AGREEMENT CONCERNING THE AGREEMENT AND PLAN OF MERGER BY AND AMONG MYCOM GROUP, INC., MYCOM ACQUISITION CORPORATION, a wholly owned subsidiary of Mycom Group, Inc., AND VERITAS SOLUTIONS, INC., THE SECURITY HOLDERS OF VERITAS SOLUTIONS, INC. AND...
Exhibit
10.1
AGREEMENT
CONCERNING
THE AGREEMENT AND PLAN OF MERGER
BY
AND AMONG
MYCOM
GROUP, INC.,
MYCOM
ACQUISITION CORPORATION,
a
wholly owned subsidiary of Mycom Group, Inc.,
AND
VERITAS
SOLUTIONS, INC.,
THE
SECURITY HOLDERS OF VERITAS
SOLUTIONS, INC. AND
SECURE
ASSET REPORTING SERVICES, INC.
a
wholly subsidiary of Veritas Solutions Inc.
THIS
AGREEMENT AND PLAN OF MERGER (“Agreement”)
is
made this 28th
day of
August, 2007 (the “Closing
Date”),
by
and between Mycom Group, Inc. a Nevada corporation (“Mycom”),
Mycom
Acquisition Corporation, a Nevada corporation and a wholly owned subsidiary
of
Mycom (“MergerCo”),
Veritas Solutions, Inc., a Washington corporation (“VSI”),
the
security holders of VSI (the “VSI
Security Holders”)
who
are listed on Exhibit
1.2
attached
hereto and Secure Asset Reporting Services Inc., an Alaska corporation and
a
wholly owned subsidiary of VSI (“SARS”).
WHEREAS,
VSI and SARS wishes to merge with and into MergerCo with MergerCo being the
surviving corporation (the “Merger”);
WHEREAS,
VSI desires to exchange all of the Shares (defined below) held by VSI Security
Holders for newly issued unregistered shares of common stock of Mycom;
WHEREAS,
Mycom agrees to reserve the Remaining Shares (defined below) for issuance upon
the close of the Financing (also defined below);
WHEREAS,
it is the intention of the parties that the Merger shall qualify as a
transaction in securities exempt from registration or qualification under the
Securities Act of 1933, as amended (the “Securities
Act”),
and
under the applicable securities laws of each state or jurisdiction where the
VSI
Security Holders reside; and
WHEREAS,
the
board
of directors of VSI, SARS, MergerCo each deem it to be in the best interests
of
VSI, SARS and MergerCo and their respective shareholders to consummate the
Merger, as a result of which MergerCo shall acquire all of the assets of VSI
and
its respective subsidiaries.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, the parties hereto agree as
follows:
ARTICLE
I
The
Merger
1.1 The
Merger. At
the
Effective Time (defined below) and subject to and upon the terms and conditions
of this Agreement, VSI and SARS shall merge with and into MergerCo in accordance
with the provisions of the Washington Business Corporations Act (the
“WBCA”),
the
Nevada Business Associations; Securities; Commodities Act (the “NBA”)
and
the Alaska Business Corporations Act (“ABCA”),
the
separate corporate existence of VSI and SARS shall cease and MergerCo shall
continue as the surviving entity. The Effective Time of the Merger shall occur
upon the filing of the Articles of Merger (defined below) executed in accordance
with the applicable provisions of the WBCA, NBA and the ABCA with the
Secretaries of State of the States of Washington, Nevada and Alaska, or at
such
later time as may be agreed to by VSI, SARS and MergerCo and specified in the
Articles of Merger subject to the satisfaction or waiver of each of the
conditions set forth in Section 4. Provided that this Agreement has not been
terminated, the parties will cause the Articles of Merger to be filed on the
Closing Date. The “Effective
Time”
shall
mean the date upon which the Merger of VSI and SARS into MergerCo shall be
consummated pursuant to the filing of the Articles of Merger with the
Secretaries of State of the States of Washington, Nevada and Alaska.
“Articles
of Merger”
shall
mean the certificate of merger of VSI and SARS with and into MergerCo with
MergerCo as the surviving corporation pursuant to the WBCA, ABCA and
NBA.
(a) Upon
the
terms and subject to the conditions set forth in this Agreement and in
accordance with the WBCA, NBA and ABCA, at the Effective Time all VSI Shares
shall be converted into the right to receive the shares of Mycom from
MergerCo.
(b) Exchange
Agent. The Xxxx Law Group, PLLC shall act as the exchange agent (the
“Exchange
Agent”)
for
the purpose of exchanging the VSI Shares for shares of Mycom common
stock.
1.2 Issuance
of Securities.
Subject
to the terms and conditions of this Agreement, MergerCo agrees to issue and
exchange Mycom common stock for one hundred percent (100%) of the Shares
(defined below) held by the VSI Security Holders on a one-for-one basis.
MergerCo shall reserve the Remaining Shares (defined below) for issuance upon
completion of the Financing (defined below), also on a one-for-one basis. Mycom,
with MergerCo, shall direct its transfer agent, Corporate Stock Transfer, Inc.
to exchange its common stock with the VSI Security Holders for the Shares on
the
Closing Date, pursuant to the schedule set forth in Exhibit
1.2,
and to
reserve the Remaining Shares (defined below).
(a) As
of
August 20, 2007, VSI shall have twenty-four million eight hundred sixteen
thousand six hundred twelve (24,816,612) shares outstanding (“VSI
Outstanding”).
(b) As
of the
Closing Date, VSI has (i) one (1) share of 8% cumulative series A convertible
preferred stock, the principal amount of Nine Hundred Forty-Nine Thousand Nine
Hundred Eight Dollars and Eighty-Three Cents ($949,908.83) (ii) one hundred
forty thousand (140,000) shares of 8% cumulative series B convertible preferred
stock that shall mandatorily convert into one hundred forty-nine thousand three
hundred thirty-three (149,333) shares of VSI common stock at the Closing
(collectively, the “Converted
Preferred Shares”).
The
VSI Outstanding and the Converted Preferred Shares equal an aggregate total
amount of twenty-four million nine hundred sixty-five thousand nine hundred
forty-five (24,965,945) shares and shall collectively be referred to as the
“Shares.”
(c) As
of the
Closing Date, Mycom shall have a total of one million five hundred thousand
ninety-five (1,500,095) shares of common stock and zero shares of preferred
stock issued and outstanding. Upon issuance of the Shares and the Remaining
Shares, Mycom shall have a total of thirty-five million one hundred twenty-six
thousand forty (35,126,040) shares of common stock outstanding and one share
of
series A convertible preferred stock outstanding.
1.3 Exemption
from Registration.
The
parties hereto intend that all MergerCo common stock to be issued to the VSI
Security Holders, as well as the Remaining Shares, when issued, shall be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”),
pursuant to Section 506 and/or Regulation D of the Securities Act and rules
and
regulations promulgated thereunder.
2
1.4 Effect
of Merger. The
Merger shall have the effect set forth in Section 23B.11.090 of the WBCA, Title
10, Chapter 5 of the ABCA and Title 7 of the NBA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the
properties, rights, privileges, powers and franchises of VSI, SARS, MergerCo
shall vest in MergerCo (the “Surviving
Entity”),
and
all debts, liabilities and duties of VSI, SARS and MergerCo shall become the
debts, liabilities and duties of the Surviving Entity.
1.5 Certificate
Of Incorporation and Bylaws; Directors And Officers.
Prior
to the Effective Time of the Merger:
(a) The
Certificate of Incorporation of MergerCo shall be the Certificate of
Incorporation of the Surviving Entity following the Merger. The Bylaws of
MergerCo shall be the Bylaws of Surviving Entity following the
Merger.
(b) On
the
Closing Date, the Surviving Entity shall appoint the following individuals
to
its Board of Directors: Xxxxxxx X. Xxxxxx, Chairman, Xxxxxxx Xxxxxxx, Xxxxxx
Xxxxxxx and Xxxxx X. Xxxx. Such members of the Board of Directors shall serve
until the earlier of their death, resignation or removal.
(c) On
the
Closing Date, Xxxxxxx Xxxxxx, Xx. shall (i) resign as Chief Executive Officer
and Secretary of Mycom and MergerCo and (ii) Mycom and the Surviving Entity
shall appoint the following individuals to the following positions: Xxxxxxx
Xxxxxxx, Chief Executive Officer, Xxxxxx Xxxxxxx, Chief Technology Officer,
Xxxxx X. Xxxx, Secretary and Xxxxxx Xxxx, Chief Operating Officer (the
“New
Officers”).
The
New Officers shall serve until the earlier of their death, resignation or
removal.
(d) On
the
Closing Date, Mycom shall appoint Xxxxx X. Xxxx to its Board of Directors.
Xx.
Xxxx shall serve until the earlier of their death, resignation or
removal.
1.6 Further
Actions.
(a) If,
at
any time after the Effective Time, the Surviving Entity or Mycom considers
or is
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm (of
record or otherwise) in the Surviving Entity its right, title or interest in,
to
or under any of the rights, properties, or assets of VSI, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of
the
Surviving Entity will be authorized to execute and deliver, in the name and
on
behalf of each of VSI, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of VSI, all such other actions
and
things as the Board of Directors of the Surviving Entity may determine to be
necessary or desirable to vest, perfect or confirm any and all right, title
and
interest in, to and under such rights, properties or assets in the Surviving
Entity or otherwise to carry out the intent and purposes of this
Agreement.
3
(b) Termination
of Merger. In the event VSI Security Holders demand dissenter’s rights that
result in VSI repurchasing shares of common stock that are cumulatively in
excess of One Hundred Thousand Dollars ($100,000), the Merger will be
terminated, unless the parties waive such term.
1.7 Restrictions
on Resale.
The
Shares will not be registered under the Securities Act, or the securities laws
of any state, and cannot be transferred, hypothecated, sold or otherwise
disposed of until: (i) a registration statement with respect to such securities
is declared effective under the Securities Act, or (ii) Mycom receives an
opinion of counsel for the stockholder, reasonably satisfactory to counsel
for
Mycom, that an exemption from the registration requirements of the Securities
Act is available.
The
certificates representing the Shares, when exchanged, and the Remaining Shares,
when issued, pursuant to this Agreement shall contain a legend substantially
as
follows:
“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR DOT VN, INC. RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR
MYCOM GROUP, INC. THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT IS AVAILABLE.”
1.8 Exchange
of Certificates.
(a) After
the
Effective Time and pursuant to a customary letter of transmittal or other
instructional form provided by the Exchange Agent to the VSI Security Holders,
the VSI Security Holders shall be able to surrender all their shares to the
Exchange Agent, and the VSI Security Holders shall be entitled upon such
surrender to receive in exchange therefor certificates representing the
proportionate number of shares of common stock into which the Mycom securities
theretofore represented by the stock transfer forms so surrendered shall have
been exchanged pursuant to this Agreement. Until so surrendered, each
outstanding certificate, which, prior to the Effective Time, represented VSI
securities, shall be deemed for all corporate purpose, subject to the further
provisions of this Article I, to evidence the ownership of the number of whole
shares for which such VSI Shares have been so exchanged. No dividend payable
to
holders of VSI securities of record as of any date subsequent to the Effective
Time shall be paid to the owner of any certificate which, prior to the Effective
Time, represented VSI Shares, until such certificate or certificates
representing all the relevant VSI Shares, together with a stock transfer form,
are surrendered as provided in this Article I or pursuant to letters of
transmittal or other instructions with respect to lost certificates provided
by
the Exchange Agent.
4
(b) All
Mycom
shares for which the Shares shall have been exchanged pursuant to this Article
I
shall be deemed to have been issued in full satisfaction of all rights
pertaining to the Shares.
(c) On
the
Effective Date, the stock transfer book of VSI shall be deemed to be closed
and
no transfer of VSI Shares shall thereafter be recorded thereon.
ARTICLE
II
Representations
and Warranties of VSI and SARS
VSI
and
its wholly owned subsidiary, SARS, hereby represent and warrant to Mycom and
its
wholly owned subsidiary, MergerCo, that:
2.1 Organization.
VSI is
a corporation duly organized, validly existing and in good standing under the
laws of Washington, has all necessary corporate powers to own its properties
and
to carry on its business as now owned and operated by it, and is duly qualified
to do business and is in good standing in each of the states where its business
requires qualification. SARS is a corporation duly organized, validly existing
and in good standing under the laws of Alaska, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing
in
each of the states where its business requires qualification.
2.2 Capital.
Upon
the close of VSI’s current private placement of its securities with Regal
Securities Corp. (the “Financing”),
an
additional eight million six hundred sixty thousand (8,660,000) shares of VSI
common stock are expected to be issuable (the “Remaining
Shares”).
.
Upon the Closing Date, a total of four million eight hundred forty thousand
(4,840,000) shares of VSI common stock are issuable in connection with the
Financing. Except for the securities listed on Exhibit
2.2
attached
hereto, there are no outstanding subscriptions, options, rights, warrants,
debentures, instruments, convertible securities or other agreements or
commitments obligating VSI to issue any additional VSI securities of any
class.
2.3 Subsidiaries.
VSI
currently owns the following subsidiaries: (i) Secure Asset Reporting Services,
Inc., an Alaska corporation; and (ii) ESL Wireless, Inc., a Washington
corporation.
2.4 Directors
and Executive Officers.
The
names and titles of the directors and executive officers of VSI are as follows:
Name
|
Position
|
|
Xxxxxxx
Xxxxxxx
|
Director
and Chief Executive Officer
|
|
Xxxxxx
X. Xxxxxx
|
Chairman
|
|
Xxxxx
X. Xxxx
|
Director
and Secretary
|
|
Xxxxxx
Xxxxxxx
|
Director
and Chief Technology Officer
|
|
Xxxxx
Xxxxxxxx
|
Chief
Financial Officer
|
|
Xxxxxx
Xxxx
|
Chief
Operating Officer
|
5
The
names
and titles of the director and executive officers of SARS are as
follows:
Name
|
Position
|
|
Xxxxxxx
Xxxxxxx
|
Director
and Chief Executive Officer
|
|
Xxxxxx
Xxxxxxx
|
Director
and Chief Technology Officer
|
|
Xxxx
Xxxxxxx
|
Director
|
|
Xxxxxx
Xxxx
|
Chief
Operating Officer
|
|
Xxxxx
Xxxxxxx
|
Director
|
2.5 Financial
Statements.
On or
before the Closing Date, VSI shall provide Mycom with unaudited financial
statements of VSI for the six months ended June 30, 2007 and audited financials
for the year ended September 30, 2006 (the “VSI
Financial Statements”).
The
VSI Financial Statements are attached hereto as Exhibit
2.5.
The VSI
Financial Statements will be prepared in accordance with generally accepted
accounting principles and practices consistently followed by VSI throughout
the
periods indicated,
and fairly present the financial position of VSI as of the date of the balance
sheets included in the VSI Financial Statements and the results of operations
for the periods indicated.
2.6 Absence
of Changes.
Since
June
30,
2007,
there
has not been any material change in the financial condition or operations of
VSI
and SARS, except as contemplated by this Agreement. As used throughout this
Agreement, “material” means: Any change or effect (or development that, insofar
as can be reasonably foreseen, is likely to result in any change or effect)
that
causes substantial increase or diminution in the business, properties, assets,
condition (financial or otherwise) or results of operations of a party. Taken
as
a whole, material change shall not include changes in national or international
economic conditions or industry conditions generally; changes or possible
changes in statutes and regulations applicable to a party; or the loss of
employees, customers or suppliers by a party as a direct or indirect consequence
of any announcement relating to this transaction.
2.7 Absence
of Undisclosed Liabilities.
As of
June
30,
2007,
VSI and
SARS did not have any material debt, liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, that is not reflected in the VSI Financial Statements.
2.8 Tax
Returns.
VSI and
SARS have filed all federal, state and local tax returns required by law and
have paid all taxes, assessments and penalties due and payable. The provisions
for taxes, if any, reflected in Exhibit
2.8
are
adequate for the periods indicated. There are no present disputes as to taxes
of
any nature payable by VSI or SARS.
6
2.9 Investigation
of Financial Condition.
Without
in any manner reducing or otherwise mitigating the representations contained
herein, Mycom, MergerCo, its legal counsel and accountants shall have the
opportunity to meet with VSI’s accountants and attorneys to discuss the
financial condition of VSI and SARS during reasonable business hours and in
a
manner that does not interfere with the normal operation of VSI’s and SARS’
business. VSI and SARS shall make available to Mycom and MergerCo all books
and
records of VSI and SARS.
2.10 Intellectual
Property Rights.
VSI
and/or SARS owns or has the right to use all trademarks, service marks, trade
names, copyrights and patents material to its business.
2.11 Compliance
with Laws.
To the
best of VSI’s and SARS’ knowledge, VSI and SARS has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations,
including federal and state securities laws, except where such non-compliance
would not have a material adverse impact upon its business or
properties.
2.12 Litigation.
VSI and
SARS is not a defendant in any suit, action, arbitration or legal,
administrative or other proceeding, or governmental investigation which is
pending or, to the best knowledge of VSI and SARS, threatened against or
affecting VSI or SARS or its business, assets or financial condition. VSI and
SARS is not in default with respect to any order, writ, injunction or decree
of
any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. VSI and SARS are not engaged in any material
litigation to recover monies due to it.
2.13 Authority.
The
Boards of Directors of VSI and SARS have authorized the execution of this
Agreement and the consummation of the transactions contemplated herein, and
VSI
and SARS have full power and authority to execute, deliver and perform this
Agreement, and this Agreement is a legal, valid and binding obligation of VSI
and SARS and is enforceable in accordance with its terms and conditions. A
majority of VSI Security Holders has agreed to and has approved the terms of
this Agreement and the exchange of securities contemplated hereby.
2.14 Ability
to Carry Out Obligations.
The
execution and delivery of this Agreement by VSI and SARS and the performance
by
VSI and SARS of its obligations hereunder in the time and manner contemplated
will not cause, constitute or conflict with or result in (a) any breach or
violation of any of the provisions of or constitute a default under any license,
indenture, mortgage, instrument, article of incorporation, bylaw, or other
agreement or instrument to which VSI and SARS is a party, or by which it may
be
bound, nor will any consents or authorizations of any party other than those
hereto be required, (b) an event that would permit any party to any agreement
or
instrument to terminate it or to accelerate the maturity of any indebtedness
or
other obligation of VSI and SARS, or (c) an event that would result in the
creation or imposition of any lien, charge or encumbrance on any asset of VSI
or
SARS.
7
2.15 Full
Disclosure.
None of
the representations and warranties made by VSI and SARS herein or in any
exhibit, certificate or memorandum furnished or to be furnished by VSI, or
on
its behalf, contains or will contain any untrue statement of material fact
or
omit any material fact the omission of which would be misleading.
2.16 Assets.
VSI
and
SARS’ assets are fully included in Exhibit
2.16
and are
not subject to any claims or encumbrances except as indicated in Exhibit
2.16.
2.17 Material
Contracts.
VSI and
SARS’ material contracts are attached hereto as Exhibit
2.17.
2.18 Indemnification.
VSI and
SARS agree to indemnify, defend and hold Mycom and MergerCo harmless against
and
in respect of any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest, penalties
and reasonable attorney fees asserted by third parties against Mycom or MergerCo
which arise out of, or result from (i) any breach by VSI or SARS in performing
any of its covenants or agreements under this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by VSI
and
SARS under this Agreement, (ii) a failure of any representation or warranty
in
this Article II or (iii) any untrue statement made by VSI or SARS in this
Agreement.
2.19 Criminal
or Civil Acts.
For the
period of five (5) years prior to the execution of this Agreement, no current
executive officer, director or principal stockholder of VSI and SARS have been
convicted of a felony crime, filed for personal bankruptcy, been the subject
of
a Commission or NASD judgment or decree, or is currently the subject to any
investigation in connection with a felony crime or Commission or NASD
proceeding.
2.20
Restricted
Securities.
VSI,
SARS and the VSI Security Holders acknowledge that all of the Mycom shares
issued by Mycom are restricted securities and none of such securities may be
sold or publicly traded except in accordance with the provisions of the
Securities Act.
ARTICLE
III
Representations
and Warranties of Mycom and MergerCo
Mycom
and
its wholly owned subsidiary, MergerCo, represents and warrants to VSI and its
wholly owned subsidiary, SARS, that:
3.1 Organization.
Mycom
is a corporation duly organized, validly existing and in good standing under
the
laws of Nevada, has all necessary corporate powers to carry on its business,
and
is duly qualified to do business and is in good standing in each of the states
where its business requires qualification. MergerCo is a corporation duly
organized, validly existing and in good standing under the laws of Nevada,
has
all necessary corporate powers to carry on its business, and is duly qualified
to do business and is in good standing in each of the states where its business
requires qualification.
8
3.2 Capital.
The
authorized capital stock of Mycom consists of ninety million (90,000,000) shares
of $0.01 par value common stock, of which one million five hundred thousand
ninety-five (1,500,095) shares are currently outstanding and will be outstanding
on the Closing Date, and zero (0) shares of $0.01 par value preferred stock,
none of which are outstanding. All of the outstanding common stock is duly
and
validly issued, fully paid and non-assessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments, convertible
securities or other agreements or commitments obligating Mycom to issue any
additional shares of its capital stock of any class.
3.3 Subsidiaries.
Mycom
currently owns the following subsidiary: Mycom Acquisition Corporation, a Nevada
corporation.
3.4 Directors
and Officers.
The
name and title of the director and executive officer of Mycom and MergerCo
are
as follows:
Name
|
Position
|
|
Xxxxxxx
Xxxxxx, Xx.
|
Director
and Chief Executive Officer
|
3.5 Financial
Statements.
Exhibit
3.5
attached
hereto consists of the audited financial statements of Mycom for the year ended
December 31, 2006 (the “Mycom
Financial Statements”)
and
for the quarter ended June 30, 2007. The Mycom Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently followed by Mycom throughout the period indicated, and
fairly present the financial position of Mycom as of the date of the balance
sheet included in the Mycom Financial Statements and the results of operations
for the period indicated.
3.6 Absence
of Changes.
Since
June 30, 2007, there has not been any material change in the financial condition
or operations of Mycom and MergerCo, except as contemplated by this Agreement.
As used throughout this Agreement, “material” means: Any change or effect (or
development that, insofar as can be reasonably foreseen, is likely to result
in
any change or effect) that causes substantial increase or diminution in the
business, properties, assets, condition (financial or otherwise) or results
of
operations of a party. Taken as a whole, material change shall not include
changes in national or international economic conditions or industry conditions
generally; changes or possible changes in statutes and regulations applicable
to
a party; or the loss of employees, customers or suppliers by a party as a direct
or indirect consequence of any announcement relating to this
transaction.
3.7 Absence
of Undisclosed Liabilities.
As of
June 30, 2007, Mycom and MergerCo did not have any material debt, liability
or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected in the Mycom Financial
Statements.
3.8 Tax
Returns.
Mycom
and MergerCo have filed all federal, state and local tax returns required by
law
and have paid all taxes, assessments and penalties due and payable. The
provisions for taxes, if any, reflected in Exhibit
3.8
are
adequate for the periods indicated. There are no present disputes as to taxes
of
any nature payable by Mycom and MergerCo.
9
3.9 Investigation
of Financial Condition.
Without
in any manner reducing or otherwise mitigating the representations contained
herein, VSI, SARS, its legal counsel and accountants shall have the opportunity
to meet with Mycom’s and MergerCo’s accountants and attorneys to discuss the
financial condition of Mycom and MergerCo during reasonable business hours
and
in a manner that does not interfere with the normal operation of Mycom’s and
MergerCo’s business. Mycom and MergerCo shall make available to VSI and SARS all
books and records of Mycom and MergerCo.
3.10 Intellectual
Property Rights.
Mycom
and MergerCo have no trademarks, service marks, trade names, copyrights or
patents material to its business.
3.11 Compliance
with Laws.
To the
best of Mycom’s and MergerCo’s knowledge, Mycom and MergerCo have complied with,
and is not in violation of, applicable federal, state or local statutes, laws
and regulations, including federal and state securities laws, except where
such
non-compliance would not have a material adverse impact upon its business or
properties.
3.12 Litigation.
Mycom
is not a defendant in any suit, action, arbitration or legal, administrative
or
other proceeding, or governmental investigation which is pending or, to the
best
knowledge of Mycom and MergerCo, threatened against or affecting Mycom and
MergerCo or its business, assets or financial condition. Mycom and MergerCo
are
not in default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or instrumentality
applicable to it. Mycom and MergerCo are not engaged in any material litigation
to recover monies due to it.
3.13 Authority.
The
Boards of Directors of Mycom and MergerCo have authorized the execution of
this
Agreement and the consummation of the transactions contemplated herein, and
Mycom and MergerCo have full power and authority to execute, deliver and perform
this Agreement, and this Agreement is a legal, valid and binding obligation
of
Mycom and MergerCo and is enforceable in accordance with its terms and
conditions.
3.14 Ability
to Carry Out Obligations.
The
execution and delivery of this Agreement by Mycom and MergerCo and the
performance by Mycom and MergerCo of its obligations hereunder in the time
and
manner contemplated will not cause, constitute or conflict with or result in
(a)
any breach or violation of any of the provisions of or constitute a default
under any license, indenture, mortgage, instrument, article of incorporation,
bylaw, or other agreement or instrument to which Mycom or MergerCo is a party,
or by which it may be bound, nor will any consents
or authorizations of any party other than those hereto be required, (b) an
event
that would permit any party to any agreement or instrument to terminate it
or to
accelerate the maturity of any indebtedness or other obligation of
Mycom
and
MergerCo,
or (c)
an event that would result in the creation or imposition of any lien, charge
or
encumbrance on any asset of Mycom
and
MergerCo.
3.15 Full
Disclosure.
None of
the representations and warranties made by Mycom and MergerCo herein or in
any
exhibit, certificate or memorandum furnished or to be furnished by Mycom, or
on
its behalf, contains or will contain any untrue statement of material fact
or
omit any material fact the omission of which would be misleading.
10
3.16 Assets.
Mycom
and MergerCo’s assets are fully included in Exhibit
3.16
and are
not subject to any claims or encumbrances except as indicated in Exhibit
3.16.
3.17 Material
Contracts.
Mycom
and MergerCo do not have any material contracts.
3.18 Indemnification.
Mycom
and MergerCo agree to indemnify, defend and hold VSI and SARS harmless against
and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorney fees asserted by third parties
against VSI and SARS which arise out of, or result from (i) any breach by Mycom
and MergerCo in performing any of its covenants or agreements under this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or to be furnished by Mycom and MergerCo under this Agreement, (ii) a failure
of
any representation or warranty in this Article III or (iii) any untrue statement
made by Mycom and MergerCo in this Agreement.
3.19 Criminal
or Civil Acts.
For the
period of five (5) years prior to the execution of this Agreement, no current
executive officer, director or principal stockholder of Mycom and MergerCo
have
been convicted of a felony crime, filed for personal bankruptcy, been the
subject of a Commission or NASD judgment or decree, or is currently the subject
to any investigation in connection with a felony crime or Commission or NASD
proceeding.
ARTICLE
IV
Covenants
Prior to the Closing Date
4.1 Investigative
Rights.
Prior
to the Closing Date, each party shall provide to the other party, and such
other
party’s counsel, accountants, auditors and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party’s properties, books, contracts, commitments and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party’s affairs as the other
party may reasonably request. If during the investigative period one party
learns that a representation of the other party was not accurate, no such claim
may be asserted by the party so learning that a representation of the other
party was not accurate.
4.2 Conduct
of Business.
Prior
to the Closing Date, each party shall conduct its business in the normal course
and shall not sell, pledge or assign any assets without the prior written
approval of the other party, except in the normal course of business. No party
shall amend its Articles of Incorporation or Bylaws (except as may be described
in this Agreement), declare dividends, redeem or sell stock or other securities.
No party shall enter into negotiations with any third party or complete any
transaction with a third party involving the sale of any of its assets or the
exchange of any of its common stock.
11
4.3 Confidential
Information.
Each
party will treat all non-public, confidential and trade secret information
received from the other party as confidential, and such party shall not disclose
or use such information in a manner contrary to the purposes of this Agreement.
Moreover, all such information shall be returned to the other party in the
event
this Agreement is terminated.
4.4 Notice
of Non-Compliance.
Each
party shall give prompt notice to the other party of any representation or
warranty made by it in this Agreement becoming untrue or inaccurate in any
respect or the failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement.
ARTICLE
V
Conditions
Precedent to Mycom’s and MergerCo’s Performance
5.1 Conditions.
Mycom
and
MergerCo’s
obligations hereunder shall be subject to the satisfaction at or before the
Closing Date of all the conditions set forth in this Article V.
Mycom
and
MergerCo
may
waive any or all of these conditions in whole or in part without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by Mycom and
MergerCo
of any
other condition of or any of Mycom’s
and
MergerCo’s
other
rights or remedies, at law or in equity, if VSI and SARS shall be in default
of
any of its representations, warranties or covenants under this
Agreement.
5.2 Accuracy
of Representations.
Except
as otherwise permitted by this Agreement, all representations and warranties
by
VSI and SARS in this Agreement or in any written statement that shall be
delivered to Mycom and MergerCo by VSI and SARS under this Agreement shall
be
true and accurate on and as of the Closing Date as though made at that
time.
5.3 Performance.
VSI and
SARS shall have performed, satisfied and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with
by it
on or before the Closing Date.
5.4 Absence
of Litigation.
No
action, suit or proceeding, including injunctive actions, before any court
or
any governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, shall have been instituted or
threatened against VSI or SARS on or before the Closing Date.
5.5 Officer’s
Certificate.
VSI and
SARS shall have delivered to Mycom and MergerCo a certificate dated the Closing
Date signed by the Chief Executive Officer of VSI and SARS certifying that
each
of the conditions specified in this Article has been fulfilled and that all
of
the representations set forth in Article II are true and correct as of the
Closing Date.
5.6 Corporate
Action.
VSI and
SARS shall have obtained the approval of the VSI Security Holders for the
transaction contemplated by this Agreement.
5.7 Acceptance
of Financial Statements.
Mycom
and MergerCo shall have reviewed and in its sole discretion accepted, prior
to
the Closing Date, the VSI Financial Statements as set forth in Exhibit
2.5.
12
ARTICLE
VI
Conditions
Precedent to VSI’s and SARS’ Performance
6.1 Conditions.
VSI’s
and SARS’ obligations hereunder shall be subject to the satisfaction at or
before the Closing Date of all the conditions set forth in this Article VI.
VSI
and SARS may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by VSI and SARS of any other condition of or any of VSI’s
and SARS’ rights or remedies, at law or in equity, if Mycom and MergerCo shall
be in default of any of its representations, warranties or covenants under
this
Agreement.
6.2 Accuracy
of Representations.
Except
as otherwise permitted by this Agreement, all representations and warranties
by
Mycom and MergerCo in this Agreement or in any written statement that shall
be
delivered to VSI and SARS by Mycom and MergerCo under this Agreement shall
be
true and accurate on and as of the Closing Date as though made at that
time.
6.3 Performance.
Mycom
and MergerCo shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it on or before the Closing Date.
6.4 Absence
of Litigation.
No
action, suit or proceeding before any court or any governmental body or
authority, pertaining to the transaction contemplated by this Agreement or
to
its consummation, shall have been instituted or threatened against Mycom on
or
before the Closing Date.
6.5 Officer’s
Certificate.
Mycom
and MergerCo shall have delivered to VSI and SARS a certificate dated the
Closing Date signed by the Chief Executive Officer of Mycom and MergerCo
certifying that each of the conditions specified in this Article has been
fulfilled and that all of the representations set forth in Article III are
true
and correct as of the Closing Date.
6.6 Payment
of Liabilities.
On
or
before the Closing Date, Mycom and MergerCo shall have paid any outstanding
obligations and liabilities of Mycom and MergerCo through the Closing Date,
including obligations created subsequent to the execution of this
Agreement.
6.7 Directors
of Mycom.
On the
Closing Date, the Board of Directors of Mycom shall appoint Xxxxx X. Xxxx to
Mycom’s and MergerCo’s Board of Directors.
6.8 Directors
of MergerCo.
On the
Closing Date, the Board of Directors of MergerCo shall elect the Board of
Directors of VSI, as set forth in Section 2.4 above, and MergerCo’s existing
Board of Directors shall resign.
6.9 Officers
of Mycom and MergerCo.
On the
Closing Date, the Board of Directors of Mycom and MergerCo shall elect the
officers of VSI, as set forth in Section 2.4 above, and Mycom’s existing
executive officers shall resign.
13
ARTICLE
VII
Closing
7.1 Closing.
The
closing of this Agreement shall be held at the offices of The Xxxx Law Group,
PLLC or at any mutually agreeable place on or prior to August 31, 2007, unless
extended by mutual agreement. At the closing:
(a) VSI
and
SARS shall deliver to MergerCo and Mycom (i) copies all exhibits required by
VSI
and/or SARS to provide in accordance with this Agreement, (ii)
the
officer’s certificates described in Section 5.5, (iii)
signed minutes of its board of directors and the VSI Security Holders approving
this Agreement, and (iv) signed minutes of SARS’ board of directors and
shareholder approving this Agreement..
(b)
MergerCo
and Mycom shall deliver to VSI and SARS (i)
copies of all exhibits required by MergerCo and/or its parent, Mycom, to provide
in accordance with this Agreement, (ii) the
officer’s certificates described in Section 6.5, (iii) signed minutes of its
board of directors and shareholders, if necessary, approving this
Agreement,
and
(iv)
signed minutes of Mycom’s board of directors approving this agreement and
authorizing the issuance of shares to MergerCo for VSI.
ARTICLE
VIII
Covenants
Subsequent to the Closing Date
8.1 Registration
and Listing.
Following the Closing Date, Mycom and/or MergerCo shall:
(a) Continue
Mycom’s common stock quotation on the Electronic Over-the-Counter Bulletin Board
system;
(b) Comply
with the Form 8-K requirements of the Securities Exchange Act of 1934 (the
“Exchange
Act”),
including the timely preparation and filing of audited financial statements
as
required by Form 8-K;
(c) Promptly
retain a qualified investor and public relations firm; and
(d) Clear
any
Exchange Act Rule 144 sales of Mycom common stock offered by any Mycom common
stockholder including affiliates or former affiliates of Mycom within
forty-eight (48) hours of the filing of the Notice of Sale pursuant to Rule
144.
8.2 Corporate
Action.
Mycom
shall take steps necessary to amend its Articles of Incorporation and change
its
name to “SARS, Corp.” and cause the amount of authorized shares to increase to
the total aggregate amount to five hundred fifty million (550,000,000). MergerCo
shall take steps necessary to amend its Articles of Incorporation and change
its
name to “Secure Asset Reporting Services, Inc.” and cause the amount of
authorized shares, if necessary, to increase the total aggregate amount to
five
hundred fifty million (550,000,000).
14
8.3 Mycom
shall file a registration statement with the SEC within sixty (60) days of
the
close of the VSI Financing, registering (i) all shares of restricted Mycom
common stock that were outstanding prior to the Closing Date; (ii) all the
shares of common stock issued by VSI in connection with the Financing; and
(iii)
all the shares of common stock underlying warrants issued by VSI in connection
with the Financing. Mycom shall use its best
efforts to cause the registration statement to be declared effective by the
SEC
as soon as practicable thereafter, but in any event not later than one hundred
fifty (150) days after the Closing. The amount of common stock included in
a
registration statement filed remains subject, however, to the right of VSI
and
any underwriters to reduce the number of shares proposed to be registered
pro-rata in view of market conditions or legal considerations, pursuant to
Rule
415 of the Exchange Act, which may limit the total number of shares included
on
a registration statement to thirty percent (30%) of the then issued and
outstanding common stock of Mycom.
8.4 The
stock
transfer agent shall be Pacific Stock Transfer, Inc. (“Pacific
Stock”).
Mycom
shall take all steps necessary to engage Pacific Stock to become the transfer
agent for Mycom and the Surviving Entity.
ARTICLE
IX
Miscellaneous
9.1 Captions
and Headings.
The
Article and Section headings throughout this Agreement are for convenience
and
reference only and shall not define, limit or add to the meaning of any
provision of this Agreement.
9.2 No
Oral Change.
This
Agreement and any provision hereof may not be waived, changed, modified or
discharged orally, but only by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification or discharge
is sought.
9.3 Non-Waiver.
The
failure of any party to insist in any one or more cases upon the performance
of
any of the provisions, covenants or conditions of this Agreement or to exercise
any option herein contained shall not be construed as a waiver or relinquishment
for the future of any such provisions, covenants or conditions. No waiver by
any
party of one breach by another party shall be construed as a waiver with respect
to any other subsequent breach.
9.4 Time
of Essence.
Time is
of the essence of this Agreement and of each and every provision
hereof.
9.5 Entire
Agreement.
This
Agreement contains the entire Agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings.
9.6 Choice
of Law.
This
Agreement and its application shall be governed by the laws of the state of
Nevada.
15
9.7 Counterparts.
This
Agreement may be executed simultaneously in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.8 Notices.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given on the date of service
if served personally on the party to whom notice is to be given, or on the
third
day after mailing if mailed to the party to whom notice is to be given, by
first
class mail, registered or certified, postage prepaid, and properly addressed
as
follows:
Mycom/MergerCo: |
Mycom
Group, Inc.
0000
X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxx, Xx., Chief Executive Officer
|
VSI/SARS: |
Veritas
Solutions, Inc.
000
000xx
Xxxxxx XX, Xxxxx 0000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx, Chief Executive
Officer
|
With a copy to: |
The
Xxxx Law Group, PLLC
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Attn:
Xxxxx Xxxx
|
9.9 Binding
Effect.
This
Agreement shall inure to and be binding upon the heirs, executors, personal
representatives, successors and assigns of each of the parties to this
Agreement.
9.10 Mutual
Cooperation.
The
parties hereto shall cooperate with each other to achieve the purpose of this
Agreement and shall execute such other and further documents and take such
other
and further actions as may be necessary or convenient to effect the transaction
described herein.
9.11 Finders.
There
are no finders in connection with this transaction.
9.12 Announcements.
The
parties will consult and cooperate with each other as to the timing and content
of any public announcements regarding this Agreement.
9.13 Expenses.
Each
party will bear their own expenses, including legal fees incurred in connection
with this Agreement. The VSI Security Holders shall not be responsible for
any
costs incurred in connection with the transaction contemplated by this
Agreement.
9.14 Survival
of Representations and Warranties.
The
representations, warranties, covenants and agreements of the parties set forth
in this Agreement or in any instrument, certificate, opinion or other writing
providing for in it, shall survive the Closing Date.
16
9.15 Exhibits.
As of
the execution hereof, the parties have provided each other with the exhibits
described herein. Any material changes to the exhibits shall be immediately
disclosed to the other party.
9.16 Termination,
Amendment and Waiver.
(a)
Termination.
This
Agreement may be terminated at any time prior to the Closing Date, whether
before or after approval of matters presented in connection with the share
exchange by the stockholders of VSI:
(1) By
mutual
written consent of VSI and SARS and Mycom and MergerCo;
(2) By
either
VSI and SARS or Mycom and MergerCo;
(i)
|
If
any court of competent jurisdiction or any governmental, administrative
or
regulatory authority, agency or body shall have issued an order,
decree or
ruling or taken any other action permanently enjoining, restraining
or
otherwise prohibiting the transactions contemplated by this Agreement;
or
|
(ii)
|
If
the transaction shall not have been consummated on or before August
31,
2007, unless the failure to consummate the transaction is the result
of a
material breach of this Agreement by the party seeking to terminate
this
Agreement.
|
(3) By
VSI
and SARS, if Mycom or MergerCo breaches any of its representations or warranties
hereof or fails to perform in any material respect any of its covenants,
agreements or obligations under this Agreement; and
(4) By
Mycom
and MergerCo, if VSI or SARS breaches any of its representations or warranties
hereof or fails to perform in any material respect any of its covenants,
agreements or obligations under this Agreement.
(b)
Effect
of Termination.
In the
event of termination of this Agreement by either Mycom and MergerCo or VSI
and
SARS, as provided herein, this Agreement shall forthwith become void and have
no
effect, without any liability or obligation on the part of VSI and SARS or
Mycom
and MergerCo, and such termination shall not relieve any party hereto for any
intentional breach prior to such termination by a party hereto of any of its
representations or warranties or any of its covenants or agreements set forth
in
this Agreement.
17
(c)
Extension;
Waiver.
At any
time prior to the Closing Date, the parties may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligation of the other
acts of the other parties, (b) waive any inaccuracies in the representations
and
warranties contained herein or in any document delivered pursuant hereto or
waive compliance with any of the agreements or conditions contained herein.
Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such
rights.
(d)
Procedure
for Termination, Amendment, Extension or Waiver.
A
termination of this Agreement, an amendment of this Agreement or an extension
or
waiver shall, in order to be effective, require in the case of VSI and SARS
or
Mycom and MergerCo, action by its respective Board of Directors or the duly
authorized designee of such Board of Directors.
[Remainder
of Page Intentionally Blank; Signature Page Follows]
18
In
witness whereof, the parties have executed this Agreement concerning the
exchange of securities on the date indicated above.
MYCOM
GROUP, INC.
By:
Xxxxxxx
Xxxxxx, Xx.
Chief
Executive Officer
MYCOM
ACQUISITION CORPORATION
By:
Xxxxxxx Xxxxxx, Xx.
Xxxxxxx Xxxxxx, Xx.
Chief
Executive Officer
VERITAS
SOLUTIONS, INC.
By:
Xxxxxxx
Xxxxxxx
Chief
Executive Officer
SECURE
ASSET REPORTING SERVICES, INC.
By:
Xxxxxxx
Xxxxxxx
Chief
Executive Officer
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