EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made
this 25th day of March, 2008, by and among Kayenta Kreations,
Inc., a Nevada corporation ("Parent"), Kayenta Subsidiary Corp.
("Merger Sub"), Geospatial Mapping Systems, Inc., a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxx, an individual
("Parent Stockholder").
RECITALS
WHEREAS, the Company is authorized to issue 90,000,000
shares of its common stock, par value $.001 per share (the
"Company Common Stock") of which 20,074,188 shares ("Company
Shares") are issued and outstanding; and
WHEREAS, the Company is authorized to issue 10,000,000
shares of its preferred stock, par value $.001 per share (the
"Company Preferred Stock") of which no shares are issued and
outstanding; and
WHEREAS, Parent is authorized to issue 50,000,000 shares of
common stock, par value $.001 per share (the "Parent Common
Stock") of which 1,316,292 shares (the "Issued Parent Shares")
are issued and outstanding; and
WHEREAS, Parent shall request its stockholders to approve a
2.8 for 1 forward stock split (the "Forward Split"), resulting in
no more than 3,685,618 shares of Parent Common Stock outstanding
at Closing; and
WHEREAS, Merger Sub is a newly formed, wholly-owned
subsidiary of Parent and is authorized to issue 1,000 shares of
common stock, par value $.001 (the "Merger Sub Shares"), all of
which such Merger Sub Shares are issued and outstanding and owned
by Parent; and
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved and deemed it advisable
to enter into this Agreement which contemplates the merger of
Merger Sub with and into the Company under the terms and
conditions hereinafter set forth (the "Merger"), the Merger to be
effected pursuant to the Delaware General Corporation Law (the
"DGCL") and the Merger to be a tax free reorganization under
Section 368, and other applicable sections of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Parent Stockholder, Merger Sub and the
Company desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein, Parent, Parent Stockholder, Merger Sub and
the Company agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Benefit Plan" shall mean: (a) each
"employee benefit plan," as such term is defined in Section 3(3)
of ERISA, (b) each plan that would be an "employee benefit plan,"
as such term is defined in Section 3(3) of ERISA, if it was
subject to ERISA, such as foreign plans and plans for directors,
(c) each stock bonus, stock ownership, stock option, stock
purchase, stock appreciation rights, phantom stock, or other
stock plan (whether qualified or nonqualified), and (d) each
bonus or incentive compensation plan; provided, however, the term
"Benefit Plan" shall not include (i) routine employment policies
and procedures or payroll plans developed and applied in the
ordinary course of business and consistent with past practice,
including wage, vacation, holiday, and sick or other leave
policies, (ii) workers' compensation insurance, and (iii)
directors' and officers' liability insurance.
Section 1.2 "Certificate" shall have the meaning
ascribed to such term in Section 2.3.
Section 1.3 "Certificate of Merger" shall have the
meaning ascribed to such term in Section 2.2.
Section 1.4 "Closing" shall have the meaning
ascribed to such term in Section 2.2.
Section 1.5 "Closing Date" shall have the meaning
ascribed to such term in Section 2.2.
Section 1.6 "Code" shall have the meaning ascribed
to such term in the Recitals.
Section 1.7 "Commission" shall mean the Securities
and Exchange Commission.
Section 1.8 "Company Common Stock" shall have the
meaning ascribed to such term in the Recitals.
Section 1.9 "Company Converted Option" shall have
the meaning ascribed to such term in Section 2.5.
Section 1.10 "Company Disclosure Schedule" shall mean
the schedule of exceptions to the representations and warranties
of the Company contained in Article III which is attached hereto
and incorporated by reference herein.
Section 1.11 "Company Employee Option" shall mean
each right to purchase Company Common Stock granted pursuant to
any equity compensation plan maintained by the Company to any
participant therein, that is outstanding and unexercised
immediately prior to or as of
the Effective Time.
Section 1.12 "Company Financial Statements" shall
mean the consolidated audited balance sheets of the Company as of
December 31, 2007 and the related consolidated audited statements
of income and statements of cash flow of the Company for the
fiscal year ended December 31, 2007.
Section 1.13 "Company Preferred Stock" shall have the
meaning ascribed to such term in the Recitals.
Section 1.14 "Company Warrant" shall mean each right
to purchase Company Common Stock, granted pursuant to an
agreement with a third party, other than a Company Employee
Option, that is outstanding and unexercised immediately prior to
or as of the Effective Time.
Section 1.14 "Consent" shall have the meaning
ascribed to it in Section 3.20.
Section 1.15 "Default" shall mean (a) a material
breach or default, or (b) the occurrence of an event that with
the passage of time or the giving of notice or both would
constitute a material breach or default.
Section 1.16 "DGCL" shall have the meaning ascribed
to such term in the Recitals.
Section 1.17 "Dissenting Shares" shall have the
meaning ascribed to such term in Section 2.10.
Section 1.18 "Effective Time" shall have the meaning
ascribed to such term in Section 2.2.
Section 1.19 "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
Section 1.20 "Evaluation Date" shall have the meaning
ascribed to such term in Section 4.27.
Section 1.21 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Section 1.22 "Exchange Agent" shall have the meaning
ascribed to such term in Section 2.4.
Section 1.23 "Exchange Fund" shall have the meaning
ascribed to such term in Section 2.4.
Section 1.24 "Exchange Ratio" shall have the meaning
ascribed to such term in Section 2.3.
Section 1.25 "Excluded Shares" shall have the meaning
ascribed to such term in Section 2.3.
Section 1.26 "Forward Split" shall have the meaning
ascribed to such term in the Recitals.
Section 1.27 "GAAP" shall mean generally accepted
accounting principles as recognized by the American Institute of
Certified Public Accountants, from time to time.
Section 1.28 "Governmental Entity" shall mean any
federal, state, local or foreign government, any political
subdivision thereof, or any court, administrative or regulatory
agency, department, instrumentality, body or commission or other
governmental authority or agency, domestic or foreign.
Section 1.29 "Holder" shall have the meaning ascribed
to such term in Section 2.4.
Section 1.30 "Initial Parent Common Stock
Registration" shall have the meaning ascribed to such term in
Section 5.12(c).
Section 1.31 "Intellectual Property Rights" shall
mean all material proprietary technology, patents, trademarks,
trade names, service marks, and registered copyrights, and all
pending applications or current registrations for any of the
foregoing, and all licenses granted to any party or any of its
subsidiaries in the conduct of their business, together with
trade secrets and know how used in the conduct of their business,
and all goodwill associated with the foregoing.
Section 1.32 "IRS" shall mean the Internal Revenue
Service.
Section 1.33 "Issued Parent Shares" shall have the
meaning ascribed to such term in the Recitals.
Section 1.34 "Material Adverse Effect" shall mean any
change or event that, individually or in the aggregate, has had,
or would reasonably be expected to have, a material adverse
effect on the business, results of operations or financial
condition of the Company, Parent, or Merger Sub, as the case may
be, taken as a whole.
Section 1.35 "Material Contracts" shall mean all
agreements, contracts, arrangements, understandings and
commitments, whether written or oral, to which the Company, is a
party, or from which the Company will receive substantial
benefits and which are material to the Company.
Section 1.36 "Merger" shall have the meaning ascribed
to such term in Section 2.1.
Section 1.37 "Merger Consideration" shall have the
meaning ascribed to such term in Section 2.3.
Section 1.38 "Merger Sub Shares" shall have the
meaning ascribed to such term in the Recitals.
Section 1.39 "Parent Board Member" shall mean Xxxxxx
Xxxxx, the sole member of the Board of Directors of Parent.
Section 1.40 "Parent Common Stock" shall have the
meaning ascribed to such term in the Recitals.
Section 1.41 "Parent Disclosure Schedule" shall mean
the schedule of exceptions to the representations and warranties
of Parent, Parent Stockholder and Merger Sub contained in Article
IV which is attached hereto and incorporated by reference herein.
Section 1.42 "Parent Financial Statements" shall mean
Parent's balance sheets, statement of operations, statement of
stockholders' equity and statement of cash flows, all as of
December 31, 2007 and Parent's audited financial statements for
the years ended December 31, 2007 and 2006, together with any
accompanying notes.
Section 1.43 "Person" shall mean any individual,
corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, Governmental Entity or other
entity of any kind or nature.
Section 1.44 "Proposal" shall have the meaning
ascribed to it in Section 5.9.
Section 1.45 "Required Shareholder Approval" shall
have the meaning ascribed to such term in Section 6.1(a).
Section 1.46 "SEC Reports" shall mean all reports
required to be filed with the SEC under the Securities Act and
the Exchange Act.
Section 1.47 "Securities Act" shall mean the
Securities Act of 1933, as amended.
Section 1.48 "Stock Option Plan" shall have the
meaning ascribed to such term in Section 5.1.
Section 1.49 "Surviving Corporation" shall mean
Geospatial Mapping Systems, Inc., the surviving entity of the
Merger.
Section 1.50 "Takeover Statute" shall have the
meaning ascribed to such term in Section 5.9.
Section 1.51 "Taxes" shall mean means (i) federal,
state, county, local, foreign and other taxes, assessments,
charges, duties, fees, levies, imposts or other similar charges
imposed by a Taxing Authority, including all income, franchise,
profits, capital gains, capital stock, transfer, gross receipts,
production, customs, sales, use, transfer, service, occupation,
ad valorem, property, excise, severance, windfall profits,
premium, stamp, license, payroll, employment, social security,
workers compensation, unemployment, disability, environmental,
alternative minimum, add-on, value-added, capital taxes,
withholding and other taxes, assessments, deficiencies, charges,
duties, fees, levies, imposts or other similar charges of any
kind whatsoever (whether payable directly or by withholding and
whether or not requiring the filing of a Tax Return), and all
estimated taxes, deficiency assessments, additions to tax,
interest, and penalties (civil or criminal), additional amounts
imposed by any Taxing Authority and interest on or in respect of
a failure to comply with any requirement relating to such taxes
or any Tax Return and expenses incurred in connection with the
determination, settlement or litigation of any tax liability;
(ii) any liability of any Person pursuant to Treasury regulations
Section 1.1502-6 (or any similar provision of foreign, state or
local law) for the payment of amounts of a type described in
clause (i) above as a result of being a member of a group of
companies that files their Tax Returns on a consolidated,
combined, affiliated, unified, or group basis, or as a result of
any obligation of such Person under any Tax sharing arrangement
or agreement whether imposed or assessed directly on a Person (or
the business, assets, operations or items of income, gain or
losses of Person), or (iii) any liability of any Person for the
payment of amounts with respect to payments of a type described
in clauses (i) and (ii) above as a transferee, successor, or
payable pursuant to a contractual obligation or otherwise.
Section 1.52 "Taxing Authority" shall mean shall mean
the IRS or any other federal, state, cantonal, provincial,
county, local or national Governmental Entity (whether domestic
or foreign) or any subdivision or taxing agency thereof
(including a United States possession).
Section 1.53 "Tax Return" shall mean any form,
report, return, document, declaration or other information or
filing required to be supplied (including any electronic
submissions) to any Taxing Authority or jurisdiction (foreign or
domestic) with respect to Taxes, including any elections,
information returns or reports, amended or corrected returns,
reports, statements or other documents, any documents required to
accompany the required filings, any principal documentation (as
described in Treasury regulations Section 1.6662-6(d)(2)(iii)(B)
or similar state or foreign jurisdiction provisions) that was
prepared to support transfer pricing methodologies, any documents
with respect to or accompanying payments of estimated Taxes, any
documents with respect to or accompanying requests for the
extension of time in which to file any such form, report, return,
document, declaration or other information, and including, where
permitted or required, combined, consolidated or unitary returns
for any group of entities that includes any of the parties.
Section 1.54 "Termination Date" shall mean April 30,
2008.
Section 1.55 "Terms Generally". The words "hereby,"
"herein," "hereof," "hereunder" and words of similar import refer
to this Agreement as a whole (including any Exhibits hereto and
Schedules delivered herewith) and not merely to the specific
section, paragraph or clause in which such word appears. All
references herein to Sections, Exhibits and Schedules shall be
deemed references to Sections of, Exhibits to and Schedules
delivered with this Agreement unless the context shall otherwise
require. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The
definitions given for terms in this Article I and elsewhere in
this Agreement shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. Except as otherwise expressly provided
herein, all references to "Dollars" or "$" shall be deemed
references to the lawful money of the United States of America.
All references herein to "parties" shall be to the parties hereto
unless the context shall otherwise require.
ARTICLE II
THE MERGER
Section 2.1 The Merger; Surviving Corporation. Upon
the terms and subject to the satisfaction or waiver of the
conditions hereof, and in accordance with the applicable
provisions of this Agreement and the DGCL, at the Effective Time,
Merger Sub shall be merged with and into the Company (the
"Merger"). Following the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall
continue as the Surviving Corporation and as a wholly-owned
subsidiary of Parent. The Company's name, identities,
certificate of incorporation, bylaws, existence, purposes,
powers, objects, franchises, rights and immunities shall be
unaffected and unimpaired by the Merger, except as described
herein and in the Certificate of Merger.
Section 2.2 Effective Time; Closing. Subject to the
terms and conditions of this Agreement, the closing of the
transactions contemplated hereby (the "Closing") will be held at
the offices of Winston & Xxxxxx LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, X.X. 00000 at 11:00 a.m. eastern time within two (2)
days after such date that all the conditions set forth in Article
VI have either been satisfied or waived or such other place and
time as Parent and the Company may agree to in writing (the
"Closing Date"). On the Closing Date, the parties hereto shall
cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as is required by, and
executed in accordance with, the relevant provisions of Delaware
law. The Certificate of Merger shall be in the form of Exhibit A
hereto with such changes therein as the Boards of Directors of
each of Parent and the Company shall mutually approve. The
Merger shall become effective at such time at which such
Certificate of Merger shall be duly filed with the Secretary of
State of the State of Delaware, or at such later time reflected
in such Certificate of Merger as shall be agreed by Parent and
the Company in writing (the time that such Merger becomes
effective, the "Effective Time").
Section 2.3. Treatment of the Company Shares.
(a) At the Effective Time, the Company Shares
shall be converted by virtue of the Merger into an aggregate of
20,074,188 Parent Shares, via each Company Share issued and
outstanding immediately prior to the Effective Time (other than
Company Shares (i) held in treasury by the Company or (ii) that
are Dissenting Shares (collectively, the "Excluded Shares"))
being converted on the basis of one (1) Parent Share for each
Company Share (the "Exchange Ratio"), without any action on the
part of the holders thereof (the "Merger Consideration"). All
outstanding options, warrants or similar outstanding Company
securities shall likewise be converted to like securities of
Parent. Upon such conversion, Company Shares so converted (via
the surrender thereof pursuant to Section 2.4 of this Agreement)
shall be owned of record and beneficially by Parent. Upon
conversion, any fractional Parent Shares resulting from
conversion shall be rounded up to the next highest whole number.
(b) At the Effective Time, each Company Share
converted into the Merger Consideration pursuant to
Section 2.3(a) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each Certificate that immediately prior to the Effective Time
represented any such Company Shares (each, a "Certificate")
(other than Certificates representing Excluded Shares) shall
thereafter represent only the right to receive the Merger
Consideration upon surrender of such Certificate in accordance
with this Article II.
(c) Subject to Section 2.10, each Excluded Share
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and shall
cease to exist.
Section 2.4 Exchange of Certificates for Merger
Consideration.
(a) Exchange Agent and Procedures
(i) Company and Parent acknowledge and agree
that Parent's existing transfer agent, Interwest Transfer
Company, Inc., shall act as paying agent (the "Exchange Agent")
for purposes of this Agreement. At or prior to the Effective
Time, Parent shall deposit, or shall cause the Surviving
Corporation to deposit, with the Exchange Agent, separate and
apart from its other funds, as a trust fund for the Holders of
record of Certificates (each, a "Holder"), the aggregate Merger
Consideration, consisting of Certificates representing the Parent
Common Stock to be issued as Merger Consideration (such
Certificates being hereinafter referred to as the "Exchange
Fund"). Except as contemplated by Section 2.4(a)(iii) , the
Exchange Fund will not be used for any other purpose.
(ii) Between the date of this Agreement and
such time as is promptly after the Effective Time, the Company or
the Surviving Corporation shall mail, or shall cause the Exchange
Agent to mail to each Holder (A) a letter of transmittal (in a
form approved by the Company), which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and which
shall be in such form and have such
other customary provisions as Parent and the Surviving
Corporation may reasonably specify and (B) instructions for use
in effecting the surrender of the Certificates in exchange for
the Merger Consideration to which such Holder is entitled
pursuant to Section 2.3(a).
(iii) Each Holder of a Certificate
representing any Company Common Stock that has been converted
into a right to receive the Merger Consideration set forth in
Section 2.3(a) shall, upon surrender of such Certificate for
cancellation to the Exchange Agent, together with a properly
completed letter of transmittal, duly executed in accordance with
the instructions thereto, be entitled to receive in exchange
therefor a Certificate or Certificates representing that number
of whole shares of Parent Common Stock to which such Holder is
entitled pursuant to Section 2.3(a) after taking into account
all Company Common Stock held by such Holder and the
Certificate(s) so surrendered shall forthwith be marked canceled.
No interest will be paid or accrued on any Merger Consideration
payable upon due surrender of the Certificates. The Exchange
Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose
to effect an orderly exchange thereof in accordance with normal
exchange practices.
(iv) In the event of the surrender of a
Certificate that is not registered in the transfer records of the
Company under the name of the Person surrendering such
Certificate, the Merger Consideration shall be paid to such a
transferee if such Certificate is presented to the Exchange Agent
and such Certificate is duly endorsed or is accompanied by all
documents required to evidence and effect such transfer and to
evidence that any applicable stock transfer Taxes have been paid.
If any Merger Consideration is to be delivered to a Person whose
name is other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such
delivery that the Person requesting such delivery shall pay any
transfer or other Taxes required to be paid by reason of such
delivery to a Person whose name is other than that of the Holder
of the Certificate surrendered or shall establish to the
reasonable satisfaction of Parent that such Tax has been paid or
is not applicable.
(b) Closing of Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers of the
Company Common Stock outstanding immediately prior to the
Effective Time thereafter on the records of the Company. From and
after the Effective Time, the holders of Certificates
representing Company Common Stock outstanding immediately prior
to the Effective Time will cease to have any rights with respect
to such Company Common Stock, except as otherwise provided herein
or by applicable law. If, after the Effective Time, any
Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be marked canceled and
exchanged as provided in this Article II.
(c) Termination of Exchange Fund. Any portion of
the Exchange Fund that remains unclaimed by the Holders and other
eligible Persons in accordance with this Article II following one
(1) year after the Effective Time shall be delivered to the
Surviving Corporation, upon
demand, and any Holder who has not
previously complied with this Article II shall thereafter look
only to the Surviving Corporation for, and the Surviving
Corporation shall remain liable for, payment of its claim for
Merger Consideration.
(d) Lost, Stolen or Destroyed Certificates. In
the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond
in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange
Agent will issue the Merger Consideration in exchange for such
lost, stolen or destroyed Certificate. Delivery of such affidavit
and the posting of such bond shall be deemed delivery of a
Certificate with respect to the relevant Company Common Stock for
purposes of this Article II .
(e) Distributions with Respect to Unexchanged
Parent Common Shares. No dividends or other distributions
declared or made after the Effective Time with respect to Parent
Common Stock with a record date after the Effective Time will be
paid to the Holder of any unsurrendered Certificate with respect
to Parent Common Stock represented thereby, until the Holder of
such Certificate surrenders such Certificate. Subject to the
effect of escheat, tax or other applicable laws, following
surrender of such Certificate, there will be paid to the Holder
of the certificates representing whole Parent Common Stock issued
in exchange therefor, without interest, at the appropriate
payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable
with respect to such whole Parent Common Stock.
(f) No Further Rights in Company Common Shares.
All Parent Common Stock issued upon conversion of the Company
Common Stock in accordance with the terms hereof will be deemed
to have been issued in full satisfaction of all rights pertaining
to such Company Common Stock.
(g) No Liability. None of Parent, Merger
Sub, the Surviving Corporation or the Exchange Agent shall be
liable to any Person in respect of any portion of the Exchange
Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 2.5 Treatment of Company Equity Compensation
and Company Warrants. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger
and without any further action on the part of Parent, Merger Sub,
the Company or any Holder of any Company Common Stock, Company
Employee Options or Company Warrants, Company Employee Options
and Company Warrants shall cease to represent a right to acquire
Company Common Stock and shall automatically be converted into an
option (a "Company Converted Option") to purchase Parent Common
Stock. The number of shares of Parent Common Stock subject to
each Company Converted Option shall be equal to the product of
the number of shares of Company Common Stock subject to such
Company Employee Option or Company Warrant multiplied by the
Exchange Ratio; provided, however, that any fractional shares of
Parent Common Stock resulting from such
multiplication shall be
rounded up to the nearest whole share. The exercise price per
share of each Company Converted Option shall equal the quotient
of (A) the exercise price per share under the corresponding
Company Employee Option or Company Warrant divided by (B) the
Exchange Ratio; provided, further, that such exercise price shall
be rounded up to the nearest whole cent. Each such Company
Converted Option will otherwise have substantially the same terms
and conditions as the corresponding Company Employee Option or
Company Warrant, as the case may be, including vesting and term
of exercise.
Section 2.6 Treatment of Merger Sub Shares. At the
Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each Merger Sub Share issued and
outstanding immediately prior to the Effective Time shall be
automatically cancelled and shall cease to exist.
Section 2.7 Effects of the Merger. The effect of
the Merger shall be as provided in this Agreement and the
applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and the Merger Sub shall vest in
the Surviving Corporation and all debts, liabilities and duties
of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
Section 2.8 Certificate of Incorporation and By-Laws
of Surviving Corporation.
(a) The certificate of incorporation (as amended)
of the Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended in accordance with the
provisions thereof and applicable law.
(b) The by-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the by-laws of
the Surviving Corporation until thereafter amended in accordance
with the provisions thereof and applicable law.
Section 2.9 Directors. Parent shall take all
necessary action so that immediately following the Effective Time
the board of directors of Parent shall be comprised of three (3)
members each designated by the Company prior to the Effective
Time to replace the existing Parent Board Member which directors
shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or
removal in accordance with the certificate of incorporation or
by-laws of Parent.. In addition, the directors of the Company
shall become the initial directors of the Surviving Corporation
and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or
removal in accordance with the certificate of incorporation or
by-laws of the Surviving Corporation.
Section 2.10 Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, shares of the Company
that are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who shall not
have voted to adopt this Agreement and who properly demand
appraisal for such shares in accordance with Section 262 of the
DGCL (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration,
but shall be converted into the right to receive such
consideration as may be determined to be due to holders of
Dissenting Shares pursuant to Section 262 of the DGCL, unless
such holder fails to perfect or withdraws or otherwise loses his
rights to appraisal. If, after the Effective Time, a holder of
Dissenting Shares fails to perfect or withdraws or loses his
right to appraisal, such Dissenting Shares shall thereupon be
deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest
thereon. The Company shall give Parent and Merger Sub prompt
written notice (but in any event within forty-eight (48) hours)
of any demands for appraisal of any Company shares, attempted
withdrawals of such demands and any other instruments served
pursuant to the DGCL and received by the Company relating to
rights to be paid the "fair value" of Dissenting Shares, as
provided in Section 262 of the DGCL.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants as follows,
except to the extent set forth on the Company Disclosure
Schedule:
3.1 Organization; Capitalization. The Company is a
duly organized and a validly existing corporation in good
standing under the laws of the state of Delaware. There are
issued and outstanding only the Company Common Stock, all of
which shares are duly authorized and validly issued. The names,
addresses and number of shares owned of each Company stockholder
are set forth in Section 3.1 of the Company Disclosure Schedule.
There are no outstanding rights, options or warrants to purchase
any equity interest in the Company, and there will be no other or
any other issued or outstanding securities of any nature
convertible into or exercisable or exchangeable for equity of the
Company other than as set forth in Section 3.1 of the Company
Disclosure Schedule. The outstanding options, warrants or
similar rights of Company security holders shall be exchanged for
like securities of Parent adjusted for the Forward Split and in
the same ratio as the share exchange as described in Section 2.3
herein. No person has any right of first refusal, right of
participation, or any similar right with respect to disposition
of the Company Common Stock.
3.2 Authority. The Company has full power and
authority to enter into this Agreement and, subject to any third
party approval in accordance with the laws of the State of
Delaware, to consummate the transactions contemplated hereby.
This Agreement and the transactions contemplated hereby have been
duly approved by the Board of Directors of the Company and, prior
to the Closing, by all stockholders of the Company whose consent
is required under applicable law.
3.3 Binding Agreement. This Agreement has been duly
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against
it in accordance with the terms hereof, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the
enforcement of rights hereunder or general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.4 No Conflicts. The execution and delivery by the
Company of this Agreement, the consummation and performance of
the transactions herein contemplated, and compliance with the
terms of this Agreement by the Company will not conflict with,
result in a breach of or constitute or give rise to a default
under (i) any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which the Company is now a
party or by which it or any of its assets or properties are
bound; (ii) the Company's certificate of incorporation and by-
laws, in each case as amended; or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its
business or properties wherein such breach could have a material
adverse effect on the Company or any of its business or
properties.
3.5 Subsidiaries. The Company does not have nor does
it own any direct or indirect interest in any other business
entity.
3.6 Foreign Qualifications. The Company is qualified
or licensed as a foreign corporation in all jurisdictions where
its business or ownership of assets so requires, except where the
failure to be qualified or licensed would not be reasonably
expected to have a Material Adverse Effect on the business of the
Company.
3.7 Financial Statements. The Company has furnished
Parent with a true and complete copy of the Company Financial
Statements. The Company Financial Statements fairly present in
all material respects the financial position, results of
operations and other information purported to be shown thereon of
the Company, at the dates and for the respective periods to which
they apply. All Company Financial Statements that have been
audited are accompanied by their audit report and were prepared
in conformity with GAAP.
3.8 No Adverse Events. Since the date of the Company
Financial Statements, except as set forth therein or as otherwise
disclosed to Parent in writing:
(i) there has not been any material adverse change in
the financial position or condition of the Company, its
liabilities, assets or any damage, loss or other change in
circumstances materially affecting the Company, its business
or assets or the Company's right to carry on its business,
other than changes in the ordinary course of business or due
to general economic, industry or political conditions;
(ii) neither the Company nor any of its subsidiaries
has entered into any transaction other than transactions in
the ordinary course of business consistent with past
practice and other than transactions in connection with or
in anticipation of the Merger;
(iii) there has been no sale, assignment, transfer,
mortgage, pledge, encumbrance or lease of any asset or
property of the Company or any subsidiary that was not in the
ordinary course of business consistent with past practice;
(iv) there has been (i) no declaration or payment of a
dividend, or any other declaration, payment or distribution
of any type or nature to any stockholder of the Company or
any of its subsidiaries in respect of its stock, whether in
cash or property, and (ii) no purchase or redemption of any
share of the capital stock of the Company or any of its
subsidiaries;
(v) there has been no declaration, payment, or
commitment for the payment, by the Company or any of its
subsidiaries, of a bonus or other additional salary,
compensation, or benefit to any employee of the Company or
its subsidiaries other than consistent with past practice;
(vi) there has been no release, compromise, waiver or
cancellation of any debt to or claim by the Company, or
waiver of any right of the Company;
(vii) there have been no capital expenditures by
the Company in excess of $10,000 for any single item, or
$25,000 in the aggregate;
(viii) there has been no change in accounting
methods or practices or revaluation of any asset of the
Company;
(ix) there has been no material damage or destruction
to, or loss of, physical property (whether or not covered by
insurance) adversely affecting the business or the
operations of the Company;
(x) there has been no loan by the Company, or guaranty
by the Company of any loan, to any employee of the Company;
(xi) there has been no termination or resignation of
any key employee or officer of the Company, and to the
knowledge of the Company, no such termination or resignation
is threatened;
(xii) there has been no amendment or termination of
any material oral or written contract, agreement or license
to which the Company is or was a party or by which the
Company is or was bound, except in the ordinary course of
business or as expressly contemplated hereby;
(xiii) the Company has not discharged or satisfied
or paid any lien or encumbrance or obligation or liability
other than current liabilities in the ordinary course of
business; and
(xiv) there has been no agreement or commitment by
the Company to do any of the foregoing;
(xvi) there has been no other event or condition of
any character that has had, or
could reasonably be expected
to have, a Material Adverse Effect as to the; and
(xvii) there has been no liability (including, but
not limited to, tax liability) or claim against the Company
(whether such liability or claim is contingent or absolute,
direct or indirect, matured or unmatured) not appearing on
the Company Financial Statements, other than (i) liabilities
incurred in the ordinary course of business since the date
of the Company Financial Statements, (ii) taxes accrued on
earnings since the date of the Company Financial Statements
which are not yet due or payable, or (iii) liabilities which
do not exceed $25,000.
3.9 Liabilities; Claims. There are no liabilities
(including, but not limited to, tax liabilities) or claims
against the Company (whether such liabilities or claims are
contingent or absolute, direct or indirect, matured or unmatured)
not appearing on the Company Financial Statements, other than (i)
liabilities incurred in the ordinary course of business since the
date of the Company Financial Statements, (ii) taxes accrued on
earnings since the date of the Company Financial Statements which
are not yet due or payable, or (iii) liabilities which do not
exceed $25,000.
3.10 Tax Returns. All federal, state, county and local
income, excise, property and other tax returns required to be
filed by the Company are true and correct in all material
respects and have been timely filed, and all required taxes, fees
or assessments have been paid or an adequate reserve therefor has
been established in the Company Financial Statements. The
federal income tax returns and state income tax returns of the
Company have not been audited by the IRS or any other taxing
authority. Neither the IRS nor any state, local or other taxing
authority has proposed any additional taxes, interest or
penalties with respect to the Company or any of its operations or
businesses. There are no pending, or to the knowledge of the
Company, threatened, tax claims or assessments, and there are no
pending, or to the knowledge of the Company, threatened, tax
examinations by any taxing authorities. The Company has not
given any waivers of rights (which are currently in effect) under
applicable statutes of limitations with respect to the federal
income tax returns of the Company for any year.
3.11 Title to Assets. Except as provided for in the
Company Financial Statements, the Company, has good and
marketable title to all of its furniture, fixtures, equipment,
inventory and other assets owned by the Company, and such assets
are owned free and clear of all security interests, pledges,
liens, restrictions and encumbrances of every kind and nature,
except to the extent that failure to have such title would not
have a material adverse effect on the Company or its business or
properties. The Company was, on the date of the Company
Financial Statements, the owner of its inventory as set forth in
the Company Financial Statements and has good and marketable
title thereto.
3.12 Accounts Receivable. The accounts receivable as
set forth in the Company Financial Statements represent amounts
due for goods sold or services rendered by the Company in the
ordinary course of business.
3.13 Material Contracts. A copy of all Material
Contracts has been made available to Parent or its counsel. Any
Material Contracts entered into between the date hereof and the
Effective Time will be delivered to Parent or its counsel prior
to Closing. The validity and enforceability of, and rights of
the Company contained in, each such Material Contract shall not
be adversely effected by the Merger or the transactions
contemplated hereby or any actions taken in furtherance hereof.
The Company is not in Default under any Material Contract.
3.14 Legal Proceedings. There are no legal,
administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending, or to the
Company's knowledge, threatened, directly or indirectly involving
the Company or its officers, directors, employees or affiliates,
individually or in the aggregate, in which an unfavorable
determination could result in suspension or termination of the
Company's business or authority to conduct such business in any
jurisdiction or could result in the payment by the Company of
more than $100,000, or challenging the validity or propriety of
the transactions contemplated by this Agreement. The Company is
not a party to any order, judgment or decree which will, or might
reasonably be expected to, materially adversely affect the
business, operations, properties, assets or financial condition
of the Company.
3.15 Insurance. The Company has maintained casualty
and liability policies and other insurance policies with respect
to its business which are appropriate and customary for
businesses similar in size, industry and risk profile. Copies of
all of the policies of insurance and bonds presently in force
with respect to the Company, including without limitation those
covering properties, buildings, machinery, equipment, worker's
compensation, officers and directors and public liability, have
been made available to Parent. All such insurance is outstanding
and in full force and effect, with all premiums thereon duly
paid, and the Company has not received any notice of cancellation
of any such policies.
3.16 Intellectual Property. The Company has supplied
Parent with a true and complete list of all its Intellectual
Property Rights. Except as set forth on the list so supplied or
the Company Disclosure Schedule, the Company owns, or has validly
licensed or otherwise has the right to use or exploit, as
currently used or exploited, all of its Intellectual Property
Rights, free of any lien or any obligation to make any payment
(whether of a royalty, license fee, compensation or otherwise).
No claims are pending against the Company or threatened against
the Company that the Company is infringing or otherwise violating
the rights of any person with regard to any Intellectual Property
Right or that any Intellectual Property Right is invalid or
unenforceable. To the knowledge of the Company, no person is
infringing the rights of the Company with respect to any
Intellectual Property Right nor, to the knowledge of the Company,
has any person threatened to do so. To the knowledge of the
Company, neither the Company, nor any of its employees, agents or
independent contractors, in connection with the performance of
such person's services with the Company, has used, appropriated
or disclosed, directly or indirectly, any trade secret or other
proprietary or confidential information of any other person
without the right to do so, or otherwise violated any
confidential relationship with any other person, other than such
actions that did not have, or would not reasonably be expected to
have, a Materially Adverse Effect.
3.17 Compliance with Laws. The Company has in all
material respects operated its
business and conducted its affairs
in compliance with all applicable laws, rules and regulations,
except where the failure to so comply did not have and would not
be expected to have a Material Adverse Effect on its business or
property.
3.18 Related Party Contracts. Except as disclosed to
the Company in writing prior to Closing, there are no loans,
leases, agreements, arrangements, understandings or Material
Contracts outstanding between the Company and any of its
officers, directors or any person related to or affiliated with
any such officers or directors.
3.19 Benefit Plans. Except as set forth on the Company
Disclosure Schedule, the Company does not have any Benefit Plans.
3.20 Consents and Approvals. Except for the consent
and approval of the stockholders of the Company and the filing of
the Certificate of Merger, no consents or approvals of, or
filings or registrations with, any third party or Governmental
Entity (each, a "Consent") are necessary in connection with (i)
the execution and delivery by the Company of this Agreement and
(ii) the consummation by the Company of the Merger and of all
other transactions contemplated hereby.
3.21 Finder's Fees. The Company knows of no person who
rendered any service in connection with the introduction of the
Company to Parent or Merger Sub, for a "finder's fee" or similar
type of fee in connection with the Merger and the other
transactions contemplated hereby.
3.22 Employee Matters. No employees of the Company are
on strike or to the best of the Company's knowledge threatening
any strike or work stoppage. The Company does not have any
obligations under any collective bargaining or labor union
agreements, nor is the Company involved in any material
controversy with any of its employees or any organization
representing any of its employees.
3.23 Charter Documents. The charter documents of the
Company have not been altered since its incorporation, except as
filed in the record books of the Company and delivered to Parent.
3.24 Corporate Minute Books. The corporate minute books
of the Company are complete and the minutes and consents
contained therein accurately reflect the actions that were taken
at a duly called and held meeting or by consent without a
meeting. All material actions by the Company which required
director or stockholder approval are reflected on the corporate
minute books of the Company. The Company is not in violation or
breach of, or in default with respect to, any term of its
Certificate of Incorporation (or other charter documents) or by-
laws.
3.25 Accredited Investors. To its knowledge after
reasonable inquiry, the Company has fewer than thirty-five (35)
stockholders that are not accredited investors within the meaning
of Rule 501 of Regulation D of the Securities Act, all of whom
are sophisticated investors within the meaning of Rule 506 of
Regulation D of the Securities Act. Except for such
stockholders, to the knowledge of the Company, each stockholder
of the Company is an
accredited investor within the meaning of
Rule 501 of Regulation D under the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT, PARENT STOCKHOLDER AND MERGER SUB
WITH RESPECT TO PARENT AND MERGER SUB
Parent, Parent Stockholder and Merger Sub hereby jointly and
severally represent, warrant and covenant as follows, except to
the extent set forth on the Parent Disclosure Schedule:
4.1 Organization; Capitalization.
(a) Parent is a duly organized and validly
existing corporation in good standing under the laws of the State
of Nevada, authorized to issue an aggregate of 50,000,000 shares
of Parent Common Stock, 5,000,000 shares of blank check preferred
stock, and no other shares of capital stock. At the Effective
Time, there will be issued and outstanding 3,685,618 shares of
Parent Common Stock, all of which such issued and outstanding
shares will be validly issued, fully paid and non-assessable.
Except as contemplated by this Agreement, at the Effective Time
there will be no issued or outstanding securities and no issued
or outstanding options, warrants or other rights, or commitments
or agreements of any kind, contingent or otherwise, to purchase
or otherwise acquire Parent Common Stock or any issued or
outstanding securities of any nature convertible into Parent
Common Stock. There is no proxy or any other agreement,
arrangement or understanding of any kind authorized, effective or
outstanding which restricts limits or otherwise affects the right
to vote any shares of Parent Common Stock.
(b) Merger Sub is a duly organized and validly
existing corporation in good standing under the laws of the State
of Delaware, authorized to issue only the Merger Sub Shares.
Immediately prior to the Effective Time, there will be issued and
outstanding all of the Merger Sub Shares, which shall be fully
paid and non-assessable and all of which shall be owned solely by
Parent. There are no issued or outstanding options or warrants
to purchase Merger Sub Shares or any issued or outstanding
securities of any nature convertible into Merger Sub Shares, or
any agreements or understandings to issue any Merger Sub Shares,
options or warrants.
4.2 Authority. Each of Parent and Merger Sub has full
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement
and the transactions contemplated hereby have been duly approved
by the Board of Directors of each of Parent and Merger Sub.
4.3 Binding Agreement. This Agreement has been duly
executed and delivered by each of Parent and Merger Sub and
constitutes the legal, valid and binding obligation of each of
Parent and Merger Sub enforceable against it in accordance with
the terms hereof, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
application
relating to or affecting the enforcement of rights
hereunder or general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
4.4 Recent Business Operations. Merger Sub has been
organized solely for the purpose of consummating the Merger and,
since its inception, has had no business activity of any nature
other than those related to its organization or as contemplated
by this Agreement. Except as set forth in its filings with the
Commission, Parent has not been engaged in any other business
activity since its formation other than the search for an
acquisition or merger partner.
4.5 Foreign Qualifications. Each of Parent and Merger
Sub is duly authorized, qualified and licensed under any and all
applicable laws, regulations, ordinances or orders of public
authorities to carry on its business in the places and in the
manner as presently conducted. Parent is not require it to be
registered as an investment company or investment advisor, as
such terms are defined under the Investment Company Act and the
Investment Advisors Act of 1940.
4.6 Subsidiaries. Parent has no subsidiaries, except
for Merger Sub, nor does it own any direct or indirect interest
in any other business entity. Merger Sub has no subsidiaries,
nor does it own any direct or indirect interest in any other
business entity.
4.7 Financial Statements. The Parent Financial
Statements are complete and correct in all material respects,
present fairly the financial position of Parent, the results of
operations and changes in financial position for the period
covered thereby, were prepared in accordance with GAAP, and have
been adjusted for all normal and recurring accruals.
4.8 No Adverse Changes. There has been no material
change in the financial condition of Parent or Merger Sub from
that set forth in the Parent Financial Statements except for (i)
transactions in the ordinary course of business, (ii)
transactions relating to this Agreement, and (iii) the incurring
of expenses and liabilities relating to this Agreement.
4.9 Liabilities. There are no liabilities (including,
but not limited to, tax liabilities) or claims against Parent or
Merger Sub (whether such liabilities or claims are contingent or
absolute, direct or indirect, accrued or unaccrued and matured or
unmatured) not appearing on the Parent Financial Statements,
except for (i) liabilities for expenses incurred relating to this
Agreement and the consummation of the transactions contemplated
hereby and (ii) liabilities and commitments incurred or made in
the ordinary course of Parent's business or taxes incurred on
Parent's earnings since December 31, 2007.
4.10 Tax Returns. All federal, state, county and local
income, excise, property or other tax returns required to be
filed by Parent and Merger Sub have been timely filed and all
required taxes, fees and assessments have been paid or an
adequate reserve therefore has been provided for in the Parent
Financial Statements. The federal income tax returns and state
income tax returns of Parent and Merger Sub have not been audited
by the IRS or any other taxing authority during the five (5) year
period prior to the Effective Time. Neither the IRS nor any
state, local or other taxing authority has proposed any
additional taxes, interest or penalties with respect to Parent,
or any of its
operations or businesses or Merger Sub. There are
no pending, or to the knowledge of Parent, threatened, tax claims
or assessments, and there are no pending, or to the knowledge of
Parent, threatened, tax examinations by any taxing authorities.
Neither Parent nor Merger Sub has given any waivers of rights
(which are currently in effect) under applicable statutes of
limitations with respect to the federal income tax returns of
Parent or Merger Sub for any year.
4.11 Assets. Except as set forth in the SEC Reports,
Parent has no fixtures, furniture, equipment, inventory, accounts
receivable or other assets. Merger Sub has no fixtures,
furniture, equipment, inventory, accounts receivable or other
assets other than its interest in this Agreement.
4.12 Material Contracts. Except as set forth in the
SEC Reports, Parent has no Material Contracts to which it is a
party. Merger Sub has no contracts or commitments to which it is
a party, except for this Agreement and other documents and
instruments contemplated hereby in connection with the Merger.
4.13 No Conflicts. Neither the execution and delivery
by Parent or Merger Sub of this Agreement, nor the consummation
and performance of the transactions herein contemplated and
compliance with the terms of this Agreement by Parent and Merger
Sub will conflict with, result in a breach of or constitute a
default under (i) any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which Parent or Merger Sub
is now a party or by which it or any of its assets or properties
is bound; (ii) the certificate of incorporation or the bylaws of
Parent and Merger Sub, in each case as amended; or (iii) any law,
order, rule, regulation, writ, injunction, judgment or decree of
any government, governmental instrumentality or court, domestic
or foreign, having jurisdiction over Parent or Merger Sub or any
of their respective business or properties.
4.14 Legal Proceedings. There are no legal,
administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending or to Parent's
or Merger Sub's knowledge threatened, against Parent or Merger
Sub, including, but not limited to any stockholder claims or
derivative actions, or challenging the validity or propriety of
the transactions contemplated by this Agreement, and, to Parent's
or Merger Sub's knowledge, there is no reasonable basis for any
proceeding, claim, action or governmental investigation against
Parent or Merger Sub. Neither Parent nor Merger Sub is a party
to any order, judgment or decree which will, or might reasonably
be expected to, have a Material Adverse Effect.
4.15 Certain Transactions. Except as disclosed in the
Parent Financial Statements, there have not been (i) any loans
made to or transactions with any officer or director of Parent or
Merger Sub, or (ii) any dividends or other distributions declared
or paid by Parent.
4.16 Issuances of Securities.
(a) Except as set forth in the SEC Reports,
Parent has not, except for the Issued Parent Shares, issued or
committed itself to issue any shares of Parent Common Stock or any
options, rights, warrants, or other securities convertible
into Parent Shares, except as contemplated by this Agreement.
(b) Since its inception, Merger Sub has not
issued or committed itself to issue any Merger Sub Shares or any
options, rights, warrants, or other securities convertible into
Merger Sub Shares, except for the issuance of the Merger Sub
Shares to Parent.
4.17 Intellectual Property Rights. Neither Parent nor
Merger Sub has any Intellectual Property Rights. Neither Parent
nor Merger Sub has any knowledge of any infringements, alleged or
actual, by Parent or Merger Sub of any third party's Intellectual
Property Rights.
4.18 Compliance with Laws. Each of Parent and Merger
Sub has in all material respects operated its business and
conducted its affairs in compliance with all applicable laws,
rules and regulations, except where the failure to so comply did
not have and would not be expected to have a Material Adverse
Effect on its business or property. To the best of its
knowledge, neither Parent nor Merger Sub is in violation of any
federal, state or local environmental law or regulation.
4.19 Related Party Transactions. There are no loans,
leases, commitments, arrangements or other contracts of any kind
or nature outstanding (i) between Parent and Merger Sub or (ii)
between either Parent or Merger Sub and any officer or director
of Parent or Merger Sub or any person related to or affiliated
with any officer or director of Parent or Merger Sub. Since the
inception of Merger Sub there have been (i) no salaried or
otherwise compensated employees and no bonuses paid to any
officer or director of Merger Sub; (ii) no dividends or other
distributions declared or paid by Merger Sub; and (iii) no
purchase by Merger Sub of any Merger Sub Shares.
4.20 Benefit Plans. Neither Parent nor Merger Sub has
any Benefit Plan.
4.21 Consents.
(a) Except for the consent and approval of the
Board of Directors, the stockholders of Parent, and the
stockholders of Merger Sub, the filing of the Certificate of
Merger and the filing of Commission Form 8-K, no Consents are
necessary in connection with (i) the execution and delivery by
Parent of this Agreement or (ii) the consummation by Parent of
the Merger and the other transactions contemplated hereby.
Parent has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.
(b) Except for the consent and approval of the
Board of Directors and stockholders of Merger Sub, and the filing
of the Certificate of Merger, no Consents are necessary in
connection with (i) the execution and delivery by Merger Sub of
this Agreement and (ii) the consummation by Merger Sub of the
Merger and the other transactions contemplated hereby.
4.22 Finder's Fees. Neither Parent, Parent Stockholder
nor Merger Sub knows of any person who rendered any service in
connection with the introduction of Parent or Merger Sub to
the Company for a "finder's fee" or similar type of fee in connection
with the Merger and the other transactions contemplated hereby.
4.23 Employees. Except as set forth in the SEC
Reports, Parent and Merger Sub have no employees.
4.24 Disclosure. None of the information supplied or
to be supplied by or about Parent or Merger Sub to the Company
concerning the Merger contains any untrue statement of a material
fact or omits 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
misleading.
4.25 SEC Reports; Financial Statements. Parent has
filed with the Commission all SEC Reports required to be filed by
it since the effective date of its registration statement on a
timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Parent's financial statements included in
the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in
accordance with GAAP, except as may be otherwise specified in
such financial statements or the notes thereto, and fairly
present in all material respects the financial position of Parent
and any consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
4.26 Charter Documents; Merger Sub Corporate Minute
Books. Parent's charter documents have not been altered since
its incorporation, except as filed in the record books of Parent.
Merger Sub's charter documents have not been altered since its
incorporation. The corporate minute books of Merger Sub are
complete and the minutes and consents contained therein
accurately reflect the actions that were taken at a duly called
and held meeting or by consent without a meeting. All actions by
Merger Sub which required director or stockholder approval are
reflected on the corporate minute books of Merger Sub. Merger
Sub is not in violation or breach of, or in default with respect
to, any term of its certificate of incorporation (or other
charter documents) or by-laws.
4.27 Xxxxxxxx-Xxxxx; Internal Accounting Controls.
Parent is in material compliance with all provisions of the
Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it. Parent
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for
assets is
compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences. Parent has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) for Parent and designed such disclosure controls and
procedures to ensure that material information relating to Parent
is made known to the certifying officers by others within those
entities, particularly during the period in which Parent most
recently filed periodic report under the Exchange Act, as the
case may be, is being prepared. Parent's certifying officers
have evaluated the effectiveness of Parent's controls and
procedures as of the date prior to the filing date of the most
recently filed periodic report under the Exchange Act (such date,
the "Evaluation Date"). Parent presented in its most recently
filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no
significant changes in Parent's internal controls (as such term
is defined in Item 307(b) of Regulation S-K under the Exchange
Act) or, to Parent's knowledge, in other factors that could
significantly affect Parent's internal controls.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 Parent Shareholder Approval. Parent
shall, through its Board of Directors, take all action necessary,
in accordance with and subject to the Nevada General Corporation
Law and its articles of incorporation and bylaws, as soon as
practicable but prior to Closing to (i) cause a special meeting
of its stockholders to be called, or (ii) obtain written consent
of such stockholders, as applicable, as is necessary to: (a)
approve the Merger on the terms and conditions set forth herein,
(b) approve the Forward Split, (c) approve a stock option plan
covering fifteen million (15,000,000) shares of Parent Common
Stock (the "Stock Option Plan") substantially in the form
attached hereto as Exhibit B, (d) approve the increase in the
authorized shares of Parent Common Stock to 100,000,000 shares,
and (e) authorize Parent to change its name to Geospatial
Corporation.
Section 5.2 Approval of Merger Sub Stockholder.
Merger Sub shall, as soon as practicable but prior to Closing (i)
cause a special meeting of its stockholder to be called to
consider and vote upon the Merger on the terms and conditions
hereinafter set forth, or (ii) each obtain written consent of
such stockholder, as applicable, as is necessary to approve the
Merger.
Section 5.3 Approval of Stockholders of the Company.
The Company shall, as soon as practicable but prior to Closing
(i) cause a special meeting of its stockholders to be called to
consider and vote upon the Merger on the terms and conditions
hereinafter set forth, or (ii) obtain written consent of such
stockholders, as applicable, as is necessary to approve the
Merger
Section 5.4 Further Assurances; Reasonable Best
Efforts. Subject to the terms and conditions hereof and to
applicable legal requirements, each of Parent, Parent
Stockholder, Merger Sub and the Company shall, and in the case of
Parent, shall cause Merger Sub to, cooperate and use its
reasonable best efforts to perform its obligations under this
Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
Section 5.5 Filings; Consents.
(a) Upon the terms and conditions hereof, each of
the parties to this Agreement shall use its reasonable best
efforts to obtain as promptly as practicable all material
Consents of any Governmental Entity or any other person required
in connection with the consummation of the transactions
contemplated by this Agreement, including without limitation, by
(i) promptly making all required filings or submissions to
Governmental Entities, including, but not limited to, all
required federal securities and state "blue sky" filings, (ii)
cooperating and consulting with one another in (A) determining
whether any other filings are required, or are deemed advisable,
to be made with, or Consents, permits, authorizations or
approvals are required, or are deemed advisable, to be obtained
from any third party, the United States government or any other
Governmental Entity in connection with the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby, and (B) timely making all such filings and
timely seeking all such Consents, permits, authorizations,
approvals or waivers.
(b) Each of Parent, Parent Stockholder, Merger
Sub and the Company shall, without limitation, (i) promptly
notify the other of, and if in writing, furnish the other with
copies of (or, in the case of oral communications, advise the
other of) any communications from or with any Governmental Entity
with respect to the transactions contemplated by this Agreement;
(ii) permit the other to review and discuss in advance, and
consider in good faith, the views of the other in connection
with, any proposed written or any oral communications with any
such Governmental Entity; and (iii) not participate in any
meeting or have any communication with any such Governmental
Entity unless it has given the other an opportunity to consult
with it in advance and, to the extent permitted by such
Governmental Entity, give the other party the opportunity to
attend and participate therein; and (iv) furnish the other party
with copies of all filings and communications between it (or its
advisors) and any such Governmental Entity with respect to the
transactions contemplated by this Agreement; provided, however,
that notwithstanding the foregoing, the rights of the Company,
Parent, Parent Stockholder and Merger Sub under this Section
5.5(b) may be exercised on their behalf by their respective
outside counsel.
5.6 Notification of Certain Matters. Parent, Parent
Stockholder, Merger Sub and the Company shall use their
reasonable best efforts to promptly notify each other of: (a)
any notice or other communications from any person alleging that
the Consent of such person is or may be required in connection
with the transactions contemplated by this Agreement if such
Consent would be material to the transactions; (b) any material
notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement,
or regarding any violation, or alleged violation, of law; (c) any
actions, suits, claims, investigations or proceedings in
connection with the transactions contemplated by this Agreement
commenced or, to the best of its knowledge, threatened against or
involving or otherwise affecting the Company; or (d) the
occurrence of non-occurrence of any fact or event which would be
reasonably likely to cause any condition in Article VI hereof not
to be satisfied; provided, however, that no such notification,
nor the obligation
to make such notification, shall affect the
representations, warranties or covenants of any party or the
conditions or the obligations of any party hereunder.
5.7 State Takeover Laws. Each of Parent, Parent
Stockholder, Merger Sub and the Company shall take all reasonable
steps as are necessary to exclude the applicability of, or to
assist in challenging the validity or applicability of any "fair
price," "moratorium," "control share acquisition," "interested
shareholder" or other similar anti-takeover statute or regulation
(each a "Takeover Statute") to the transactions contemplated by
this Agreement.
5.8 Public Announcements. All parties hereto agree
that any public announcement, press release or other public
disclosure of the signing of this Agreement shall be made jointly
and only after all parties hereto have reviewed and approved the
language and timing of such disclosure, except as such disclosure
may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto.
5.9 Exclusivity; Confidentiality.
(a) Upon the execution and delivery hereof,
Parent and Merger Sub agree for themselves, their officers,
affiliates, directors, stockholders, agents and representatives
not to discuss transactions contemplated hereby or provide any
information to or consummate any such transaction with any other
individual or entity, unless the parties are unable to close this
transaction under terms similar to those contained herein on or
before the Termination Date, or the Company waives its rights
under this provision in writing.
(b) During the period following the execution
hereof and the Termination Date, Parent and Merger Sub shall not,
directly or indirectly, through any agent, broker, investment
banker, attorney or accountant retained by it or otherwise,
solicit, initiate or encourage the submission of any other
proposal or offer from any other person or entity relating to any
sale of assets, acquisition, merger, securities offering or
similar transaction (a "Proposal") and shall immediately cease
and cause to be terminated any and all contacts, discussions and
negotiations with third parties regarding any current Proposal.
5.10 Investment Representation of the Company's
Stockholders. The Company shall obtain an instrument, in the
form attached hereto as Exhibit C, from the Company's
stockholders, including a representation from such stockholders
that the Parent Common Stock being acquired as a result of the
transactions contemplated by this Agreement are being acquired
for investment purposes only and not with a view to, or sale in
connection with, any distribution within the meaning of the
Securities Act.
5.11 Reverse Stock Splits. The Company agrees to
cause Parent not to approve any reverse stock splits of the
Parent Common Stock until the 24 month anniversary of the Closing
without the express written consent of the Parent Stockholder.
5.12 Subsequent Filings.
(a) Until the Effective Time, Parent will use
reasonable best efforts to timely file with the SEC each form,
report and document required to be filed by the Parent under the
Exchange Act. As of their respective dates, none of such reports
shall contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of the Parent included in such reports shall be
prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto) and shall
fairly present, in all material respects, the financial position
of the Parent as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(b) No later than five (5) days prior to the
Closing Date, the Company shall deliver to Parent for its review
a draft of the Company's Form 8-K, which the Company shall timely
file with the Commission following the Effective Time.
(c) The Company shall use commercially reasonable
efforts to file with the Commission within thirty (30) days after
the Effective Time, a Form S-1 registration statement covering
the resale of all restricted shares of Parent Common Stock, but
not including any of the shares issued to the Company's
stockholders in connection with the Merger (the "Initial Parent
Common Stock Registration"). The Company shall not file any
other registration statement or otherwise seek to register any
shares of Parent Common Stock until such time as the Initial
Parent Common Stock Registration is effective.
ARTICLE VI
CONDITIONS TO THE CONSUMMATION OF THE MERGER
6.1 Conditions to the Obligations of Each Party.
The respective obligations of Parent, Parent Stockholder, Merger
Sub and the Company to consummate the Merger are subject to the
satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions:
(a) Shareholder Approval. The shareholders of
each of Parent, Merger Sub and the Company have duly adopted this
Agreement pursuant to applicable law and the parties' articles of
incorporation and by-laws (the "Required Shareholder Approval").
(b) Injunctions; Illegality. The consummation of
the Merger shall not be restrained, enjoined or prohibited by any
order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Entity and there shall
not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger
or has the effect of making the Merger illegal.
(c) Governmental Consents or Filings. Any
required Consents from Governmental Entities or required filings
with Governmental Entities have been obtained or made.
6.2 Conditions to the Obligations of Parent, Parent
Stockholder and Merger Sub. The obligations of Parent, Parent
Stockholder, and Merger Sub to consummate the Merger are subject
to the satisfaction or waiver by Parent on the Closing Date of
the following further conditions:
(a) Performance. The Company shall have
performed in all material respects its covenants and obligations
under this Agreement required to be performed by it on or prior
to the Closing Date.
(b) Representations and Warranties. (i) The
representations and warranties made by the Company in this
Agreement shall be true and correct when made and immediately
prior to the Effective Time with the same force and effect as
though such representations and warranties had been made on and
as of such time.
6.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject
to the satisfaction or waiver by the Company on or prior to the
Closing Date of the following further conditions:
(a) Performance. Parent, Parent Stockholder and
Merger Sub shall have performed in all material respects its
covenants and obligations under this Agreement required to be
performed by it on or prior to the Closing Date.
(b) Representations and Warranties. (i) The
representations and warranties made by Parent, Parent Stockholder
and Merger Sub in this Agreement shall be true and correct when
made and immediately prior to the Effective Time with the same
force and effect as though such representations and warranties
had been made on and as of such time.
ARTICLE VII
MISCELLANEOUS
7.1 Survival. All of the representations, covenants
and warranties contained in this Agreement (including all
statements contained in any certificate or other instrument
delivered by or on behalf of Parent, Parent Stockholder, Merger
Sub, or the Company pursuant hereto or in connection with the
transactions contemplated hereby) shall survive the Closing for a
period of two (2) years from the Effective Time.
7.2 Further Assurances of Title. As and when
requested by the Surviving Corporation, or by any of its
successors or assigns, Merger Sub shall execute and deliver, or
cause to be executed and delivered, all such deeds and
instruments and will take or cause to be taken all such further
action as the Surviving Corporation may deem necessary or
desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of the property acquired by
the Surviving Corporation by reason or as a result of the Merger,
and otherwise to carry out the intent and purposes
hereof, and
the officers, directors of the Surviving Corporation, the Company
and Parent, as applicable, are fully authorized to take any and
all such action.
7.3 Indemnification. Parent, the Parent Stockholder
and Merger Sub, jointly and severally, agree to indemnify and
hold harmless the Company, its affiliates and stockholders,
directors, officers, employees, agents, successors in interest,
assigns and representatives from and against any and all losses,
claims, damages or liabilities or expenses (including reasonable
attorneys' fees) which may be incurred or suffered by any such
party and which, directly or indirectly, arise out of or result
from the operations of Parent prior to the Effective Time.
7.4 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior
to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company:
(a) by the mutual written consent of Parent and
the Company;
(b) by Parent or the Company, if the Effective
Time shall not have occurred on or prior to the Termination Date;
(c) by Parent or the Company by written notice to
the other party at any time in the event of the failure of any
condition in favor of such entity as to which the consummation of
the Merger is subject;
(d) by the Company if it does not obtain the
requisite shareholder approval required to consummate the Merger;
or
(e) by Parent if the Company does not obtain the
requisite shareholder approval required to consummate the Merger.
In the event of termination of this Agreement, the
same shall become wholly void and of no effect, and there shall
be no further liability or obligation hereunder on the part of
any of the parties hereto or their respective Boards of Directors
to any other party to this Agreement.
7.6 Delivery of Corporate Proceedings of Parent and
Merger Sub. At the Closing, Parent and Merger Sub shall deliver
to counsel for the Company copies of all of the corporate
proceedings of the Parent and Merger Sub, duly certified by their
respective Secretaries, relating to this Agreement and the
Company shall deliver to counsel for Parent copies of all of the
corporate proceedings of the Company, duly certified by its
Secretary, relating to this Agreement.
7.7 No Third Party Beneficiaries. The representations
and warranties made by any party to this Agreement are intended
to be relied upon only by the other parties to this Agreement and
by no other person. Nothing contained in this Agreement shall be
deemed to confer upon any person
not a party to this Agreement
any third party beneficiary rights or any other rights of any
nature whatsoever.
7.8 Further Instruments and Actions; Fees. Each party
shall deliver such further instruments and take such further
action as may be reasonably requested by any other party in order
to carry out the intent and purposes of this Agreement. The
Company shall be responsible, upon the consummation of the
Merger, to pay $35,000 to Parent for costs and fees incurred by
Parent in connection with the Merger.
7.9 Governing Law. This Agreement is being delivered
and is intended to be performed in the State of Delaware, and
shall be construed and enforced in accordance with the laws of
such state, without regard to conflicts of laws thereof. Each
party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other documents executed
in connection herewith (whether brought against a party hereto or
its respective affiliates, directors, officers, stockholders,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the State of Delaware.
7.10 Notices. All notices or other communications to
be sent by any party to this Agreement to any other party to this
Agreement shall be sent by certified mail, personal delivery or
nationwide overnight courier to the addresses designated below,
or such other addresses as may hereafter be designated in writing
by a party. Notice shall be deemed given and received on the
date of actual delivery to the address specified thereon.
If to the Company: If to Parent or Merger Sub:
Xxxx X. Xxxxx Xxxxxx X. Xxxxxx
President & CEO Kayenta Kreations, Inc
Geospatial Mapping Systems, Inc. 000 Xxxxx Xxxxx Xxxxxx
000 Xxxxx Xxx Xxxx Xxxxx 000
Xxxxxx, XX 00000 Xxxx Xxxx Xxxx, XX 00000
T: 000-000-0000 T: 000-000-0000
F: 724-353-3049 F: 000-000-0000
Email: xxxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx Email: xxxxxxxx@xxxxx.xxx
With a copy to:
Winston & Xxxxxx LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
T: 000-000-0000
F: 202-282-5100
Email: xxxxxxx@xxxxxxx.xxx
7.11 Binding Agreement. This Agreement represents the
entire agreement among the parties hereto with respect to the
matters described herein and is binding upon and shall inure to
the benefit of the parties hereto and their legal
representatives, successors and permitted assigns. This
Agreement may not be assigned and, except as stated herein, may
not be altered or amended except in writing executed by all of
the parties hereto.
7.12 Counterparts. This Agreement may be executed in
counterparts, all of which, when taken together, shall constitute
the entire Agreement.
7.13 Severability. The provisions of this Agreement
shall be severable, so that the unenforceability, validity or
legality of any one provision shall not affect the
enforceability, validity or legality of the remaining provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have made and
executed this Agreement as of the day and year first above
written.
Kayenta Kreations, Inc.,
a Nevada corporation
By: /s/Xxxxxx Xxxxx
Xxxxxx Xxxxx, President &
Secretary/Treasurer
Geospatial Mapping Systems, Inc.,
a Delaware corporation
By: /s/Xxxx Xxxxx
Xxxx Xxxxx, President
Kayenta Subsidiary Corp.
a Delaware corporation
By: /s/Xxxxxx Xxxxx
Xxxxxx Xxxxx, President &
Secretary/Treasurer
/s/Xxxxxx X. Xxxxxx
____________________________________
Xxxxxx X. Xxxxxx, principal
Stockholder of Kayenta Kreations,
Inc.
DC:542350.13
DC:542350.13
