AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”)
is
made and entered into as of September 4, 2007, by and among CaminoSoft
Corp., a California corporation (“Parent”),
CC
Merger Corp., a Nevada corporation and a wholly-owned subsidiary of Parent
(“Merger
Sub”),
and
Xxxx Development Corp., a Nevada corporation (the “Company”).
Parent, Merger Sub and the Company are collectively referred to herein as the
“Parties,”
and
each is a “Party”.
Capitalized terms used and not otherwise defined herein have the meanings set
forth in Article 1.
RECITALS
WHEREAS,
the respective Boards of Directors of Parent, Merger Sub and the Company have
deemed it advisable and in the best interests of their respective corporations
and shareholders that Parent, Merger Sub and the Company enter into a business
combination transaction;
WHEREAS,
in furtherance thereof, the respective Boards of Directors of Parent, Merger
Sub
and the Company each have approved and declared advisable this Agreement and
the
merger of Merger Sub with and into the Company (the “Merger”),
upon
the terms and subject to the conditions set forth in this Agreement and in
accordance with the provisions of the Nevada Revised Statutes (the “NRS”);
WHEREAS,
the respective Boards of Directors of Parent and the Company have determined
to
recommend to their respective shareholders the approval and adoption of this
Agreement and the Merger; and
WHEREAS,
in connection with the Merger, the parties desire to make certain
representations, warranties, covenants and agreements and also to prescribe
various conditions to the Merger, upon the terms and subject to the conditions
contained herein.
NOW,
THEREFORE, in consideration of the covenants, promises, representations and
warranties set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE
1
DEFINITIONS
1.1 Certain
Definitions.
The
following terms shall, when used in this Agreement, have the following
meanings:
“Affiliate”
means,
with respect to any Person: (i) any Person directly or indirectly owning,
controlling or holding with power to vote ten percent (10%) or more of the
outstanding voting securities of such other Person (other than passive or
institutional investors); (ii) any Person ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly owned, controlled
or
held with power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by or under common control with such other
Person; and (iv) any officer, director or partner of such other Person.
“Control” for the foregoing
purposes
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities or voting interests, by contract or
otherwise;
“Agreement”
shall
have the meaning set forth in the Recitals of this Agreement;
“Business
Day”
means
any
day
other than Saturday, Sunday or a day on which banking institutions in Los
Angeles, California, are required or authorized to be closed;
“Alternative
Acquisition”
shall
have the meaning set forth in Section 5.12 of this Agreement;
“Capital
Increase”
shall
have the meaning set forth in Section 5.4 of this Agreement;
“Certificates”
shall
have the meaning set forth in Section 2.9 of this Agreement;
“Change
of Control,”
with
respect to any Person, means (i) a liquidation or dissolution of such Person;
(ii) a merger or consolidation of such Person with or into another corporation
or entity in which such Person is not the surviving corporation or other
business entity (other than a merger with a wholly owned subsidiary); (iii)
a
merger or consolidation of such Person (or a triangular merger involving a
subsidiary of the Company) where such Person is the surviving corporation but
with respect to which the shareholders of such Person immediately prior to
the
merger or consolidation hold less than 50% of the outstanding Common Stock
of
such Person immediately following the merger or consolidation; or (iv) an
underwritten initial public offering by such Person of its common
stock;
“Closing”
shall
have the meaning set forth in Section 2.2 of this Agreement;
“Closing
Date”
shall
have the meaning set forth in Section 2.2 of this Agreement;
“Collateral
Documents”
means
the Confidential Disclosure Schedules to this Agreement;
“Company”
shall
have the meaning set forth in the preamble of this Agreement;
“Company
Common Stock”
shall
have the meaning ascribed to it in Section 2.7 of this Agreement;
“Company
Option Plan”
shall
have the meaning ascribed to it in Section 2.7 of this Agreement;
“Company
Preferred Stock”
shall
mean, collectively, the Company Series A Preferred Stock and Company Series
B
Preferred Stock;
“Company
Series A Preferred Stock”
shall
mean the 3,800,000 shares of the Company’s Series A Preferred Stock issued and
outstanding;
“Company
Series B Preferred Stock”
shall
mean the 4,600,000 shares of the Company’s Series B Preferred Stock issued and
outstanding;
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“Company
Financial Statement Date”
shall
have the meaning set forth in Section 3.8 of this Agreement;
“Continuing
Employees”
shall
have the meaning set forth in Section 5.2 of this Agreement;
“Contracts”
shall
have the meaning set forth in Section 3.16 of this Agreement;
“Dissenting
Shares”
shall
have the meaning set forth in Section 2.15 of this Agreement;
“Effective
Time”
shall
have the meaning set forth in Section 2.3 of this Agreement;
“Effective
Date”
shall
have the meaning set forth in Section 2.3 of this Agreement;
“Eligible
Warrant”
shall
have the meaning set forth in Section 2.7(b) of this Agreement;
“Eligible
Warrant Agreements”
shall
have the meaning set forth in Section 2.9 of this Agreement;
“Encumbrance”
means
any material mortgage, pledge, lien, encumbrance, charge, security interest,
security agreement, conditional sale or other title retention agreement,
limitation, option, assessment, restrictive agreement, restriction, adverse
interest, restriction on transfer or exception to or material defect in title
or
other ownership interest (including but not limited to restrictive covenants,
leases and licenses);
“Equity
Equivalents”
shall
have the meaning set forth in Section 3.3(b) of this Agreement;
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended;
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended;
“Exchange
Ratio”
shall
have the meaning set forth in Section 2.7(c) of this Agreement;
“GAAP”
means
U.S. generally accepted accounting principles consistently applied, as in effect
from time to time;
“Indemnified
Party”
shall
have the meaning set forth in Section 7.3 of this Agreement;
“Indemnifying
Party”
shall
have the meaning set forth in Section 7.3 of this Agreement;
“Intellectual
Property”
means
all trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, patents
and patent rights, utility models and utility model rights, copyrights, mask
work rights, brand names, trade dress, product designs, product packaging,
business and product names, logos, slogans, rights of publicity, trade secrets,
inventions (whether patentable or not), invention disclosures, improvements,
processes, formulae, industrial models, processes, designs, specifications,
technology, methodologies, computer software (including all source code
and
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object
code), firmware, development tools, flow charts, annotations, all Web addresses,
sites and domain names, all data bases and data collections and all rights
therein, any other confidential and proprietary right or information, whether
or
not subject to statutory registration, and all related technical information,
the information set forth in manufacturing, engineering and technical drawings,
know-how and all pending applications for and registrations of patents, utility
models, trademarks, service marks and copyrights, and the right to xxx for
past
infringement, if any, in connection with any of the foregoing;
“Joint
Proxy-Registration Statement”
shall
have the meaning set forth in Section 5.4 of this Agreement;
“Key
Employees”
shall
have the meaning set forth in Section 5.1 of this Agreement;
“Key
Employee Agreements”
shall
have the meaning set forth in Section 5.1 of this Agreement;
“Legal
Requirements”
means
any statute, ordinance, law, rule, regulation, code, injunction, judgment,
order, decree, ruling, or other requirement enacted, adopted or applied by
any
Regulatory Authority, including judicial decisions applying common law or
interpreting any other Legal Requirement;
“Losses”
shall
mean all damages, awards, judgments, assessments, fines, sanctions, penalties,
charges, costs, expenses, payments, diminutions in value and other losses,
however suffered or characterized, all interest thereon, all costs and expenses
of investigating any claim, lawsuit or arbitration and any appeal there from,
all actual attorneys’, accountants’ investment bankers’ and expert witness’ fees
incurred in connection therewith, whether or not such claim, lawsuit or
arbitration is ultimately defeated and, subject to Section 7.4, all amounts
paid
incident to any compromise or settlement of any such claim, lawsuit or
arbitration;
“Material
Adverse Effect”
means
a
material adverse effect on (i) the assets, liabilities, properties or business
of the Parties, (ii) the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or (iii) the ability of any Party to
perform its obligations under this Agreement and the Collateral Documents;
provided,
however,
that
none of the following shall constitute a Material Adverse Effect on the Company:
(i) the filing, initiation and subsequent prosecution, by or on behalf of
shareholders of any Party, of litigation that challenges or otherwise seeks
damages with respect to the Merger, this Agreement and/or transactions
contemplated thereby or hereby, (ii) occurrences due to a disruption of a
Party’s business as a result of the announcement of the execution of this
Agreement or changes caused by the taking of action required by this Agreement,
(iii) general economic conditions, or (iv) any changes generally affecting
the
industries in which a Party operates;
“Merger”
shall
have the meaning set forth in the Recitals of this Agreement;
“Merger
Consideration”
shall
have the meaning set forth in Section 2.7 (b) of this Agreement;
“Merger
Options”
shall
have the meaning set forth in Section 2.7 (b) of this
Agreement;
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“Merger
Sub”
shall
have the meaning set forth in the preamble to this Agreement;
“New
Parent Warrants”
shall
have the meaning set forth in Section 2.8 of this Agreement;
“NRS”
shall
have the meaning set forth in the preamble of this Agreement;
“Order”
means
any writ, judgment, decree, ruling, injunction or similar order of any
Regulatory Authority (in each such case whether preliminary or final);
“Parent”
shall
have the meaning set forth in the preamble to this Agreement;
“Parent
Common Stock”
means
the shares of common stock of Parent, no par value per share;
“Parent
Financial Statements”
shall
have the meaning set forth in Section 4.8 of this Agreement;
“Parent
Financial Statement Date”
shall
have the meaning set forth in Section 4.8 of this Agreement;
“Parent
Preferred Stock”
shall
have the meaning set forth in Section 2.7(b) of this Agreement;
“Parent
Series A Preferred Stock”
shall
have the meaning set forth in Section 2.7(b) of this Agreement;
“Parent
Series B Preferred Stock”
shall
have the meaning set forth in Section 2.7(b) of this Agreement;
“Parent
Warrants”
shall
have the meaning set forth in Section 2.7(e) of this
Agreement;
“Participating
Company Shares”
means
all issued and outstanding shares of Company Common Stock and Company Preferred
Stock immediately prior to the Effective Time plus
all
shares of Company Common Stock deemed to be issued upon exercise of all Company
options granted under the Company Option Plan and Eligible
Warrants;
“Party”
or
“Parties”
shall
have the meaning set forth in the preamble to this Agreement;
“Permit”
means
any license, franchise, certificate, declaration, waiver, exemption, variance,
permit, consent, approval, registration, authorization, qualification or similar
right granted by a Regulatory Authority;
“Person”
means
any
natural person, individual, firm, corporation, including a non-profit
corporation, partnership, trust, unincorporated organization, association,
limited liability company, labor union, Regulatory Authority or other
entity;
“Regulatory
Authority”
means:
any (i) federal, state, local, municipal or foreign government; (ii)
governmental or quasi-governmental authority of any nature (including
without
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limitation
any governmental agency, branch, department, official, instrumentality or entity
and any court or other tribunal; (iii) multi-national organization or body;
or
(iv) body exercising or entitled to exercise any administrative, executive,
judicial, legislative, police, regulation or taxing authority or power of any
nature;
“Representatives”
shall
have the meaning set forth in Section 5.12 of this Agreement;
“Reverse
Split”
shall
have the meaning set forth in Section 2.5 of this Agreement;
“SEC”
means
the United States Securities and Exchange Commission;
“Securities
Act”
means
the Securities Act of 1933, as amended;
“SEC
Reports”
with
respect to each of Parent and the Company, means such Party’s Annual Report on
Form 10-KSB and all interim reports filed with the SEC under the Exchange Act
after the date of the Form 10-KSB filing.
“Securities
Filings”
means
the filings with the SEC of a Party.
“Subsidiary”
of
a
specified Person means (a) any Person if securities having ordinary voting
power
(at the time in question and without regard to the happening of any contingency)
to elect a majority of the directors, trustees, managers or other governing
body
of such Person are held or controlled by the specified Person or a Subsidiary
of
the specified Person; (b) any Person in which the specified Person and its
subsidiaries collectively hold a fifty percent (50%) or greater equity interest;
(c) any partnership or similar organization in which the specified Person or
subsidiary of the specified Person is a general partner; or (d) any Person
the
management of which is directly or indirectly controlled by the specified Person
and its Subsidiaries through the exercise of voting power, by contract or
otherwise;
“Surviving
Corporation”
shall
have the meaning set forth in Section 2.1 of this Agreement;
“Taxes”
means
any U.S. or non U.S. federal, state, provincial, local or foreign (i) income,
corporation gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
recording, occupancy, sales, use, transfer, registration, value added minimum,
ad valorem or excise tax, estimated or other tax of any kind whatsoever,
including any interest, additions to tax, penalties, fees, deficiencies,
assessments, additions or other charges of any nature with respect thereto,
whether disputed or not; and (ii) any liability for the payment of any amount
of
the type described in (i) above;
“Tax
Returns”
means
all federal, state, local, provincial and foreign tax returns, declarations,
reports, claims, schedules and forms for refund or credit or information return
or statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof;
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“Terminated
Employees”
shall
have the meaning set forth in Section 5.3 of this Agreement; and
“Transmittal
Letter”
shall
have the meaning set forth in Section 2.9.
ARTICLE
2
THE
MERGER
2.1 Merger.
Upon
the terms and conditions set forth in this Agreement, and in accordance with
the
provisions of the NRS, at the Effective Time (as defined below), Merger Sub
shall be merged with and into the Company, the separate corporate existence
of
Merger Sub shall cease and the Company will continue as the surviving
corporation following the Merger, succeeding to all of the property, rights,
privileges, powers and franchises of Merger Sub, and shall become a wholly-owned
Subsidiary of Parent. The Company, as the surviving corporation after the
Merger, is sometimes referred to herein as the “Surviving
Corporation.”
2.2 Closing.
Subject
to the terms and conditions of this Agreement, the closing of the Merger (the
“Closing”)
will
take place at the offices of Xxxx & Xxxxx located at 0000 Xxxxxxx Xxxx Xxxx,
00xx
Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place as Parent and the Company
mutually agree, at 10:00 a.m. local time on the later to occur of (a) November
15, 2007, or (b) the second Business Day after the day on which the last of
the
closing conditions set forth in Article 6 below has been satisfied or waived,
or
such other date as Parent and the Company mutually agree upon in writing (the
“Closing
Date”).
2.3 Effective
Time.
Upon
the terms of and subject to the conditions of this Agreement, as soon as
practicable on the Closing Date: (a) the parties hereto will cause the Merger
to
be consummated by filing with the Secretary of State of the State of Nevada
a
certificate of merger and any required related documents, in such form or forms
as are required by, and executed in accordance with, applicable law (the date
and time of such filing being the “Effective
Time”
and
the
date upon which the Effective Time occurs, being the “Effective
Date”);
and
(b) Parent will deliver the Merger Consideration to the shareholders of the
Company and the holders of the Company Preferred Stock in accordance with
Section 2.7 hereof; and (c) Parent, Merger Sub and the Company will
cross-deliver the certificates and other documents and instruments to be
cross-delivered pursuant to Article 6 below.
2.4 Effect
of the Merger.
At the
Effective Time, in accordance with the NRS, the separate existence of Merger
Sub
will cease and the Surviving Corporation shall succeed, without further action,
to all the property, assets, rights, privileges, powers and franchises of every
kind of the nature and description of Merger Sub and the Company. All debts,
liabilities and duties of Merger Sub and the Company will become the debts,
liabilities and duties of the Surviving Corporation. As of the Effective Time,
the Surviving Corporation will be a wholly owned subsidiary of the Parent.
2.5 Effect
of Merger on Common Stock of the Parent.
Subject
to a reverse split to be determined by the Parties after the date hereof (the
“Reverse
Split”)
to
occur prior to Closing, each share of Common Stock of Parent issued and
outstanding immediately prior to the Effective Time, including, without
limitation, Parent Common Stock, shall remain issued and
outstanding
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from
and
after the Effective Time. Notwithstanding anything herein to the contrary,
the
number of shares of Parent Common Stock to be held by the shareholders of Parent
immediately prior to the Closing shall equal 4.99% of the fully diluted capital
stock of the Parent as of the Closing after giving effect to the shares of
Parent Common Stock (i) to be issued to the holders of Company Common Stock
pursuant to Section 2.7(a); (ii) issuable upon conversion of the
Parent Preferred Stock to be issued pursuant to Section 2.7(b);
(iii) issuable upon exercise of the Merger Options to be issued pursuant to
Section 2.7(c) and the Parent Warrants to be issued pursuant to
Section 2.7(e); and (iv) without duplication, the capital stock
(including any shares of common stock issuable upon conversion on exercise
of
any derivative securities) issuable or deemed to be issued (if not in fact
issued) in connection with an equity financing or financings to be undertaken
by
Parent or the Company pursuant to which Parent or the Company shall raise at
least $6,000,000 in gross proceeds at a per share price of not less than $0.50
per share (on a pre-Reverse Split basis).
2.6 Effect
of Merger on Common Stock of Merger Sub.
At the
Effective Time, each share of common stock, par value $.001 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holders thereof,
be converted into and become one validly issued, fully paid and non-assessable
share of common stock, par value $.001 per share, of the Surviving Corporation.
2.7 Effect
of Merger on Capital Stock of Company.
(a) Company
Common Stock.
At the
Effective Time, all issued and outstanding shares of the Company’s common stock
(the “Company
Common Stock”)
shall,
by virtue of the Merger and without any action on the part of the holders
thereof ,
be
converted into the right to receive a such number of shares of Parent Common
Stock equal to 95.01% of Parent Common Stock outstanding immediately prior
to
Closing (after giving effect to the Reverse Split) less the shares of Parent
Common Stock issuable upon Conversion of the Parent Preferred Stock and the
exercise of the Parent Warrants and the Merger Options.
(b) Company
Series A Preferred Stock and Series B Preferred Stock.
At the
Effective Time, (i) all of the issued and outstanding shares of the Company’s
Series A Preferred Stock, par value $0.001 per share, (the “Company
Series A Preferred Stock”)
shall
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive a pro rata share of 3,800,000
shares of Parent’s Series A Preferred Stock (the “Parent
Series A Preferred Stock”);
and
(iii) all of the issued and outstanding shares of the Company’s Series B
Preferred Stock, par value $0.001 per share, (the “Company
Series A Preferred Stock”)
shall
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive a pro rata share of 4,600,000
shares of Parent’s Series B Preferred Stock (the “Parent
Series B Preferred Stock”,
together with Parent Series A Preferred Stock, the “Parent
Preferred Stock”),
as
set forth in Schedule 2.7 hereto, subject to the terms and conditions of this
Agreement. The shares of Parent Common Stock and Parent Preferred Stock issuable
pursuant to Sections 2.7(a) and this Section 2.7(b) are collectively referred
to
herein as the “Merger
Consideration.”
(c) Outstanding
Company Options.
At the
Effective Time, each outstanding option to purchase Company Common Stock granted
under the Company’s 2007 Stock Option
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and
Performance Awards Plan (the “Company
Option Plan”),
which
has not previously expired or been exercised in full, whether or not vested
or
exercisable on the Closing Date, shall be assumed by Parent. Pursuant to such
assumption, holders of such assumed Options shall be entitled to receive in
respect of each share of Company Common Stock subject to such assumed Options,
after the Effective Time, options (“Merger
Options”)
to
purchase that number of shares of Parent Common stock obtained by multiplying
(x) the number of shares of Company Common Stock issuable under such assumed
option by (y) the Exchange Ratio (defined below), at an exercise price equal
to
the exercise price of such assumed option divided by the Exchange Ratio and
otherwise on the same terms and conditions as those contained in such assumed
option. For the avoidance of doubt, and notwithstanding anything to the contrary
contained herein, under no circumstances shall any such assumed options
accelerate with respect to the vesting thereof by virtue of, in anticipation
of
or otherwise in connection with the Merger or the transactions contemplated
by
this Agreement. For purposes of this Agreement, “Exchange
Ratio”
shall
mean the ratio obtained by dividing (x) the number of shares equal to the Merger
Consideration by (y) the sum of the number shares of the Company Common Stock
and the Company Preferred Stock issued and outstanding immediately prior to
the
Effective Time and the number of shares of Company Common Stock issuable upon
exercise of all such Merger Options and Parent Warrants.
(d) Company
Option Plan.
At the
Effective Time, Parent shall assume the Company Option Plan pursuant to which
9,500,000 shares of Company Common Stock are reserved for issuance.
(e) Outstanding
Company Warrants.
At the
Effective Time, each outstanding warrant to purchase Company Common Stock,
which
has not previously expired or been exercised in full (each such option, an
“Eligible
Warrant”),
shall
be assumed by Parent (the “Parent
Warrants”).
(f) As
a
result of the Merger and without any action on the part of the holders thereof,
at the Effective Time, all shares of Company Common Stock, all shares of Company
Series A Preferred Stock, and all shares of Company Series B Preferred Stock
shall be cancelled and retired and shall cease to be outstanding. Each holder
of
shares of the Company Common Stock, Company Series A Preferred Stock, and
Company Series B Preferred Stock shall thereafter cease to have any rights
with
respect to such shares, except that the issued and outstanding shares of Company
Common Stock, Company Series A Preferred Stock and Company Series B Preferred
Stock immediately prior to the Effective Time, and the respective holders
thereof, shall have the right to receive the Merger Consideration in accordance
with this Section 2.7 upon the surrender of the certificate or certificates
representing such shares.
(g) Each
share of Company Common Stock held in the Company’s treasury at the Effective
Time, if any, shall, by virtue of the Merger and without any action on the
part
of the Company, cease to be outstanding and shall be cancelled and retired
without payment of any Merger Consideration or any other consideration
therefor.
2.8 Effect
of Merger on Existing Common Stock of Parent.
At the
Effective Time, holders of Parent Common Stock shall be entitled to receive
in
respect of each share of Parent Common Stock, warrants (the “New
Parent Warrants”)
to
purchase 0.333 shares of Parent
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Common
Stock following the consummation of the Merger and other transactions
contemplated herein at an exercise price of 110% per share of the most recent
private placement of the Company from the date hereof and ending six months
from
the Closing Date. At and after the Effective Time, Parent will deliver to each
holder of a Parent Common Stock a certificate, evidencing the New Parent
Warrants. Pursuant to Article 5 hereof, such New Parent Warrants and the shares
of Parent Common Stock issuable pursuant to the exercise thereof shall be
registered with the SEC under the Joint Proxy-Registration Statement to be
filed
with the SEC following the execution of this Agreement in respect of the Merger,
this Agreement and the transactions contemplated hereby.
2.9 Delivery
of Certificates and Eligible Warrant Agreements.
At and
after the Effective Time, Parent will make available, and each holder of an
issued and outstanding share of Company Common Stock and Company Preferred
Stock, and each holder of an Eligible Warrant, will be entitled to receive,
(i)
upon surrender to Parent or its representatives of any certificates evidencing
Company Common Stock and Company Preferred Stock (the “Certificates”)
for
cancellation and a letter of transmittal or assignment separate from certificate
in customary form (which will be in such form and have such other provisions
as
Parent will reasonably specify) (the “Transmittal
Letter”);
or
(ii) upon delivery to Parent or its representatives of agreements evidencing
the
Eligible Warrants (the “Eligible
Warrant Agreements”)
and/or
other certificates or instruments evidencing the Eligible Warrants, if any,
the
pro-rata share of the Merger Consideration, Merger Options and Merger Warrants,
as applicable, into which such Company Common Stock or Eligible Warrant have
been converted into pursuant to the Merger, and upon such surrender of each
Certificate and/or the agreements or certificates representing the Eligible
Warrants, and delivery by Parent of the aggregate Merger Consideration in
exchange therefor, the Participating Company Shares will forthwith be cancelled.
Until surrendered or delivered as contemplated by this Section 2.9, each
Certificate, Eligible Warrant Agreement or certificates representing the
Eligible Warrants, as applicable, will be deemed at any time after the Effective
Time for all purposes to evidence only the right to receive upon such surrender
the corresponding pro rata portion of the Merger Consideration and Merger
Warrants, as applicable.
2.10 Stock
Transfer Books.
From
and after the Effective Time, the stock transfer books of the Company will
be
closed, and there will be no further registration or transfers of Company Common
Stock and Company Preferred Stock thereafter on the records of the Company.
2.11 No
Further Ownership Rights.
The
Merger Consideration and Merger Warrants delivered upon the surrender for
exchange of the Certificates, or the delivery of the agreements or certificates
representing Eligible Warrants, in accordance with the terms hereof will be
deemed to have been issued in full satisfaction of all rights pertaining to
such
Participating Company Shares, and there will be no further registration of
transfers of such shares which were outstanding immediately prior to the
Effective Time on the records of the Surviving Corporation. If, after the
Effective Time, Certificates, or agreements or certificates representing the
Eligible Warrants, are presented to the Surviving Corporation, they will be
cancelled, assumed and/or adjusted, as applicable, pursuant to Section 2.7
hereof.
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2.12 Lost,
Stolen or Destroyed Certificates.
In the
event any Certificates are lost, stolen or destroyed, Parent will issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of
an
affidavit of that fact by the holder thereof and the other deliveries required
above, the applicable Merger Consideration; provided, however, that the
Surviving Corporation may, in its sole discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver an indemnity or bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against it with respect
to the Certificates alleged to have been lost, stolen or destroyed.
2.13 Charter
Documents; Directors and Officers.
Unless
otherwise agreed by the Company and Parent prior to the Closing, at and as
of
the Effective Time, without any further action on the part of Parent, Merger
Sub
or the Company: (i) the Articles of Incorporation and the Bylaws of the Company
as in effect immediately prior to the Effective Time will be the Articles of
Incorporation and Bylaws of the Surviving Corporation at and after the Effective
Time until thereafter amended as provided by applicable law and such Articles
of
Incorporation and Bylaws, as applicable; (ii) the directors of the Company
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation from and after the Effective Time, until their successors
are elected and qualified or until their resignation or removal; (iii) the
officers of the Company immediately prior to the Effective Time shall serve
in
their respective offices of the Surviving Corporation from and after the
Effective Time, until their successors are elected or appointed and qualified
or
until their resignation or removal.
2.14 Taking
of Necessary Action; Further Action.
Each of
Parent, Merger Sub and the Company will take all such reasonable lawful action
as may be necessary or appropriate in order to effect the Merger in accordance
with this Agreement as promptly as practicable. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry
out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all the property, rights, privileges, power
and
franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action
2.15 Company
Dissenting Shares.
Shares
of Company Common Stock which are issued and outstanding immediately prior
to
the Effective Time and which are held by persons who are entitled to and have
properly exercised, and not withdrawn or waived, appraisal rights with respect
thereto in accordance with the NRS (the “Dissenting
Shares”),
will
not be converted into the right to receive the Merger Consideration, and holders
of such shares of Company Common Stock will be entitled, in lieu thereof, to
receive payment of the appraised value of such shares of Company Common Stock
in
accordance with the provisions of the NRS unless and until such holders fail
to
perfect or effectively withdraw or lose their rights to appraisal and payment
under the NRS. If, after the Effective Time, any such holder fails to perfect
or
effectively withdraws or loses such right, such shares of Company Common Stock
will thereupon be treated as if they had been converted at the Effective Time
into the right to receive the Merger Consideration, without any interest
thereon. The Company will give Parent prompt notice of any demands received
by
the Company for appraisal of shares of Company Common Stock. Prior to the
Effective Time, the Company will not, except with the prior written consent
of
Parent make any payment with respect to, or settle or offer to settle, any
such
demands.
-11-
2.16 Parent
Dissenting Shares.
Shares
of Parent Common Stock which are issued and outstanding immediately prior to
the
Effective Time and which are held by persons who are entitled to and who have
properly exercised, and not withdrawn or waived, appraisal rights with respect
thereto in accordance with the California General Corporation Law (“CGCL”)
(the
“Dissenting
Shares”),
will
be entitled to receive payment of the appraised value of such shares of Parent
Common Stock in accordance with the provisions of the CGCL unless and until
such
holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the CGCL. The Parent will give Company prompt notice
of any demands received by the Parent for appraisal of shares of Parent Common
Stock. Prior to the Effective Time, the Parent will not, except with the prior
written consent of Company make any payment with respect to, or settle or offer
to settle, any such demands.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Parent that (subject to such
exceptions as are disclosed in the corresponding Schedules with respect to
specific sections of this Article 3) the statements contained in this Article
3
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article 3, except in the case of representations and warranties stated to be
made as of the date of this Agreement or as of another date and except for
changes contemplated or permitted by this Agreement):
3.1 Organization,
Standing and Qualification.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. The Company has all requisite corporate
power and authority to own, lease and use its assets as they are currently
owned, leased and used and to conduct its business as it is currently conducted.
The Company is duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of the properties owned,
leased or used by it or the nature of the activities conducted by it make such
qualification necessary, except any such jurisdiction where the failure to
be so
qualified or licensed would not have a Material Adverse Effect on the Company
or
a Material Adverse Effect on the validity, binding effect or enforceability
of
this Agreement or the Collateral Documents or the ability of the Company to
perform its obligations under this Agreement or any of the Collateral Documents.
(b) The Company’s wholly-owned subsidiaries Information Intellect, Inc., Riptide
Software, Inc. and Bravera, Inc. are corporations duly organized, validly
existing and in good standing under the laws of the State of Georgia, State
of
Florida and State of Florida respectively. Each has all requisite corporate
power and authority to own, lease and use its assets as they are currently
owned, leased and used and to conduct its business as it is currently conducted.
Each subsidiary is duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of its properties owned,
leased or used by it or the nature of the activities conducted by it make such
qualification necessary, except any such jurisdiction where the failure to
be so
qualified or licensed would not have a Material Adverse Effect on the Company
and its subsidiaries as a whole.
-12-
3.2 Due
Authorization.
The
Company has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company
of
this Agreement and the consummation by the Company of the transactions
contemplated hereby, and the performance by the Company of its obligations
hereunder, have been duly and validly authorized by all necessary action by
the
Board of Directors of the Company, and no other action on the part of the Board
of Directors of the Company is required to authorize the execution, delivery
and
performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws relating to the enforcement of creditors’ rights generally and by general
principles of equity.
3.3 Capitalization.
(a) The
authorized common stock and other ownership interests of the Company consist
of
800,000,000 shares of Common Stock, par value $0.001 per share and 60,000,000
shares of Preferred Stock, par value $0.001 per share, of which 10,000,000
shares have been designated as Series A Preferred Stock and 20,000,000 shares
have been designated as Series B Preferred Stock. There are 63,446,676 shares
of
Common Stock, 3,800,000 shares of Series A Preferred Stock and 4,600,000 shares
of Series B Preferred Stock issued and outstanding as of the date hereof. All
of
the issued and outstanding shares of the Company Common Stock, Company Series
A
Preferred Stock and Company Series B Preferred Stock have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable and have
been issued in compliance with applicable securities laws and other applicable
Legal Requirements or transfer restrictions under applicable securities
laws.
(b) Schedule
3.3(b)
hereto
lists all outstanding or authorized options, warrants, purchase rights,
preemptive rights or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
common stock or other ownership interests (collectively “Equity
Equivalents”),
including, without limitation, all Eligible Warrants. Except as disclosed in
Schedule
3.3(b)
hereto,
there are no other Equity Equivalents, commitments or agreements of any
character (whether created by statute, the Articles of Incorporation or Bylaws
of the Company, or any agreement or otherwise) to which the Company is a party
or by which it is bound, obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of common stock of the Company or obligating the Company
to
grant, extend, accelerate the vesting of, change the price or otherwise amend
or
enter into any such option, warrant, call, right, commitment or agreement.
3.4 No
Conflicts.
Except
as set forth on Schedule
3.4
hereto,
the execution, delivery and performance by the Company of this Agreement and
the
Collateral Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute
a
violation or breach of, constitute a default or give rise to any right of
termination or
-13-
acceleration
of any right or obligation of the Company under, or result in the creation
or
imposition of any Encumbrance upon the Company, its business, assets, properties
or the Company Common Stock by reason of the terms of (i) the Articles of
Incorporation, Bylaws or other charter or organizational document of the Company
or any Subsidiary of the Company, (ii) any material contract, agreement, lease,
indenture or other instrument to which the Company is a party or by or to which
the Company, or its assets may be bound or subject and a violation of which
would result in a Material Adverse Effect on the Company, (iii) any order,
judgment, injunction, award or decree of any arbitrator or Regulatory Authority
or any statute, law, rule or regulation applicable to the Company or (iv) any
Permit of the Company, which in the case of (ii), (iii) or (iv) above would
have
a Material Adverse Effect on the Company or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents.
3.5 Consents
and Approvals.
Except
as set forth on Schedule
3.5
hereto,
no consent, approval, authorization or order of, registration or filing with,
or
notice to, any Regulatory Authority or any other Person is necessary to be
obtained, made or given by the Company in connection with the execution,
delivery and performance by the Company of this Agreement or any Collateral
Document or for the consummation by the Company of the transactions contemplated
hereby or thereby, except to the extent the failure to obtain any such consent,
approval, authorization or order or to make any such registration or filing
would not have a Material Adverse Effect on the Company or a material adverse
effect on the validity, binding effect or enforceability of this Agreement
or
the Collateral Documents or the ability of the Company to perform its
obligations under this Agreement or any of the Collateral
Documents.
3.6 Intellectual
Property.
Except
as set forth on Schedule
3.6
hereto,
the Company and each of the Company’s subsidiaries own, or is licensed or
otherwise possesses legally enforceable rights to use, all Intellectual Property
that is used or currently proposed to be used in the business of the Company
as
currently conducted or as presently proposed by the Company to be conducted
in
the immediate future.
3.7 Compliance
with Legal Requirements.
The
Company has operated its business in compliance with all Legal Requirements
applicable to the Company except to the extent the failure to operate in
compliance with all material Legal Requirements would not have a Material
Adverse Effect on the Company on the validity, binding effect or enforceability
of this Agreement or the Collateral Documents.
3.8 Financial
Statements.
The
Company has
provided
Parent with copies of the unaudited Consolidated Balance Sheets of the Company
as of June 30, 2007 (the “Company
Financial Statement Date”),
and
the unaudited Consolidated Statements of Operations for the period then ended
and the audited Consolidated Balance Sheet of the Company as of December 31,
2006 and the audited Consolidated Statement of Operations for the period then
ended (collectively, the “Company
Financial Statements”).
The
Company Financial Statements have been
prepared in accordance with GAAP applied on a basis consistent throughout all
periods presented, present fairly in all material respects the financial
condition of the Company and its results of operations as of the date and for
the periods indicated
therein.
The accounting and
-14-
other
financial records of the Company have been maintained in accordance with good
business practices.
3.9 Litigation.
Except
as set forth on Schedule
3.9
hereto,
there are no outstanding judgments or orders against or otherwise affecting
or
related to the Company, its business, assets or properties, and there is no
action, arbitration, audit, hearing, suit, complaint, proceeding or
investigation, judicial, administrative or otherwise, that is pending or, to
the
Company’s knowledge, threatened that, if adversely determined, would have a
Material Adverse Effect on the Company or a Material Adverse Effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents.
3.10 Taxes.
Except
as set forth on Schedule
3.10
hereto,
the Company has duly and timely filed in proper form all Tax Returns for all
Taxes required to be filed with the appropriate Regulatory Authority, and has
paid all taxes required to be paid in respect thereof except where such failure
would not have a Material Adverse Effect on the Company.
3.11 Books
and Records.
The
books and records of the Company accurately and fairly represent the Company’s
business and its results of operations in all material respects.
3.12 Brokers
or Finders.
Except
as set forth on Schedule
3.12
hereto,
all negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by the Company or its Affiliates in connection
with
the transactions contemplated by this Agreement, and neither the Company, or
Affiliates has incurred any obligation to pay any brokerage or finder’s fee or
other commission in connection with the transaction contemplated by this
Agreement.
3.13 Disclosure.
No
representation or warranty of the Company in this Agreement or in the Collateral
Documents and no statement in any certificate furnished or to be furnished
by
the Company pursuant to this Agreement contained, contains or will contain
on
the date such agreement or certificate was or is delivered, or on the Closing
Date, any untrue statement of a material fact, or omitted, omits or will omit
on
such date to state any material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading.
3.14 No
Undisclosed Liabilities.
Except
as set forth in Schedule
3.14
hereto,
the Company has no obligations or liabilities of any nature (matured or
unmatured, fixed or contingent) other than (i) those set forth or reserved
against in the Company Financial Statements or if subsequent to the date of
the
Company Financial Statements, as otherwise disclosed in filings made with the
SEC, (ii) those incurred in connection with this Agreement or the transactions
contemplated hereby, (iii) those incurred in the ordinary course of business
consistent with the Company’s past practice.
3.15 Absence
of Certain Changes.
Except
as set forth on Schedule
3.15
hereto,
since the Financial Statement Date or otherwise disclosed in filings made with
the SEC, the Company has not: (a) suffered any material adverse change in its
financial condition, assets, liabilities or business; (b) contracted for or
paid
any capital expenditures; (c) except as otherwise disclosed in SEC filings,
incurred any indebtedness or borrowed money, issued or sold any debt or
equity
-15-
securities,
declared any dividends or discharged or incurred any liabilities or obligations
except in the ordinary course of business as heretofore conducted; (d) except
as
otherwise disclosed in SEC filings mortgaged, pledged or subjected to any lien,
lease, security interest or other charge or encumbrance any of its properties
or
assets; (e) except as otherwise disclosed in SEC filings paid any material
amount on any indebtedness prior to the due date, forgiven or cancelled any
material amount on any indebtedness prior to the due date, forgiven or cancelled
any material debts or claims or released or waived any material rights or
claims; (f) suffered any damage or destruction to or loss of any assets (whether
or not covered by insurance); (g) except as otherwise disclosed in SEC filings
acquired or disposed of any assets or incurred any liabilities or obligations;
(h) except as otherwise disclosed in SEC filings made any payments to its
Affiliates or associates or loaned any money to any person or entity; (i) except
as otherwise disclosed in SEC filings acquired or disposed of any interest
in
any corporation, partnership, limited liability company, joint venture or other
entity; (j) except as otherwise disclosed in SEC filings entered into any
employment, compensation, consulting or collective bargaining agreement or
any
other agreement of any kind or nature with any person or group, or modified
or
amended in any respect the terms of any such existing agreement; (k) except
as
otherwise disclosed in SEC filings entered into any other commitment or
transaction or experienced any other event that relates to or affect in any
way
this Agreement or to the transactions contemplated hereby, or that has affected,
or may adversely affect the Company’s business, operations, assets, liabilities
or financial condition; or (1) except as otherwise disclosed in SEC filings
amended its Articles of Incorporation or By-laws, except as otherwise
contemplated herein.
3.16 Contracts.
Schedule
3.16(a)
hereto
sets forth a true and complete list of all contracts, agreements, leases,
commitments or other understandings or arrangements, written or oral, express
or
implied, to which the Company is a party or by which it or any of its property
is bound or affected requiring payments to or from, or incurring of liabilities
by, the Company in excess of $250,000 (the “Contracts”).
Except as set forth on Schedule
3.16(b)
hereto,
the Company has complied with and performed, in all material respects, all
of
its obligations required to be performed under and is not in default with
respect to any of the Contracts, as of the date hereof, nor has any event
occurred which has not been cured which, with or without the giving of notice,
lapse of time, or both, would constitute a default in any respect thereunder.
To
the best knowledge of the Company, no other party has failed to comply with
or
perform, in all material respects, any of its obligations required to be
performed under or is in material default with respect to any such Contracts,
as
of the date hereof, nor has any event occurred which, with or without the giving
of notice, lapse of time or both, would constitute a material default in any
respect by such party thereunder. Except as set forth on Schedule
3.16(c)
hereto,
the Company knows of and has no reason to believe that there are any facts
or
circumstances which would make a material default by any party to any contract
or obligation likely to occur subsequent to the date hereof.
3.17 Permits
and Licenses.
The
Company has all certificates of occupancy, rights, permits, certificates,
licenses, franchises, approvals and other authorizations as are reasonably
necessary to conduct its business and to own, lease, use, operate and occupy
its
assets, at the places and in the manner now conducted and operated, except
those
the absence of which would not materially adversely affect its business. The
Company has not received any written or oral notice or claim pertaining to
the
failure to obtain any material permit, certificate, license,
-16-
approval
or other authorization required by any federal, state or local agency or other
regulatory body, the failure of which to obtain would materially and adversely
affect its business.
3.18 Restrictions
on Business Activities.
Except
as set forth in Schedule
3.18
hereto,
there is no agreement or Order binding upon the Company, or any of its assets
or
properties which has had or could reasonably be expected to have the effect
of
prohibiting or impairing any current business practice of the Company (or future
business practice of the Surviving Corporation), any acquisition of property
by
the Company or the conduct of business by the Company as currently conducted
or
as proposed to be conducted by the Company other than in the ordinary course
of
business or which would not reasonably be expected to give rise to a Material
Adverse Effect.
3.19 Title
to Property.
The
Company has good and marketable title to all of its properties, interests in
properties and assets, real and personal, reflected in the Company Financial
Statements or acquired after the Financial Statement Date (except as otherwise
disclosed in SEC filings and except properties, interests in properties and
assets sold or otherwise disposed of since the Financial Statement Date in
the
ordinary course of business), or with respect to leased properties and assets,
valid leasehold interests in, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) liens for current
Taxes not yet due and payable or which are being contested by the Company in
good faith, (ii) such imperfections of title, liens and easements as do not
and
will not materially detract from or interfere with the use of the properties
subject thereto or affected thereby, or otherwise materially impair business
operations involving such properties, (iii) liens securing debt which is
reflected on the Company Financial Statements, and (iv) Encumbrances listed
on
Schedule
3.19
hereto.
The property and equipment of the Company that are used in the operations of
its
business are in good operating condition subject to normal wear and tear. All
material properties used in the operations of the Company are reflected in
the
Company Financial Statements. The Company owns no real property.
3.20 Labor
Agreements and Labor Relations.
Except
as set forth on Schedule
3.20(a)
hereto,
the Company has no collective bargaining or union contracts or agreements.
Except as set forth on Schedule
3.20(b)
hereto,
the Company is in compliance with all applicable laws respecting employment
and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practices; there are no charges of
discrimination or unfair labor practice charges, or complaints against the
Company pending or threatened before any governmental or regulatory agency
or
authority; and, there is no material labor strike, dispute, employee grievance,
disciplinary action, slowdown or stoppage actually pending or threatened against
or affecting the Company.
3.21 Employment
Arrangements.
Except
as set forth on Schedule
3.21(a)
hereto,
the Company has no employment or consulting agreements or arrangements, written
or oral, which are not terminable at the will of the Company, or any pension,
profit-sharing, option, other incentive plan, or any other type of employment
benefit plan as defined in ERISA or otherwise, or any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance or other benefits. Except as set forth on Schedule
3.21(b)
hereto,
no employee of the Company is in violation of any employment agreement or
restrictive covenant.
-17-
3.22 Conduct
of Business.
Prior
to the Closing Date, the Company shall conduct its business in the normal
course, and shall not sell, pledge, or assign any assets, without the prior
written approval of Parent, except in the regular course of business. Except
as
otherwise provided herein, the Company shall not amend its Articles of
Incorporation or By-Laws, declare dividends, redeem or sell stock or other
securities, acquire or dispose of fixed assets, change employment terms, enter
into any material or long-term contract, guarantee obligations of any third
party, settle or discharge any material balance sheet receivable for less than
its stated amount, pay more on any liability than its stated amount or enter
into any other transaction other than in the regular course of
business
3.23 SEC
Reports. The
Company has filed all required SEC Reports since March 2, 2007 the date of
the
merger of Xxxx Development Corp. and Information Intellect, Inc. and to the
best
of the Company’s knowledge all SEC filings prior to March 2, 2007 have been
filed with the SEC, each of which complied at the time of filing in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, as applicable, in each case as in effect on the dates such forms reports
and documents were filed. None of the Company’s SEC Reports contained when filed
an untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in
order
to make the statements therein in light of the circumstances under which they
were made not misleading, except to the extent superseded by a SEC Report filed
subsequently and prior to the date hereof. Except as publicly disclosed by
the
Company since the filing of its last SEC Report, there have been no events,
changes or effects with respect to the Company which the Company (i) was
required to publicly disclose, in a filing with the SEC or otherwise, or (ii)
which would reasonably be expected to have a material adverse effect on the
Company’s future operations or financial condition.
3.24 Information
Supplied by Company.
None of
the information supplied or to be supplied by the Company for inclusion in
the
Joint Proxy-Registration Statement to be delivered to its shareholders in
connection with any written consent by or meeting of such shareholders, at
the
date on which such information was supplied prior to the time the Company’s
shareholders were requested to approve the Merger, contained or will contain
any
untrue statement or material fact or omits or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub hereby, jointly and severally, represent and warrant to the
Company that (subject to such exceptions as are disclosed in the corresponding
Schedules with respect to specific sections of this Article 4) the statements
contained in this Article 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 4, except in the case of representations
and
warranties stated to be made as of the date of this Agreement or as of another
date and except for changes contemplated or permitted by this
Agreement):
-18-
4.1 Organization,
Standing and Qualification.
Parent
and Merger Sub are each corporations duly organized, validly existing and in
good standing under the laws of their respective jurisdictions of incorporation.
Parent and Merger Sub each have the requisite corporate power and authority
to
own, lease and use its assets as they are currently owned, leased and used
and
to conduct their respective businesses as currently conducted. Parent and Merger
Sub are each duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of the properties owned,
leased or used by, or the nature of the activities conducted by, each of Parent
and Merger Sub make such qualification necessary, except any such jurisdiction
where the failure to be so qualified or licensed would not have a Material
Adverse Effect on Parent or Merger Sub, or a Material Adverse Effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of each of Parent and Merger Sub to perform their
respective obligations under this Agreement or any of the Collateral
Documents.
4.2 Due
Authorization; Ownership of Stock.
(a)
Each of Parent and Merger Sub has full corporate power and authority to execute
and deliver this Agreement, to perform their respective obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery by each of Parent and Merger Sub of this Agreement and the consummation
by Parent and Merger Sub of the transactions contemplated hereby, and the
performance by Parent and Merger Sub of their respective obligations hereunder,
have been duly and validly authorized by all necessary action by the Board
of
Directors of each of Parent and Merger Sub, and no other action on the part
of
the Board of Directors of each of Parent and Merger Sub is required to authorize
the execution, delivery and performance of this Agreement and the consummation
by Parent and Merger Sub of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Parent and Merger
Sub and constitutes a legal, valid and binding obligation of each of Parent
and
Merger Sub enforceable against Parent and Merger Sub in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Legal Requirements relating to the enforcement of creditors’ rights generally
and by general principles of equity. (b) Except for the transactions
contemplated by this Agreement, as of the date hereof, neither Parent nor Merger
Sub beneficially owns any Company Common Stock.
4.3 Capitalization.
(a) The
authorized common stock and other ownership interests of Parent consist of
100,000,000 shares of Common Stock, of which 14,258,756 shares of Common Stock
are issued and outstanding as of the date hereof. All of the issued and
outstanding shares of Parent Common Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable and have been
issued in compliance with applicable securities laws and other applicable Legal
Requirements or transfer restrictions under applicable securities laws.
(b) The
authorized common stock and other ownership interests of Merger Sub consist
of
100 shares of Common Stock, of which 100 shares of Common Stock are issued
and
outstanding as of the date hereof. All of the issued and outstanding shares
of
Common Stock of Merger Sub have been duly authorized and are validly issued
and
outstanding, fully paid and
-19-
nonassessable
and have been issued in compliance with applicable securities laws and other
applicable Legal Requirements or transfer restrictions under applicable
securities laws.
(c) Schedule
4.3(c)
hereto
lists all Equity Equivalents of Parent. Except as disclosed in Schedule
4.3(c)
hereto,
there are no other Equity Equivalents, commitments or agreements of any
character (whether created by statute, the Articles of Incorporation or Bylaws
of Parent, or any agreement or otherwise) to which Parent is a party or by
which
it is bound, obligating Parent to issue, deliver, sell, repurchase or redeem,
or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
common stock of Parent or obligating Parent to grant, extend, accelerate the
vesting of, change the price or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement.
4.4 No
Conflicts.
Except
as set forth on Schedule
4.4
hereto,
the execution, delivery and performance by the Parent and Merger Sub of this
Agreement and the Collateral Documents to which each is a party and the
consummation of the transactions contemplated hereby and thereby in accordance
with the terms and conditions hereof and thereof, do not and will not conflict
with, constitute a violation or breach of, constitute a default or give rise
to
any right of termination or acceleration of any right or obligation of either
Parent or Merger Sub under, or result in the creation or imposition of any
Encumbrance upon the property of either Parent or Merger Sub by reason of the
terms of (i) the articles of incorporation, by laws or other charter or
organizational document of either Parent or Merger Sub, (ii) any contract,
agreement, lease, indenture or other instrument to which either Parent or Merger
Sub is a party or by or to which either Parent or Merger Sub or its property
may
be bound or subject and a violation of which would result in a Material Adverse
Effect on Parent taken as a whole, (iii) any order, judgment, injunction, award
or decree of any arbitrator or Regulatory Authority or any statute, law, rule
or
regulation applicable to either Parent or Merger Sub or (iv) any Permit of
Parent or Merger Sub, which in the case of (ii), (iii) or (iv) above would
have
a Material Adverse Effect on Parent or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of either Parent or Merger Sub to perform its
obligations hereunder or thereunder.
4.5 Consents
and Approvals.
Except
as set forth on Schedule
4.5
hereto,
no consent, approval, authorization or order of, registration or filing with,
or
notice to, any Regulatory Authority or any other Person is necessary to be
obtained, made or given by either Parent or Merger Sub in connection with the
execution, delivery and performance by them of this Agreement or any Collateral
Documents or for the consummation by them of the transactions contemplated
hereby or thereby, except to the extent the failure to obtain such consent,
approval, authorization or order or to make such registration or filings or
to
give such notice would not have a Material Adverse Effect on Parent or a
Material Adverse Effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents or the ability of either Parent
or
Merger Sub to perform its obligations under this Agreement or any of the
Collateral Documents.
4.6 Intellectual
Property.
Except
as set forth on Schedule
4.6
hereto,
Parent owns, or is licensed or otherwise possesses legally enforceable rights
to
use, all Intellectual Property that is used or currently proposed to be used
in
the business of Parent as currently conducted or as presently proposed by Parent
to be conducted in the immediate future.
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4.7 Compliance
with Legal Requirements.
Parent
has operated its business in compliance with all Legal Requirements applicable
to Parent except to the extent the failure to operate in compliance with all
material Legal Requirements would not have a Material Adverse Effect on Parent
on the validity, binding effect or enforceability of this Agreement or the
Collateral Documents.
4.8 Financial
Statements.
Parent
has
provided
the Company with copies of the unaudited Condensed Consolidated Balance Sheet
of
Parent as of June 30, 2007 (the “Parent
Financial Statement Date”),
and
the unaudited Condensed Consolidated Statements of Operations for the period
then ended and the audited Condensed Consolidated Balance Sheets of Parent
as of
September 30, 2006 and the audited Condensed Consolidated Statements of
Operations for the period then ended (collectively, the “Parent
Financial Statements”).
The
Parent Financial Statements have been
prepared in accordance with GAAP applied on a basis consistent throughout all
periods presented, present fairly in all material respects the financial
condition of Parent and its results of operations as of the date and for the
periods indicated
therein.
The accounting and other financial records of Parent have been maintained in
accordance with good business practices.
4.9 Litigation.
Except
as set forth on Schedule
4.9
hereto,
there are no outstanding judgments or orders against or otherwise affecting
or
related to Parent or its business or assets; and there is no action,
arbitration, audit, hearing, suit complaint, proceeding or investigation,
judicial, administrative or otherwise, that is pending or, to the best knowledge
of Parent, threatened that, if adversely determined, would have a Material
Adverse Effect on Parent or a Material Adverse Effect on the validity, binding
effect or enforceability of this Agreement or the Collateral
Documents.
4.10 Taxes.
Except
as set forth on Schedule
4.10
hereto,
Parent has duly and timely filed in proper form all Tax Returns for all Taxes
required to be filed with the appropriate Regulatory Authority, and has paid
all
taxes required to be paid in respect thereof except where such failure would
not
have a Material Adverse Effect on Parent.
4.11 Books
and Records.
The
books and records of Parent accurately and fairly represent its business and
its
results of operations in all material respects.
4.12 Brokers
or Finders.
Except
as set forth on Schedule
4.12
hereto,
all negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Parent in connection with the transactions
contemplated by this Agreement, and neither Parent nor Merger Sub has entered
into any contract, agreement, arrangement or understanding which may result
in
an obligation to pay any brokerage or finder’s fee or other commission in
connection with the transaction contemplated by this Agreement.
4.13 Disclosure.
No
representation or warranty of Parent or Merger Sub in this Agreement or in
the
Collateral Documents and no statement in any certificate furnished or to be
furnished by Parent pursuant to this Agreement contained, contains or will
contain on the date such agreement or certificate was or is delivered, or on
the
Closing Date, any untrue statement of a material fact, or omitted, omits or
will
omit on such date to state any material fact necessary in
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order
to
make the statements made, in light of the circumstances under which they were
made, not misleading.
4.14 No
Undisclosed Liabilities.
Except
as set forth in Schedule
4.14
hereto,
neither Parent nor Merger Sub has any obligations or liabilities of any nature
(absolute, accrued, matured or unmatured, fixed or contingent) other than (i)
those set forth or reserved against in the Parent Financial Statements, (ii)
those incurred in connection with this Agreement or the transactions
contemplated hereby, (iii) those incurred in the ordinary course of business
consistent with the Parent’s past practice.
4.15 Absence
of Certain Changes.
Except
as set forth on Schedule
4.15
hereto,
since the Parent Balance Sheet Date, Parent has not: (a) suffered any material
adverse change in its financial condition, assets, liabilities or business;
(b)
contracted for or paid any capital expenditures; (c) incurred any indebtedness
or borrowed money, issued or sold any debt or equity securities, declared any
dividends or discharged or incurred any liabilities or obligations except in
the
ordinary course of business as heretofore conducted; (d) mortgaged, pledged
or
subjected to any lien, lease, security interest or other charge or encumbrance
any of its properties or assets; (e) paid any material amount on any
indebtedness prior to the due date, forgiven or cancelled any material amount
on
any indebtedness prior to the due date, forgiven or cancelled any material
debts
or claims or released or waived any material rights or claims; (f) suffered
any
damage or destruction to or loss of any assets (whether or not covered by
insurance); (g) acquired or disposed of any assets or incurred any liabilities
or obligations; (h) made any payments to its affiliates or associates or loaned
any money to any person or entity; (i) formed or acquired or disposed of any
interest in any corporation, partnership, limited liability company, joint
venture or other entity; (j) entered into any employment, compensation,
consulting or collective bargaining agreement or any other agreement of any
kind
or nature with any person or group, or modified or amended in any respect the
terms of any such existing agreement; (k) entered into any other commitment
or
transaction or experience any other event that relates to or affect in any
way
this Agreement or to the transactions contemplated hereby, or that has affected,
or may adversely affect the Parent’s business, operations, assets, liabilities
or financial condition; (1) amended its Articles of Incorporation or By-laws,
except as otherwise contemplated herein (m) made any change in accounting
methods or practices or internal control procedures, other than as required
as a
result of changes in law or GAAP; (n) made any single expenditure or commitment
in excess of $25,000 for additions to property plant, equipment, or intangible
capital assets, or (o) agreed to take any action described in this Section
4.15.
4.16 Contracts.
Schedule
4.16(a)
hereto
is a true and complete list of all Contracts to which Parent is a party or
by
which it or any of its property is bound or affected requiring payments to
or
from, or incurring of liabilities by, Parent in excess of $100,000. Except
as
set forth on Schedule
4.16(b)
hereto,
Parent has complied with and performed, in all material respects, all of its
obligations required to be performed under and is not in default with respect
to
any of the Contracts, as of the date hereof, nor has any event occurred which
has not been cured which, with or without the giving of notice, lapse of time,
or both, would constitute a default in any respect there under. To the best
knowledge of Parent, no other party has failed to comply with or perform, in
all
material respects, any of its obligations required to be performed under or
is
in material default with respect to any such Contracts, as of the date hereof,
nor has any event occurred which, with or without the giving of notice, lapse
of
time or both, would constitute a
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material
default in any respect by such party there under. Except as set forth on
Schedule
4.16(c)
hereto,
Parent knows of and has no reason to believe that there are any facts or
circumstances, which would make a material default by any party to any contract
or obligation likely to occur subsequent to the date hereof.
4.17 Permits
and Licenses.
The
Parent and Merger Sub have all certificates of occupancy, rights, permits,
certificates, licenses, franchises, approvals and other authorizations as are
reasonably necessary to conduct their respective businesses and to own, lease,
use, operate and occupy their respective assets, at the places and in the manner
now conducted and operated, except those the absence of which would not
materially adversely affect their respective businesses. The Parent and Merger
Sub have not received any written or oral notice or claim pertaining to the
failure to obtain any material permit, certificate, license, approval or other
authorization required by any federal, state or local agency or other regulatory
body, the failure of which to obtain would materially and adversely affect
their
respective businesses.
4.18 Restrictions
on Business Activities.
Except
as set forth in Schedule
4.18
hereto,
there is no agreement or Order binding upon Parent, or any of its assets or
properties which has had or could reasonably be expected to have the effect
of
prohibiting or impairing any current business practice of Parent (or future
business practice of the Surviving Corporation), any acquisition of property
by
Parent or the conduct of business by Parent as currently conducted or as
proposed to be conducted by Parent other than in the ordinary course of business
or which would not reasonably be expected to give rise to a Material Adverse
Effect.
4.19 Title
to Property.
Parent
has good and marketable title to all of its properties, interests in properties
and assets, real and personal, reflected in the Parent Financial Statements
or
acquired after the Financial Statement Date (except properties, interests in
properties and assets sold or otherwise disposed of since the Financial
Statement Date in the ordinary course of business), or with respect to leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current Taxes not yet due and payable or which are being
contested by Parent in good faith, (ii) such imperfections of title, liens
and
easements as do not and will not materially detract from or interfere with
the
use of the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties, (iii) liens
securing debt which is reflected on the Parent Financial Statements, and (iv)
liens listed on Schedule
4.18
hereto.
The property and equipment of the Company that are used in the operations of
its
business are in good operating condition subject to normal wear and tear. All
material properties used in the operations of Parent are reflected in the Parent
Financial Statements. Parent owns no real property.
4.20 Labor
Agreements and Labor Relations.
Except
as set forth on Schedule
4.20(a)
hereto,
Parent has no collective bargaining or union contracts or agreements. Except
as
set forth on Schedule
4.20(b)
hereto,
Parent is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practices; there are no charges of
discrimination or unfair labor practice charges, or complaints against Parent
pending or threatened before any governmental or regulatory agency or authority;
and, there is no labor strike, dispute, employee
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grievance,
disciplinary action, slowdown or stoppage actually pending or threatened against
or affecting Parent.
4.21 Employment
Arrangements.
Except
as set forth on Schedule
4.21(a)
hereto,
Parent has no employment or consulting agreements or arrangements, written
or
oral, which are not terminable at the will of Parent, or any pension,
profit-sharing, option, other incentive plan, or any other type of employment
benefit plan as defined in ERISA or otherwise, or any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance or other benefits. Except as set forth on Schedule
4.21(b)
hereto,
no employee of Parent is in violation of any employment agreement or restrictive
covenant.
4.22 Conduct
of Business.
Prior
to the Closing Date, Parent shall conduct its business in the normal course,
and
shall not sell, pledge, or assign any assets, without the prior written approval
of the Company, except in the regular course of business. Except as otherwise
provided herein, Parent shall not (i) amend its Articles of Incorporation or
By-Laws, (ii) declare, set aside, make or payout dividends or other
distributions, (iii) redeem or sell stock or other securities, (iv) acquire
or
dispose of fixed assets, (v) enter into or change employment terms, or increase
the compensation payable to its officers, employees, agents or consultants,
or
grant any severance or termination pay, (vi) enter into any material or
long-term contract, (vii) guarantee obligations of any third party, (viii)
settle or discharge any material balance sheet receivable for less than its
stated amount, (ix) pay more on any liability than its stated amount, (x) enter
into any other transaction other than in the regular course of business, (xi)
reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock or other securities, (xii)
acquire, including without limitation by merger, consolidation or acquisition
of
stock or assets any corporation, partnership, other business organization or
division thereof or any material amount or assets, or incur any indebtedness
for
borrowed money or issue any debt securities or assume, guarantee or endorse,
or
become responsible for the obligations of any Person or make loans or advances,
except in the ordinary course of business, or (xiii) agree to any of the
foregoing, except as may be necessary to do the actions required
herein.
4.23 SEC
Reports. Parent
has filed all required SEC Reports since October 1, 2004, each of which complied
at the time of filing in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, as applicable, in each case as
in
effect on the dates such forms reports and documents were filed. None of
Parent’s SEC Reports contained when filed an untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading, except to the
extent superseded by a SEC Report filed subsequently and prior to the date
hereof. Except as publicly disclosed by Parent since the filing of its last
SEC
Report, there have been no events, changes or effects with respect to Parent
which Parent (i) was required to publicly disclose, in a filing with the SEC
or
otherwise, or (ii) which would reasonably be expected to have a material adverse
effect on Parent's future operations or financial condition.
4.24 Information
Supplied by Parent or Merger Sub.
None of
the information supplied or to be supplied by the Parent or Merger Sub for
inclusion in the proxy statement to be delivered to its shareholders in
connection with any written consent by or meeting of such shareholders,
at
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the
date
on which such information was supplied prior to the time the Parent’s
shareholders were requested to approve the Merger, contained or will contain
any
untrue statement or material fact or omits or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading.
ARTICLE
5
COVENANTS
OF THE PARTIES
5.1 Key
Employees.
As soon
as practicable following the execution of this Agreement, but in any event
prior
to the Closing Date, Parent shall deliver to the Company a list of key employees
of Parent (such persons, “Key
Employees”),
which
such Key Employees shall be required to execute and enter into employment
agreements with the Surviving Corporation, in substantially the form attached
hereto as Exhibit
A
(the
“Key
Employee Agreements”),
subject to the terms and conditions set forth in such Key Employee
Agreements.
5.2 Continuing
Employees.
As soon
as practicable following the execution of this Agreement, but in any event
prior
to the Closing Date, Parent and the Company shall determine and identify which
employees of Parent, other than the Key Employees, will receive employment
offers from the Surviving Corporation following the consummation of the Merger
in accordance with the terms hereof (such employees, the “Continuing
Employees”),
which
determination of such Continuing Employees shall be based on the Operating
Expense Budget for FY2008 prepared by Parent and delivered to Company. Prior
to
the consummation of the Merger in accordance with the terms hereof, the Company
may request certain Continuing Employees to amend their respective Eligible
Warrant Agreement, if any, in connection with such Continuing Employee’s waiver
of certain rights thereunder with respect to a Change of Control of Parent.
5.3 Terminated
Employees.
Immediately prior to consummation of the Merger, but in no event later than
the
Closing Date, Parent shall terminate the employment of all employees of Parent
other than the Key Employees and the Continuing Employees (the “Terminated
Employees”),
and
such Terminated Employees shall be entitled to receive all benefits accruing
to
them pursuant to any existing employment agreements or option awards, including,
without limitation, any severance payments or options to which such Terminated
Employees may be entitled pursuant to applicable documents. In the event the
Terminated Employees were not hired by Parent pursuant to an employment
agreement, then such Terminated Employees shall receive severance benefits,
if
any, in accordance with Parent’s past practices, subject to the execution by
such Terminated Employee of a waiver and release in a form reasonably
satisfactory to the Company.
5.4 Joint
Proxy-Registration Statement.
As soon
as practicable following the execution of this Agreement, the Parties shall
work
together to prepare and file with the SEC a joint proxy - registration statement
in respect of the Merger and the transactions contemplated hereby (the
“Joint
Proxy-Registration Statement”),
which
such Joint Proxy Registration Statement shall be used in respect of (a)
soliciting shareholder approval in connection with the Merger and this
Agreement, (b) registering the Merger Consideration and the Merger Options,
New
Parent Warrants and Parent Warrants and the shares of Parent Common Stock
issuable pursuant to the exercise thereof issued pursuant to Article 2 hereof,
(c) authorizing the Reverse
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Split,
(d) changing the name of Parent to “Bravera, Inc.” and (d) increasing the
authorized number of shares of Parent Common Stock to 800,000,000 and increasing
the number of authorized shares of Parent Preferred Stock to not less than
15,000,000 (the “Capital
Increase”).
5.5 Access
to Information.
The
Parties shall provide to each other and their respective representatives such
financial, operating and other documents, data and information relating to
the
Party, and their respective businesses, properties, assets and liabilities,
as
each Party, or its representatives may reasonably request. In addition, each
Party hereby agrees to take all action necessary to enable their respective
representatives review, inspect and audit each Party’s business, properties,
assets and liabilities and discuss them with such Party’s officers, employees,
independent accountants and counsel. Notwithstanding any investigation that
any
Party may conduct of the other Parties, or their respective businesses,
properties, assets and liabilities, each Party may fully rely on the other
Party’s warranties, covenants and indemnities set forth in this Agreement.
5.6 Consents
and Approvals.
As soon
as practicable after execution of this Agreement, the Parties shall use
commercially reasonable efforts to obtain any necessary consent, approval,
authorization or order of, make any registration or filing with or give any
notice to, any Regulatory Authority or Person as is required to be obtained,
made or given by any Party to consummate the transactions contemplated by this
Agreement and the Collateral Documents.
5.7 Notification
of Adverse Change and Certain Matters.
Each
Party shall promptly notify the other Parties of any material adverse change
in
the condition (financial or otherwise) of such Party. Each Party shall promptly
notify the other Parties of any fact, event, circumstance or action known to
it
that is reasonably likely to cause such Party to be unable to perform any of
its
covenants contained herein or any condition precedent in Article 6 not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to another Party pursuant to this Agreement or the
existence or occurrence of which would cause any of the such Party’s
representations or warranties under this Agreement not to be correct and/or
complete. Each Party shall give prompt written notice to the other Parties
of
any adverse development causing a breach of any of the representations and
warranties in Articles 3 and 4 as of the date made.
5.8 Meeting
of the Shareholders.
Promptly after the date hereof, if required under applicable law and subject
to
SEC review of the Joint Proxy Registration Statement, each Party will take
all
action necessary in accordance with its articles of incorporation and by-laws,
or other charter or organizational documents, to convene a meeting of their
respective shareholders, or seek the written consent of its shareholders to
consider the adoption and approval of this Agreement and approval of the Merger
to be held as promptly as practicable. Each Party, if required, will use its
reasonable efforts to solicit from its shareholders proxies in favor of the
adoption and approval of this Agreement and the approval of the Merger.
5.9 Disclosure
Schedule.
Each
Party shall, from time to time prior to Closing, supplement the Disclosure
Schedules attached hereto with additional information that, if existing or
known
to it on the date of delivery to the other Party, would have been required
to be
included
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therein.
For purposes of determining the satisfaction of any of the conditions to the
obligations of any Party in Article 6, the Disclosure Schedules of such Party
shall be deemed to include only (a) the information contained therein on the
date of this Agreement and (b) information added to the such Party’s Disclosure
Schedule by written supplements delivered prior to Closing by such Party (i)
are
accepted in writing by the receiving Party, or (ii) reflect actions taken or
events occurring after the date hereof prior to Closing.
5.10 State
Statutes.
The
Parties and their respective Board of Directors shall, if any state takeover
statute or similar law is or becomes applicable to the Merger, this Agreement
or
any of the transactions contemplated by this Agreement, use all reasonable
efforts to ensure that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby.
5.11 Conduct
of Business.
The
Parties mutually agree that during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to the provisions of Article 8 hereof or the Closing, the Company, Parent and
Merger Sub each shall (unless otherwise required by this Agreement or Company
has given its prior written consent to Parent or Merger Sub or Parent has given
its prior written consent to the Company, as the case may be) carry on its
business in the ordinary course consistent with past practice, to pay its Taxes
and other obligations consistent with its past practices, to pay or perform
other obligations when due consistent with its past practices, subject to any
good faith disputes over such Taxes and other obligations and, to the extent
consistent with such business, to use reasonable efforts and institute all
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees, preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
independent contractors and other Persons having business dealings with it
and
to cause its Subsidiaries to do the same, all with the express purpose and
intent of preserving unimpaired its goodwill and ongoing businesses at the
Closing.
5.12 No
Solicitation.
Until
the earlier of the Closing or the date of termination of this Agreement pursuant
to the provisions of Article 8 hereof, neither Company nor Parent or Merger
Sub,
nor any of their respective shareholders, officers, directors, agents,
investment bankers or other representatives of any of them (collectively, the
“Representatives”)
will,
directly or indirectly, (i) solicit, engage in discussions or negotiate with
any
Person (regardless of who initiates such discussions or negotiations), or take
any other action intended or designed to facilitate the efforts of any Person,
other than the parties hereto, relating to the possible acquisition of the
Company, Parent or Merger Sub (whether by way of purchase of capital stock,
purchase of assets or otherwise) or any significant portion of its capital
stock
or assets by any Person other than the parties hereto (an “Alternative
Acquisition”),
(ii)
provide information with respect to the Company, Parent or Merger Sub to any
Person relating to a possible Alternative Acquisition by any Person, (iii)
enter
into an agreement with any Person providing for a possible Alternative
Acquisition, or (iv) make or authorize any statement, recommendation or
solicitation in support of any possible Alternative Acquisition by any Person.
The Company, Parent, or Merger Sub, as the case may be, shall cause its
Representatives to immediately cease and cause
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to
be
terminated all existing discussions or negotiations with any Person heretofore
conducted with respect to any possible Alternative Acquisition.
5.13 Confidentiality.
Parent,
Merger Sub and the Company acknowledge and agree that the terms and conditions
described in this Agreement, including its existence, as well as the non-public
information and data furnished to them or their respective Representatives
from
the first introduction of the parties and throughout the negotiation and
drafting of this Agreement is confidential and will not be disclosed to any
third party, or used for any purpose not specifically contemplated herein,
without prior written consent of the other party, unless otherwise required
by
Law or unless it ceases to be confidential through no breach of the receiving
party.
5.14 Closing
Balance Sheet.
For the
purposes of the requirements of Internal Revenue Service Revenue Ruling 59-60
and the accounting requirements pursuant to the accounting for business
combinations, the Company shall deliver within ten (10) days of the Closing a
balance sheet of the Company as of the Closing Date (the “Closing
Date Balance Sheet”)
that
has been reviewed and approved by its independent accounting firm. Within
fifteen (15) days after the delivery of the Closing Date Balance Sheet, Parent
will provide to the Company a proposed allocation of the Merger Consideration,
which shall have been prepared by an independent valuation accountant or
consultant.
ARTICLE
6
CLOSING
CONDITIONS
All
obligations of the Parties under this Agreement shall be subject to the
fulfillment at or prior to Closing of each of the following conditions
applicable to such Party, it being understood that the Parties may, in their
sole discretion, to the extent permitted by applicable Legal Requirements,
waive
any or all of such conditions in whole or in part:
6.1 Accuracy
of Representations.
All
representations and warranties of each Party contained in this Agreement, the
Collateral Documents and any certificate delivered by any of the Parties at
or
prior to Closing shall be, if specifically qualified by materiality, true in
all
respects and, if not so qualified, shall be true in all material respects,
in
each case on and as of the Closing Date with the same effect as if made on
and
as of the Closing Date, except for representations and warranties expressly
stated to be made as of the date of this Agreement or as of another date other
than the Closing Date and except for changes contemplated or permitted by this
Agreement. The Company shall have delivered to the Parent and Merger Sub, and
the Parent and Merger Sub shall have delivered to the Company, a certificate
dated the Closing Date to the foregoing effect.
6.2 Covenants.
The
Parties shall, in all material respects, have performed and complied with each
of the covenants, obligations and agreements contained in this Agreement and
the
Collateral Documents that are to be performed or complied with by them at or
prior to Closing. The Company shall have delivered to the Parent and Merger
Sub,
and the Parent and Merger Sub shall have delivered to the Company, a certificate
dated the Closing Date to the foregoing effect.
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6.3 Consents
and Approvals.
All
consents, approvals, permits, authorizations and orders required to be obtained
from, and all registrations, filings and notices required to be made with or
given to, any Regulatory Authority or Person as provided herein, shall have
been
so obtained or filed with such Regulatory Authority or Person.
6.4 Shareholder
Approval.
All
shareholder approval, as required under any applicable Legal Requirements,
shall
have been obtained to approve the transactions contemplated hereunder including
the approval of the Merger, this Agreement or the transactions contemplated
hereby.
6.5 Joint
Proxy Statement.
The
Joint Proxy Statement shall have been filed and declared effective by the SEC
pursuant to Article 5 hereof.
6.6 Key
Employee Agreements.
The Key
Employee Agreements shall have been executed and delivered to Parent and the
Company pursuant to Article 5 hereof.
6.7 No
Litigation.
No
injunction, action, suit or proceeding shall be pending or threatened by or
before any Regulatory Authority and no Legal Requirement shall have been
enacted, promulgated or issued or deemed applicable to any of the transactions
contemplated by this Agreement and the Collateral Documents that would: (i)
prevent consummation of any of the transactions contemplated by this Agreement
and the Collateral Documents; (ii) cause any of the transactions contemplated
by
this Agreement and the Collateral Documents to be rescinded following
consummation; or (iii) have a Material Adverse Effect on a Party, the Merger,
this Agreement or the transactions contemplated hereby.
6.8 Renaissance
Capital Indebtedness.
All of
the debt owed by Parent, including but not limited to its debt owed to
Renaissance Capital and affiliated funds, shall have been converted into
equity.
6.9 Fairness
Opinion.
Parent
shall have received a fairness opinion issued by the Mentor Group in that the
transactions contemplated herein are fair to the shareholders of Parent from
a
financial perspective.
6.10 Centrecourt
Lien.
Centrecourt shall have received a security interest in all of the assets of
Parent.
6.11 Parent
Assumption of Company Option Plan.
Parent
shall have adopted and assumed the Company Option Plan.
6.12 No
Material Adverse Change.
There
shall have been no material adverse change in the business, financial condition
or operations of any of the Parties.
ARTICLE
7
INDEMNIFICATION
7.1 Indemnification
by the Company.
The
Company shall indemnify, defend and hold harmless Parent, Merger Sub, and each
of their respective shareholders, members, partners, directors, officers,
managers, employees, agents, attorneys and representatives, from and
against
-29-
any
and
all Losses which may be incurred or suffered by any such party and which may
arise out of or result from any breach of any material representation, warranty,
covenant or agreement of the Company contained in this Agreement.
7.2 Indemnification
by the Parent and Merger Sub.
The
Parent and Merger Sub shall indemnify, defend and hold harmless the Company,
and
its shareholders, members, partners, directors, officers, managers, employees,
agents, attorneys and representatives from and against any and all Losses which
may be incurred or suffered by any such party hereto and which may arise out
of
or result from any breach of any material representation, warranty, covenant
or
agreement of the Parent and Merger Sub contained in this Agreement.
.
7.3 Notice
to Indemnifying Party.
If any
party (the “Indemnified
Party”)
receives notice of any claim or other commencement of any action or proceeding
with respect to which any other party (or parties) (the “Indemnifying
Party”)
is
obligated to provide indemnification pursuant to Sections 7.1 or 7.2, the
Indemnified Party shall promptly give the Indemnifying Party written notice
thereof, which notice shall specify in reasonable detail, if known, the amount
or an estimate of the amount of the liability arising here from and the basis
of
the claim. Such notice shall be a condition precedent to any liability of the
Indemnifying Party for indemnification hereunder, but the failure of the
Indemnified Party to give prompt notice of a claim shall not adversely affect
the Indemnified Party’s right to indemnification hereunder unless the defense of
that claim is materially prejudiced by such failure. The Indemnified Party
shall
not settle or compromise any claim by a third party for which it is entitled
to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section
7.4.
7.4 Defense
by Indemnifying Party.
In
connection with any claim giving rise to indemnity hereunder resulting from
or
arising out of any claim or legal proceeding by a Person who is not a party
to
this Agreement, the Indemnifying Party at its sole cost and expense may, upon
written notice to the Indemnified Party, assume the defense of any such claim
or
legal proceeding (i) if it acknowledges to the Indemnified Party in writing
its
obligations to indemnify the Indemnified Party with respect to all elements
of
such claim (subject to any limitations on such liability contained in this
Agreement) and (ii) if it provides assurances, reasonably satisfactory to the
Indemnified Party, that it will be financially able to satisfy such claims
in
full if the same are decided adversely. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, it may use counsel of its choice
to prosecute such defense, subject to the approval of such counsel by the
Indemnified Party, which approval shall not be unreasonably withheld or delayed.
The Indemnified Party shall be entitled to participate in (but not control)
the
defense of any such action, with its counsel and at its own expense; provided,
however, that if the Indemnified Party, in its sole discretion, determines
that
there exists a conflict of interest between the Indemnifying Party (or any
constituent party thereof) and the Indemnified Party, the Indemnified Party
(or
any constituent party thereof) shall have the right to engage separate counsel,
the reasonable costs and expenses of which shall be paid by the Indemnified
Party. If the Indemnifying Party assumes the defense of any such claim or legal
proceeding, the Indemnifying Party shall take all steps necessary to pursue
the
resolution thereof in a prompt and diligent manner. The Indemnifying Party
shall
be entitled to consent to a settlement of, or the stipulation of any judgment
arising from, any such claim or legal proceeding, with the consent
of
-30-
the
Indemnified Party, which consent shall not be unreasonably withheld or delayed;
provided, however, that no such consent shall be required from the Indemnified
Party if (i) the Indemnifying Party pays or causes to be paid all Losses arising
out of such settlement or judgment concurrently with the effectiveness thereof
(as well as all other Losses theretofore incurred by the Indemnified Party
which
then remain unpaid or unreimbursed), (ii) in the case of a settlement, the
settlement is conditioned upon a complete release by the claimant of the
Indemnified Party and (iii) such settlement or judgment does not require the
encumbrance of any asset of the Indemnified Party or impose any restriction
upon
its conduct of business.
ARTICLE
8
TERMINATION
8.1 Termination.
This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned, at any time prior to the Effective Time.
(a) By
mutual
written agreement of the Parties;
(b) By
either
of Parent or the Company if the Closing does not occur on or before December
31,
2007 or to be extended by mutual consent of the parties;
(c) By
either
of Parent or the Company if the shareholders of such Party fail to approve
the
Merger, this Agreement and the transactions contemplated hereby;
(d) By
either
of Parent or the Company if any court of competent jurisdiction or other
competent Regulatory Authority shall have issued an order making illegal or
otherwise permanently restricting, preventing or otherwise prohibiting the
Merger and such order shall have become final;
(e) By
either
of the Company or Parent upon written notice to the other Party in the event
of
a breach of any provision or covenant of this Agreement, or any representation
or warranty made by such Party hereunder becomes inaccurate; provided,
however,
that
such breach or inaccuracy would cause the related closing condition, if any,
not
be satisfied in accordance with Article 6 hereof; provided,
further,
that
prior to any termination by the non-breaching party, such Party shall provide
written notice to the breaching Party specifically identifying the breach or
inaccurate representation, and the breaching Party does not cure or correct
such
breach or inaccuracy within 30 days following receipt of the written
notice.
8.2 Effect
of Termination.
If this
Agreement is validly terminated by either the Company or Parent pursuant to
Section 8.1, this Agreement will forthwith become null and void and there will
be no liability or obligation on the part of the parties hereto, except that
nothing contained herein shall relieve any party hereto from liability for
willful breach of its representations, warranties, covenants or agreements
contained in this Agreement.
ARTICLE
9
MISCELLANEOUS
PROVISIONS
9.1 Notices.
All
notices, requests and other communications hereunder must be in writing and
will
be deemed to have been duly given only if delivered personally against
written
-31-
receipt
or mailed by prepaid first class registered or certified mail, return receipt
requested, or sent by overnight courier prepaid, to the parties at the following
addresses or facsimile numbers:
|
If
to Parent or Merger Sub to:
000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx
Xxxxxxx, XX 00000-0000
Attn:
Xxxxxxx Xxxxxxx, Chief Executive Officer
Tel:
(000) 000-0000
Fax:
(000) 000-0000
|
|
|
with
a copy, which shall not constitute notice to:
Xxxxx
Xxxxxxxx
Xxxx
& Xxxxx, PC
0000
Xxxxxxx Xxxx Xxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Tel:
(000) 000-0000
Fax:(000)
000-0000
|
|
|
If
to the Company:
Xxxx
Development Corp.
0000
Xxxx Xxxxx Xx, Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxx, Chairman and CEO
Tel:
(000) 000-0000
Fax:
(000) 000-0000
|
|
|
with
a copy, which shall not constitute notice, to:
Xxxxxxxxxx,
Xxxxxxxxx & Xxxxxx, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
|
9.2 Entire
Agreement.
This
Agreement supersedes all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof and contains the sole
and
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof. Except for the representations and warranties contained
in
this Agreement or in any instrument delivered pursuant to this Agreement, each
of the Parties to this Agreement acknowledges that no other representations
or
warranties have been relied upon by that Party or
-32-
made
by
any other party or its officers, directors, employees, agents, financial and
legal advisors or other representatives.
9.3 Further
Assurances; Post-Closing Cooperation.
At any
time or from time to time after the Closing, the Parties will execute and
deliver to the other party such other documents and instruments, provide such
materials and information and take such other actions as the other party may
reasonably request to consummate the transactions contemplated by this Agreement
and otherwise to cause the other Party to fulfill its obligations under this
Agreement and the transactions contemplated hereby. Each Party agrees to use
commercially reasonable efforts to cause the conditions to its obligations
to
consummate the transactions contemplated hereby to be satisfied.
9.4 Amendment.
This
Agreement may be amended by the Parties hereto at any time before the Closing
by
execution of an instrument in writing signed on behalf of each of the Parties
hereto and after the Closing by execution of an instrument in writing signed
on
behalf of Parent and the Surviving Corporation.
9.5 Extension.
At any
time prior to the Closing, Parent, Merger Sub and the Company may, to the extent
legally allowed, may agree in writing to extend the time for the performance
of
any of the obligations of the other party hereto.
9.6 Waiver.
Any
term or condition of this Agreement may be waived at any time by the party
that
is entitled to the benefit thereof, but no such waiver will be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, will be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement
or
by Law or otherwise afforded, will be cumulative and not
alternative.
9.7 Third
Party Beneficiaries.
The
terms and provisions of this Agreement are intended solely for the benefit
of
each Party hereto and their respective successors or permitted assigns, and
it
is not the intention of the Parties to confer third-party beneficiary rights,
and this Agreement does not confer any such rights, upon any other Person other
than any Person entitled to indemnity as described in Article 7.
9.8 No
Assignment; Binding Effect.
Neither
this Agreement nor any right, interest or obligation hereunder may be assigned
(by operation of law or otherwise) by any Party without the prior written
consent of the other Parties and any attempt to do so will be void. Subject
to
the preceding sentence, this Agreement is binding upon, inures to the benefit
of
and is enforceable by the Parties hereto and their respective successors and
assigns.
9.9 Captions.
The
headings and table of contents used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions
hereof.
9.10 Invalid
Provisions.
If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this Agreement will
be
construed and enforced as if such
-33-
illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect
and
will not be affected by the illegal, invalid or unenforceable provision or
by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
9.11 Governing
Law.
This
Agreement will be governed by and construed in accordance with the domestic
laws
of the State of Nevada, without giving effect to any choice of law or conflict
of law provision.
9.12 Construction.
The
Parties hereto agree that this Agreement is the product of negotiation between
sophisticated parties and individuals, all of whom were represented by counsel,
and each of whom had an opportunity to participate in and did participate in,
the drafting of each provision hereof. Accordingly, ambiguities in this
Agreement, if any, will not be construed strictly or in favor of or against
any
Party hereto but rather will be given a fair and reasonable construction without
regard to the rule of contra proferentum.
9.13 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed an original, but all of which together will constitute one and the same
instrument.
9.14 Specific
Performance.
The
Parties hereto agree that irreparable damage would occur in the event that
Section 5.13 of this Agreement is not performed in accordance with its specific
terms or were otherwise breached. It is agreed that the Parties will be entitled
to an injunction or injunctions to prevent breaches of Section 5.13 of this
Agreement and to enforce specifically the terms and provisions thereof in any
court having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
-34-
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
|
By:
Name:
Xxxxxxx Xxxxxxx
Title:
Chief Executive Officer
|
|
|
CC
Merger Corp.
By:
Name:
Xxxxxxx Xxxxxxx
Title:
Chief Executive Officer
|
|
|
Xxxx
Development Corp.
By:
Name:
Xxxxxxx X. Xxxxx
Title:
Chairman and CEO
|
-35-
DISCLOSURE
SCHEDULES
Table
of
Contents
|
Schedule
Number
|
Schedule
Name
|
Page
Number
|
Parent
or Company
|
Status
|
|
3.3(b)
|
List
of all outstanding warrants, options and stock and rights
|
12
|
Company
|
|
|
3.4
|
List
of potential conflicts as it pertains to the agreement
|
13
|
Company
|
|
|
3.5
|
List
of consents and approvals needed
|
13
|
Company
|
|
|
3.6
|
Intellectual
Property
|
13
|
Company
|
|
|
3.9
|
List
of current pending litigation
|
14
|
Company
|
|
|
3.10
|
List
of unfiled taxes
|
14
|
Company
|
|
|
3.12
|
List
of fees for brokers
|
14
|
Company
|
|
|
3.14
|
List
of obligations and liabilities
|
15
|
Company
|
|
|
3.15
|
List
of material changes to the business post the last filed financial
statement
|
15
|
Company
|
|
|
3.16
|
List
of all contracts, leases, etc.
|
15
|
Company
|
|
|
3.18
|
List
of restrictions on the Company to do business
|
16
|
Company
|
|
|
3.19
|
List
of liens and encumbrances on the property
|
16
|
Company
|
|
|
3.20(a)
|
List
of union contracts
|
16
|
Company
|
|
|
3.20(b)
|
List
of employment laws the Company is not in compliance with
|
16
|
Company
|
|
|
3.21(a)
|
List
of employee agreements that are not terminable at will
|
17
|
Company
|
|
|
3.21
(b)
|
List
of employees in violation of their agreements
|
18
|
Company
|
|
|
4.3
(c)
|
List
of equity equivalents
|
19
|
Parent
|
|
|
4.4
|
List
of conflicts as it relates to the Camino parties
|
19
|
Parent
|
|
|
4.5
|
List
of consents and approvals needed
|
19
|
Parent
|
|
|
4.6
|
List
of Intellectual Property
|
19
|
Parent
|
|
|
4.9
|
List
of litigation pending
|
20
|
Parent
|
|
|
4.10
|
List
of unfiled taxes
|
20
|
Parent
|
|
|
4.12
|
List
of third party fees
|
20
|
Parent
|
|
|
4.14
|
List
of undisclosed liabilities and obligations
|
21
|
Parent
|
|
|
4.15
|
List
of material changes
|
21
|
Parent
|
|
|
4.16
(a)
|
List
of contracts
|
21
|
Parent
|
|
|
4.16
(b)
|
List
of contract where the parent is in default
|
21
|
Parent
|
|
|
4.16
(c)
|
List
of potential default or changes
|
21
|
Parent
|
|
|
4.18
|
List
of restrictions as it relates to ordinary business
|
22
|
Parent
|
-36-
|
4.20
(a)
|
List
of union agreements
|
22
|
Parent
|
|
|
4.20(b)
|
List
of employee related issues
|
22
|
Parent
|
|
|
4.21(a)
|
List
of employee agreements that are not terminable at-will
|
22
|
Parent
|
|
|
4.21(b)
|
List
of Parent violations regarding employee agreements
|
22
|
Parent
|
|
|
Exhibit
A
|
Employee
Agreement
|
23
|
Parent
|
|
-37-
Schedule
3.3(b)
Capitalization
Table
-38-
Schedule
3.4
Potential
Conflicts
To
the
Company’s best knowledge, the execution, delivery and performance by the Company
of this Agreement and the Collateral Documents to which it is a party, and
the
consummation of the transactions contemplated hereby and thereby in accordance
with the terms and conditions hereof and thereof, do not and will not conflict
with, constitute a violation or breach of, constitute a default or give rise
to
any right of termination or acceleration of any right or obligation of the
Company.
-39-
Schedule
3.5
Consents
Needed
To
the
Company’s knowledge, the following represents the consents, approvals and
authorizations which may be required to be obtained, made or given by the
Company in connection with the execution, delivery and performance by the
Company of this Agreement:
Holders
of the Senior Secured Notes
Bridgepointe
Holders
of Series A and Series B Preferred Stock
Holders
of Debt
-40-
Schedule
3.6
Intellectual
Property
-41-
Schedule
3.9
List
of Pending Litigation
To
the
Company’s knowledge, there are no outstanding judgments or orders against or
otherwise affecting or related to the Company, its business, assets or
properties, and there is no action, suit, complaint, proceeding or
investigation, judicial, administrative or otherwise would have a Material
Adverse Effect on the Company or a material adverse effect on the validity,
binding effect or enforceability of this Agreement or the Collateral
Documents.
-42-
Schedule
3.10
List
of Unfiled Taxes
To
the
Company’s knowledge and to the knowledge of each of its Subsidiaries the
following represents the status of all federal, state and foreign income and
all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject.
|
Tax
Filing Status
|
||||||
|
Company
|
Tax
Year
|
Jurisdiction
|
Status
|
|||
|
Xxxx
Development Corp.
|
2006
|
Federal
|
Extended
|
|||
|
2005
|
Federal
|
Filed
|
||||
|
Information
Intellect, Inc.
|
2006
|
Federal
|
Extended
|
|||
|
2006
|
Georgia
|
Extended
|
||||
|
2005
|
Federal
|
Filed
|
||||
|
2005
|
Georgia
|
Filed
|
||||
|
ETG,
Inc.
|
2006
|
Federal
|
Extended
|
|||
|
2006
|
Texas
|
Extended
|
||||
|
2005
|
Federal
|
Filed
|
||||
|
2005
|
Texas
|
Filed
|
||||
|
PSD
Software
|
2005
|
Federal
|
Filed
|
|||
|
(sold
in 2005)
|
2005
|
Georgia
|
Filed
|
|||
|
Riptide
Software, Inc.
|
2006
|
Federal
|
Filed
|
|||
|
2006
|
Florida
|
Filed
|
||||
|
2005
|
Federal
|
Filed
|
||||
|
2005
|
Florida
|
Filed
|
||||
|
Bravera,
Inc.
|
2006
|
Federal
|
Extended
|
|||
|
2006
|
Florida
|
Extended
|
||||
|
2006
|
South
Carolina
|
Extended
|
||||
|
2006
|
Virginia
|
Extended
|
||||
|
2006
|
Maryland
|
Extended
|
||||
|
2005
|
Federal
|
Filed
|
||||
|
2005
|
Florida
|
Filed
|
||||
|
2005
|
South
Carolina
|
Filed
|
||||
|
2005
|
Virginia
|
Filed
|
||||
|
2005
|
Maryland
|
Filed
|
As
it
relates to the shell company Xxxx Development Corp, the Company has not filed
any returns as a shell company due to the fact that it was not profitable.
-43-
Schedule
3.12
List
of Company Broker and Third Party Fees
To
the
Company’s best knowledge there is no plan to pay brokers fees or other third
party fees outside of the auditors and lawyers.
-44-
Schedule
3.14
List
of Obligations and Liabilities
To
the
Company’s knowledge, the Company has no obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) other than (i) those set forth
or
reserved against in the Company Financial Statements or if subsequent to the
date of the Company Financial Statements, as otherwise disclosed in filings
made
with the SEC, (ii) those incurred in connection with this Agreement or the
transactions contemplated hereby, (iii) those incurred in the ordinary course
of
business consistent with the Company’s past practice.
-45-
Schedule
3.15
Absence
of Changes
The
following list represents all Material Changes in and by the Company since
the
May 15, 2007 Form10-QSB:
|
1.
|
Asset
sale of Acufile 2 and Intelliplant
software
|
-46-
Schedule
3.16 (a)
List
of Contracts
To
the
Company’s knowledge there are no agreements, contracts, etc. that are not over
$1,000,000 and not reported in our SEC filings or Material to the
Company.
-47-
Schedule
3.16 (b)
Contracts
The
best
of the Company’s knowledge, the Company has complied with and performed, in all
material respects, all of its obligations required to be performed under and
is
not in default with respect to any of the Contracts, as of the date hereof,
nor
has any event occurred which has not been cured which, with or without the
giving of notice, lapse of time, or both, would constitute a default in any
respect there under.
-48-
Schedule
3.16(c)
Contracts
To
the
Company’s best knowledge, the Company knows of and has no reason to believe that
there are any facts or circumstances which would make a material default by
any
party to any contract or obligation likely to occur subsequent to the date
hereof.
-49-
Schedule
3.18
Restrictions
on Business Activities
To
the
Company’s knowledge, there is no agreement or Order binding upon the Company, or
any of its assets or properties which has had or could reasonably be expected
to
have the effect of prohibiting or impairing any current business practice of
the
Company (or future business practice of the Surviving Corporation), any
acquisition of property by the Company or the conduct of business by the Company
as currently conducted or as proposed to be conducted by the Company other
than
in the ordinary course of business or which would not reasonably be expected
to
give rise to a Material Adverse Effect.
-50-
Schedule
3.19
Title
to Property
The
Company has good and marketable title to all of its properties, interests in
properties and assets, real and personal, reflected in the Company Financial
Statements or acquired after the Financial Statement Date (except properties,
interests in properties and assets sold or otherwise disposed of since the
Financial Statement Date in the ordinary course of business), or with respect
to
leased properties and assets, valid leasehold interests in, free and clear
of
all mortgages, liens, pledges, charges or encumbrances of any kind or
character.
-51-
Schedule
3.20(a)
Labor
Relations
To
the
best of the Company’s knowledge, the Company has no collective bargaining or
union contracts or agreements.
-52-
Schedule
3.20 (b)
Violation
of Employment Laws
To
the
Company’s knowledge, the Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practices; there are no charges of discrimination or unfair labor practice
charges, or complaints against the Company pending or threatened before any
governmental or regulatory agency or authority; and, there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against or
affecting the Company.
-53-
Schedule
3.21(a)
Employee
Agreements Not Terminable At-Will
To
the
best of the Company’s knowledge, the Company has no employment or consulting
agreements or arrangements, written or oral, which are not terminable at the
will of the Company
-54-
Schedule
3.21(b)
Employment
Agreement Violations
To
the
best of the Company’s knowledge, no employee of the Company is in violation of
any employment agreement or restrictive covenant.
-55-
Schedule
4.3 (c)
Capitalization
Common
Stock 100,000,000 shares authorized and 14,258,756 issued and
outstanding.
Preferred
Stock 2,000,000 shares authorized no shares currently issued.
The
following table sets forth certain information regarding the beneficial
ownership of the Company’s Common Stock as of September 30, 2006 by (I) each
person who is known by the Company to own beneficially more than 5% of the
Company’s outstanding Common Stock; (ii) each of the Company’s directors; (iii)
the named Executive Officers; and (iv) executive officers and directors of
the
Company as a group:
|
COMMON
STOCK (1)
|
|||||||
|
NUMBER
OF
|
PERCENTAGE
OF
|
||||||
|
NAME
AND ADDRESS (2)
|
SHARES
|
OUTSTANDING
(3)
|
|||||
|
Xxxxxx
Xxxxxxx (4)
|
----
|
----
|
|||||
|
Xxxxxx
Xxxxx
|
268,000
(5
|
)
|
1.85
|
||||
|
Xxxxxxx
Xxxxxxxxx (4)
|
----
|
----
|
|||||
|
Xxx
Xxxxx
|
----
|
----
|
|||||
|
Xxxxxxx
Xxxxxxx
|
1,205,770
(6
|
)
|
7.91
|
||||
|
Xxxxxxx
Xxxxxxx
|
741,785
(7
|
)
|
4.96
|
||||
|
Renaissance
Capital Growth & Income Fund III, Inc.
|
5,321,226
(8
|
)
|
33.17
|
||||
|
0000
X. Xxxxxxx Xxxxxxxxxx
|
|||||||
|
Xxxxx
000
|
|||||||
|
Xxxxxx,
Xxxxx 00000
|
|||||||
|
Renaissance
US Growth & Income Trust PLC
|
4,667,698
(9
|
)
|
29.32
|
||||
|
0000
X. Xxxxxxx Xxxxxxxxxx
|
|||||||
|
Xxxxx
000
|
|||||||
|
Xxxxxx,
Xxxxx 00000
|
|||||||
|
BFSUS
Special Opportunities Trust PLC
|
7,062,282
(10
|
)
|
37.15
|
||||
|
0000
X. Xxxxxxx Xxxxxxxxxx
|
|||||||
|
Xxxxx
000
|
|||||||
|
Xxxxxx,
Xxxxx 00000
|
|||||||
|
All
executive officers and directors as a group (5 persons)
|
2,215,555
|
13.68
|
|||||
-56-
| (1) |
As
used herein, the term beneficial ownership is defined by Rule 13d-3
under
the Securities Exchange Act of 1934 as consisting of sole or shared
voting
power and/or sole or shared investment power subject to community
property
laws where applicable.
|
| (2) |
Except
as indicated, the address of each person is c/o the Company at 000
Xxxxxxxxx Xxxx, #000, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx
00000.
|
| (3) |
Based
on 14,258,756 shares of Common Stock outstanding, as of September
30,
2006.
|
| (4) |
Does
not include any shares owned by the Renaissance Funds described in
the
table. Xx. Xxxxxxx is an executive officer of Renaissance Capital
Group,
Inc. (“RCG”) which is the investment advisor to the Renaissance Funds and
BFS US and the investment manager of Renaissance U.S.
|
| (5) |
Includes
four year non-qualified options from the Company to purchase 50,000
shares
at $.95 per share, 35,000 shares from the Company at $.61 per share,
85,000 shares from the Company at $.44 per share and options to purchase
85,000 shares from the Company at $0.41 per share, does not include
35,000
options not currently exercisable.
|
| (6) |
Includes
currently exercisable options to purchase 48,000 shares from the
Company
at $.56 per share, 120,000 shares from the Company at $3.87 per share,
60,000 shares from the Company at $5.00 per share, 120,000 shares
from the
Company at $1.55 per share, 50,000 shares from the Company at $.95
per
share, 100,000 shares from the Company at $.61 per share, 100,000
shares
from the Company at $.44 per share, options to purchase 300,000 shares
at
$0.55 per share, options to purchase 85,000 shares at $0.41 per share
and
does not include 100,000 options not currently exercisable.
|
| (7) |
Includes
currently exercisable options from the Company to purchase 700,000
shares
at $0.63 per share. Does not include 700,000 options not currently
exercisable.
|
| (8) |
RCG
is the investment advisor of the Renaissance Funds. The Common Shares
deemed to be beneficially owned by the Renaissance Capital Growth
and
Income Fund III, are comprised of 3,539,414 shares of our Common
Stock,
options to purchase 26,500 shares at $0.95 per share, options to
purchase
18,550 shares at $0.61 per share, options to purchase 38,250 shares
at
$0.44 per share, options to purchase 37,400 shares at $0.41 per share,
warrants to purchase 540,541 shares at $0.74 per share, warrants
to
purchase 540,540 shares at $1.11 per share, warrants to purchase
471,698
shares at $0.53 per share, warrants to purchase 58,333 shares at
$1.14 per
share and warrants to purchase 50,000 shares at $0.86 per share.
All of
such securities are owned by the Renaissance Funds as described
herein.
|
| (9) |
RCG
is the Investment Manager of Renaissance US. The Common Shares deemed
to
be beneficially owned by the Renaissance US Fund are comprised of
3,006,585 shares of our Common Stock and warrants to purchase 540,541
shares at $0.74 per share, warrants to purchase 540,540 shares at
$1.11
per share, warrants to purchase 471,698 shares at $0.53 per share,
warrants to purchase 58,334 shares at $1.14 per share and warrants
to
purchase 50,000 shares at $0.86 per
share.
|
| (10) |
RCG
is the Investment Advisor for BFS US. The Common Shares deemed to
be
beneficially owned by BFS US are comprised of 2,312,818 shares of
Common
Stock and 3,088,352 shares of Common Stock issuable upon conversion
of an
aggregate of $1,750,000 of 6% Convertible Debenture at a weighted
average
conversion price of $0.63 per share. Also includes warrants to purchase
540,541 shares at $0.74 per share, warrants to purchase 540,540 shares
at
$1.11 per share, warrants to purchase 471,698 shares at $0.53 per
share,
warrants to purchase 58,333 shares at $1.14 per share and warrants
to
purchase 50,000 shares at $0.86 per
share.
|
The
following table summarizes information about employee’s stock options
outstanding at June 30, 2007.
|
Outstanding
|
Exercisable
|
|||||||||||||||
|
Weighted
Average
|
Weighted
Average
|
|||||||||||||||
|
Exercise
|
Life
|
Exercise
|
Exercise
|
|||||||||||||
|
Price
|
Options
|
(Months)
|
Price
|
Options
|
Price
|
|||||||||||
|
$0.41
|
438,000
|
30
|
$
|
0.41
|
413,500
|
$
|
0.41
|
|||||||||
|
0.44
|
388,000
|
30
|
0.44
|
371,000
|
0.44
|
|||||||||||
|
0.52
|
85,000
|
30
|
0.52
|
85,000
|
0.52
|
|||||||||||
|
0.55
|
302,000
|
30
|
0.55
|
301,000
|
0.55
|
|||||||||||
|
0.56
|
146,000
|
30
|
0.56
|
146,000
|
0.56
|
|||||||||||
|
0.61
|
305,000
|
30
|
0.61
|
305,000
|
0.61
|
|||||||||||
|
0.62
|
70,000
|
34
|
0.62
|
70,000
|
0.62
|
|||||||||||
-57-
|
0.63
|
1,400,000
|
30
|
0.63
|
1,050,000
|
0.63
|
|||||||||||
|
0.87
|
2,000
|
42
|
0.87
|
500
|
0.87
|
|||||||||||
|
0.90
|
70,000
|
30
|
0.90
|
70,000
|
0.90
|
|||||||||||
|
0.95
|
259,000
|
30
|
0.95
|
259,000
|
0.95
|
|||||||||||
|
1.01
|
5,000
|
42
|
1.01
|
1,250
|
1.01
|
|||||||||||
|
1.14
|
365,000
|
30
|
1.14
|
91,250
|
1.14
|
|||||||||||
|
1.25
|
25,000
|
30
|
1.25
|
25,000
|
1.25
|
|||||||||||
|
1.30
|
15,000
|
30
|
1.30
|
15,000
|
1.30
|
|||||||||||
|
1.55
|
300,000
|
30
|
1.55
|
300,000
|
1.55
|
|||||||||||
|
3.38
|
2,000
|
30
|
3.38
|
2,000
|
3.38
|
|||||||||||
|
3.56
|
|
52,000
|
30
|
3.56
|
52,000
|
3.56
|
||||||||||
|
3.87
|
314,500
|
30
|
3.87
|
314,500
|
3.87
|
|||||||||||
|
5.00
|
150,000
|
30
|
5.00
|
150,000
|
5.00
|
|||||||||||
|
$0.41-$5.00
|
4,693,500
|
$ |
1.10
|
4,022,000
|
$ |
1.14
|
The
following table summarizes information about warrants outstanding at June 30,
2007.
| Outstanding |
Exercisable
|
|||||||||||||||
|
Weighted
Average
|
Weighted
Average
|
|||||||||||||||
|
Exercise
|
Life
|
Exercise
|
Exercise
|
|||||||||||||
|
Price
|
Warrants
|
(Months)
|
Price
|
Warrants
|
Price
|
|||||||||||
|
$
0.53
|
1,415,094
|
25
|
0.53
|
1,415,094
|
$
|
0.53
|
||||||||||
|
0.74
|
1,621,623
|
18
|
0.74
|
1,621,623
|
0.74
|
|||||||||||
|
0.86
|
150,000
|
44
|
0.86
|
150,000
|
0.86
|
|||||||||||
|
1.11
|
1,621,620
|
18
|
1.11
|
1,621,620
|
1.11
|
|||||||||||
|
1.14
|
175,000
|
40
|
1.14
|
175,000
|
1.14
|
|||||||||||
|
$0.53-$1.14
|
4,983,337
|
$
|
0.82
|
4,983,337
|
$ | 0.82 | ||||||||||
-58-
Schedule
4.4
$1,000,000
Convertible Debenture Agreement, originated November 27, 2002
Matures
on November 27, 2007
$750,000
Convertible Debenture Agreement, originated July 2003, Matures on
November
27, 2007
$750,000
Secured Loan, Matures on January 19, 2008.
$100,000
Secured Convertible Note, Matures on November 7, 2007
$100,000
Secured Convertible Note, Matures on November 7, 2007
The
above
agreements and associated rights documents have conflicts relating to any change
of ownership.
-59-
Schedule
4.5
Consent
of the CaminoSoft Corp. Shareholders.
Consent
of the CaminoSoft Corp. Board of Directors.
Consent
of the debt holders of $2.7 million in total CaminoSoft Corp. debt as listed
below.
$1,000,000
Convertible Debenture Agreement, originated November 27, 2002
Matures
on November 27, 2007
$750,000
Convertible Debenture Agreement, originated July 2003, Matures on
November
27, 2007
$750,000
Secured Loan, Matures on January 19, 2008.
$100,000
Secured Convertible Note, Matures on November 7, 2007
$100,000
Secured Convertible Note, Matures on November 7, 2007
-60-
Schedule
4.6
CaminoSoft
Corp. Intellectual Property used as collateral to secure debt financing listed
below.
$1,000,000
Convertible Debenture Agreement, originated November 27, 2002
Matures
on November 27, 2007
$750,000
Convertible Debenture Agreement, originated July 2003, Matures on
November
27, 2007
$750,000
Secured Loan, Matures on January 19, 2008.
$100,000
Secured Convertible Note, Matures on November 7, 2007
$100,000
Secured Convertible Note, Matures on November 7, 2007
-61-
Schedule
4.9
None
-62-
Schedule
4.10
None
-63-
Schedule
4.12
None
-64-
Schedule
4.14
Undisclosed
Liabilities:
Non
Book
vacation accrual named executives. Payment of Vacation pay is normal based
on
historical practice the listed liabilities although tracked by the company
for
hours and number of vacation days used the liability balance of the accrued
vacation amounts were not carried as liabilities on the Company’s financial
statements.
Xxxx
Xxxxxxx balance
due as of July 31, 2007 = $11,209.49
Xxxxx
Xxxxxxx balance due as of July 31, 2007 = $63,668.80
|
VACATION
ACCRUAL SCHEDULE
|
|||||
|
NAME:
|
XXXX
XXXXXXX
|
|
|||
|
DOH:
|
04/02/04
|
||||
|
DOT:
|
|
||||
|
MONTH/
|
|
HOURS
|
HOURS
|
ACCRUED
|
LIABILITY
|
|
YEAR
|
|
ACCRUED
|
TAKEN
|
BALANCE
|
AMOUNT
|
|
**BAL.
FRWRD FROM DEC. 31, 2006**
|
92.11
|
||||
|
01/31/07
|
X
|
6.67
|
0.00
|
98.78
|
7,977.47
|
|
02/28/07
|
X
|
6.67
|
0.00
|
105.45
|
8,516.14
|
|
03/31/07
|
X
|
6.67
|
0.00
|
112.12
|
9,054.81
|
|
04/30/07
|
X
|
6.67
|
0.00
|
118.79
|
9,593.48
|
|
05/31/07
|
X
|
6.67
|
0.00
|
125.46
|
10,132.15
|
|
06/30/07
|
X
|
6.67
|
0.00
|
132.13
|
10,670.82
|
|
07/31/07
|
X
|
6.67
|
0.00
|
138.80
|
11,209.49
|
|
08/31/07
|
|
6.67
|
|
|
0.00
|
|
09/30/07
|
|
6.67
|
|
|
0.00
|
|
10/31/07
|
|
6.67
|
|
|
0.00
|
|
11/30/07
|
|
6.67
|
|
|
0.00
|
|
12/31/07
|
|
6.67
|
|
|
0.00
|
|
Balance
|
0.00
|
0.00
|
|||
|
Vacation
taken:
|
Current
Year
|
0.00
|
|||
-65-
|
VACATION
ACCRUAL SCHEDULE
|
|||||
|
NAME:
|
XXXXX
XXXXXXX
|
|
|||
|
DOH:
|
03/01/92
|
||||
|
DOT:
|
|
||||
|
MONTH/
|
|
HOURS
|
HOURS
|
ACCRUED
|
LIABILITY
|
|
YEAR
|
|
ACCRUED
|
TAKEN
|
BALANCE
|
AMOUNT
|
|
**BAL.
FRWRD FROM DEC. 31, 2006**
|
805.63
|
||||
|
01/31/07
|
X
|
13.33
|
8.00
|
810.96
|
58,478.33
|
|
02/28/07
|
X
|
13.33
|
0.00
|
824.29
|
59,439.55
|
|
03/31/07
|
X
|
13.33
|
0.00
|
837.62
|
60,400.78
|
|
04/30/07
|
X
|
13.33
|
0.00
|
850.95
|
61,362.00
|
|
05/31/07
|
X
|
13.33
|
0.00
|
864.28
|
62,323.23
|
|
06/30/07
|
X
|
13.33
|
8.00
|
869.61
|
62,707.58
|
|
07/31/07
|
X
|
13.33
|
0.00
|
882.94
|
63,668.80
|
|
08/31/07
|
|
13.33
|
|
|
0.00
|
|
09/30/07
|
|
13.33
|
|
|
0.00
|
|
10/31/07
|
|
13.33
|
|
|
0.00
|
|
11/30/07
|
|
13.33
|
|
|
0.00
|
|
12/31/07
|
|
13.33
|
|
|
0.00
|
|
Balance
|
0.00
|
0.00
|
|||
|
Vacation
taken:
|
Current
Year
|
16.00
|
|||
-66-
Schedule
4.15
None
-67-
Schedule
4.16 (a)
$1,000,000
Convertible Debenture Agreement, originated November 27, 2002
Matures
on November 27, 2007
$750,000
Convertible Debenture Agreement, originated July 2003, Matures on
November
27, 2007
$750,000
Secured Loan, Matures on January 19, 2008.
$100,000
Secured Convertible Note, Matures on November 7, 2007
$100,000
Secured Convertible Note, Matures on November 7, 2007
-68-
Schedule
4.16 (b)
None
-69-
Schedule
4.16 (c)
None
-70-
Schedule
4.18
CaminoSoft
Corp. Intellectual Property used as collateral to secure debt financing listed
below.
$1,000,000
Convertible Debenture Agreement, originated November 27, 2002
Matures
on November 27, 2007
$750,000
Convertible Debenture Agreement, originated July 2003, Matures on
November
27, 2007
$750,000
Secured Loan, Matures on January 19, 2008.
$100,000
Secured Convertible Note, Matures on November 7, 2007
$100,000
Secured Convertible Note, Matures on November 7, 2007
-71-
Schedule
4.20(a)
None
-72-
Schedule
4.20(b)
None
-73-
Schedule
4.21(a)
None
-74-
Schedule
4.21(b)
None
-75-
