in
accordance with the laws of the State of Nevada.
Section 4. Bylaws
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The Bylaws of the Surviving Corporation shall be the Bylaws of
USC as in effect on the date of this Agreement.
Section 5. Manner of Converting Shares
5.1 Conversion. The mode of carrying the merger into effect and
the manner and basis of converting the shares of TGI into shares of the
Surviving Corporation are as follows:
(1) For and in consideration of the exchange of all shares of TGI
Common Stock ($.001 par value) issued and outstanding on the Effective Date:
(a) Acknowledging that USC has recapitalized its issued and
outstanding shares of Common Stock ($.001 par value) from
10,020,000 shares to 200,400 shares by a reverse split of 1
share for 50 shares, USC will issue an additional 850,000
shares to persons listed on Schedule 5.1(a) in exchange for
the consideration listed opposite their name, resulting in
1,050,400 shares issued and outstanding.
(b) USC will grant assignable warrants to Pacific Continental
Securities, Inc. (Pacific)to purchase 350,000 (post-split)
shares exercisable at $.71 per share of the USC stock in
lieu of the TGI warrants to purchase up to 350,000 shares
of TGI stock. These options will not be granted to Pacific
until completion of the Private Placement (purchase of
4,185,000 shares of TGI common stock by Pacific) as set
forth in section 14.8. The warrants may be exercised for a
period of two (2) years from the date of issuance and may
only be exercised after the closing bid price of TGI's
(formerly USC) common stock has equaled or exceeded $5.00
per share for a period of 10 consecutive trading days, as
reflected on the Electronic Bulletin Board.
(c) USC will assume the obligations of TGI regarding all
outstanding stock options to purchase shares of common
stock at $.71 per share for a five (5) year period from
date of grant, previously granted to the following
individuals: options to purchase 1,500,000 shares of
common stock to Xxxxx Xxxxxxx; options to purchase 500,000
shares to Xxxxxxx (Xxxx) Xxxxxxx; and additional options
to acquire 2,000,000 shares of common stock issued to the
shareholders of TGI as listed on Schedule 5.1(c).
(d) USC shall issue to the present holders of TGI Common Stock
9,315,000 shares of USC Common Stock so that such holders
shall own not less than 89.8663% of the issued and
outstanding shares of USC Common Stock.
(e) 2,092,500 shares of USC common stock will be issued to
Pacific Capital Group, LTD. or its transferees with
respect to those shares acquired pursuant to a private
placement in accordance with the terms of a Confidential
Offering Memorandum dated July 2, 1998 as amended
(COM)as set forth in section 14.8. Up to an additional
2,092,500 shares of USC common stock will be issued upon
completion of the Private Placement in accordance with
the COM. Should all of these shares or any portion
thereof be issued there will be a total of not more than
13,500,000 shares of USC to be issued to present holders
of TGI stock and the purchasers of its Private
Placement, so that a total of not more than 14,550,400
shares of USC shall be issued and outstanding upon
completion of such private placement.
(2) Each share of TGI Common Stock which is issued and
outstanding on the Effective Date shall, by virtue of the merger and without any
action on the part of TGI, be retired and cancelled.
5.2 Exchange of Certificates. As promptly as practicable after
the Effective Date, each holder of an outstanding certificate or certificates
theretofore representing shares of TGI Common Stock shall surrender the same to
Signature Stock Transfer ("Exchange Agent"), Dallas, Texas, and shall receive in
exchange a certificate or certificates
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representing the number of full shares of USC Common Stock into which the shares
of TGI Common Stock represented by the certificate or certificates so
surrendered shall have been converted. The name, address and amount of shares
owned by each holder of TGI Common Stock is set forth on Schedule 5.2.
5.3 Fractional Shares. Fractional shares of USC Common Stock
shall not be issued.
5.4 Unexchanged Certificates. Until surrendered, each outstanding
certificate which, prior to the Effective Date, represented TGI Common Stock
shall be deemed for all purposes, other than the payment of dividends or other
distributions, to evidence ownership of the whole number of shares of USC Common
Stock into which it is to be converted, and no dividend or other distribution
payable to holders of USC Common Stock as of any date subsequent to the
Effective Date shall be paid to the holders of outstanding certificates. There
shall be paid to the record holders of the certificates issued in exchange
therefor the amount, without interest thereon, of dividends and other
distributions which would have been payable with respect to the shares of USC
Common Stock represented thereby.
5.5 Legend on USC Certificates Issued in Conversion of certain
TGI Common. Each of the certificates representing shares of USC Common Stock
issued in conversion of the TGI Common Stock as provided for herein shall bear
the following legends:
(1) The certificates of present holders representing 9,315,000
shares of TGI Common Stock herein shall bear the following legend:
The securities represented by this Certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is
defined in Rule 144 under the Act. The securities may not
be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the
Act or pursuant to an exemption from registration under
the Act, the availability of which is to be established to
the satisfaction of the Corporation.
(2) The certificates representing the 754,045 shares of TGI
Common Stock which were sold pursuant to the exemptions from registration
contained in Section 3(b) of the Act shall bear the following legend:
The securities represented by this Certificate have not
been registered under the Securities Act of 1933 (the
"Act"), in reliance upon the exemptions from the
registration requirements under the Act pursuant to
Section 3(b) and Rule 504 of Regulation D of the Act, and
that the Shares have not been registered under any blue
sky or state securities laws; and the securities can not
be sold, transferred or assigned to any person or entity
without compliance with the provisions of applicable state
blue sky or securities laws until such time as the Shares
have been qualified for secondary trading in the various
states, or pursuant to an exemption from registration
under State Securities laws, the availability of which is
to be established to the satisfaction of the corporation's
counsel.
(3) The certificates representing the 1,338,455 shares of TGI
Common Stock which were sold pursuant to the exemptions from registration
provided by Regulation S of the Act shall bear the following legend:
The securities represented by this Certificate have not
been registered with the Securities and Exchange
Commission (the "SEC") under the United States Securities
Act of 1933 (the "Securities Act"), or the securities act
of any State under any State Securities Law. They are
being offered pursuant to an exemption from registration
under Regulation S ("Regulation S") promulgated under the
Securities Act. The Securities may not be offered, sold or
otherwise transferred in the United States or to U.S.
Persons (as such term is defined in Regulation S) unless
the securities are registered under the Securities Act and
applicable State Securities Laws, or such
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offers, sales and transfers are made pursuant to
available exemptions from the registration requirements
of those laws.
Section 6. Board of Directors and Officers
Until the election and qualification of their successors, the
members of the Board of Directors of the Surviving Corporation shall be the
Board of Directors of TGI in office on the Effective Date. The elected officers
of the Surviving Corporation, who shall continue in office at the pleasure of
the Board of Directors of the Surviving Corporation, shall be the elected
officers of TGI on the Effective Date. The Directors and Officers of USC shall
resign on the Effective Date.
Section 7. Effect of the Merger
On the Effective Date, the separate existence of TGI shall cease
(except insofar as continued by statute) and it shall be merged with and into
the Surviving Corporation. All the property of each of the Constituent
Corporations, and all debts due to either of them, shall be transferred to and
vested in the Surviving Corporation, without further act or deed. The Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of each of the Constituent Corporations, and any claim or
judgment against either of the Constituent Corporations may be enforced against
the Surviving Corporation.
Section 8. Approval of Shareholders
This Agreement shall be submitted to the shareholders of the
Constituent Corporations as provided by the applicable laws of their respective
states of incorporation at meetings called for that purpose. There shall be
required for the adoption of this Agreement: (1) as to TGI, the affirmative vote
of the holders of at least a majority of all the shares of its Common Stock
issued and outstanding and entitled to vote; and (2) as to USC, the affirmative
vote of the holders of at least a majority of all the shares of its Common Stock
issued and outstanding and entitled to vote.
Section 9. Representations and Warranties of TGI
TGI represents and warrants that:
9.1 Corporate Organization and Good Standing. TGI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
9.2 Capitalization. TGI's authorized capital stock consists of:
50,000,000 shares of TGI Common Stock, $0.001 par value, of which as of August
31, 1998, 11,407,500 shares are issued and outstanding, fully paid and
nonassessable; and 10,000,000 shares of TGI Preferred Stock, $0.001 par value,
of which no shares have been issued. There are no options, warrants or rights
outstanding to purchase shares of TGI Common Stock from TGI except as disclosed
on Schedule 9.2.
9.3 Subsidiaries. TGI has no subsidiaries.
9.4 Financial Statements. TGI's balance sheet as of December 31,
1997, and the related statements of income and retained earnings for the years
ended December 31, 1996 and December 31, 1997, all certified by Xxxxxxx &
Associates., independent certified public accountants, and the unaudited balance
sheet and related statements of income and retained earnings for the period
ended June 30, 1998, copies of which are to be delivered by TGI to USC, fairly
present the financial condition of TGI as of said dates and the results of its
operations for the periods then ended, in conformity with
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generally accepted accounting principles consistently applied for the periods
covered and shall comply in form and substance with applicable rules and
regulations of the United States Securities and Exchange Commission ("SEC").
9.5 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in TGI's balance sheet as of June 30, 1998, TGI
did not have at that date any liabilities or obligations (secured, unsecured,
contingent or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles ("Liabilities"). All Liabilities incurred subsequent to June 30, 1998
are set forth in Schedule 9.5 hereto.
9.6 Absence of Certain Changes. Except as disclosed on Schedule
9.6, there has been no material adverse change in the business, properties or
financial condition of TGI since June 30, 1998.
9.7 Litigation, Etc. Except as disclosed on Schedule 9.7, there
is no litigation, proceeding or investigation pending or, to the knowledge of
TGI, threatened against TGI which if successful might result in a material
adverse change in the business, properties or financial condition of TGI or
which questions the validity or legality of this Agreement or of any action
taken or to be taken by TGI in connection with this Agreement.
9.8 Contracts. Except as disclosed on Schedule 9.8, TGI is not a
party to any material contract not in the ordinary course of business which is
to be performed in whole or in part at or after the date of this Agreement.
9.9 Title. TGI has good and marketable title to all property
included in the balance sheet of TGI as of June 30, 1998, other than property
disposed of in the ordinary course of business after said date. Except as
disclosed on Schedule 9.9, the properties of TGI as previously disclosed in
writing to USC, are not subject to any mortgage, encumbrance or lien of any kind
except minor encumbrances which do not materially interfere with the use of the
property in the conduct of the business of TGI.
9.10 Tax Returns. TGI has timely filed all required federal,
state and local tax returns and has no outstanding tax liabilities, including
but not limited to income, withholding, property and corporate franchise taxes.
9.11 No Violation. Consummation of the merger will not constitute
or result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease or agreement, or any order, judgment, decree, law or
regulation to which any property of TGI is subject or by which TGI is bound,
except for breaches or defaults which in the aggregate would not have a
materially adverse effect on TGI's properties, business operations or financial
condition.
9.12 Authorization. Execution of this Agreement has been duly
authorized and approved by TGI's Board of Directors.
9.13 Books and Records. The corporate minute books, stock
certificate books, stock registers and other corporate records of TGI are
correct and complete in all material respects, and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have signed the same.
9.14 Disclosure. Neither this Agreement nor any Schedule, Exhibit
or certificate delivered in accordance with the terms hereof, or any document or
statement in writing which has been supplied by or on behalf of TGI or by any of
TGI's directors or officers, in connection with the transactions contemplated
hereby, contains any untrue statement of a material fact, or omits any statement
of a material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact or circumstance known to TGI which
materially and adversely affects or which may materially and adversely affect
its business, prospects or financial condition or its assets, which has not been
set forth in this Agreement, the Schedules, Exhibits, certificates or statements
furnished in writing to USC in connection with the transactions contemplated by
this Agreement.
9.15 Broker's or Finder's Fees. No broker, finder or similar
intermediary is entitled to fees in connection with the transactions
contemplated by this Agreement by virtue of any action or agreement of TGI.
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9.16 Due Diligence. TGI has completed its due diligence review of
USC.
Section 10. Representations and Warranties of USC
USC represents and warrants that:
10.1 Corporate Organization and Good Standing. USC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, and is qualified to do business as a foreign corporation
in each jurisdiction, if any, in which its property or business requires such
qualification.
10.2 Capitalization. USC's authorized capital stock consists of:
(i) 50,000,000 shares of Common Stock, ($.001 par value), of which 1,050,400
shares are issued and outstanding, fully paid and nonassessable; and, (ii)
10,000,000 shares of Preferred Stock ($.001 par value) none of which are issued
and outstanding. There are no options, warrants or rights outstanding to
purchase shares of USC Common Stock from USC.
10.3 Financial Statements. USC's balance sheet as of June 30,
1998 and the related statements of income and retained earnings for the years
ended June 30, 1997 and 1998, all certified by Xxxxxx X. Xxxxxxx, independent
certified public accountant, and the audited balance sheet and related
statements of income and retained earnings for the period ended August 31, 1998,
copies of which have been delivered by USC to TGI, fairly present the financial
condition of USC as of said dates and the results of its operations for the
periods then ended, in conformity with generally accepted accounting principles
consistently applied for the periods covered and comply in form and substance
with applicable regulations of the SEC.
10.4 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in USC's balance sheet as of August 31, 1998 USC
did not have at that date any liabilities or obligations (secured, unsecured,
contingent or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles ("Liabilities"). All Liabilities incurred subsequent to August 31,
1998 will be paid by USC prior to closing.
10.5 Absence of Certain Changes. There has been no material
adverse change in the business, properties or financial condition of USC since
August 31, 1998.
10.6 Litigation There is no litigation, proceeding or
investigation pending or, to the knowledge of USC, threatened against USC which
if successful might result in a material adverse change in the business,
properties or financial condition of USC or which questions the validity or
legality of this Agreement or of any action taken or to be taken by USC in
connection with this Agreement.
10.7 Contracts. USC is not a party to any material contract not
in the ordinary course of business which is to be performed in whole or in part
at or after the date of this Agreement.
10.8 Title. USC has good and valid title to all property included
in the balance sheet of USC as of August 31, 1998, other than property disposed
of in the ordinary course of business after said date. The properties of USC are
not subject to any mortgage, encumbrance or lien of any kind.
10.9 Tax Returns. USC has timely filed all required federal,
state and local tax returns and has no outstanding tax liabilities, including
but not limited to income, withholding, property and corporate franchise taxes.
10.10 No Violation. Consummation of the merger will not
constitute or result in a breach or default under any provision of any charter,
bylaw, indenture, mortgage, lease or agreement, or any order, judgment, decree,
law or regulation to which any property of USC is subject or by which USC is
bound, except for breaches or defaults which in the aggregate would not have a
materially adverse effect on USC's properties, business operations or financial
condition.
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10.11 Authorization. Execution of this Agreement has been duly
authorized and approved by USC's Board of Directors.
10.12 Books and Records. The corporate minute books, stock
certificate books, stock registers and other corporate records of TGI are
correct and complete in all material respects, and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have signed the same.
10.13 Disclosure. Neither this Agreement nor any Schedule,
Exhibit or certificate delivered in accordance with the terms hereof, or any
document or statement in writing which has been supplied by or on behalf of USC
or by any of USC's directors or officers, in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
any statement of a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact or circumstance
known to USC which materially and adversely affects or which may materially and
adversely affect its business, prospects or financial condition or its assets,
which has not been set forth in this Agreement, the Schedules, Exhibits,
certificates or statements furnished in writing to TGI in connection with the
transactions contemplated by this Agreement.
10.14 Broker's or Finder's Fees. No broker, finder or similar
intermediary is entitled to fees in connection with the transactions
contemplated by this Agreement by virtue of any action or agreement of USC.
Section 11. Conduct of TGI Pending the Effective Date
TGI covenants that between the date of this Agreement and the
Effective Date:
11.1 Certificate of Incorporation and Bylaws. Other than as
required by this Agreement, no change will be made in TGI's certificate of
incorporation or bylaws.
11.2 Capitalization, Etc. Other than as required by this
Agreement, TGI will not make any change in its authorized or issued capital
stock, or issue, encumber, purchase or otherwise acquire any of its capital
stock other than as provided for in this Agreement.
11.3 Shareholders' Meeting. TGI will submit this Agreement to the
shareholders' meeting contemplated by Section 8 with a favorable recommendation
by its Board of Directors and will use its best efforts to obtain the requisite
shareholder approval.
11.4 Conduct of Business. TGI will use its best efforts to
maintain and preserve its business organization and goodwill intact, and will
not, without the written consent of USC, enter into any material commitment
except in the ordinary course of business other than as provided for in this
Agreement.
Section 12. Conduct of USC Pending the Effective Date
USC covenants that between the date of this Agreement and the
Effective Date:
12.1 Certificate of Incorporation and Bylaws. No change will be
made in USC's certificate of incorporation or bylaws without the consent of TGI.
12.2 Capitalization, Etc. USC will not make any change in its
authorized or issued capital stock, or issue, encumber, purchase or otherwise
acquire any of its capital stock, other than as provided for in this Agreement.
12.3 Shareholders' Meeting. USC will submit this Agreement to the
shareholders' meeting contemplated by Section 8 with a favorable recommendation
by its Board of Directors and will use its best efforts to obtain the requisite
shareholder approval.
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12.4 Conduct of Business. USC will use its best efforts to
maintain and preserve its business organization and goodwill intact, and will
not, without the written consent of TGI, enter into any material commitment
other than as provided for in this Agreement.
Section 13. Conditions Precedent to Obligation of TGI
TGI's obligation to consummate this merger shall be subject to
fulfillment on or before the Effective Date of each of the following conditions,
unless waived in writing by TGI:
13.1 USC's Representations and Warranties. The representations
and warranties of USC set forth in Section 10 hereof shall be true and correct
at the Effective Date as though made at and as of that date, except as affected
by transactions contemplated hereby.
13.2 USC's Covenants. USC shall have performed all covenants
required by this Agreement to be performed by it on or before the Effective
Date.
13.3 Shareholder Approval. This Agreement shall have been adopted
by the necessary vote of holders of the capital stock of the Constituent
Corporations as set forth in Section 8 hereof.
13.4 Dissenting Shareholders of USC. The number of shares of
Common Stock of USC with respect to which objections to the merger and demands
for payment of the fair value thereof shall have been made in accordance with
the provisions of Nevada law, and with respect to which such demands shall not
have been withdrawn with the consent of USC, shall not exceed five (5%) percent
of the number of shares entitled to object and make such demand.
13.5 Opinion of USC's Counsel. USC shall have delivered to TGI
the opinion of its counsel, Xxxxxxx X. Xxxxxx, Xx. P.C., dated the Effective
Date, in form and substance satisfactory to counsel for TGI, to the effect that:
(1) USC is a corporation duly organized, validly existing and in
good standing, and is duly qualified to do business as a foreign corporation in
each jurisdiction (if any) in which, to the best knowledge of counsel, its
property or business requires such qualification.
(2) USC's authorized capital stock is as set forth in Section
10.2 hereof.
(3) The execution and consummation of this Agreement have been
duly authorized and approved by USC's Board of Directors and shareholders and
consummation of this Agreement will not constitute or result in any breach or
default of the character described in Section 10.11 hereof of which counsel has
knowledge.
(4) Counsel has no knowledge of any liabilities or obligations of
the type described in Section 10.5 hereof, any litigation, proceeding, or
investigation of the type described in Section 10.7 hereof, or any defects in
title or mortgages, encumbrances or liens of the type described in Section 10.9
hereof.
(5) The shares of USC Common Stock into which TGI Common Stock is
to be converted pursuant to this Agreement will, upon such conversion, be duly
and validly authorized and issued, and will be fully paid and nonassessable.
(6) Counsel shall rely on representations contained in
certificates of officers and directors of USC and on Nevada counsel for USC as
basis for its opinion as represented herein.
13.6 Accountant's Letter. TGI shall have received a letter from
Xxxxxx X. Xxxxxxx, certified public accountant, dated the Effective Date, in
form and substance satisfactory to TGI, stating that on the basis of
consultation with officers of USC, a limited review (but not an audit) of USC's
accounting records, and other specified procedures and inquiries, which TGI may
request in writing, nothing has come to their attention which indicates that
there has been any
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material adverse change in the financial condition of USC during the period from
June 30, 1998 to a specified date not more than five days prior to the Effective
Date and that all liabilities of USC have been paid.
13.7 Proxy Information. None of the information with respect to
USC which shall have been furnished by or on behalf of USC for inclusion in the
proxy solicitation material sent to the shareholders of TGI in connection with
the meeting of such shareholders to be held in accordance with Section 8 hereof
shall be false or misleading in any material respect or shall fail to state any
fact necessary to make the statements therein not false or misleading in any
material respect.
13.8 Assets. USC will have no cash on hand at Closing and no
unpaid liabilities. USC will provide documentation that all outstanding
liabilities as of the Effective Date of Merger shall have been fully paid and
cancelled.
Section 14. Conditions Precedent to Obligation of USC
USC's obligation to consummate this merger shall be subject to
fulfillment on or before the Effective Date of each of the following conditions,
unless waived in writing by USC:
14.1 TGI's Representations and Warranties. The representations
and warranties of TGI set forth in Section 9 hereof shall be true and correct at
the Effective Date as though made at and as of that date, except as affected by
transactions contemplated hereby.
14.2 TGI's Covenants. TGI shall have performed all covenants
required by this Agreement to be performed by it on or before the Effective
Date.
14.3 Shareholder Approval. This Agreement shall have been adopted
by the necessary vote of holders of the capital stock of the Constituent
Corporations as set forth in Section 8 hereof.
14.4 Dissenting Shareholders of TGI. TGI shall have no
shareholders dissenting from the merger.
14.5 Opinion of TGI's Counsel. TGI shall have delivered to USC
the opinion of its counsel, Xxxxxxx Xxxxxxxx & Xxxxxxxxx, P.C., dated the
Effective Date, in form and substance satisfactory to counsel for USC, to the
effect that:
(1) TGI is a corporation duly organized, validly existing and in
good standing, and is duly qualified to do business as a foreign corporation in
each jurisdiction (if any) in which, to the best knowledge of counsel, its
property or business requires such qualification.
(2) TGI's authorized capital stock is as set forth in Section 9.2
hereof.
(3) The execution and consummation of this Agreement have been
duly authorized and approved by TGI's Board of Directors and shareholders and
consummation of this Agreement will not constitute or result in any breach or
default of the character described in Section 9.11 hereof of which counsel has
knowledge.
(4) Counsel shall rely on representations contained in
certificates of officers and directors of TGI and on California counsel for TGI
as basis for its opinion as represented herein.
14.6 Accountant's Letter. USC shall have received a letter from
Xxxxxxx & Associates, certified public accountants, dated the Effective Date, in
form and substance satisfactory to USC, stating that on the basis of
consultation with officers of TGI, a limited review (but not an audit) of TGI's
accounting records, and other specified procedures and inquiries, which USC may
request in writing, nothing has come to their attention which indicates that
there
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has been any material adverse change in the financial condition of TGI during
the period from June 30, 1998, to a specified date not more than five days prior
to the Effective Date.
14.7 Proxy Information. None of the information with respect to
TGI which shall have been furnished by or on behalf of TGI for inclusion in the
proxy solicitation material sent to the shareholders of USC in connection with
the meeting of such shareholders to be held in accordance with Section 8 hereof
shall be false or misleading in any material respect or shall fail to state any
fact necessary to make the statements therein not false or misleading in any
material respect.
14.8 Funding. TGI is presently conducting a private placement of
its common stock which shall result in net proceeds of not less than $2,999,809
less payment of expenses (the "Private Placement"). The Private Placement is
being made under the provisions of Rule 504 of Regulation D and Regulation S
promulgated under the Securities Act of 1933, as amended. The offering is being
made only to"Accredited Investors" as that term is defined in Regulation D, who
are not residents of the United States
14.9 Due Diligence. USC shall have completed a due diligence
review of all books, records and business and financial affairs of TGI
reasonably satisfactory to it.
Section 15. Access
From the date hereof to the Effective Date, USC and TGI shall
provide each other with such information and permit each other's officers and
representatives such access to its properties and books and records as the other
may from time to time reasonably request. If the merger is not consummated, all
documents received in connection with this Agreement shall be returned to the
party furnishing the same, and all information so received shall be treated as
confidential.
Section 16. Stand-still Agreement
From and after the date of this Agreement and up to and
including the Closing Date both parties agree to conduct their respective
businesses in the ordinary course and agree that during such period each shall
have the exclusive right to negotiate with the other with respect to the Merger
and during such period each party agrees not to directly or through
intermediaries solicit, entertain or otherwise discuss with any person or entity
any other offer and neither USC nor TGI will issue or agree to issue, except as
otherwise disclosed in this Agreement, any additional securities without the
consent of the other party. Without the consent of the other party, neither
party will, except in the ordinary course of business, transfer assets or create
liabilities other than those contemplated herein. All reasonable expenses
incurred in connection with the completion of the transactions contemplated
herein shall be deemed to be in the ordinary course of business. Should any
party be in violation of this provision, this agreement shall be null and void.
Section 17. Notice of Events
Each party shall promptly notify each other party of (a) any
event, condition or circumstance occurring from the date hereof through the
Closing Date that would constitute a violation or breach of this Agreement, or
(b) any event, occurrence, transaction or other item which would have been
required to have been disclosed on any Schedule, Exhibit or statement delivered
hereunder, had such event, occurrence, transaction or item existed on the date
hereof, other than items arising in the ordinary course of business which would
not render a change in any of the representations, warranties or other
agreements of said party.
Section 18. Termination
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18.1 Circumstances of Termination. This Agreement may be
terminated (notwithstanding approval by the shareholders of either party
hereto):
(1) By the mutual consent in writing of the Boards of Directors
of TGI and USC.
(2) By the Board of Directors of TGI if any condition provided in
Section 13 hereof has not been satisfied or waived on or before the Effective
Date.
(3) By the Board of Directors of USC if any condition provided in
Section 14 hereof has not been satisfied or waived on or before the Effective
Date.
(4) By the Board of Directors of USC if the Closing has not
occurred by September 30, 1998, subject to an extension of up to ten (10) days
which may be exercised by USC upon written notice to TGI. In addition, TGI may
extend the closing up to ten (10) days upon written notice to USC in the event
that: 1.) audited financial statements of TGI required for closing are not
available; and, 2.) such unavailability is not the result of TGI's inability to
be audited or failure to pay or cooperate with its auditors.
(5) By the Board of Directors of TGI if more than 5% of the
shareholders of TGI request appraisal rights prior to ratification and adoption
of this Agreement by the majority of outstanding shareholders of TGI.
18.2 Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 18.1 (1) hereof, each party shall pay the costs
and expenses incurred by it in connection with this Agreement and no party (or
any of its officers, directors and shareholders) shall be liable to any other
party for any costs, expenses, damage or loss of anticipated profits hereunder.
Section 19 General Provisions
19.1 Further Assurances. At any time, and from time to time,
after the Effective Date, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
19.2 Waiver. Any failure on the part of either party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
19.3 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
19.4 Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
19.5 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to conflict of laws. This Agreement shall be subject to the
jurisdiction and venue of the state and federal courts situated in Los Angeles,
California.
19.6 Assignment. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and assigns;
provided, however, that any assignment by either party of its rights under this
Agreement without the written consent of the other party shall be void.
19.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
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Section 20. Survival of Representations, Warranties and Agreements
All of the representations and warranties of the parties
contained in this Agreement shall survive for a period of two years after the
Closing Date.
Section 21. Indemnity Agreements of USC and TGI
TGI and the officers, directors and major shareholders of USC
each shall indemnify, defend, reimburse and hold harmless the other from and
against any and all Losses resulting from:
(a) Any inaccuracy in, or breach of, any representation
and warranty or nonfulfillment of any covenant on the part of USC
or TGI, respectively, contained in this Agreement.
(b) Any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of USC or TGI,
respectively, contained in any other agreement, certificate or
other instrument furnished or to be furnished to the other party
by that party pursuant to this Agreement.
Section 22. Fees and Expenses
Legal, accounting and other fees, costs and expenses to be
incurred by each party regarding this Agreement and the transactions
contemplated hereby shall be paid by the party incurring them. Notwithstanding
any other provision in this Agreement, in the event of any dispute or
controversy, in addition to any other remedies the prevailing party may obtain
in such dispute, the prevailing party in such dispute shall be entitled to
recover from the other party all of its reasonable legal fees and out-of-pocket
costs incurred by such party in enforcing or defending its rights hereunder.
Section 23. Other Agreements
23.1 Public Disclosure. None of the parties hereto shall issue
any press release or otherwise make any public statement with respect to the
transactions contemplated hereby not required by law except upon the written
consent of the other party hereto. Such approval shall not be unreasonably
withheld.
23.2 Notices. All consents, waivers, notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by facsimile transmission or by
overnight courier to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
(1) If to USC to:
U. S. Connect 1995, Inc.
With copies to:
Xxxxxxx X. Xxxxxx, Xx., Esq.
1520 Bank One Center
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
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(2) If to TGI to:
Technology Guardian, Inc.
00000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party may change the address to which notices, requests, demands and other
communications hereunder are to be sent to such party by giving the other
parties hereto written notice thereof in accordance with this Section 24.2.
23.3 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided that this Agreement may not be assigned by any party without
the consent of the other parties.
23.4 Entire Agreement. This Agreement (including the Exhibits and
Schedules referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
23.5 Schedules and Exhibits. The Schedules and Exhibits referred
to in this Agreement shall be construed as an integral part of this Agreement as
if the same had been set forth herein and shall be satisfactory in form and
substance to each party hereto.
23.6 Applicable Law and Jurisdiction. This Agreement shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of California without regard to conflict of law, except for
Nevada corporate law, which is in accordance with the laws of the State of
Nevada. This Agreement shall be subject to the jurisdiction and venue of the
state and federal courts situated in Los Angeles, California.
23.7 No Benefit to Third Parties. No provision of this Agreement
is intended to confer any rights or remedies upon any person not a party of this
Agreement.
23.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one document. It shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
23.9 Acknowledgments.
(a) The parties represent and acknowledge that each has been
represented and advised by counsel in connection with this
Agreement.
(b) TGI acknowledges that certain members of TGI's law firm
own shares of TGI common stock.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
Technology Guardian, Inc., a Nevada
corporation (formerly, U.S. Connect 1995,
Inc., a Nevada corporation)
By
----------------------------------------
Xxxxxxx XxXxxxx, President
TECHNOLOGY GUARDIAN, INC., a California
corporation
By
----------------------------------------
Xxxxx X. Xxxxxxx, President
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