AGREEMENT OF MERGER
This Agreement of Merger (the "Agreement of Merger") is dated as of
January 16, 2007, by and among CRYOMETRIX, INC., a California corporation and
wholly-owned subsidiary of Parent ("Surviving Corporation") and ALL TEMP
ENGINEERING, INC., a California corporation ("Disappearing Corporation").
Surviving Corporation and Disappearing Corporation are collectively referred
to herein as the "Constituent Corporations".
A. Disappearing Corporation and Surviving Corporation, along with
Reflect Scientific, Inc., a Utah corporation ("Parent"), have entered into
that certain Agreement and Plan of Merger dated as of November 14, 2006 (the
"Plan of Merger"), providing, among other things, for the execution and filing
of this Agreement of Merger and the merger of the Disappearing Corporation
with and into the Surviving Corporation (the "Merger") upon the terms and
subject to the conditions set forth in the Plan of Merger and this Agreement
of Merger; and
B. The respective boards of directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations, and their respective shareholders, that the Disappearing
Corporation be merged with and into Surviving Corporation; and
C. The shareholders of Disappearing Corporation and Surviving
Corporation have unanimously adopted and approved of the Plan of Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants, and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Surviving Corporation. Surviving Corporation is a California
corporation organized on October 27, 2005, and has one (1) share of common
stock outstanding.
1.2 Disappearing Corporation. Disappearing Corporation is a California
corporation organized on May 6, 1985, and has ten thousand (10,000) shares of
common stock outstanding.
1.3 Filing. This Agreement of Merger, together with the officers'
certificates of each of the Constituent Corporations required by the General
Corporation Law of the State of California (the "California Law"), shall be
filed with the Secretary of State of the State of California at the time
specified in the Plan of Merger.
1.4 Effectiveness. The Merger shall become effective at the time
this Agreement of Merger is filed with and accepted by the Secretary of State
of the State of California (the "Effective Time").
1.5 Merger. At the Effective Time, Disappearing Corporation shall
be merged into Surviving Corporation and the separate corporate existence of
Disappearing Corporation shall thereupon cease. Surviving Corporation shall
be the surviving corporation in the Merger and the separate corporate
existence of Surviving Corporation, with all of its purposes, objects, rights,
privileges, powers, immunities and franchises, shall continue unaffected and
unimpaired by the Merger.
1.6 Further Action. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement of Merger or to vest the Surviving Corporation with the full right,
title and possession to all assets, property, rights, privileges, immunities,
powers and franchises of either or both of the Constituent Corporations, the
officers and directors of the Surviving Corporation are fully authorized in
the name of either or both of the Constituent Corporations or otherwise to
take all such action.
ARTICLE II
CORPORATE GOVERNANCE MATTERS
2.1 Articles. The Articles of Incorporation and Bylaws of
Surviving Corporation shall not be amended or effected by the Merger.
ARTICLE III
MERGER CONSIDERATION
3.1 Conversion. At the Effective Time, by virtue of the Merger and
without any action on the part of the Surviving Corporation and/or the
Disappearing Corporation:
(a) Each outstanding share of common stock of the Disappearing
Corporation ("Disappearing Corporation Common Stock") issued and outstanding
immediately prior to the Effective Time (except for common stock referred to
in Section 3.1(c) hereof) will be converted into Two Hundred (200) shares of
the common stock of Parent such that all outstanding shares of Disappearing
Corporation Common Stock issued and outstanding immediately prior to the
Effective Time (except for common stock referred to in Section 3.1(c) hereof)
will be converted into an aggregate total of two million (2,000,000) shares of
the common stock of Parent. No fractional shares shall be issued. As further
consideration for the Merger, Parent shall pay to the shareholders of
Disappearing Corporation a pro-rata running royalty of up to 5.0% of the gross
annual revenues earned after Closing (the "Royalty") on the All Temp
Engineering business segment that will be maintained as a separate division
within the Surviving Corporation (the "Royalty Business Segment"). The
Royalty shall be paid so long as Parent owns and operates the Royalty Business
Segment and on revenues earned, providing it does not result in the Royalty
Business Segment earnings, as measured by earnings before interest and taxes
("EBIT"), of less than 10%, and accordingly, such Royalty shall be paid in
accordance with the following table:
E R
------------------------------
Up to 10 0
11 1
12 2
13 3
14 4
15 5
16 and higher 5
For purposes of the above table, "E" is the Royalty Business Segment's EBIT on
a percentage of revenue basis; and "R" is the percent royalty to be paid to
the shareholders of Disappearing Corporation based on revenues less any
amounts paid in commissions and freight, i.e., actual revenues received for
services and products. Fractional amounts shall be prorated accordingly using
the formula R = E - 10, when E falls between 10 and 15. By way of example, if
"E" is 12.36 percent of revenue the Royalty basis shall be 2.36 percent. The
foregoing Royalty shall be paid quarterly within 45 days following the close
of each quarter and assumes the Royalty Business Segment will be maintained
separately within the Surviving Corporation ("Company Business Division") is
profitable as represented by the shareholders of the Disappearing Corporation.
If, within three (3) years of the Closing, the Company Business Division is
transferred (by means of a sale of assets, merger, sale of stock or
otherwise), the shareholders of Disappearing Corporation shall receive a cash
payment of Six Hundred Thousand Dollars ($600,000.00) less any accumulated
royalties payable under this agreement. However, no payment shall be made if
the Company Business Division is terminated or liquidated due to non
performance.
(b) All stock options, warrants, convertible debt, other
convertible securities or other rights to acquire shares of the Disappearing
Corporation outstanding at the Effective Time, whether or not exercisable and
whether or not vested, shall be cancelled.
(c) Except as expressly set forth herein, each share of any
other equity interest of the Disappearing Corporation (other than Disappearing
Corporation Common Stock) will be canceled without payment of any
consideration therefor and without any conversion thereof.
(d) Each share of common stock of Surviving Corporation,
("Surviving Corporation Common Stock"), issued and outstanding immediately
prior to the Effective Time, will remain outstanding as of the Effective Time
and will not be effected by the Merger.
(e) Each holder of shares of Disappearing Corporation Common
Stock shall surrender their share certificate or certificates to the secretary
of Surviving Corporation and shall be entitled to receive in exchange therefor
a certificate or certificates representing the number of shares into which
their shares theretofore represented by a certificate or certificates so
surrendered shall have been converted as aforesaid.
ARTICLE IV
TERMINATION AND AMENDMENT
4.1 Termination. Notwithstanding the approval of this Agreement of
Merger by the shareholders of Disappearing Corporation and Surviving
Corporation, this Agreement of Merger shall terminate forthwith in the event
that the Plan of Merger shall be terminated as therein provided.
4.2 Amendment. This Agreement of Merger may be amended by the
parties hereto at any time before or after approval hereof by the shareholders
of either Disappearing Corporation or Surviving Corporation, but, after any
such approval, no amendment shall be made which without the further approval
of such shareholders would (i) have a material adverse effect on the
shareholders of either Disappearing Corporation or Surviving Corporation; (ii)
change any of the principal terms of the Plan of Merger; or (iii) change any
term of the Articles of Incorporation of the Surviving Corporation. This
Agreement of Merger may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto prior to the Effective Time.
ARTICLE V
MISCELLANEOUS
5.1 Headings. The underlined headings contained in this Agreement
of Merger are for convenience of reference only, shall not be deemed to be a
part of this Agreement of Merger and shall not be referred to in connection
with the construction or interpretation of this Agreement of Merger.
5.2 Counterparts. This Agreement of Merger may be executed in
several counterparts, each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.
5.3 Governing Law. This Agreement of Merger shall be construed in
accordance with, and governed in all respects by, the internal laws of the
State of California (without giving effect to principles of conflicts of
laws).
5.4 Effectiveness. The effect of the Merger is as prescribed by
law.
IN WITNESS WHEREOF, the parties have executed this Agreement of Merger.
SURVIVING CORPORATION:
CRYOMETRIX, INC., a California corporation
By /s/ Xxx Xxxxx
XXX XXXXX, President
By /s/ Xxxxxx Xxxxx
XXXXXX XXXXX, Secretary
DISAPPEARING CORPORATION:
ALL TEMP ENGINEERING, INC.,
a California corporation
By /s/ Xxxxxxxx X. Xxxxxxxx
XXXXXXXX X. XXXXXXXX, President
By /s/ Xxxx X. Xxxx
XXXX X. XXXX, Chief Executive
Officer and Secretary
OFFICERS' CERTIFICATE
XXXXXXXX X. XXXXXXXX and XXXX X. XXXX and hereby certify that:
1. XXXXXXXX X. XXXXXXXX is the President of ALL TEMP ENGINEERING,
INC., a California corporation (the "Corporation"); Xxxx X. Xxxx is the Chief
Executive Officer and the Secretary of the Corporation.
2. The Agreement of Merger to which this Certificate is attached (the
"Agreement of Merger") has been duly approved by the Board of Directors of the
Corporation.
3. The Corporation has one class of stock outstanding, designated
"Common Stock," of which ten thousand (10,000) shares were outstanding and
entitled to vote on the merger.
4. The principal terms of the Agreement of Merger were approved by the
unanimous vote of the shares of common stock outstanding which equaled or
exceeded the vote required. The vote required was a majority of the
outstanding shares of the Common Stock entitled to vote.
Each of the undersigned declare under penalty of perjury that the matters
set out in the foregoing Certificate are true of their own knowledge.
Executed at Los Gatos, California on January 2, 2007.
/s/ Xxxxxxxx X. Xxxxxxxx
XXXXXXXX X. XXXXXXXX, President
/s/ Xxxx X. Xxxx
XXXX X. XXXX, Chief Executive
Officer and Secretary
OFFICERS' CERTIFICATE
Xxx Xxxxx and Xxxxxx Xxxxx hereby certify that:
1. They are the President and Secretary, respectively, of
CRYOMETRIX, INC., a California corporation (the "Corporation").
2. The Agreement of Merger to which this Certificate is attached (the
"Agreement of Merger") has been duly approved by the Board of Directors of the
Corporation.
3. The Corporation has one class of stock outstanding, designated
"Common Stock," of which one (1) share was outstanding and entitled to vote on
the merger.
4. The principal terms of the Agreement of Merger were approved by the
unanimous vote of the shares of common stock outstanding which equaled or
exceeded the vote required. The vote required was a majority of the
outstanding shares of the Common Stock entitled to vote.
5. The vote of the shareholders of REFLECT SCIENTIFIC, INC., the
parent of the Corporation which parent corporation is issuing equity
securities to the shareholders of ALL TEMP ENGINEERING, INC. pursuant to the
Agreement of Merger, was not required.
Each of the undersigned declares under penalty of perjury that the
matters set out in the foregoing Certificate are true of his or her own
knowledge. Executed at Orem, Utah on January 16, 2007.
/s/ Xxx Xxxxx
XXX XXXXX, President
/s/ Xxxxxx Xxxxx
XXXXXX XXXXX, Secretary
